Ingersoll Rand 2025-26: $525M M&A, $450M Recurring, FY26 +5%
FY25 revenue $7.65B (+6%); op income $1.42B (+9%); NI $581M (-31% on impairments + tariffs); EPS $1.45. Q4 organic orders +1%, organic revenue +3%. Recurring revenue exceeded $450M (backlog $1.1B). FY25 deployed $525M to 16 deals ($275M annualized inorganic revenue). 9 deals under LOI in 2026 (incl. Synomics Jan 2026). FY26 guide: revenue +2.5-4.5%, adj EBITDA $2.13-2.19B, adj EPS $3.45-$3.57.
Key takeaways
- M&A flywheel real and disciplined. $525M deployed in 16 deals in 2025 (avg pre-synergy multiple ~9.5x); generates ~$275M annualized inorganic revenue. 9 deals under LOI heading into 2026 (Synomics closed January 2026).
- Recurring revenue >$450M with $1.1B backlog. This is the structural shift — IR is morphing from cyclical industrial pump/compressor to recurring-revenue + aftermarket business. Backlog gives forward visibility unusual for cyclical industrials.
- PST (Precision + Solutions Technologies) margin expansion. Q4 PST adj EBITDA margin 30.4% (+280bp YoY). Life Sciences (Flexan) yield rates from 55% → 90% on customer products. Margin lift compounds with M&A.
- Tariff-driven margin pressure FY25 with FY26 mitigation. Section 232 tariffs hit ITS margins in Q3-Q4. Mid-year guidance cut on tariff. Pricing actions taken; mitigation continues into FY26.
- FY26 guide is mid-single-digit cyclical floor. Revenue +2.5-4.5% (1% organic, 1.5% M&A, 1% FX); adj EBITDA $2.13-2.19B; adj EPS $3.45-$3.57 (+5% midpoint). FCF/adj NI conversion ~95%. Organic of 1% reflects industrial caution; M&A makes up the gap.
Business
Ingersoll Rand operates two segments + a disciplined M&A engine:
- Industrial Technologies & Services (ITS) (~70% of revenue). Compressors + industrial vacuum + blowers + power tools + lifting. The legacy industrial spine. Q4 orders +8% (organic +1%); revenue +11% (organic +3%); adj EBITDA margin 28.9% (down on tariffs + commercial investment).
- Precision & Specialty Technologies (PST) (~30%). Liquid handling + life sciences + medical (Flexan) + sustainable chemistry. Q4 orders +6% (organic +1%; life sciences +mid teens organic). FY revenue +8% (organic +4%). Adj EBITDA margin 30.4% (+280bp YoY).
Strategic playbook:
- "In-region for-region" footprint: serve customers locally with high-ROI tech
- Aftermarket + recurring: ~37% of revenue from aftermarket; ITS recurring grew double digits
- M&A: averaging 9.5x pre-synergy (disciplined)
- Sustainability leadership: #1 in NA + globally; CDP A list; $600M employee equity grant value creation
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 5.92 | 6.88 | 7.24 | 7.65 |
| Revenue YoY | n/a | +16% | +5% | +6% |
| Gross profit ($B) | 2.33 | 2.88 | 3.17 | 2.95 |
| Op income ($B) | 0.82 | 1.16 | 1.30 | 1.42 |
| Op margin | 13.8% | 16.9% | 17.9% | 18.5% |
| Net income ($M) | 605 | 779 | 839 | 581 |
| Diluted EPS ($) | 1.48 | 1.90 | 2.06 | 1.45 |
| FCF ($B) | 0.77 | 1.27 | 1.25 | 1.22 |
| Capex ($M) | -95 | -105 | -149 | -136 |
| Total debt ($B) | 2.79 | 2.77 | 4.98 | 4.78 |
| Dividends ($M) | -32 | -32 | -32 | -32 |
| Buyback ($M) | -261 | -263 | -261 | -1,018 |
Net income (-31% YoY, $581M vs $839M FY24) and diluted EPS ($1.45 vs $2.06) reflect:
- $300-400M in impairments (High Pressure Solutions + ILC Dover, flagged in Q2 call)
- Tariff drag (Section 232) on margin
- Higher D&A from M&A pace Op income $1.42B (+9%) is the cleaner operating signal. Adj EPS run-rate of ~$3.30 FY25 vs guide of $3.45-3.57 FY26 is the right comp.
Buybacks stepped up to $-1.02B (4x FY24). Board authorized additional $1B; total $2B authorization in May 2025.
Capital allocation
- Capex: $-136M FY25 (~1.8% of revenue). Light for an industrial.
- Dividends: $-32M (held flat).
- Buybacks: $-1.02B FY25 (vs $-261M FY24, ~4x acceleration). Board authorized additional $1B.
- M&A: $525M deployed in 16 deals FY25 (~$275M annualized inorganic revenue). 9 deals under LOI for 2026.
- FCF: $1.22B (-2% YoY).
- Debt: $4.78B (vs $4.98B FY24, slight paydown).
The capital deployment story is the lead: M&A + buyback >$1.5B in FY25 vs $1.22B FCF — the company is leaning into deployment.
FY26 outlook (per Q4 2025 call, 2026-02-13)
| FY26 framework | Detail |
|---|---|
| Total revenue growth | +2.5% to +4.5% |
| Organic order growth | +1% |
| M&A contribution | +1.5% |
| FX tailwind | +1% |
| Adj EBITDA | $2.13B to $2.19B |
| Adj EPS | $3.45 to $3.57 (+5% midpoint) |
| Corporate costs | $170M |
| Adj tax rate | ~23% |
| Net interest expense | ~$230M |
| Share count | ~394M |
| FCF / adj NI conversion | ~95% |
The +1% organic guide is conservative — implies industrial end-market caution. Inorganic +1.5% is from already-closed deals + LOIs; FX +1% reflects USD weakness. Adj EBITDA +5-8% YoY at midpoint with margin holding ~28% is the operational read.
Key risks
- Tariff persistence. Section 232 + other tariffs hit FY25 margins. Mitigation underway but material exposure remains.
- Industrial end-market cyclicality. Compressor + vacuum + power tools tied to industrial capex cycle. Organic +1% guide already conservative; downside risk in cyclical contraction.
- M&A integration risk. 16 deals in 2025 + 9 LOIs for 2026. Integration cadence + synergy delivery are key — impairments at HPS + ILC Dover show the risk.
- Tariff war room execution. Pricing realization timing is the swing factor; FY26 EBITDA flexes with this.
- Currency. ~50% non-US exposure; FX tailwind to FY26 guide assumes weak USD continues.
- Life Sciences customer concentration. Flexan yield improvement story attractive but customer mix concentration unclear.
Bottom line
IR FY25 is a strong M&A-flywheel + recurring-revenue + margin-expansion year, masked by GAAP NI -31% (impairments + tariffs). The recurring revenue >$450M with $1.1B backlog is the structural shift to less-cyclical compounder. PST margin expansion (+280bp) is a tailwind through FY26. FY26 guide of +2.5-4.5% revenue + $3.45-3.57 adj EPS is conservative — track record of beat suggests upside to $3.55-3.65. Risks are tariff + cyclical + integration. Quality industrial compounder with the multiple it deserves.
Citations
- Ingersoll Rand Inc. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- IR Q4 2025 earnings call, 2026-02-13 — record $450M+ recurring revenue, $1.1B backlog, 16 deals / $525M deployed FY25, 9 LOIs for 2026 (Synomics Jan 2026), FY26 guide ($3.45-3.57 adj EPS, $2.13-2.19B adj EBITDA, +2.5-4.5% revenue).
- IR Q3 2025 earnings call, 2025-10-31 — Section 232 tariff impact + EBITDA midpoint cut to $2.075B.
- IR Q2 2025 earnings call, 2025-08-01 — HPS + ILC Dover impairments; raised FY guide; $650M M&A deployed YTD.
- IR Q1 2025 earnings call, 2025-05-02 — $1B additional buyback authorization (total $2B); 9 deals in LOI; record Q1 FCF $223M.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).