Ingersoll Rand Inc. Q2 FY2025 earnings call

• Strong first half performance with organic order growth, book-to-bill of 1.06x, and backlog increasing by 16% since end of 2024.
• Sustainability leadership: ranked #1 in North America and globally, CDP A list, $600 million value creation through employee equity grants.
• Value creation flywheel: 11 M&A transactions year-to-date adding ~$200 million in annualized revenue, $650 million deployed to acquisitions including Lead Fluid and Termomeccanica.
• Q2 financials: Orders up 8% YOY, book-to-bill 1.03x, aftermarket revenue 37% of total, adjusted EBITDA $509 million (margin 27%), adjusted EPS $0.80, free cash flow $210 million, total liquidity $3.9 billion.
• Impairments: High Pressure Solutions and ILC Dover due to market changes, but conviction in Life Sciences business remains.

IT&S Segment: Q2 orders finished up 7% year-over-year and 5% sequentially, with organic order growth in the low single digits. Revenue was up low single digits, and adjusted EBITDA margins declined due to organic volume flow-through, dilutive impact from recently acquired businesses, tariff pricing, and commercial investments. Compressor orders were up low single digits, industrial vacuum and blowers up high teens, and power tools and lifting saw a minimal decline. Regional orders: Americas up high teens, EMEA up high single digits, Asia Pacific up low double digits. P&ST Segment: Q2 orders were up 13% year-over-year with a book-to-bill of 0.96x. Organic orders were down 5% but excluding large projects, were up low single digits. Revenue was up 17% year-over-year driven largely by M&A, and adjusted EBITDA was $117 million, up 14% year-over-year with a margin of 29.5%.

• Raised full year guidance for revenue, adjusted EBITDA, and adjusted EPS. Adjusted EBITDA midpoint to $2.13 billion, adjusted EPS to $3.40 at midpoint.
• Anticipate adjusted tax rate ~23%, net interest expense ~$220 million, CapEx ~2% of revenue.
• Guidance excludes effect of additional share repurchases or M&A.

• Uncertainty in tariff landscape affecting pricing and revenue.
• Macro environment dynamics impacting large project timelines and MQL conversion.
• Impairment risks from changes in market outlook for acquired businesses like ILC Dover.

Q: Talk about demand cadence and order cadence in the back half of the year.

A: Historically book-to-bill around 1 full year, first half book-to-bill 1.06, second half expected to build on backlog. Second quarter had stable momentum, July continued momentum.

Q: Margins in the back half of the year.

A: Seasonality, increased revenue profile in back half, integration of M&A, PST business has easier comp in Q4.

Q: Organic sales year-on-year.

A: First half down ~3.5%, full year guide minus 1%, Q4 expected to be healthier than Q3.

Q: M&A protection and larger deals.

A: Comprehensive diligence, negotiated representations and warranties, ILC Dover had reps/warranties backed by insurance.

Q: MQLs and long cycle projects.

A: MQLs show real demand, long cycle projects spread, wastewater facilities and reshoring in India show momentum.

Q: PST legacy business and IT&S margin.

A: PST legacy medical business has momentum, IT&S margin in Q2 affected by volume, M&A, tariff, but expect sequential expansion.