Ingersoll Rand (IR) Deutsche Bank’s Chicago Industrials Summit summary

Order and revenue trends

• July organic orders accelerated to low double digits to mid-teens, driven by long-cycle project conversions, especially in ITS, with healthy momentum in short and medium cycles continuing from Q2.

• Long-cycle project funnel remains robust, with order conversion delays now easing, building backlog into 2027 as projects average 6–18 months from PO to shipment.

• Q2 saw 4% organic revenue growth in ITS, with both price and volume contributing; guidance for the back half implies 3–4% organic growth, reflecting stable trends.

• Recurring revenue surpassed $450 million in 2025, with a target to approach $1 billion by 2027, expanding across all regions and product lines.

• Pricing actions are normalizing to 1–2% annually, with tariff-related surcharges rolling off and region-specific strategies in place.

Regional and segment performance

• North America led Q2 organic orders with high single-digit growth, while Europe remained stable and India continued double-digit growth; China saw mid-teens volume growth off a lower baseline despite pricing headwinds.

• China remains a highly competitive, deflationary market with negative low single-digit pricing headwinds, expected to normalize over the medium term.

• ITS margins have faced headwinds from tariffs and negative volumes but are expected to improve sequentially in the back half and into 2027 as volumes recover and productivity initiatives take hold.

• PST segment showed 7% organic order growth, with life sciences driving outsized performance; mid-30s EBITDA margin target is on track for 2027.

Strategic initiatives and capital deployment

• Recurring revenue is the highest growth initiative, now proliferating globally and across product lines, with strong double-digit growth expected through 2027.

• M&A activity remains robust, with 5–6 bolt-on deals closed in the first half and 11 more under LOI; focus remains on smaller, family-owned targets across all regions and segments.

• No large-scale acquisitions are imminent, but the company is prepared to act if opportunities arise; balance sheet remains strong with 1.7x net debt leverage.

• Share buybacks reached $250 million in Q2 and $350 million in the first half; further repurchases are likely if opportunities arise, though M&A remains the primary capital allocation priority.