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IR

Ingersoll Rand Inc. (IR)·Q2 2025 Earnings Summary

Executive Summary

  • Record Q2 performance on orders ($1.94B, +8%), revenue ($1.888B, +5%), and adjusted EBITDA ($509M, +3%; 27.0% margin), while GAAP diluted EPS was -$0.29 due to non-cash impairments; adjusted diluted EPS was $0.80 .
  • Guidance raised: FY25 adjusted EBITDA to $2.10–$2.16B and adjusted EPS to $3.34–$3.46; organic revenue lowered to (-2)%–0% solely on reduced tariff pricing assumptions, with no impact to adjusted EBITDA/EPS .
  • Orders and backlog momentum: book-to-bill 1.03x in Q2, 1.06x in 1H; aftermarket was 37% of revenue; backlog up mid-teens vs end-2024—supporting 2H phasing and 2026 visibility .
  • Capital allocation: $500M buyback in Q2 (~6.1M shares at $81.35), $47M to M&A; leverage 1.7x; liquidity $3.9B; dividend maintained at $0.02 per quarter .
  • Stock reaction catalysts: raised guidance, resilient orders/book-to-bill, and clarity that impairments are non-cash and excluded from adjusted results; tariff-related pricing framework detailed on the call .

What Went Well and What Went Wrong

What Went Well

  • Record Q2 orders, revenue, and adjusted EBITDA; adjusted diluted EPS at $0.80 and margin at 27.0%—management raised FY25 adjusted EBITDA and adjusted EPS guidance .
  • IT&S orders grew 7% with book-to-bill 1.05x; Americas high teens, EMEA high single digits, APAC low double digits; China delivered organic order growth—“resilience of our team” and IRX cited by management .
  • PST revenue up 17% (M&A-driven), adjusted EBITDA up 14% with margin of 29.5%; margin improved 40bps sequentially and 190bps vs Q4’24—“EVO Series electric diaphragm pump…15% improvement in energy efficiency” .

What Went Wrong

  • GAAP net loss (-$115M) and diluted EPS (-$0.29) from non-cash impairments: minority stake in High Pressure Solutions, ILC Dover A&D customer reduction, trade name; biopharma goodwill impaired from higher discount rates and lower peer multiples .
  • IT&S adjusted EBITDA margin down 110bps YoY (28.6%) on organic volume declines, dilutive impact from recent acquisitions, and tariff pricing that offsets costs one-for-one; PST margin down 80bps YoY (29.5%) .
  • Free cash flow down YoY ($210M vs $283M) due primarily to timing of bond interest payments; company highlighted this as a timing factor rather than structural .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.899 $1.717 $1.888
Adjusted EBITDA ($USD Millions)$532.3 $459.7 $509.4
Adjusted EBITDA Margin (%)28.0% 26.8% 27.0%
GAAP Diluted EPS ($)$0.57 $0.46 -$0.29
Adjusted Diluted EPS ($)$0.84 $0.72 $0.80
Free Cash Flow ($USD Millions)$490.9 $222.7 $210.4

Segment performance and mix:

Segment MetricQ4 2024Q1 2025Q2 2025
IT&S Orders ($USD Millions)$1,422.2 $1,487.0 $1,560.9
IT&S Revenue ($USD Millions)$1,511.0 $1,352.1 $1,491.6
IT&S Segment Adjusted EBITDA ($USD Millions)$457.6 $389.1 $427.2
IT&S Segment Adjusted EBITDA Margin (%)30.3% 28.8% 28.6%
PST Orders ($USD Millions)$377.8 $395.3 $378.7
PST Revenue ($USD Millions)$387.6 $364.7 $396.3
PST Segment Adjusted EBITDA ($USD Millions)$106.8 $106.2 $116.8
PST Segment Adjusted EBITDA Margin (%)27.6% 29.1% 29.5%

KPIs and operating metrics:

KPIQ2 2025
Book-to-bill (Total Co.)1.03x
Book-to-bill (IT&S)1.05x
Book-to-bill (PST)0.96x
Aftermarket revenue (% of total)37%
Liquidity$3.9B
Net debt / Adjusted EBITDA1.7x
Corporate costs (Q2)$35M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue Growth (YoY)FY 20253%–5% 4%–6% Raised
Organic Revenue GrowthFY 2025(-1)%–1% (-2)%–0% Lowered (tariff pricing assumption)
IT&S Organic GrowthFY 2025(-1)%–1% (-2)%–0% Lowered
PST Organic GrowthFY 2025(-1)%–1% (-2)%–0% Lowered
FX ImpactFY 2025~ -0.5% ~ +1% Raised
M&A Revenue ContributionFY 2025~$330M ~$375M Raised
Corporate CostsFY 2025~ $165M ~ $160M Lowered
Adjusted EBITDAFY 2025$2,070–$2,130M $2,100–$2,160M Raised
Adjusted EPSFY 2025$3.28–$3.40 $3.34–$3.46 Raised
Adjusted Tax RateFY 2025N/A~23% New detail
Net Interest ExpenseFY 2025N/A~ $220M New detail
CapExFY 2025N/A~2% of revenue New detail
Share Count AssumptionFY 2025N/A~403M Updated (reflects Q2 buyback)
Dividend (Quarterly)Ongoing$0.02 declared Apr/Q2 cadence$0.02 per share (payable Sep 4, 2025) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prev)Q1 2025 (Prev)Q2 2025 (Current)Trend
Orders/BacklogRecord results; strong margins; setup for 2025 Book-to-bill 1.10x IT&S; strong FCF Co. book-to-bill 1.03x; 1H book-to-bill 1.06x; backlog up mid-teens vs end-2024 Improving backlog/mix
Tariffs/MacroFX/tariff framing in 2025 outlook Precautionary organic guide; FX ~ -0.5% Organic lowered solely on tariff pricing; base price ~2%; total price 3.5–4% back half Uncertain but better framework
Product innovationStrong margins, integration Sequential margin improvement PST CompAir Ultima oil-free compressor +14% energy efficiency; EVO diaphragm pump +15% Positive innovation cadence
Regional trendsChina/PL impacts Mixed APAC; momentum Americas high teens, EMEA high single digits, APAC low double digits; China organic orders up Mixed-to-improving
Life Sciences platformILC Dover acquired in 2024 PST organic orders +3% Lead Fluid acquisition; additional bolt-on under LOI; mid-teens ROIC target Building out platform
Impairments/ILC DoverNone notedN/ANon-cash impairments; reps & warranties insurance claim filed One-time, contained
Aftermarket/RecurringHigh FCF; margin durability Strategy emphasis Aftermarket 37% of revenue; recurring “care-type” solutions expansion Structural tailwind
Long-cycle projectsRNG strong in prior years Funnel activity robust Wastewater infra momentum; delays from tariffs/EPC capacity; pharma capacity potential ahead Pipeline robust, timing slower

Management Commentary

  • “We delivered another strong quarter, with momentum reflected in our first half organic orders growth, robust book-to-bill ratio, and raised guidance on revenue, Adjusted EBITDA, and Adjusted EPS.” — Vicente Reynal, CEO .
  • CFO on impairments: “These adjustments have no effect on our adjusted earnings or the underlying operational performance… write-down due to upstream oil & gas outlook; ILC Dover A&D customer reduction; biopharma goodwill impacted by discount rate and peer multiples.” .
  • Pricing playbook: “We expect pricing to be in the 3.5% to 4% total range… roughly evenly split between base pricing and tariff-related pricing.” .
  • Capital returns: “$500 million in share repurchases… still targeting up to an additional $250 million for the balance of the year.” .
  • Innovation: “CompAir Ultima Oil Free compressor… 14% improvement in energy efficiency… EVO Series electric diaphragm pump… 15% improvement in energy efficiency.” .

Q&A Highlights

  • Demand cadence and 2H phasing: book-to-bill 1.06x in 1H; Q3 slightly positive organic sales, Q4 stronger; long-cycle orders robust into 2026 .
  • Margin bridge: sequential margin expansion expected in 2H on seasonality, pricing, productivity, and M&A integration; PST has easier comps in Q4 .
  • Tariff clarity: organic guide lowered solely on tariff pricing assumptions; management remains precautionary until greater certainty; base price ~2% is structural .
  • ILC Dover/insurance: reps & warranties backed by insurance; claim filed; conviction in long-term Life Sciences remains .
  • Regional color: EMEA resilient; LATAM healthy; North America sluggish amid tariff uncertainty; APAC/China showing organic order growth .

Estimates Context

  • Q2 2025 vs consensus: revenue $1.8889B vs $1.8481B* (beat); adjusted EBITDA $509.4M vs $507.0M* (beat); adjusted diluted EPS $0.80 vs $0.7988* (inline to slight beat) .
  • Q1 2025 vs consensus: revenue $1.7168B vs $1.7254B* (slight miss); adjusted EBITDA $459.7M vs $473.0M* (miss); adjusted diluted EPS $0.72 vs $0.7368* (miss) .
  • Back-half setup: phasing consistent with prior years, with sequential margin improvement and higher organic pricing; organic volume down low-single digits in 2H vs mid-single digits in 1H .

Values retrieved from S&P Global.

MetricQ1 2025 ActualQ1 2025 Consensus*Q2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Billions)$1.717 $1.725*$1.888 $1.848*
Adjusted EBITDA ($USD Millions)$459.7 $473.0*$509.4 $507.0*
Adjusted Diluted EPS ($)$0.72 $0.7368*$0.80 $0.7988*

Key Takeaways for Investors

  • Raised FY25 adjusted EBITDA and EPS guidance is the headline; organic reduction is tariff-pricing driven and does not impact adjusted profitability—positioning for a positive 2H phasing and sequential margin expansion .
  • Orders/book-to-bill strength (1.03x in Q2; 1.06x in 1H) and backlog up mid-teens since end-2024 support revenue visibility into 2H and 2026, particularly for ITS long-cycle .
  • Focus near term on tariff resolution—clarity is a key unlock for funnel conversion; base pricing ~2% appears structural; expect disciplined pass-through for tariffs .
  • PST margin trajectory improving; M&A accretion and innovation (EVO pumps, recurring care solutions) should support mix and recurring revenue expansion (aftermarket 37%) .
  • Non-cash impairments are contained and excluded from adjusted results; reps & warranties insurance claim filed reduces downside risk from ILC Dover issues .
  • Capital allocation remains shareholder-friendly: $500M Q2 repurchase completed; liquidity $3.9B; leverage 1.7x; ongoing $0.02 quarterly dividend .
  • Watch catalysts: long-cycle conversions (wastewater, pharma capacity build), tariff clarity, PST margin progress, and additional bolt-on M&A execution at mid-teens ROIC .

Additional Press Releases Relevant to Q2 2025

  • Declared regular quarterly cash dividend of $0.02 per share payable September 4, 2025 (record date August 14, 2025) .
  • 2025 guidance tables and non-GAAP reconciliations furnished via Exhibit 99.1 in Q2 8-K .

Notes and Cross-References

  • Organic revenue lowered due solely to tariff pricing assumptions; management emphasized no impact to adjusted EBITDA/EPS from this change .
  • Free cash flow decline YoY in Q2 primarily due to timing of bond interest payments (not structural) .
  • Segment commentary: IT&S margins pressured by organic volume and tariff pricing match; PST margins improving sequentially; innovation cited as energy efficiency leaders .