Ingersoll Rand Defies Weak Organic Growth With 10% Revenue Jump

Date of Call: Feb 13, 2026

Financials Results

• Revenue: Q4: up 10% YOY, organic up 3% YOY. Full year: up 6% YOY, organic down 1% YOY.
• EPS: Q4: $0.96 adjusted EPS, up 14% YOY. Full year: $3.34 adjusted EPS, up 2% YOY.
• Operating Margin: Q4 adjusted EBITDA margin: 27.7%. Full year adjusted EBITDA margin: 27.4%.

Guidance:

• Total company revenue expected to grow 2.5% to 4.5% in 2026 (organic growth at midpoint of 1%).
• Total adjusted EBITDA expected to be $2.13B to $2.19B.
• Adjusted EPS projected to be $3.45 to $3.57, approximately 5% growth at the midpoint.
• Adjusted tax rate expected to be ~23%.
• Corporate costs planned at $170M, incurred evenly per quarter.
• Free cash flow to adjusted net income conversion expected around 95%.
• EPS expected to grow at similar mid-single-digit rate in both first and second half of the year.

Business Commentary:

Strong Financial Performance and Growth:

• Ingersoll Rand reported revenue up 10% year-over-year in Q4 2025, with organic revenue growth of 3%.
• The company delivered adjusted EBITDA of $580 million, maintaining strong margins at 27.7%.
• This performance was attributed to positive momentum in organic order growth, a robust acquisition strategy, and efficient execution of commercial investments.

M&A Strategy and Impact:

• Ingersoll Rand completed 16 transactions in 2025, generating approximately $275 million in annualized inorganic revenue.
• The company's disciplined M&A approach averaged a 9x pre-synergy multiple, enhancing technological capabilities and driving above-market growth.
• The strategic focus on enhancing the existing portfolio and leveraging high-return acquisitions contributed significantly to overall growth.

Recurring Revenue and Order Growth:

• The company's recurring revenue initiative exceeded $450 million in 2025, with a backlog of approximately $1.1 billion in future revenue from existing contracts.
• Both the ITS and PST segments delivered low single-digit organic order growth in Q4, contributing to the company's strong order performance.
• This growth was supported by the company's strategic focus on expanding recurring revenue streams and leveraging IRX for agility in the market.

Regional and Segment Performance:

• The Americas saw positive organic order growth, while EMEA was down mid-single digits and Asia Pacific was up low double digits in Q4.
• The PST segment's Life Science business delivered mid-teens organic order growth, driven by strong demand in biopharma production and medical devices.
• The performance was influenced by regional market dynamics, with particular strength in Asia Pacific and the Life Science segment.

Outlook and Guidance for 2026:

• Ingersoll Rand's full-year guidance for 2026 anticipates revenue growth between 2.5% and 4.5%, driven by organic order growth of 1% at the midpoint.
• The company expects adjusted EBITDA to range from $2.13 billion to $2.19 billion, reflecting continued strong execution and capital deployment.
• The guidance is based on maintaining current market trajectories, with expectations for improvement in volume performance and margin expansion in the second half of the year.

Sentiment Analysis:

Overall Tone: Positive

• "We ended the year on a strong note, delivering low single-digit organic order growth for both the fourth quarter and the full year. Additionally, our return to organic revenue growth reflects positive momentum heading into 2026." "We're also very pleased with the momentum we continue to see on our recurring revenue initiative, which exceeded $450 million in 2025..." "Our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust..." "I'm confident that our strong finish in 2025 puts us in an excellent position for success in 2026."

Q&A:

• Question from Michael Halloran (Robert W. Baird & Co. Incorporated): I want to start on the -- in the guidance, what sort of end market trajectory is embedded in the guidance? And on the shorter cycle side of your businesses, are you seeing any signs of change? And what would the businesses that you would look at to internally for leading indicators on your side?
  Response: Guidance assumes current market trajectory continues with no recovery baked in. Seeing some short-cycle pickup, but PMI only one data point; cautious optimism. Life Sciences improving sequentially with mid-teens order growth in Q4. Headwinds like RNG and EV are largely behind.

• Question from Julian Mitchell (Barclays Bank PLC): Just trying to understand the seasonality through the year a little bit better. So is it fair to assume the guidance is based on roughly that 1 point of organic revenue growth year-on-year fairly evenly through the year? And then on EPS growth, I think you mentioned mid-single digits year-on-year in both halves. Are you starting out first quarter around that mid-single-digit EPS growth as well?
  Response: Q1 organic revenue expected flat to slightly down; Q2-Q4 low single-digit growth. EPS growth mid-single digits for both halves, with relatively even quarterly earnings growth.

• Question from Jeffrey Sprague (Vertical Research Partners): Just a couple of things. First, just back on the short cycle, yes, we've all seen the PMI, Vicente, I just want to kind of clarify a little bit, though. Are you not seeing any actual pickup in short-cycle pockets, whether it's, I don't know, tools or small compressors or the like is sort of question number one. And then does the guide actually anticipate volumes turning positive by the time we get to the back half of the year?
  Response: Seeing some short-cycle pickup in orders. Volume expected to improve in second half, perhaps flattish by year-end, but no meaningful recovery assumed in guidance.

• Question from Joseph O'Dea (Wells Fargo Securities): Can you dig in a little bit on the acquisition opportunity set when you talked about the 400 to 500 bps of annualized revenue expected to be acquired in '26. Just in terms of the composition of the pipeline right now, it sounds like primarily in the bolt-on side of things, but anything that could be in the larger side as well, what that would mean, what your appetite is for anything in that kind of larger category?
  Response: Pipeline is currently bolt-on focused but includes some larger (~$1B) opportunities being cultivated. One acquisition (Scinomix) already completed in 2026.

• Question from Nigel Coe (Wolfe Research): Lots of details so far. Vik, I just wanted to go back to your comments on 1Q being flat to maybe slightly down, relative to the, call it, 3% organic you posted in 4Q. So that would imply a pretty significant kind of Q-over-Q deceleration. So just wondering, was there any timing of shipments that benefited 4Q that informs that view? And then just maybe just if you could just dimensionalize the price/cost and investment spending that you are highlighting? And any sense on how we should think about ITS margins, again, first half versus second half?
  Response: Q1 revenue expected flat/slightly down vs Q4 due to normal seasonality (Q4 is typically strongest). Price/cost neutral in first half, margin expansion in second half. ITS margins flattish full year; PST margins up triple-digit bps.

• Question from Nicole DeBlase (Deutsche Bank AG): Can we just start with -- when you look at the full year guidance for organic flat to up 2%, are you looking for something similar -- a similar magnitude in both PST and ITS?
  Response: Trajectory comparable, with PST slightly healthier overall.

• Question from Nathan Jones (Stifel, Nicolaus & Company): I guess I'll just start off with a question on the EBITDA guidance. I mean, it's pretty clear you're not planning on much in the way of volume growth. You get a little bit of addition to EBITDA from M&A. It doesn't seem to really embed any cost actions or any productivity in the guide. Can you talk about any expectations you have there for cost out or for productivity gains during 2026?
  Response: Guidance includes productivity/cost actions: savings from 2025 restructuring, normal course productivity (material, I2V), and targeted pricing actions, offsetting tariff headwinds and commercial investments.

• Question from Christopher Snyder (Morgan Stanley): When we look at the pickup in Q4 organic growth, was this more so driven by momentum in the short-cycle businesses? Or did some of the longer cycle orders in the backlog begin to convert? And I asked because I noticed that this was the first quarter since the first half of '24 where organic sales outpaced orders. So maybe it's signaling some level of backlog release. And I'm just wondering if could that remain a tailwind for the business into the first half of '26?
  Response: Q4 organic growth driven by both short cycle and long cycle shipments (seasonal). Book-to-bill slightly below 1 in Q4 is standard; backlog provides visibility into 2026.

• Question from Stephen Volkmann (Jefferies LLC): Just a couple of very quick ones for me. I'm curious, it seems like valuations are kind of going up across the board, not just yours, but I'm presuming in the M&A funnel as well. Just does that change anything in terms of how you manage your capital deployment?
  Response: No change; disciplined approach continues with pre-synergy multiples around 9x. M&A flywheel differentiated with sole-sourced, cultivated targets offering good value.

• Question from Joseph Ritchie (Goldman Sachs Group): Can you just touch on the margin profile of the recurring revenue business, the $450 million plus that you referenced, Vicente. I recall you guys talking about a gross margin profile that was north of 60%. I'm just wondering if that's actually coming through as expected?
  Response: Recurring revenue margins generally higher than normal course business, often north of 60%, but reinvestment in commercial areas like service technicians is also occurring.

• Question from David Raso (Evercore ISI Institutional Equities): I was interested to see the ITS organic orders in the quarter that EMEA was down mid-single digit. Just we've heard generally more constructive things out of Europe. And I'm just curious if you're seeing -- is that sort of a comp sort of temporary?
  Response: EMEA down mid-single digits in Q4 due to project timing, but full year ITS orders in EMEA were up low single digits. Regional performance varies (Mediterranean faster than Germany).

• Question from Andrew Buscaglia (BNP Paribas): You made a comment earlier on China just that it is improving, and that's been a little bit of a change, I'd say, in the last quarter or 2. And other companies are kind of talking about that a little bit more. Where can you -- can you get more specific about where you're seeing this improvement and how you see that playing out in 2026?
  Response: Improvement driven by new product launches and technology localization (including from acquisitions) in China, not overall market improvement. Team innovation combining technologies for differentiated solutions.

Contradiction Point 1

Short-Cycle Business & Order Recovery

Contradiction on whether a meaningful short-cycle recovery is expected.

What are your key growth drivers? - Jeffrey Sprague (Vertical Research Partners)

2025Q4: Short-cycle pickup is visible in order rates and continuing into January. No major recovery is assumed. - Vicente Reynal(CEO)

Have you seen any pickup in short-cycle areas like tools and small compressors? Does the guidance assume volumes will turn positive in H2? - Michael Halloran (Robert W. Baird & Co. Incorporated)

2025Q3: Organic orders improved sequentially, with positive momentum across most regions... - Vicente Reynal(CEO)

Contradiction Point 2

Pricing/Cost Outlook and Margin Trajectory

Contradiction on the near-term (2026) EBITDA margin progression.

What are your key takeaways from the recent earnings report? - Julian Mitchell (Barclays Bank PLC)

2025Q4: Margins are expected to be flattish for the year. H1 will face headwinds... while H2 should see expansion... - Vikram Kini(CFO)

Does the flat full-year EBITDA margin guidance reflect a small H1 decline and H2 improvement? What are the price/cost headwinds? - Julian Mitchell (Barclays Bank PLC)

2025Q3: For 2026, margins are expected to be more muted in the first half as tariff impacts are digested, improving in the second half. - Vikram Kini(CFO)

Contradiction Point 3

Nature and Duration of Long-Cycle Project Delays

Contradiction on whether delays are temporary (due to specific unlock factors) or indicative of a broader, persistent slowdown.

Nicole DeBlase (Deutsche Bank)? - Nicole DeBlase (Deutsche Bank)

2025Q4: The long-cycle project funnel remains very active... While customer decision-making elongation continues, projects are not being canceled, and momentum is good. - Vicente Reynal(CEO)

What trends in long-cycle project decisions are observed in Q4 and early 2026? - Robert Cameron Wertheimer (Melius Research LLC)

2025Q2: Customer decision-making elongation continues... delays due to sites not being ready, technical spec changes... It's not a cancellation of demand but a slower progression. - Vicente Reynal(CEO)

Contradiction Point 4

Life Sciences Segment Growth Trajectory and Confidence

Contradiction on the level of confidence and momentum driving the segment's future growth.

What are your key priorities for the next quarter? - Christopher Snyder (Morgan Stanley)

2025Q4: Encouraged by momentum in biopharma and medical devices... The team remains confident despite tougher comparisons. - Vikram Kini(CFO)

What is Life Science's expected organic growth in 2026 given difficult comps? - Jeffrey Sprague (Vertical Research Partners)

2025Q2: The Life Sciences business... remains a key growth platform with expectations for mid-single-digit ROIC by year 3. - Vicente Reynal(CEO)

Contradiction Point 5

Expected Progression of Organic Revenue and EBITDA Margins

Contradiction on whether organic growth is expected to turn positive in H2.

What are your thoughts on Barclays' recent earnings performance? - Julian Mitchell (Barclays Bank PLC)

2025Q4: Organic revenue is expected to be flat to slightly down in Q1, with low single-digit growth in Q2-Q4. - Vikram Kini(CFO)

Is the guidance based on roughly 1% organic revenue growth evenly through the year and Q1 EPS growth around mid-single digits? - Julian Mitchell (Barclays)

2025Q1: H2 is expected to be up approx. 3-4% (with organic volume down low single digits and the balance from pricing)... - Vikram Kini(CFO)