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    Earnings call· Jun 2026(Q2 FY26)

    Ingersoll Rand Q2 FY26 earnings call IR

    Jul 31, 2026 Source

    Executive summary

    Ingersoll Rand Q2 FY26 — Strong Execution, Raised Revenue Guidance, and Robust M&A

    Ingersoll Rand delivered a solid Q2 FY26 with broad-based organic growth and strong free cash flow, leading to a raised full-year revenue outlook and adjusted EPS expected at the high end of the range. Despite some margin pressure in ITS due to China pricing and investments, the company saw encouraging double-digit organic order growth in July, signaling a recovery in long-cycle projects and continued short-cycle strength. M&A remains a key strategic driver, with two new acquisitions announced and a robust pipeline.

    Highlights

    6

    • Organic order growth of 2% in Q2 FY26.

    • Organic revenue growth of 4% in Q2 FY26.

    • Adjusted EPS grew 7% year-over-year to $0.86 in Q2 FY26.

    • Free cash flow increased 28% year-over-year to $269 million in Q2 FY26.

    • PST Adjusted EBITDA margin expanded 200 bps year-over-year to 31.5% in Q2 FY26.

    • Double-digit organic order growth observed in the first four weeks of July.

    Concerns

    3

    • Adjusted EBITDA margin declined 160 bps year-over-year to 25.4% in Q2 FY26, driven by inflationary pressures (primarily China), growth investments, and higher corporate costs.

    • Book-to-bill finished at 1.0 turns in Q2 FY26, slightly lower than typical, reflecting delayed timing of several large project orders.

    • ITS margin performance was impacted by challenges offsetting inflationary impacts with price, primarily in China.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year revenue growth
    4.5% to 6.5%
    high materiality
    High
    Full-year organic growth
    1% to 3%
    medium materiality
    High
    Full-year M&A growth
    approximately 2.5%
    medium materiality
    High
    Full-year FX growth
    approximately 1%
    low materiality
    High
    Full-year Adjusted EBITDA
    $2.13 billion to $2.19 billion
    high materiality
    High
    Full-year Adjusted EPS
    $3.45 to $3.55
    high materiality
    High
    Full-year Free cash flow conversion
    approximately 95%
    medium materiality
    High
    Full-year Corporate costs
    approximately $170 million
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Industrial Technologies (ITS)
    Organic revenue growth was positive across all regions. Organic order growth was impacted by the timing of several long-cycle blower and vacuum projects in Europe, as well as continued delays in the Middle East. Margin performance was impacted primarily by challenges offsetting inflationary impacts with price, particularly in China, and continued commercial investments to support future growth.
    Organic orders: flatBook-to-bill: 1xCompressor orders: low single digits globallyNorth America organic orders: high single digits
    		4% organic growthnearly 9%—26.8%
    Precision and Science Technologies (PST)
    Both Life Sciences and Precision Technologies delivered positive organic revenue growth. Adjusted EBITDA margin expanded reflecting strong execution across the portfolio and the continued benefits of IRX. Growth in Life Sciences is largely driven by biopharma, including strong exposure to GLP-1 investments.
    Orders: 11% year-over-yearOrganic orders: 7%Adjusted EBITDA: $135 millionAdjusted EBITDA margin expansion: 200 basis points year-over-yearLife Sciences organic order growth: low double-digitPrecision Technologies organic order growth: mid-single digits
    		4% organic growth8%—31.5%

    Operational metrics

    14
    Orders
    $2 billionup 5% year-over-year
    Q2 FY26

    Total orders for the quarter.

    Aftermarket revenue
    36%
    Q2 FY26

    Aftermarket revenue as a percentage of total revenue.

    Adjusted EBITDA
    $520 millionup 2% year-over-year
    Q2 FY26

    Company-wide Adjusted EBITDA.

    Adjusted EBITDA margin
    25.4%down 160 basis points year-over-year
    Q2 FY26

    Company-wide Adjusted EBITDA margin.

    Unallocated corporate costs
    $49 millionversus $34.6 million a year ago
    Q2 FY26

    Higher corporate costs driven by incentive compensation true-up.

    Adjusted EPS
    $0.86up 7% year-over-year
    Q2 FY26

    Company-wide Adjusted EPS.

    Total available liquidity
    $3.8 billion
    Q2 FY26 end

    Total liquidity at quarter end.

    Leverage
    1.7x
    Q2 FY26 end

    Leverage ratio at quarter end.

    Capital deployed towards acquisitions
    $110 million
    Q2 FY26

    Amount deployed for acquisitions during the quarter.

    Capital returned to shareholders
    $248 million
    Q2 FY26

    Total capital returned to shareholders.

    ILC Dover RWI claim recovery
    $187.5 million
    initial agreement

    Initial recovery agreement from insurers on the RWI claim related to the ILC Dover transaction. Excluded from adjusted earnings and FCF guidance.

    July order growth
    double-digit
    first 4 weeks of July

    Strong start to Q3 with double-digit organic order growth.

    ITS Adjusted EBITDA margin
    26.8%
    Q2 FY26

    Adjusted EBITDA margin for the ITS segment.

    PST Adjusted EBITDA margin
    31.5%expanded 200 basis points year-over-year
    Q2 FY26

    Adjusted EBITDA margin for the PST segment.

    Industry KPIs

    3
    MetricValueDetails
    Parts aftermarket business36%%
    Data center prime power demanddiscussed_not_quantified
    Order backlog order intake by segmentlow double digit to mid-teens%

    Orderbook & backlog

    2
    Total Ordersjust over $2 billionQ2 FY26 end

    up 5% year-over-year (2% organic)

    Book-to-bill finished at 1.0 turns, slightly lower than typical Q2, primarily reflecting delayed timing of several large project orders.

    Long-cycle projects backlogbuilding out for 2027July 2026

    Typical 6- to 18-month duration, with some revenue recognition in H2 FY26. Driven by strong July order growth.

    Deals & partnerships

    2
    Lone Star BlowersU.S.-based blower manufacturer

    Acquisition closed this morning (July 31, 2026).

    Filtrimanufacturer of industrial filters based in Italy

    Acquisition signed, expected to close in Q4.

    Risks & headwinds

    3
    Inflationary pressures in ChinaQ2 FY26

    Adjusted EBITDA margin down 160 basis points year-over-year (company-wide); ITS margin performance impacted primarily by challenges offsetting inflationary impacts with price primarily in China.

    Mitigation: Viewed as transient; investing in new technologies and making commercial investments in unique applications in China for China.

    Delayed large project ordersQ2 FY26, expected to recover in H2 FY26

    Book-to-bill finished at 1.0 turns, slightly lower than typical Q2, primarily reflecting the delayed timing of several large project orders.

    Mitigation: Seeing better momentum on long-cycle projects; experienced double-digit order growth in July, including realization of previously delayed projects.

    Higher corporate costsQ2 FY26

    Unallocated corporate costs were $49 million in Q2 FY26 versus $34.6 million a year ago, driven largely by a year-to-date true-up of management incentive costs.

    Mitigation: Do not expect to recur at this level in the back half of the year; full-year corporate costs expected to be approximately $170 million.

    What to watch in Q3 FY26

    5

    Long-cycle project order conversion

    H2 FY26
    CurrentBook-to-bill finished at 1.0 turns slightly lower than we typically see in the second quarter, primarily reflecting the delayed timing of several large project orders.
    TargetContinued strong conversion, building backlog for 2027.

    Why it matters

    Indicates sustained demand recovery and future revenue visibility, especially given the strong July order growth.

    Important to note that we continue to see solid momentum in our short to medium cycle business, where orders were up mid-single digits. In addition, we expect these longer-cycle projects to recover in the back half of the year, and Vicente will provide some color on what we have seen thus far through July.

    Q&A highlights

    8

    Can you elaborate on the momentum in short and medium cycle businesses, regional performance, and specific end markets, and whether this momentum is sustainable?

    Americas is the strongest region with high single-digit ITS orders. EMEA saw low double-digit organic order decline due to long-cycle project timing and Middle East delays, but core compressor orders were up low single digits. Asia Pacific (China) had low double-digit organic revenue growth but faced pricing challenges. PST growth is driven by biopharma (GLP-1 exposure), while ITS is broad-based across power gen, electricity infrastructure, semiconductor, and general industrial.

    “Yes, Mike, let me first give you by region. So Americas is roughly 50% of our revenue, and it's been the strongest region so far. ITS orders up high single digits, healthy compressor activity. And we're seeing the short-cycle indicators that are the best in the portfolio.”

    asked by Michael Halloran · answered by Vicente Reynal

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights

    Ingersoll Rand reported 2% organic order growth, 4% organic revenue growth, and 7% adjusted EPS growth in Q2 FY26, demonstrating broad-based strength across regions and end markets. The company's first-half performance and healthy demand trends reinforce confidence in the full-year outlook, leading to updated guidance. Every main region delivered positive organic revenue growth, and investments continue to focus on durable, structurally growing end markets.

    02

    Strategic M&A and Capital Allocation

    The company announced the closing of Lone Star Blowers, a U.S.-based blower manufacturer adding approximately $50 million in annual revenue, and the signing of Filtri, an Italian industrial filter manufacturer adding approximately $30 million in annual revenue. Both acquisitions strengthen core technologies and aftermarket offerings. With 11 additional transactions under LOI, M&A remains a disciplined and key differentiator for long-term value creation. The balance sheet remains strong with $3.8 billion in liquidity and a 1.7x leverage ratio, further reinforced by a one-notch upgrade from Moody's to Baa1.

    03

    July Order Momentum

    Ingersoll Rand experienced double-digit organic order growth in the first four weeks of July, driven by the realization of several previously delayed long-cycle projects across all main regions, alongside continued strength in short-to-medium cycle businesses. This positive inflection supports confidence in achieving updated full-year guidance, with long-cycle projects primarily building backlog for 2027.

    04

    ITS Segment Dynamics

    The ITS segment saw 4% organic revenue growth but experienced adjusted EBITDA margin pressure (26.8%) primarily due to inflationary challenges in China and strategic commercial investments. Organic order growth was flat, impacted by timing of📎 long-cycle blower/vacuum projects in Europe and Middle East delays, though core compressor orders in EMEA were up low single digits. The company is localizing newly acquired technologies into China and making commercial investments in unique applications.

    05

    PST Segment Outperformance

    The PST segment delivered strong results with 7% organic order growth and 4% organic revenue growth, leading to a 200 bps expansion in adjusted EBITDA margin to 31.5%. Both Life Sciences (low double-digit organic order growth, driven by biopharma and GLP-1 exposure) and Precision Technologies (mid-single-digit organic order growth) contributed positively, reflecting strong execution and the benefits of IRX. The segment is on track to achieve its mid-30% EBITDA margin target.

    06

    ILC Dover RWI Recovery

    The company reached an agreement for an initial $187.5 million recovery from insurers related to the ILC Dover transaction, with $25 million collected in Q2 FY26 and the remaining $162.5 million expected in H2 FY26. This recovery is excluded from adjusted earnings and free cash flow guidance, providing additional capital allocation firepower and is viewed as pure upside.

    AI-generated summary of the company’s earnings call. Not investment advice.