Ingersoll Rand (IR) Barclays 43rd Annual Industrial Select Conference summary

Demand environment and outlook

• Positive momentum in Q4 with organic growth in orders across both U.S. and global segments; uncertainty has lessened, especially in North America.

• China, representing about 10% of revenue, has shown positive organic order growth for 2-3 quarters.

• Leading indicators like PMI are turning more positive, but guidance remains prudent for 2026, with hopes for further organic volume opportunities.

• No significant new headwinds expected for 2026; previous challenges like China EV and U.S. RNG are now behind.

• Seasonality and growth phasing for 2026 expected to mirror prior years, with Q1 lightest and Q4 heaviest.

Recurring revenue and business model evolution

• Recurring revenue has more than doubled in two years, reaching over $450 million in 2025, up from $200 million in 2023.

• Growth in recurring revenue is broad-based across regions and product categories, with compressors as the largest contributor.

• All nine P&Ls now have recurring revenue streams, including new areas like blowers and pumps.

• Care models remain the largest part of recurring revenue, but other offerings and software-based solutions are gaining traction.

• Recurring revenue is expected to continue ramping up into 2026 and 2027, targeting $1 billion.

Profitability, margins, and pricing

• Gold standard recurring revenue models like PackageCARE achieve 60%-70% gross margins.

• ITS segment maintains high EBITDA margins (29%-30%) despite tariff headwinds and limited organic volume growth.

• Margin expansion opportunities remain, driven by pricing, productivity, and organic volume, but at a slower pace than post-merger years.

• Tariff impacts are managed through pricing actions and supply chain adjustments, with normalization expected in the back half of 2026.

• PST segment has improved margins through integration of acquisitions and productivity initiatives, aiming for mid-30s% EBITDA margins.