tapebrief

IR · Q2 2025 Earnings

Cautious

Ingersoll Rand

Reported July 31, 2025

30-second summary

Ingersoll Rand raised full-year revenue, EBITDA, and EPS guidance, but the quarter underneath is softer than the headline suggests: organic revenue fell 3.4%, adjusted EBITDA margin compressed, and management disclosed a GAAP loss driven by impairments at ILC Dover and a write-down on the retained high-pressure solutions stake. The bull case now rests entirely on M&A contribution (~$375M), backlog (+16% since year-end), and a Q4 margin recovery — not on the organic engine. Tone shifted noticeably defensive: "nimble," "pivot," and explicit tariff-assumption disclosures replace prior growth confidence.

Headline numbers

EPS

Q2 FY2025

$0.80

Revenue

Q2 FY2025

$1.89B

+4.6% YoY

Gross margin

Q2 FY2025

43.7%

Free cash flow

Q2 FY2025

$0.21B

Operating margin

Q2 FY2025

4.0%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$1.89B+4.6%
EPS$0.80—
Gross margin43.7%—
Operating margin4.0%—
Free cash flow$0.21B—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
Industrial Technologies and Services$1.492B+1.7%
Precision and Science Technologies$0.396B+17.0%

Other KPIs

Q2 FY2025
SegmentQ2 FY2025
Adjusted EBITDA$509.4M
Adjusted EBITDA Margin27.0%
Orders$1,940M
Organic Revenue Growth-3.4%
Free Cash Flow$210.4M
Free Cash Flow Margin11.1%
Industrial Technologies & Services Book-to-Bill1.05x
Precision & Science Technologies Book-to-Bill0.96x

Management tone

Management's posture this quarter shifted from organic-growth confidence to backlog-and-M&A defense. Five specific shifts stand out.

Organic growth narrative replaced by tariff-pricing accounting. Where prior IR commentary framed reported growth as organic-led, this quarter the reduction in implied organic revenue is attributed almost entirely to a "reduced tariff pricing assumption" — pricing that flows through revenue but matches cost dollar-for-dollar with no EBITDA contribution. Management's own framing: "the change in organic revenue is solely based on a reduced tariff pricing assumption." That is not a growth story; it is an accounting story dressed as one.

ILC Dover went from transformational deal to impairment plus insurance claim. The release discloses a writedown and management notes it was "driven primarily by market-based inputs, such as an increase in the discount rate and contraction of peer market multiples," with a claim filed under the reps-and-warranties policy. Management stated ILC Dover is expected to deliver mid-single-digit ROIC by year three, versus mid-teens for bolt-ons — and noted larger transactions were always expected to be below the bolt-on benchmark. The deal is not being walked away from, but the underwriting is clearly distinct from the bolt-on playbook.

The retained high-pressure solutions stake is now a write-down, not a clean exit. Management explicitly tied the writedown to deterioration in the upstream oil & gas market. A divestiture previously framed as portfolio-cleanup is now a residual liability that has cost the company P&L this quarter.

Confidence anchor moved from current demand to forward indicators. The phrase that does the work in the release is: "with first half organic order growth of low single digits, a booked bill of 1.06 times, and a total backlog increasing by 16% since the end of 2024, we remain confident in our full year outlook." Confidence is explicitly grounded in backlog and orders — not in the quarter just reported, where organic revenue fell.

"Nimble" and "pivot" are doing a lot of work. Management says it is "prepared to pivot in what continues to be a dynamic global market environment" and notes the tariff landscape "will remain fluid." This is reactive language. The fact that an appendix slide is now required to spell out tariff assumptions tells you how much of the guide depends on those assumptions holding.

Recurring themes management leaned on this quarter:

M&A as primary growth engine with 11 deals closed YTD at 9.5x pre-synergy multipleOrganic order growth recovery in low single digits but margin pressure from tariffs and volumeBacklog strength and book-to-bill resilience despite macro uncertaintyEnergy efficiency innovation as product differentiation (14-15% efficiency gains)Capital allocation discipline with share buybacks and balance sheet flexibilityOperational agility via IRX methodology in dynamic market environment

Risks management surfaced:

Upstream oil and gas market deterioration impacting high-pressure solutions stake valuationAerospace and defense customer concentration risk at ILC Dover requiring impairmentTariff landscape volatility and one-for-one cost-pass-through constraints on marginDynamic global macro environment requiring continuous strategic pivotingBiopharma market multiples contraction and discount rate increases affecting ILC Dover valuation

Q&A highlights

Mike Halloran · Baird

How does demand cadence and order cadence play out in the back half? What sequential improvement is expected, and what seasonality/improvement assumptions are in guidance?

Management highlighted book-to-bill of 1.06 in first half, with stable order momentum through Q2 and into July. Large loan cycle orders are primary growth drivers, particularly in ITS. Expect positive impact on 2026 revenue from backlog build. ITS saw two quarters of positive order growth; PST would be positive excluding hydrogen-related comps.

Book-to-bill of 1.06 in first half of yearTypically targets book-to-bill of 1.0 on full year basisTwo consecutive quarters of positive organic order growth in ITSJuly orders momentum continued at comparable pace to Q2

Julian Mitchell · Barclays

What is the phasing of revenue and EBITDA in second half, particularly Q3? How should organic sales growth ladder between Q3 and Q4?

Management indicated phasing is consistent with prior guidance and historical patterns. Q3 expected to show slightly positive organic growth; Q4 healthier growth than Q3. Organic volume growth in second half expected down low single digits (vs. mid-single digits in first half). Pricing expected at 3.5%-4% total with even split between base pricing (~2%) and tariff-related pricing.

Q3 organic growth slightly positive; Q4 growth better than Q3Second half organic volume growth expected down low single digitsPricing 3.5%-4% total in second halfBase pricing approximately 2% (normal level)

Jeff Sprague · Vertical Research

What protections did management build into ILC Dover to manage risks from larger M&A? How does the company think about managing larger, more complex M&A transactions?

Management emphasized continued enthusiasm for life science side (75% of ILC Dover business). Expect mid-single digit ROIC by year three on ILC (vs. mid-teens for bolt-ons). Highlighted comprehensive playbook developed over 70+ transactions including diligence, negotiated reps and warranties backed by insurance. Filed claim under insurance policy. Emphasized this is not distracting management from running the business; continue to invest in ILC with new team members and creating P&Ls.

Life sciences side represents 75% of ILC Dover businessExpect mid-single digit ROIC on ILC by year threeBolt-ons target mid-teens ROIC by year threeFiled claim under reps and warranties insurance policy

Rob Wertheimer · Milius Research

What has changed in reasons for delayed project decisions? Is tariff resolution the unlock? Does hesitancy apply to all deal sizes or mainly larger projects?

Management cited tariff resolution/uncertainty as primary driver of delays, along with Big Beautiful Build Act creating holdouts in renewable energy. Projects are moving much slower than historically, primarily due to site not ready, changing technical specs, or EPCs lacking engineering resources. Importantly, these are not project cancellations but delays. Engagement with customers continues. Range of delays varies by project.

Tariff percentage movement creating major reaction and unpredictabilityBig Beautiful Build Act created holdouts for renewable energy projectsProjects slower than typical historicallyDelays attributed to: site not ready, technical spec changes, EPC resource constraints

Andy Keplowitz · Citigroup

What color on legacy Gardner Denver medical business turnaround? Are green shoots evident? How confident in PST acceleration given lack of mid-single digit plus growth recently?

Management noted fluid handling side of legacy Gardner Denver medical business seeing good momentum, particularly in personalization of cancer research and cancer medicine. Second consecutive quarter of organic revenue growth in life sciences (organic nature speaks to turnaround). PST large project orders (hydrogen refueling) were abandoned; excluding these, would show positive organic order growth. Legacy PST pump businesses growing mid-single digit from order perspective, indicating inflection point with sequential improvement expected.

Second consecutive quarter of organic revenue growth in life sciencesFluid handling business growing with cancer medicine personalizationAbandoned hydrogen refueling station projects in Q2PST would show positive organic order growth excluding large projects

What to watch into next quarter

Whether organic revenue inflects positive in Q3 as guided. Management committed to "slightly positive" Q3 organic growth. A second consecutive quarter of organic decline would break the backlog-conversion thesis.

PST book-to-bill back above 1.0x. Q2 print was 0.96x. Sustained sub-1.0x in a segment growing 17% on M&A means the organic core is shrinking faster than acknowledged.

Whether the ILC Dover insurance claim is recovered, and how much. Management filed under the reps-and-warranties policy; quantum and timing of any recovery materially affect the ROIC narrative.

Q4 adjusted EBITDA margin as the "high watermark." Management explicitly anchored to this. Margin in Q4 below Q2's 27.0% would call the H2 recovery thesis into question.

Tariff-pricing pass-through assumptions in the appendix slide. If the tariff landscape shifts again, the ~1.5–2% tariff pricing component of H2 evaporates — along with the organic-revenue framing.

Any further write-downs on legacy divestitures or the M&A book. Two impairment events this quarter (ILC Dover, high-pressure solutions stake) raise the bar for clean reporting next quarter.

Sources

  1. Ingersoll Rand Q2 2025 earnings press release, SEC filing — https://www.sec.gov/Archives/edgar/data/1699150/000162828025037035/ir2025q2ex991.htm
  2. Ingersoll Rand Q2 2025 earnings call commentary (as reflected in extracted Q&A and prepared-remarks excerpts)

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