Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

IR · Q3 2025 Earnings

Ingersoll Rand

Reported October 30, 2025

30-second summary

Ingersoll Rand lowered full-year EPS and Adjusted EBITDA guidance while reaffirming the organic revenue framework, with tariff headwinds now exceeding $100M (up from ~$80M) and pricing offsets pushed into 2026. Organic revenue fell 1.3% — inside the (2)–0% guide but the second consecutive quarter of organic decline, breaking the Q3 inflection management committed to last quarter. Margin expansion in H1 2026 is now explicitly characterized as "muted," and management refused to bake in the August tariff-reduction announcement.

Headline numbers

EPS

Q3 FY2025

$0.86

Revenue

Q3 FY2025

$1.96B

+5.0% YoY

Gross margin

Q3 FY2025

43.7%

Free cash flow

Q3 FY2025

$0.33B

Operating margin

Q3 FY2025

19.2%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$1.96B	+5.0%	$1.89B	+3.5%
EPS	$0.86	—	$0.80	+7.5%
Gross margin	43.7%	—	43.7%	+0bps
Operating margin	19.2%	—	4.0%	+1520bps
Free cash flow	$0.33B	—	$0.21B	+55.2%

Guidance

Ingersoll Rand lowered full-year FY2025 EPS and Adjusted EBITDA guidance while reaffirming organic growth expectations, citing persistent tariff headwinds and modest pricing realization.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY 2025	$3.34 - $3.46	$3.25 - $3.31	-$0.09 to -$0.15 (midpoint -$0.12 or -3.5%)	Lowered
Adjusted EBITDA	FY 2025	$2,100M - $2,160M	$2,060M - $2,090M	-$40M to -$70M (midpoint -$55M or -2.6%)	Lowered

Reaffirmed unchanged this quarter: Organic Revenue Growth ((2)-0%), Total Revenue Growth (4-6%), Industrial Technologies & Services Organic Revenue Growth ((2)-0%), Precision & Science Technologies Organic Revenue Growth ((2)-0%)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Industrial Technologies and Services	$1.541B	+5.0%
Precision and Science Technologies	$0.415B	+5.3%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Orders	$1,942 million
Organic Orders Growth	1.7%
Organic Revenue Growth	(1.3%)
Adjusted EBITDA	$545 million
Adjusted EBITDA Margin	27.9%
Free Cash Flow Margin	16.6%
Industrial Technologies & Services Book-to-Bill	0.99x
Precision and Science Technologies Book-to-Bill	1.01x

Management tone

Q2 anchor: backlog-and-M&A defense → Q3 anchor: explicit tariff-driven guidance cut with 2026 caution.

The tariff number got materially worse, and the pricing offset got pushed out. In Q2, management framed tariff exposure around ~$80M with confidence in cost-neutral pricing pass-through within the year. This quarter Vic Kinney put the number "slightly in excess of $100 million" and explicitly said pricing realization will "catch up as we move into 2026." That is a one-quarter delay in the offset thesis layered on a ~25% upsizing of the headwind. The guidance cut follows mechanically.

Margin expansion went from "Q4 high watermark" to "muted H1 2026." Last quarter management anchored confidence in a Q4 margin peak. This quarter the framing extended forward to characterize H1 2026 margin expansion as "muted during the first half of the year as we continue to offset tariffs through pricing." The horizon for normalized incremental margins has slipped by at least two quarters — and remains explicitly conditional on tariff-policy clarity.

Book-to-bill at 1.0x is now framed as a problem, not a virtue. Vic noted book-to-bill "steady around that one times number" in H2 means "the typical backlog burn that you see in the back half of the year is not as big." Backlog growth that drove the Q2 bull case is now disclosed as the mechanism delaying pricing realization. The same metric that supported confidence three months ago is now an explanation for the cut.

Pricing is explicitly cost-neutral, with no margin upside on tariff reversal. Vicente Reynal stated pricing actions have been "based on a one-to-one ratio. So to just primarily cover the cost." If tariffs are reduced, prices stay — but they were never margin-accretive in the first place. This forecloses the "tariff relief = margin upside" optionality some investors might have priced in.

Confidence anchor moved from current orders to "needs clarity on tariffs." Vicente: "we need to see a bit more clarity on the tariff situation to remove completely the uncertainty in the industrial landscape, which is what I will consider maybe the main drag." Three consecutive quarters of positive organic orders are explicitly insufficient to drive confidence — tariff-policy clarity is the gating factor. That is a meaningful shift from Q2's backlog-led optimism.

Recurring themes management leaned on this quarter:

Tariff headwinds extending into 2026 with delayed pricing realizationBacklog growth supporting book-to-bill at 1.0x+ (elevated vs. historical norms) but pushing revenue recognition outOrganic order momentum positive for three consecutive quarters but macro uncertainty persistsMargin expansion muted in near-term (2025-H1 2026) due to tariff/price-cost lag; confident in 2027 targets (ITS 30%, PST mid-30s)M&A bolt-on strategy accelerating with 14 closings YTD, 9 under LOI, targeting 400-500bps inorganic growthLife sciences platform gaining traction (ILC Dover organic now flowing through; Dayberry acquisition, Flexum yield improvements cited)

Risks management surfaced:

Tariff policy uncertainty despite August administration announcement; guidance reflects 'worst case' viewQuote-to-order cycle elongation not improving; engineering resource constraints remain for some customer projectsOrganic volume deleveraging offset by lower-margin M&A and FX; incremental EBITDA margins in mid-teens vs. historical normsIndustrial vacuum/blower business in Europe lumpy and timing-dependent; Q3 showed weakness but expected to recover in second-half viewFirst-half 2026 margins expected to remain muted; pricing lag and tariff absorption extend into new year

Answers to last quarter's watch list

Whether organic revenue inflects positive in Q3 as guided. It did not. Organic revenue was -1.3% in Q3, the second consecutive quarter of decline. Management's Q2 commitment to "slightly positive" Q3 was missed, though the print remains inside the (2)–0% FY framework.

Resolved negatively

PST book-to-bill back above 1.0x. Yes — PST book-to-bill came in at 1.01x, up from 0.96x in Q2. Marginal but above the line.

Resolved positively

Whether the ILC Dover insurance claim is recovered, and how much. Not addressed in the press release; no quantum or timing was disclosed.

Continue monitoring

Q4 adjusted EBITDA margin as the "high watermark." Implicit in the new FY guide: $2,060–$2,090M Adjusted EBITDA against $1,564M YTD (Q1+Q2+Q3 sum) implies Q4 EBITDA of $496–$526M, well below Q3's $545M. The "Q4 high watermark" thesis is now broken by the guide itself. Management instead now says both segments' EBITDA margins will be "approximately flat on a sequential basis compared to the third quarter.".

Resolved negatively

Tariff-pricing pass-through assumptions. Materially worse: tariff exposure raised from ~$80M to $100M+, pricing realization pushed into 2026, and the August tariff-reduction announcement explicitly excluded from the guide. The H2 pricing thesis evaporated.

Resolved negatively

Any further write-downs on legacy divestitures or the M&A book. No new impairments disclosed in the Q3 release.

Resolved positively

What to watch into next quarter

Q4 Adjusted EBITDA margin vs. Q3's 27.9%. Implied Q4 EBITDA of ~$496–$526M against ~$1.95B+ revenue suggests Q4 margin tracking ~25–27%, below Q3. Management explicitly guided "approximately flat" sequentially — any miss versus this anchor would compound the credibility hit.

Whether organic revenue turns positive in Q4. Two consecutive quarters of decline. Hitting the (2)–0% FY framework requires Q4 organic to be roughly flat or modestly positive given YTD trajectory.

Tariff exposure quantum vs. the "$100M+" disclosure. Whether the number stabilizes, grows further, or starts to roll off into 2026 pricing realization.

2026 framework on the Q4 call. Margin expansion was explicitly guided as "muted" in H1 2026 — watch for the magnitude (incremental EBITDA margins below historical mid-teens) and how H2 2026 recovery is framed.

M&A pace and the missing $375M FY contribution disclosure. 14 closings YTD with 9 under LOI was cited as theme, but the prior-quarter explicit M&A revenue contribution figure was dropped. Whether ITS and PST inorganic synergy realization remains on the bolt-on mid-teens ROIC track.

Free cash flow conversion in Q4. YTD FCF approximately flat YoY despite +5% reported revenue growth. Working-capital absorption tied to elevated backlog could compress FY FCF growth.

Sources

Ingersoll Rand Q3 2025 earnings press release, SEC filing — https://www.sec.gov/Archives/edgar/data/1699150/000162828025047573/ir2025q3ex991.htm
Tapebrief Q2-2025 IR brief (prior-quarter trend context and watch list)

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