Q1 2024 Ingersoll Rand Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Ingersoll-Rand first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by and welcome to the Ingersoll Rand first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question again prestige star one. Thank you I'd now like to turn the call over to your host Matthew Ford Vice President of Investor Relations you may begin.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press star one. Thank you. I'd now like to turn the call over to your host, Matthew Fort, Vice President of Investor Relations. You may begin.

Matthew Fort: Thank you, and welcome to the Ingersoll-Rand 2024 First Quarter Earnings Call. I'm Matthew Fort, Vice President of Investor Relations, and joining me this morning are Vicente Reynal, Chairman and CEO, and Vic Kini, Chief Financial Officer.

Matthew Ford: Thank you and welcome to the Ingersoll Rand 2024 first quarter earnings call I'm, Matthew for Vice President of Investor Relations and joining me. This morning are presented here at all chairman and CEO and Victor <unk> Chief Financial Officer.

Matthew Fort: We issued our earnings release and presentation yesterday, and we will reference these during the call. Both are available on the Investor Relations section of our website. In addition, a replay of this conference call will be available later today.

Matthew Ford: We issued our earnings release and presentation yesterday, and we will reference these during the call. Both are available on the Investor Relations section of our website. In addition, a replay of this conference call will be available later today before we start I want to remind everyone that certain statements on this call are forward looking in nature and are subject to the risks and uncertainties discussed in our previous.

Matthew Fort: Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filing, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide 2 for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures to the most comparable measures calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website.

Matthew Ford: Our SEC filings.

Matthew Ford: Which you should read in conjunction with the information provided on this call.

Matthew Ford: Please review the forward looking statements on slide two for more details in.

In addition in todays remarks, we will refer to certain non-GAAP financial measures you can find a reconciliation of these measures to the most comparable measures calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the Investor Relations section of our website.

Matthew Fort: On today's call, we will review our company and segment financial highlights and provide an update on our 2024 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Matthew Ford: On today's call, we will review our company and segment financial highlights and provide an update to our 2024 guidance.

Matthew Ford: For today's Q&A session, we ask that each caller keep to one question and one follow up to allow time for other participants at this time I will turn the call over to the subject.

Vicente Reynal: Thanks, Matthew, and good morning to all. I would like to begin by thanking and acknowledging our employees for their hard work, dedication, and for continuing to think and act like owners, helping us to deliver another record quarter in Q1. Starting on slide three, despite the constantly changing macroeconomic environment, our team delivered another solid start to the year, demonstrating the continuous strength of our execution engine, IRX. We remain nimble, and we're prepared to pivot if market conditions were to change.

Matthew Ford: Thanks, Matthew and good morning to all.

Speaker Change: I would like to begin by thanking and acknowledging our employees for their hard work dedication and continuing to think and act like owners, helping us to deliver another record quarter in Q1.

Matthew Ford: Starting on slide three despite the constantly changing macroeconomic environment. Our team delivered another solid start to the year demonstrating the continued strength of our execution engine Iraq, we remain nimble and we're prepared to pivot if market conditions were to change.

Vicente Reynal: And based on our solid Q1 performance, we are raising our 2024 full-year guidance. Turning to slide four, our economic growth engine continues to deliver compounding results. We remain committed to our strategy and our long-term Investors Day targets outlined on this page. IRX is our competitive differentiator.

Matthew Ford: And based on our solid Q1 performance, we are raising our 2020 for full year guidance.

Matthew Ford: Turning to slide four our economic growth engine continues to deliver compounding results.

Matthew Ford: We remain committed to our strategy and our long term investor day target.

Matthew Ford: On this page.

Matthew Ford: Either exited or competitive differentiator and combined with our unique ownership mindset, we expect to continue to deliver above market growth in 2024.

Vicente Reynal: And combined with our unique ownership mindset, we expect to continue to deliver above market growth in 2024. With that in mind, I would like to provide a brief update on our growth initiative. On slide five, let me start with our inorganic growth initiative. We're pleased to highlight two recently closed transactions. Let me walk you through these two deals that are adjacent to our court.

Matthew Ford: With that in mind I would like to provide a brief update on our growth initiatives on.

Vicente Reynal: In other words, both companies' products can be used by attaching them to our existing compressor or pump technologies. First, ItaFilter, which expands the technology by extending our reach into highly attractive end markets with the addition of sterile filtration technology. Next is Controlled Fluidics, which expands our technology with specialization in thermoplastics, high-performance plastic bonding, and custom plastic assembly products for life sciences, aerospace, and industrial applications. And finally, on the right-hand side of the page, I would like to highlight that with the announced acquisition of ILC Dover, which is expected to close later this quarter, we have already exceeded our analyzed inorganic revenue target of 400 to 500 basis points.

Matthew Ford: On slide five let me start with our inorganic growth initiatives.

Matthew Ford: We're pleased to highlight two recently closed transaction let.

Matthew Ford: Let me walk you through these two deals that are adjacent to our core.

In other words, both companies' products can be used by attaching them to our existing compressor or pump technologies.

Matthew Ford: First.

It's a filter which expands our technology by extending our reach into highly attractive end markets with the additional of sterile.

Sterile filtration technology.

Matthew Ford: Next is controlled somebody would.

Matthew Ford: Which expands our technology with specialization in thermoplastics high performance plastic bonding and custom plastic assembly products for life Sciences, Aerospace and industrial applications.

Matthew Ford: And finally on the right hand side of the page I would like to highlight that with the announced acquisition of IOC Dover, which is expected to close later this quarter, we have already exceeded our annualized inorganic revenue target of 400 to 500 basis points.

Vicente Reynal: Having said that, we continue to execute our bolt-on M&A strategy and expect more deals to be announced later in the year, further exceeding our annualized inorganic revenue target. Turning to slide six, I want to provide some additional information on the acquisition of ILC Dover with an overview of the portfolio. This slide details the breakdown of the business by market, as well as the long-term care for each portion of the business.

Matthew Ford: Having said that we continue to execute our bolt on M&A strategy and expect more deals to be announced later in the year further exceeding our annualized inorganic revenue targets.

Matthew Ford: Turning to slide six I want to provide some additional information on the acquisition of IOC Dover with an overview of the portfolio.

Matthew Ford: This slide details the breakdown of the business by end market.

Matthew Ford: As well as the long term CAGR for each portion of the business core competencies and future growth creation opportunities.

Vicente Reynal: Core Competencies and Future Growth Creation Opportunities. Approximately 75% of the total business falls into life sciences and healthcare, which can be split roughly 60-40 between key markets of biopharma and medical components, TDMO. We expect this portion of the business to grow in the high single-digit plus range over the long term. Let me dive a bit deeper, starting with biopharma, where the core competencies are in powder and liquid handling, where we see future growth opportunities for pull through on pumps and compressors, as well as new customer and direct channel access to these customers.

Matthew Ford: Approximately 75% of the total business falls into life Sciences and market.

Matthew Ford: Which can be split roughly 60 40 between key markets with Biopharma and medical component to BMO.

We expect this portion of the business to grow in the high single digit plus range over the long term.

Matthew Ford: Let me dive a bit deeper starting with biopharma.

Matthew Ford: In which the core competencies are in powder and liquid handling, where we see future growth opportunities for pull through on pumps and compressors.

Matthew Ford: Whereas the needle customer and channel access to these customers.

Vicente Reynal: Some of the most exciting growth drivers in the biopharma market, where ILC Dover has a great presence, are in supplying single-use and containment technologies in support of the manufacturing of fast-growing monoclonal antibodies and antibody derivatives in therapeutics to treat cancer and rare diseases. ILC Dover also plays a crucial role in the growing markets for novel diabetes and obesity therapy and the increasing demand for flexible next-generation cell culture facilities to serve the cell and gene therapy market.

Matthew Ford: Some of the most exciting growth drivers in the Biopharma market, where Iot Dover has great presence into blind single use and containment technology in.

Matthew Ford: Support of the manufacturing or fast growing monoclonal antibodies and anti body derivatives and therapeutics to treat cancer and rare diseases.

Matthew Ford: I Hope you deliver also played a crucial role in the growing markets with novel diabetes and obesity therapies.

Matthew Ford: On the increasing demand for flexible next generation sale closer facilities to serve the cell and gene therapy market.

Vicente Reynal: The primary benefits of the single-use equipment produced by RSC Dover are a lower cross-contamination risk, reduced cleaning and sterilization efforts, a highly flexible manufacturing process, much shorter batch turnaround times, and reduced plant footprint and capital investment, respectively, all of which play an important role in the customer ROI, which is core to how we at Ingersoll-Rand support our customers with our current products and solutions.

The primary benefits for the single use equipment produced by attitude over are at lower cross contamination risk.

Matthew Ford: Reduce cleaning and sterilization efforts.

Matthew Ford: Highly flexible manufacturing process.

Matthew Ford: Much shorter batch turnaround times, and reduce plant footprint and capital investment.

Matthew Ford: Respectively, all of which play an important role in the customer ROI, which is core to how we at Ingersoll Rand and support our customers with our current products and solutions.

Vicente Reynal: Moving on to the medical components CDMO portion of the business, where the core competency is extrusion and molding of complex custom silicon and thermoplastic components, as well as subassemblies. This business gives us access to a wide range of new customers on the medical technology side, targeting high-growth segments like cardiovascular and neurology. In addition, we see a lot of future growth opportunities to leverage this niche technology for the creation of high-consumable items like tubing for the biopharma business, as well as pull through on pumps and compression systems in the subassemblies they produce today.

Matthew Ford: Moving onto the medical component CDMA portion of the business, where our core competency is extrusion and molding of complex custom silicon and thermal plastic components as well as sort of assembly.

Matthew Ford: This business gives us access to a wide range of new customers on the medical technology side.

Matthew Ford: Focusing high growth segments, like cardiovascular and neurology.

Matthew Ford: In addition, we see a lot of future growth opportunities to leverage these niche technology for the creation of high consumable items like tubing for the Biopharma business as well as pull through on pumps and compressors systems in the sub assemblies they produce today.

Vicente Reynal: Moving on to the aerospace and defense end market, which accounts for approximately 25% of the total business. Although small in nature, we're very excited to have this business within our portfolio for multiple reasons. First, this is a very solid business in terms of growth and profitability. And second, it has given us a great point of entry into the global space market, which is estimated to be worth $1.8 trillion by 2035, nearly tripling from $630 billion in 2023. As described in the slide, the majority of the volume is comprised of human mobility and habitation.

Matthew Ford: Moving on to the aerospace and defense end market, which accounts for approximately 25% of the total business.

Matthew Ford: Although small in nature, we're very excited to have this business within our portfolio for multiple reasons.

Matthew Ford: First this is a very solid business in terms of growth and profitability.

Matthew Ford: And second it has given us a great point of entry into the global stays market, which is estimated to be worth $1 eight trillion dollars by 2035.

Matthew Ford: Nearly tripling from $630 billion in 2023.

Matthew Ford: I'd describe it is like the majority of the volume is comprise of human mobility on habitation.

Vicente Reynal: Over the long term, in this end market, we anticipate a mid-single to high single-digit growth rate. With core competencies in spacesuits, inflatable habitats, lighter-than-air vehicles, and other inflatables, we believe that there is an opportunity for a pull-through on our core technologies and a future growth opportunity. For example, oxygen generation is needed across all these products, and we're currently a market leader in compression technology for potable oxygen concentrators. And this is just one example to provide some additional perspective on how we see the pull-through of our technologies where we're not present today.

Matthew Ford: Over the long term in this end market, we anticipate a mid single to high single digit growth rate.

Matthew Ford: With core competency of space suits inflatable habitat.

Matthew Ford: Lighter than air vehicles, and other Inflatables, we believe that there is an opportunity for pull through on our core technologies.

Matthew Ford: A future growth opportunity.

Matthew Ford: For example.

Matthew Ford: Oxygen generation is needed across all these products and.

Matthew Ford: We are currently in market leader in compression technology for portable oxygen concentrators.

Matthew Ford: And this is just one example to provide some additional perspective on how we see the pull through of our technologies, where today, we're not present.

Vicente Reynal: As we move to slide seven, let me spend some time talking about the alignment of ILC Dover against our stated strategic importance for M&A. First, we start with an example of adjacent technology. Within the life science market, we have always targeted the consumable portion of bioprocess, which focuses on single-use technology, including powder containment, liquid management, tubing and components, isolator protectors, and many others. With ILC Dover, we get exactly that, a very clear adjacent market in which we can combine our pumps with those consumables and offer a more complete product portfolio to our customers.

Matthew Ford: As we move to slide seven let me spend some time talking about the alignment of IOC Dover against our stated strategic importance for M&A.

Matthew Ford: We start with an example of adjacent technologies.

Matthew Ford: Within the life science market, we have always targeted the consumable portion or bio processing, which focuses on single use technology, including powder containment liquid management.

Matthew Ford: In components isolate the protectors and many others.

Matthew Ford: With ILC that whether we get exactly that the very clear adjacent market in which we can combine our pumps to adult consumables and offer a more complete product portfolio to our customers.

Vicente Reynal: An example of this is combining our peristaltic pump technology with the newly launched ILC Dover tubing technology to deliver liquids to single-use devices, which are also made by ILC Dover. This is merely one example of how we can help support customers across multiple steps within their biopharma work. Moving into the aligned category, first, we're getting mission critical equipment like flexible isolators for biopharma manufacturing. Isolators made by ILC Dover are best-in-class, single-use, and an essential step in the manufacturing process of therapies requiring high-potency APIs, one of which is Antibody Drug Conjugate, or ABCs, which is a fast-growing class of biopharmaceutical drugs designed to target and treat cancer.

Matthew Ford: An example of this is combining our pretty static pump technology.

Matthew Ford: With the newly launch Iot, daughter tubing technology to deliver liquid the single use devices, which are also made by Iot Dover.

Matthew Ford: This is maybe one example of how we can help support customers across multiple steps within their biopharma workflow.

Matthew Ford: Moving into the line category.

Matthew Ford: First we're getting mission critical equipment like flexible isolator for Biopharma manufacturing.

Matthew Ford: Isolator has made but I also go over our best in class single use and an essential step in the manufacturing process of therapies, requiring high potency API, one of which is anti body drug conjugate or ADC, which is a fast growing class of biopharmaceutical drugs designed to target and treat cancer.

Sure.

Vicente Reynal: Second, the medical component CDMO business enabled us to enter a highly fragmented, high-growth segment of medtech and biomanufacturing. As mentioned on the previous slide, we believe that there is a significant opportunity for pull-through on our existing pumps and compression technology and also access to new customers and a direct channel of communication with them. Finally, ILC Dover is giving us the option to access the fast-growing market of aerospace and defense. With ILC Dover's deep relationship with NASA, Boeing, and Sierraspace, to just name a few, we believe that we can leverage these relationships for pull-through opportunities on many of Ingersoll-Rand's existing flow creation technologies.

Matthew Ford: Second.

Matthew Ford: The medical components EMR business enabled us to enter a highly fragmented high growth segment of med Tech and bio manufacturing.

Matthew Ford: As mentioned on the previous line, we believe that there's a significant opportunity for pull through on our existing pumps and compression technology and also access to new customers and indirect channel of communication with them.

Matthew Ford: Finally, all of this is already giving us optionality to access this fast growing market of aerospace and defense.

Matthew Ford: With ILC Dover's deep relationship with NAFTA, Boeing and see aerospace to just name a few we believe that we can leverage these relationships for pull through opportunities on linear of Ingersoll Rand existent flow creation technology.

Vicente Reynal: The acquisition of ILC Dover now provides us with a larger platform to continue to build our life sciences business through both an M&A and optionality with a fast-growing market in aerospace and defense. Moving to slide A, let me touch base on our organic conditions.

Matthew Ford: The acquisition of vials with over now provides us a larger platform to continue to build our life sciences business through bolt on M&A and Optionality with a fast growing market of aerospace and defense.

Vicente Reynal: Total organic orders in the first quarter were down 10%, due primarily to large project order timings. As we have discussed before, large, long-cycle projects, usually driven by megaproject investment, tend to be lumpy in nature. And this can create a dynamic of tough comparisons in a single quarter. We believe that we're getting an outside share of these projects, and we continue to be focused on book-to-bill. In Q1, as expected, we saw book-to-bill greater than 1.

Matthew Ford: Moving to slide eight let me touch days on our organic initiatives.

Matthew Ford: Total organic orders in the first quarter were down 7% due primarily to large project order timing.

Matthew Ford: As we have discussed before large long cycle projects, usually driven by Mega project investments tend to be lumpy in nature.

This can create a dynamic of tough comparison in a single quarter.

We believe that we're getting an outsized share of these projects.

Matthew Ford: And we continue to be focused on book to Bill in.

Matthew Ford: In Q1, I suspect that we saw book to Bill greater than one.

Vicente Reynal: Building backlog, which was up 2% year over year. Moving to the chart on the left side of the page, we're encouraged by both the organic order acceleration through Q1 and the increased Marketing Qualified Leads, or MQL, activity in the second half of the quarter. On the left-hand side of the page, we illustrate the sequential order we saw throughout the quarter.

Matthew Ford: Building backlog, which was up 2% year over year.

Matthew Ford: Moving to the trial to the left side of the page. We're encouraged by both the organic order acceleration through Q1, and the increased marketing qualified leads or MQ Alec DB in the second half of the quarter.

Matthew Ford: On the left hand side of the page we illustrate the sequential order we saw throughout the quarter.

Vicente Reynal: February saw 5% sequential order growth as compared to January, and in March, organic orders were up 18% sequentially versus February. Consistently with our initial guidance, book-to-bill was above 1, at 1.02 in the quarter. We continue to build backlog in support of our organic growth target. As we mentioned in our last hearing, Q1 2024 had some very tough comps due to large and long cycle project order timing. For a two-year stag, organic orders remain possible.

Matthew Ford: So a 5% sequential order growth as compared to January and March organic orders were up 18% sequentially versus February.

Matthew Ford: Consistently with our initial guidance book to Bill was above one at 1.0 to in the quarter.

Matthew Ford: To build backlog in support of our organic growth targets.

Matthew Ford: As we had mentioned on our last earnings call Q1, 'twenty 'twenty four had some very tough comps due to large and long cycle project order timing.

Matthew Ford: The two year stack organic orders remained positive.

Vikram U. Kini: Moving now to the right-hand side of the page, we illustrate our NQL activity acceleration throughout the first quarter of this year. In Q1 2024, MQLs finished up 4% year-over-year. And this is on top of 9% growth in Q1 of the prior year. We remain encouraged by sequential momentum in MQLs throughout the quarter, where we saw an 11% increase in MQLs during the second half of the quarter as compared to the first half of the quarter.

Moving now to the right hand side of the page, we illustrate our NTR activity acceleration through our the first quarter of this year in.

Matthew Ford: In Q1, 'twenty 'twenty four <unk> finished up 4% year over year and this is on top of 9% growth in Q1 of the prior year.

Matthew Ford: We remain encouraged by sequential momentum in <unk> throughout the quarter, where we saw an 11% increase in <unk> during the second half of the quarter as compared to the first half of the quarter.

Vikram U. Kini: We do acknowledge that market conditions are constantly changing, and we remain able and prepared to pivot with those changing market conditions. I will now turn the presentation over to Vic to provide an update on our Q1 financial performance.

Matthew Ford: We do acknowledge that market conditions are constantly changing and we remain nimble and prepared to pivot with those changing market conditions.

Matthew Ford: I will now turn the presentation over to Vic to provide an update on our Q1 financial performance.

Vikram U. Kini: Thanks, Vicente. On slide 9, despite the ongoing macroeconomic uncertainty, we delivered solid results in Q1 through a balance of commercial and operational execution fueled by IRF. Total company organic orders and revenues declined 7% and 1% year-over-year, respectively. However, both organic orders and revenues finished largely in line with expectations given the tough comps from the prior year. However, we did see approximately $15 million of revenue shift out of Q1 and into Q2 due primarily to customer site readiness, an additional headwind of approximately 1% due to FX as compared to our initial guidance. The year-over-year decline in organic orders was primarily driven by the timing of large, long-cycle orders.

Vic: Thanks for such a on slide nine despite the ongoing macroeconomic uncertainty we delivered solid results in Q1 through a balance of commercial and operational execution fueled by IRS.

Vic: Total company organic orders and revenue declined, 7% and 1% year over year, respectively.

Vic: Both organic orders and revenue finished largely inline with expectations given the tough comps from the prior year.

Vic: However, we did see approximately $15 million of revenue shift out of Q1 and into Q2, due primarily to customer site readiness and additional headwind of approximately 1% due to FX as compared to our initial guidance.

Vic: The year over year decline in organic orders was primarily driven by the timing of large long cycle orders.

Vikram U. Kini: It's important to note that on a two-year stack, total company organic orders and revenue grew 1% and 20% year-over-year, respectively. We remain encouraged by the strength of our backlog, which was up approximately 2% year over year, as well as our book to bill for the quarter, which was 1.02. This provides us with a healthy backlog to execute on for the balance of the year and gives us conviction in delivering our full year 2024 revenue guide.

Vic: It is important to note that on a two year stack total company organic orders and revenue grew 1% and 20% year over year, respectively.

Vic: We remain encouraged by the strength of our backlog, which was up approximately 2% year over year as well as our book to Bill for the quarter, which was 1.0 to.

This provides us with a healthy backlog to execute on for the balance of the year and gives us conviction in delivering our full year 2020 for revenue guidance.

Vikram U. Kini: The company delivered first quarter adjusted EBITDA of $459 million, a 15% year-over-year improvement, and adjusted EBITDA margins of 27.5%, a 290 basis point improvement year-over-year. Adjusted earnings per share was $0.78 for the quarter, which is up 20% as compared to the prior year. Free cash flow for the quarter was $99 million, and total liquidity was $3.5 billion, with $1.5 billion of cash on hand at quarter end. Our net leverage was 0.7 turns, which is 0.4 turns better than the prior year.

Vic: The company delivered first quarter, adjusted EBITDA of $459 million up 15% year over year improvement in adjusted EBITDA margins of 27, 5% or.

Vic: 290 basis point year over year improvement.

Vic: Adjusted earnings per share was <unk> 78 cents for the quarter, which is up 20% as compared to the prior year.

Vic: Free cash flow for the quarter was $99 million.

Vic: And total liquidity was $3 5 billion with $1 $5 billion of cash on hand at quarter end.

Vic: Our net leverage was 0.7 turns which is 0.4 turns better than the prior year.

Vikram U. Kini: Greatest Life 10, for the total company on an FX adjusted basis, Q1 orders declined 4% and revenue declined 3%. However, total company adjusted EBITDA increased 15% from the prior year. The ITS segment margin increased 370 basis points, while the PST segment margin increased 50 basis points year-over-year. Overall, Ingersoll-Rand expanded AdjustEva.margin by 290 basis points. The improvement in adjusted EBIT was driven by 390 basis points of gross margin expansion, largely driven by our continued execution of I2V initiatives and pricing.

Vic: Turning to slide 10 for the total company on an FX adjusted basis, Q1 orders declined 4% and revenue declined 3%.

Vic: Total company adjusted EBITDA increased 15% from the prior year.

Vic: <unk> segment margin increased 370 basis points, while the PSG segment margin increased 50 basis points year over year.

Vic: Overall, Ingersoll Rand expanded adjusted EBITDA margins by 290 basis points.

Vic: The improvement in adjusted EBITDA was driven by 390 basis points of gross margin expansion largely driven by our continued execution of <unk> initiatives and pricing.

Vikram U. Kini: Partially offsetting this gross margin expansion were investments in SG&A centered around the commercial footprint and R&D initiatives. Corporate costs came in at $44 million for the quarter. And finally, adjusted EPS for the quarter was up 20% year-over-year to 78 cents per share. And the adjusted tax rate for the quarter was 21.3%.

Vic: Partially offsetting this gross margin expansion were investments in SG&A is centered around commercial footprint and R&D initiatives.

Vic: Corporate costs came in at $44 million for the quarter.

Vic: And finally, adjusted EPS for the quarter was up 20% year over year to 78% per share and.

Vic: The adjusted tax rate for the quarter was 21, 3%.

Vikram U. Kini: On the next slide, I'd like to take a minute to highlight the $1 billion increase to our share repurchase program. This repurchase authorization is incremental to the remaining amount of the existing $750 million authorization and is currently expected to start being executed against in the first quarter of 2025. Much like the prior authorization, we would expect to utilize the new $1 billion share repurchase authorization over a three-year time period. Our capital allocation strategy remains unchanged, and share repurchases are an important part of that strategy.

Vic: On the next slide I'd like to take a minute to highlight the $1 billion increase to our share repurchase program.

Vic: This repurchase authorization incremental towards the remaining amount on the existing $750 million authorization and is currently expected to start being executed against in the first quarter of 2025.

Vic: Much like the prior authorization, we would expect to utilize the new $1 billion share repurchase authorization over a three year time period.

Our capital allocation strategy remains unchanged and share repurchases are an important part of that strategy.

Vikram U. Kini: M&A remains our top priority for our capital allocation, and we continue to expect M&A to be our primary use of cash as we look ahead. Retasks for the quarter were $99 million, including TAPx, which totaled $62 million. The year-over-year decline in free cash flow of $49 million was driven primarily by two factors. First, approximately $40 million of CapEx timing. As outlined in our guidance, our expected CapEx spend remains unchanged at approximately 2% of revenue for the full year.

Vic: M&A remains our top priority for our capital allocation and we continue to expect M&A to be our primary use of cash as we look ahead.

Vic: Free cash flow for the quarter was $99 million, including Capex, which totaled $62 million.

Vic: The year over year decline in free cash flow of $49 million was driven primarily.

Primarily by two factors.

Vic: Approximately $40 million of Capex timing.

Vic: As outlined in our guidance our expected Capex spend remains unchanged at approximately 2% of revenue for the full year.

Vikram U. Kini: And second, approximately $20 million in interest payment time. Due to the bond issuance completed in August of 2023, interest payments on those bonds are now made twice per year as compared to our prior structure, which was generally paid evenly over the course of the year. This will normalize as we move throughout the year.

Vic: And second approximately $20 million of interest payment timing.

Vic: Due to the bond issuance completed in August of 2023 interest payments on those bonds are now made twice per year as compared to our prior structure, which was generally paid evenly over the course of the year.

Vic: This will normalize as we move throughout the year.

Vikram U. Kini: Total company liquidity now stands at $3.5 billion based on approximately $1.5 billion of cash and $2 billion availability on our revolving credit facility. Leverage for the quarter was 0.7 turns, which was a 0.4-turn improvement year over year. And specifically, within the quarter, cash outflows included $143 million deployed to M&A as well as $81 million returned to shareholders, of which $73 million was in share repurchases and $8 million for our dividend payment. I will now turn the call back to Vicente to discuss our segment.

Total company liquidity now stands at $3 $5 billion based on approximately $1 $5 billion of cash and $2 billion availability on our revolving credit facility.

Vic: Leverage for the quarter was 0.7 turns which was a 0.4 turn improvement year over year.

Vic: And specifically within the quarter cash outflows included $143 million deployed to M&A as well as $81 million returned to shareholders of which $73 million of share repurchases and $8 million for our dividend payment.

Speaker Change: I will now turn the call back to the center to discuss our segments.

Vicente Reynal: Thanks, Vic. On slide 12, our industrial technologies and service segment delivered solid year-over-year revenue growth of 4% on top of outsized growth in Q1 of last year. Adjusted EBITDA margins were approximately 30%, up 370 basis points from the prior year. Booked the bill was 1.02 times, with organic orders down approximately 7%. Moving to the product highlights, compressor wear down is high single digits, primarily driven by large, long-cycle project order timing, primarily in renewable natural gas in the US and EV battery and solar projects in China. Excluding these items, organic orders in compressors were approximately flat year over year.

Greg: Thanks, Greg.

Greg: On slide 12, our industrial technologies and service segment delivered solid year over year revenue growth of 4% on top of outsize growth in Q1 of last year.

Greg: Adjusted EBITDA margins were approximately 30% of 370 basis points from the prior year.

Greg: Book to Bill was 1.02 times with organic orders down approximately 7%.

Greg: Moving to the product highlights compressors, we're down high single digits, primarily driven by large long cycle project order timing, primarily in the renewable natural gas in the U S and EV battery and solar project in China.

Greg: Excluding these items organic orders in compressors were approximately flat year over year.

Vicente Reynal: It is important to note that on a two-year stag, compressor orders are up low double digits, and revenue is up mid-30s. Industrial vacuum and blower orders were up high single digits, and revenue was up mid-teens. On a two-year stag, vacuum and blower orders were up mid-single digits, and revenues were up low 40s. For Innovation in Action, we're highlighting Elmo Richley, a new vacuum pump technology, which was recently launched in EMEA. This patented, oil-free technology ensures no air contamination or waste, which is ideal for high-growth, sustainable end markets like food and beverage, pharma, and medical. This product also offers an almost 50% reduction in energy consumption compared to equivalent liquid rain technology, enabling productivity for customers and also reducing total cost of ownership.

Greg: Important to note that on a two year stack compared to their orders are up low double digits and revenue is up mid thirties.

Greg: Industrial vacuum up lower orders were up high single digits and revenue was up mid teens.

Greg: On a two year stack vacuum and blowers orders were up mid single digits and revenues up low forty's.

Greg: For innovation in action, we're highlighting Elmo recently, new vacuum pump technology, which.

Greg: Which was recently launched in EMEA.

Greg: This patented oil free technology ensures no air contamination of our waste, which is ideal for high growth sustainable end markets like food and beverage pharma and medical.

Greg: This product also offers and almost 50% reduction in energy consumption compared to equivalent liquid ring technology.

Greg: Enabling productivity for customer and also reducing total cost of ownership.

Vicente Reynal: Turn to slide 13, the PST team delivered adjusted EBITDA of $91 million with a margin of 30.8%. However, organic orders in the PST segment were down approximately 5% year over year. The decline in odors was driven primarily by softness in life sciences and expected declines in China wastewater and market. It is important to note and encourage that the life science business saw more than a 15% increase sequentially in order momentum in Q1 2024 as compared to Q4 of 2023. In addition, short cycle orders in the PSD segment remain strong, with book and ship orders of high single-digit sequential. We see organic order growth stabilizing.

Greg: Turning to slide 13, the PSC team delivered adjusted EBITDA of $91 million with a margin of 38%.

Greg: Organic orders in the P&C segment were down approximately 5% year over year.

Greg: The decline in orders was driven primarily by softness in life Sciences and expected declines in China wastewater end markets.

Greg: It is important to note and encouraging that life science business, so more than 15% increase sequentially in order momentum in Q1, 'twenty guidance before as compared to Q4 of 2023.

Greg: In addition, short cycle orders in the P&C segment remained strong with book and ship orders up high single digits sequentially.

Greg: We see organic order growth stabilizing and we remain positive about the underlying health of the business.

Vicente Reynal: And we remain positive about the underlying health of the PST business. Overall, the PSC segment remains on track to meet our long-term Investor Day growth commitment. For PST Innovation and Action, we're highlighting a great recurring revenue opportunity with aircraft. ERCOM is a range of comprehensive end-to-end IIoT solutions that seamlessly integrate into existing infrastructure to enable monitoring, controlling, and optimization of operations. In this slide, we show one application of the ERCON system to monitor and control gas pressure on the distribution grid that can help utility companies reduce emissions by up to 10%.

Overall, the P&C segment remains on track to meet our long term investor day growth commitments.

Greg: Our PSA innovation in action, we're highlighting a great recurring revenue opportunity with aircraft.

Greg: <unk> Com is a range of comprehensive end to end Iot solutions that seamlessly integrate into existing infrastructure that enabled monitoring control and optimization of operations.

Greg: In this slide we show one application of are consistent to monitor and control gas pressure on the distribution grid that can help utility companies reduce emissions by up to 10%.

Vicente Reynal: We see this as a great opportunity for recurring revenue through subscription-based software and services. As we move to slide 14, given the solid performance in Q1, we're raising our 2024 guidance. Total company revenue is expected to grow overall between 4% to 6%, which is down 100 business points versus prior initial guidance, driven entirely by FX. We anticipate positive organic growth of 2% to 4%, consistent with prior guidance, where price and volume remain split at approximately 70-30.

We see these as a great opportunity for recurring revenue from subscription based software and services.

Greg: As we walk through slide 14, given the solid performance in Q1, we're raising our 2024 guidance.

Greg: Total company revenue is expected to grow overall between 4% to 6%, which is down 100 basis points versus prior initial guidance driven entirely by FX.

Greg: We anticipate positive organic growth of 2% to 4% consistent with prior guidance, where price and volume remains blade out approximately 730 <unk>.

Vicente Reynal: FX is now expected to be relatively flat for the full year, which is a 100 basis points headwind as compared to our initial guide. M&A is projected at approximately $170 million, which reflects all completed and closed M&A transactions as of May 1st, 2024. ILC Dover is not included in these figures and is expected to close later in the quarter.

Greg: FX is now expected to be relatively flat for the full year, which is a 100 basis points headwind as compared to our initial guide M&A.

Greg: M&A is projected at approximately $170 million, which reflects all completed and closed M&A transactions as of May one of 2024.

Greg: <unk> is not included in these figures and is expected to close later in the quarter.

Vicente Reynal: Corporate costs are planned at $170 million and will be incurred relatively evenly per quarter for the balance of the year. The increase versus initial guidance is driven by investments for growth in the 9th generation activities, as well as investments in IR digital and other IT-related investments. Total adjusted EBITDA for the company is expected to be in the range of $1.94 billion and $2 billion, which is up approximately 11% year over year at the midpoint.

Greg: Corporate costs are planned at $170 million and will be incur relatively evenly per quarter for the balance of the year.

Greg: The increase versus initial guidance is driven by investments where growth in demand generation activities as well as investments in digital and other it related investments.

Greg: Total adjusted EBITDA for the company is expected to be in the range of $1 94 billion and $2 billion.

Greg: Which is up approximately 11% year over year at the midpoint.

Vicente Reynal: At the bottom of the table, adjusted EPS is projected to be within the range of $3.20 and $3.30, which is up 2% versus prior guidance and approximately 10% year-over-year at the midpoint. On the bottom right-hand side of the page, we have included a 2024 full-year guidance bridge showing the changes in our latest guidance as compared to our initial guidance provided in February. As you can see, the primary driver of EPS growth is associated with operational activity related to improving incremental and operational performance.

Greg: At the bottom of the table adjusted EPS is projected to be within the range of $3 20, and $3 37.

Greg: She is up 2% versus prior guidance and approximately 10% year over year at the midpoint.

Greg: On the bottom right hand side of the page. We have included a 'twenty 'twenty four full year guidance bridge showing the changes in our latest guidance as compared to our initial guidance provided in February.

Greg: As you can see the primary driver of EPS growth is associated with operational activity related to improve incremental and operational performance.

Vicente Reynal: As I mentioned earlier, FX is the largest headwind, driving approximately 100 basis points of total revenue declines and a 4 cent headwind on EPS. Total interest expense is now expected to be approximately $130 million and will be incurred relatively evenly per quarter for the balance of the year.

Greg: As I mentioned earlier FX is the largest headwind driving approximately 100 basis points of total revenue declines and as for Bob.

Greg: Both EPS headwinds.

Greg: Total interest expense is now expected to be approximately $130 million and will be incurred relatively evenly per quarter for the balance of the year.

Vicente Reynal: No changes have been made to our guidance on the full-year adjusted tax rate, cap expense as a percentage of revenue, free cash flow to adjusted net income conversion, or share count. All remain in line with initial guidance. Slide 15, as we wrap up today's call, I want to reiterate that Ingersoll-Rand remains in a very strong position. We continue to deliver record results, and our updated guidance is reflective of our Q1 performance and ongoing momentum.

Greg: No changes have been made to our guidance on the full year adjusted tax rate Capex spend as a percentage of revenue free cash flow to adjusted net income conversion or share count all remain in line with initial guidance.

Greg: Turning to slide 15, as we wrap up today's call I want to reiterate that Ingersoll Rand remains in a very strong position.

Greg: We continued to deliver record results on our updated guidance is reflective of our Q1 performance and ongoing momentum.

Vicente Reynal: Our M&A funnel remains strong, and with acquisitions announced and close to date, we're poised for a record year of annualized inorganic growth. We remain nimble, and we protect the people in a constantly changing market condition. To our employees, I want to thank you one more time for an excellent start to the year. These results show the impact each of you have as owners of the campus. Thank you for your hard work, resiliency, and focused action.

Greg: Our M&A funnel remains strong and with acquisitions announced and close today, we're poised for a record year of annualized inorganic growth.

Greg: We remain nimble and we prepared to pivot with the constantly changing market conditions to.

Speaker Change: To our employees I want to thank you one more time for an excellent start through the year. These results show the impact each of you have as owners of the company.

Speaker Change: Thank you for your hard work resiliency and focused actions, we believe the power of <unk> combined with our ownership mindset and leading portfolio strength is the durability of our company, while delivering long term value to shareholders.

Vicente Reynal: We believe the power of IRX combined with our ownership mindset and leading portfolio strengthens the durability of our company while delivering long-term value to shareholders. With that, I will turn the call back to the operator to open the call for Q&A. Thank you.

With that I will turn the call back to the operator to open the call for Q&A.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question today comes from the line of Mike Halloran from Baird. Your line is open.

Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and our listening via loud speaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question today comes from the line of Mike Halloran from Baird. Your line is open.

Hey, good morning, everyone.

Good morning, Mike.

Vicente Reynal: So simplistically, what's changed from a trend line perspective? When I listen to your comments, it feels like things really haven't changed that much organically from a trend perspective. So maybe talk about any areas where you're seeing maybe a little better trends or the worst trends and some sort of inflection. And also, maybe talk about what you think the orders will look like on a full year basis and how those might track through the year.

Michael Patrick Halloran: So simplistically, what's changed from a from a trend line perspective your comments it feels like things really haven't changed that much organically from a trend perspective, so maybe talk about any areas, where you're seeing maybe a little better trends on the worst trend some sort of reflection.

Michael Patrick Halloran: And also maybe talk to what you think the orders look like on a full year basis, and how those might track.

Vicente Reynal: Yeah, Mike, I'll say that the only real change has been increased funnel activity since we last reported or spoke publicly. You know, despite the headwinds we saw in Q1 from large projects on a year-to-year basis, the very encouraging sign is that the funnel activity for large projects on a global perspective, as we look forward, is still quite healthy. And what we saw was definitely an increased activity and improvement in China in particular, as well as other places across EMEA that are related to kind of large megaproject investments that are mostly in the region for the region. So we view, again, the messaging very consistently versus what we said in February. And that is kind of quite encouraging.

Speaker Change: Yeah, Mike I'll say that'd be the only real change has been the increased funnel activity since we last.

Vicente Reynal: And then the order of expectations as you think about the year.

Speaker Change: Reported or spoke publicly.

Speaker Change: Despite despite the headwinds we saw in Q1 from large projects on a year over year basis.

Speaker Change: A very encouraging sign is that the funnel activity for large projects on a global perspective.

Speaker Change: As we look forward, it's still quite healthy.

Speaker Change: And what we saw it was there's definitely a very increase activity and improvement in China in particular.

Speaker Change: As well as other places in across EMEA.

Related to kind of large Mega project investments.

Speaker Change: But are mostly in region for the region.

Speaker Change: So we view again, the messaging very consistent versus what we said in February and ER and that is kind of quite a quite encouraging.

Speaker Change: And then the order expectations as you think about the year.

Vicente Reynal: Yeah, sequential loaders, um, uh, yeah.

Speaker Change: Yes sequential orders.

Vikram U. Kini: Yeah, maybe I'll jump in there, Mike. I think, in terms of the order activity here, first and foremost, you know, we did see book the bill above one for the first quarter at about 1.02, which is very much in line, I think, with how, you know, we intended for the year to start. And, you know, as a reminder, we typically are above one for the first half of the year and below one in the second half, largely due to normal seasonality, as well as the shipment of the long cycle projects.

Yeah, and maybe I'll, maybe I'll jump in there Mike I think.

Speaker Change: In terms of the order activity here, you know first and foremost we did see book to Bill above one for the first quarter of about 1.02, which is very much in line I think with how we intended for the year to start and you know as a as a reminder, we typically are above one for the first half of the year and below one in the second half largely due to normal seasonality as well.

Speaker Change: Is the are the the the shipment of the.

Vikram U. Kini: I think, as we move into, you know, into Q2, I think that the Q2 comps, you know, particularly on a year-over-year basis, are still, you know, I'd say a touch challenging, and I think they normalize a bit more as we move into the back half of the year. So, again, very consistent, I think, with how we saw things coming into the year. And I think, by and large, Q1 played out largely as we expected.

Up off the long cycle projects I think as we move into you know into Q2, you know I think that the Q2 comps you know, particularly on a year over year basis are still you know I'd say I'd touch challenging and I think they normalize a bit more as we move into the back half of the year. So again very consistent I think with how we saw things coming into the.

Speaker Change: Year, and I think by and large Q1 played itself out largely as we expected.

Vikram U. Kini: Thanks for that. And then maybe talk through the sequential trends you're expecting for the year from an earnings perspective and cadencing, anything different from normal seasonality, as well as the 1Q margins in the compressor segment, ITS. Is that the right run rate? I mean, that was a pretty healthy first quarter margin. So just want to make sure that's the right base to build off. Yeah, sure, let me, uh...

Speaker Change: Thanks for that and then maybe talk through the sequential trends you're expecting for the year from an earnings perspective, and a key to seeing anything different from normal seasonality as well as the the <unk> margins in the compressor segment Ics.

Speaker Change: Is that the right run rate I mean that was a pretty healthy first quarter margin. So just want to make sure. That's the right base to build off.

Vikram U. Kini: Yeah, sure. Let me start with that latter point there, you know, with regard to the margins. So I think maybe, in the context of the total company, you know, I think the full-year guide implies slightly more than 100 basis points of your margin expansion. And it's worth noting that it's actually ahead of our investor day targets that we communicated late last year, which were about 75 basis points. So we're actually quite pleased with the continued momentum we're seeing. And, as you indicated here, clearly, ITS is probably the leader of the pack in that respect.

Speaker Change: Yeah sure let me, let me maybe start with that latter point there charged to the margins. So I think maybe in the context of the total company full year guide implies slightly more than 100 basis points of <unk>.

Speaker Change: Year over year margin expansion and it's worth noting that's actually ahead of our our Investor day targets that we communicated late last year, which was about 75 basis points. So we're actually quite pleased with the continued momentum we're seeing and yes. As you indicated here clearly etfs, probably as the leader of the pack in that respect you know, but what I would say here as Q1 or X.

Vikram U. Kini: You know, but what I would say here is that Q1, our expectation certainly will be our highest margin expansion on a quarterly basis for the year, and we expect the levels of margin expansion to kind of moderate as we move into the latter half of the year. Now, that being said, you know, Mike, I think we would say, you know, we continue to be really operationally focused, QFE focused, and we'll continue to try to drive out performance where possible.

Speaker Change: Spectation certainly it will be our highest margin expansion on a quarterly basis for the year and we expect the levels of margin expansion to kind of moderate as we move into the latter half of the year.

Speaker Change: Being said I'm you know Mike I think we would say you know we're continuing to be really operationally focused QEP focused and we'll continue to try and drive outperformance where possible. The first part of your question in terms of I'd say, the the phasing and the seasonality nothing that would point to that's dramatically different than what <unk> seen in prior years, whether you want to look at it from an earnings perspective.

Vikram U. Kini: The first part of your question in terms of, I'd say, the phasing and the seasonality, nothing I'd point to that's dramatically different from what you've seen in prior years, whether you want to look at it from an earnings perspective, first half or second half, as well as what I spoke about earlier on the book with Bill Caden. So again, I'd say relatively consistent with what you've seen, but we're very encouraged by the strong start to the year we saw in Q1.

Speaker Change: First half versus second half as well as what I spoke to earlier on the book to Bill cadence. So again, I'd say relatively consistent with what you've seen but we're you know we're very encouraged with the strong start to the year, we saw in Q1.

Speaker Change: I appreciate it guys. Thank you.

Speaker Change: Thanks Ryan.

Operator: Your next question comes from the line of Julian Mitchell from Barclays. Your line is open.

Speaker Change: Your next question comes from the lineup Julian Mitchell from Barclays. Your line is open.

Vicente Reynal: Hi, good morning everyone. Good morning, Julian. Good morning. So maybe just, I don't know, without going down the rabbit hole of sort of monthly orders and so on, I guess maybe it could help us understand in the second quarter that orders are down again year on year, firm-wide. Just wanted to make sure that's... the case and sort of when you see those returning to growth again on a firm-wide basis and then on the revenue line.

Julian C.H. Mitchell: Hi, Good morning, everyone. Good morning Julien.

Julian C.H. Mitchell: Morning.

Julian C.H. Mitchell: So maybe just I don't know without going down the rabbit hole of sort of monthly orders and so on I guess, maybe help us understand in the.

Julian C.H. Mitchell: Second quarter.

Julian C.H. Mitchell: It sounds like orders are down again.

Julian C.H. Mitchell: Year on year.

Julian C.H. Mitchell: Firm wide just wanted to make sure that.

Julian C.H. Mitchell: The case.

Julian C.H. Mitchell: And sort of when you see those returning to growth again on <unk>.

Julian C.H. Mitchell: Wide basis, and then on the revenue line.

Vicente Reynal: Is the point that, you know, revenues are up sequentially sort of low mid single digits in Q2, like, normal, you have the tailwind of the 50 million push out, but maybe the top line environment is also soggier now than it was a few months ago?

Julian C.H. Mitchell: Is the point that revenues are up sequentially sort of low mid single digits in Q2 like <unk>.

Normal.

Julian C.H. Mitchell: Do you have the tailwind of the 50 million push out that maybe the topline environment is also a soggy and now than then it was a few months ago.

Vicente Reynal: Hey, Julian. As a reminder, we don't really guide on orders. But just to provide a little bit of color here on Q2, I mean, April orders really finished relatively in line with the expectations. Generally, the same trend as what we saw in Q1, meaning China is the most noted headwind again, based on that year-over-year comparison, due to the outgrowth that we saw in Q1 and Q2. And EMEA and America are performing comparatively much better, clearly.

Speaker Change: Yeah, Hi, Julien.

Speaker Change: As a reminder, we don't we don't really guide on orders, but just to provide a little bit of color here on Q2.

Julien: I mean April.

Speaker Change: Orders really finished relatively in line with the expectations are generally the same train as what we saw in Q1, meaning China is the most noted headwinds again based on that year over year comparison due to a the outgrowth that we so you know Q1, and Q2 and in China, and you know EMEA and Americas.

Speaker Change: Performing comparably much better clearly.

Vicente Reynal: Q2 comes as still a bit of a challenge from a year-over-year perspective. But that being said, we do believe that Q2 organic order growth will definitely perform better than Q1. And we do expect Q2 organic orders to be up sequentially as compared to Q1. And our confidence level here is based on the fact that we continue to see momentum in MQL activity. And as we explained also, that kind of intra-quarter sequential momentum that we saw in the first quarter, which is relatively much higher than what we have seen historically, that kind of continues to build confidence that things are kind of loosening up and freeing up as we continue to see better visibility from a customer perspective.

Speaker Change: Our Q2 comes there are still a bit of a challenge from a year over year perspective, but that would mean that being said, we do believe that Q2 organic order growth will definitely performed better than Q1, and we do expect Q2 organic orders to be up sequentially as compared to Q1. So.

Speaker Change: Our confidence level here is based on the fact that we continue to see momentum in MQ will activity and and as we explained also that kind of intra quarter sequential momentum that we saw in the first quarter, which is relatively much higher than what we have seen historically that kind of continues to build the confidence that you know things aren't.

Speaker Change: Kind of loosening up and bringing up as we continue to see better visibility from a customer perspective.

Vikram U. Kini: Yeah, and then maybe I'll take the revenue side of that question, Julian. So to answer your first part, yes, we do expect to see Q2 revenue performance sequentially trend upwards from Q1, so I think that's a completely fair statement. I think specifically with regard to Q2, and maybe I'll focus my commentary a little bit more year over year here, we do expect to see Q2 up, well, I'll say low single digits on an organic revenue growth perspective with continued year over year EBITDA margin expansion.

Speaker Change: Yeah, and then I will take the the revenue side of that question Julien. So I think to answer your first part yes, we do expect to see our Q2 revenue performance sequentially trend upwards from Q1. So I think that's a completely fair statement I think specifically with regards to Q2, and maybe I'll focus my commentary a little bit more year over year here, we do expect to see Q2.

Speaker Change: <unk> up a little I'll say low single digit organic revenue growth perspective with continued year over year EBITDA margin expansion and then I think as far as kind of the other kind of moving components dramatically not dramatically different than frankly, what you saw in Q1, our mean M&A contribution comparable to what you saw in Q1 FX.

Vikram U. Kini: And then I think as far as kind of the other kind of moving components, not dramatically different from frankly what you saw in Q1, meaning M&A contribution comparable to what you saw in Q1, FX, maybe a slight headwind on a year over year basis. And we would obviously expect to see that organic growth be, roughly speaking, maybe a two-thirds to one-third price to volume split. So again, I think relatively consistent with the same messaging you've seen before. But yeah, we do expect to see continued good momentum into Q2.

Speaker Change: FX I mean, a slight headwind on a year over year basis, and we would obviously expect to see that organic growth be roughly speaking maybe a two thirds one third price to volume split so again I think relatively.

Speaker Change: Relatively consistent with the same messaging you've seen before but yes, we do expect to see continued good momentum into Q2.

Vikram U. Kini: That's helpful. Thank you, Vic.

Speaker Change: That's helpful. Thank you. Thank you Vic and then just my quick follow up on the second quarter.

Operator: And then just my quick follow-up on the second quarter. So if revenue is sort of up sequentially, the margins may be down sequentially. Is that the point?

So if the revenue sort of up sequentially.

Speaker Change: And the margins maybe down sequentially is that is that the point I mean, often you have revenue up sequentially second quarter, and then sequential operating leverage with it and EPS up sequentially, but.

Vikram U. Kini: I mean, often you have revenue up sequentially in the second quarter and then sequential operating leverage with it, and EPS up sequentially. But if you're saying that EPS can be up sequentially, it puts the first half at 50% of the year's earnings, which I think is abnormal seasonality. But I think you're saying seasonality is normal this year. So just maybe help us understand on that second-quarter EBITDA and EPF. Yeah

Speaker Change: If you're saying that.

Speaker Change: <unk> can be up sequentially. It puts the first half of it 50% of the year's earnings, which I think is is abnormal seasonality, but I think youre, saying seasonality is normally see so just maybe help us understand on that second quarter EBIT and EPS.

Vikram U. Kini: Yeah, yeah, and maybe I'll keep it at a relatively high level, but I think the way we should think about it here is obviously Q1, really strong performance, particularly on the margin side of the equation, you know, over 27% EBITDA margin profile. I think the way we should think about it here is, you know, we do expect revenue and EBITDA dollars to grow sequentially. We would expect EBITDA margins to continue to be high.

Speaker Change: Yeah, Yeah, and maybe I'll keep it at a relatively high level, but I think the way we would think about it here is obviously Q1 really strong performance, particularly on the margin side of the equation you know over 27% EBITDA margin profile I think the way we should think about it here is you know we do expect revenue and EBITDA dollars to grow sequentially, we would expect EBITDA.

Speaker Change: Just to continue to be healthy, it's probably worth noting when you think about that in the translation down to EPS, we did benefit a little bit in the first quarter from a from a from a tax rate perspective, which we do expect to normalize a little bit so that would create a little bit of some of that sequential noise from Q1 to Q2, but again nothing that we'd point to you from an operational perspective, we continue to expect good healthy.

Speaker Change: Hello through good margins and.

Vikram U. Kini: It's probably worth noting when you think about that in the translation down to EPS, we did benefit a little bit in the first quarter from a tax rate perspective, which we do expect to normalize a little bit. So that'll create a little bit of some of that sequential noise from Q1 to Q2. But again, nothing that we'd point to from an operational perspective. We continue to expect good, healthy flow through, and good margins. And yes, we do, you know, just to be very clear, we do expect to see sequential improvement on the revenue and the EBITDA dollar side of the equation.

Yes, we do I'll just be very clear, we do expect to see sequential improvement on the revenue and the EBITDA dollar side of the equation.

Speaker Change: Great. Thank you.

Operator: Your next question comes from the line of Jeff Sprague from Vertical Research Partners. Your line is open.

Speaker Change: Your next question comes from the line of Jeff Sprague from vertical Research partners. Your line is open.

Operator: Thank you. Good morning.

Hey, Thank you good morning.

Vicente Reynal: Morning. Maybe, could we just unpack the Q1 margins and ITS a little bit more? Vicente mentioned I2V and price costs and everything, but obviously, a very impressive performance in the quarter. So I'd like to get a little more color on what happened. And just on the change in incrementals, Vic, I assume the FX change helps that number a little bit. Maybe speak to, is there any change in the kind of underlying expectation for incrementals for the year?

Speaker Change: Maybe.

Jeffrey Todd Sprague: Could we just unpack actually the Q1 margins in Ics, a little bit more besides I mentioned ITV in price cost and everything but.

Obviously, a very impressive performance in the quarter, so I'd like to get a little more color there on what happened and just on the change in Incrementals Vic.

Jeffrey Todd Sprague: Assuming the FX change helps that number a little bit maybe speak to is there any change in kind of the.

Jeffrey Todd Sprague: Underlying expectation for Incrementals for the year.

Vicente Reynal: Hey Jeff, on the ITS side, yeah, I mean, we're very pleased with the performance and you saw, you heard the commentary about solid gross margin expansion, and that's basically kind of what we saw also on the ITS side. I mean, phenomenal gross margin expansion, driven by a lot of the initiatives that we have been talking about over the past few years, you know, call it I2B, the innovative value activities, as well as some of So again, speaks pretty highly in terms of what the team continues to do to control what we can control and the fact that, you know, what is very exciting and very pleasing is to see clearly getting to that 30%, but even more so in this kind of still fairly highly inflationary market situation.

Vic: Hey, Jeff on the idea is yeah I mean, we're very pleased with the performance and you saw you heard the commentary that solid gross margin expansion and that is basically kind of what we saw also on the <unk> side I mean phenomenal gross margin expansion.

Speaker Change: And driven by a lot of the initiatives that we have been talking about over the past few years, you know call. It these I to be the innovate two value activities as well as some of the restructuring that we also did in the in the fourth quarter that we saw also benefiting here.

Speaker Change: Early on in Q1, so again it speaks pretty highly in terms of what the team continues to do to control what we can control.

Speaker Change: And the fact that you know what is very exciting and very pleasing to see clearly getting to that 30%. What do you mean more so are these kind of all still fairly highly inflationary market.

Speaker Change: <unk> situation, so meaning that as we eventually over time continue to see deflationary that continues to also help expand our margin. Even further so that is that is very we were very pleased that with the I mean, no surprise, but I'm. So excited to see that continue to performance on that.

Vicente Reynal: So meaning that as we eventually, over time, continue to see deflationary pressures, that continues to also help expand our margin even further. So that is very, we were very pleased with, I mean, not surprised, but also excited to see that continued performance on that.

Vikram U. Kini: Yeah, and then Jeff, to the second part of your question on the incrementals, you know, the way I would probably think about it is just, you know, frankly, a continuation of what Vicente spoke about. You know, when you think about the biggest drivers that Vicente spoke to, whether it be the I2V, the direct material kind of productivity initiatives, really solid price-cost flow-through where, as we communicated coming into the year, we expected inflationary headwinds to kind of move sideways.

Speaker Change: And then Jeff the second part of your question on the Incrementals you know the way I would probably think about it is just frankly, a continuation of what the center I spoke to you know when you think about the the biggest drivers that percent I spoke to you whether it be the the the IGD the direct material kind of productivity initiatives.

Speaker Change: Frankly, really really solid price cost flow through where as we message coming into the year, we expected inflationary headwinds kind of move sideways. That's frankly, what we saw and we saw good price realization in the first quarter, there's really no expectation that should be dramatically different for the balance of the year and then the restructuring actions, which just to even provide a little bit more color. We took some targeted restructuring.

Vikram U. Kini: That's frankly what we saw, and we saw good price realization in the first quarter. There's really no expectation that it should be dramatically different for the balance of the year. And then the restructuring actions, which just to provide a little bit more color, we took some targeted restructuring actions at the tail end of last year, and you actually saw we also did some in Q1 of this year. So again, that's all leading to that kind of incremental growth that we would expect for the full year, which is now closer to that 50%.

Speaker Change: Actions at the tail end of last year, you actually saw we also did some in Q1 of this year. So again, that's all leading to that kind of incrementals that we would expect for the full year, which is getting closer to that 50%.

Vikram U. Kini: And then I think coming out of this quarter, right, those of us who haven't dialed in ILC yet, we'll just any, you know, assuming kind of a late-quarter close, should we expect some EPS benefit in 2024? Or are there kind of integration and other costs that would kind of negate that? Yeah, Jeff.

And then I think coming out of this quarter right those of US who haven't dialed in ILC yet will.

Speaker Change: Just any assuming kind of a mid late quarter close should we expect some EPS benefit in 2024 or are there kind of integration and other costs that would kind of negate that.

Vikram U. Kini: Yeah, Jeff, let me take that one. So yeah, to your point, just to be very clear, obviously, our guidance does not include ILC Dover, as the deal has not closed, but based on Vicente's kind of earlier comments, we do expect to close later in the quarter. So again, we would expect nominal, if any, impact on Q2. As far as the balance of the year, which I'm really now focused on the second half, we would expect to see, you know, some nominal, EPS, you know, impact.

Speaker Change: Yes, Jeff Let me, let me take that one so yeah to your point just to be very clear obviously, our guidance does not include ILC Dover as the deal is not closed to the centre is kind of earlier comments, we do expect to close later in the quarter. So again, we would expect nominal if any you know impact in Q2 as.

Speaker Change: As far as the balance of the year, which I'm really now focusing on the second half we would expect to see some nominal EPS.

EPS.

No impact.

But again as we get through the quarter and frankly as we give our next earnings where we expect that the deal will close later this quarter, we'll give you a little bit more color for the back half of the year as we kind of get the deal closure, but again I'd say nominal EPS impact as we sit here right now for the back half of the year.

Vikram U. Kini: But you know, again, as we get through the quarter, and frankly, as we give our next earnings, where we expect that, you know, the deal will close later this quarter, we'll give you a little bit more color for the back half of the year as we kind of get to deal closure. But again, I'd say a nominal EPS impact as we sit here right now for the back half of the year.

Speaker Change: Great. Thank you.

Operator: Your next question comes from the line of Rob Wertheimer from Melius Research. Your line is open.

Your next question comes from the lineup Rob Wertheimer from Melius Research Your line is open.

Operator: Thanks. Good morning, everybody.

Robert Cameron Wertheimer: Hi, Thanks, good morning, everybody.

Robert Cameron Wertheimer: I guess I'd like to take it a little bit more towards the strategic in thinking about what ILC Dover opens up for you, which you kind of talked about in the prepared remarks on acquisition on runway and on deals and more specifically is that kind of a landmark deal where you can tuck in other things that valuations that look.

Vicente Reynal: I guess I'd like to take it a little bit more towards the strategic end and think about what ILC Dover opens up for you, which you kind of talked about in the prepared remarks on acquisition on runway and on deals. And more specifically, you know, is that kind of a landmark deal where you can tuck in other things like valuations that look, you know, either more like your traditional or in between the two?

Robert Cameron Wertheimer: Either more like your traditional or in between the two what does the pipeline build look like how are you thinking about the timeline and so forth.

Vicente Reynal: What does the pipeline build look like? How are you thinking about the timeline and so forth? And if I may, just one last one, does that sort of satisfy the larger, second half leg of the stool kind of things in the backlog? Or is there potentially more out there? Thanks. Yeah, Rob, I...

Robert Cameron Wertheimer: And if I may just one last one does that sort of satisfy the larger and we'll add a.

Robert Cameron Wertheimer: Second half legged stool kind of.

Robert Cameron Wertheimer: Things in the backlog or is there potentially more out there. Thank you.

Vicente Reynal: Yeah, Rob, you know, we definitely feel that with the acquisition of ILC Dover, we now have a very strong, you know, life science platform to build around. So not only on the biopharmaceutical side, but also on this kind of CDMO medical component technology that you even saw that we actually closed on another acquisition control fluidics, even in the quarter, and that's going to get added to that, to that, to that, to that. So, that is just one example of how we expect to see, take, take a similar approach to tokens that you have seen us do in the past, and particularly around life science platforms.

Speaker Change: Yeah, Rob I you know, we feel are definitely the deposition of IOC Dover, we have now a very strong.

Speaker Change: Our life science platform to build around.

Speaker Change: So not only on the Biopharma, but also on these kind of see the demo medical component technology that you even saw that we actually closed already on another acquisition control fluidics, even in the quarter and that's going to get added to that to that to that to that team.

Speaker Change: So that is just one example on how.

We expect to see take a take a similar approach of tuck ins that you have seen us doing the past I'm, particularly around life science platforms.

Vicente Reynal: You know, we, the exciting piece here too, as well, is that ILC Dover comes in with a phenomenal team, and with deep experience, and that already has a very strong funnel for bolt-ons and tokens. So again, putting our M&A engine into action is going to be very good for us and pretty fruitful. So the pipeline is very strong, not only on things that we have but also on things that the ILC Dover is now bringing to the table.

Speaker Change: We are the exciting piece here too as well is that youll see the over it comes in with a phenomenal team and with deep experience and that already that already has a very strong funnel for bolt ons and tuck in so again.

Speaker Change: In our M&A engine into action is going to be is going to be very good for.

Speaker Change: For us and pretty fruitful. So the pipeline is very strong not only on things that we had but also on things that now the ILC Dover is bringing to the table.

Vicente Reynal: In terms of your question about the larger acquisitions, I mean, I still see that. I would like to say, you know, we still have a couple of these kind of handfuls, one or two very large or larger, you know, above a billion-dollar purchase price that we keep track of outside of this funnel that we talk about all the time, that the funnel is really more about bolting on than tokens. But yes, we still have, you know, a couple of those above a billion-dollar purchase price that we have in play.

In terms of the your question about the larger acquisitions, I mean, I I still see that we would like to say you know we still have a couple of these kind of handful one or two very large or larger.

Speaker Change: Above a $1 billion purchase price that we keep track outside of this funnel that we talk about all the time the formula is really more on the bolt on and tuck ins, but yes, we still have a.

Speaker Change: A couple of those above a $1 billion purchase price that a bug, where we have a play.

Speaker Change: Okay. Thank you.

Operator: Thank you. Thanks, Rob. Your next question?

Speaker Change: Thanks, Rob.

Operator: Your next question comes from the line of Joe Ritchie from Goldman Sachs. Your line is open.

Your next question comes from the line of Joe Ritchie from Goldman Sachs. Your line is open.

Joseph Alfred Ritchie: Thanks, Good morning, guys.

Joseph Alfred Ritchie: Sure Phil.

Vicente Reynal: Hey, can we just start on the growth in the quarter was just a touch lighter than we expected? It may maybe this is just a follow-on to Mike Mike's question from earlier, but was there anything in the quarter that either shifted out or just potentially surprised you with a little bit softer than you expected, maybe, which is all in PST? Just any comments around that would be helpful.

Joseph Alfred Ritchie: Hey can we just start on the on the growth in the quarter, but it was a touch lighter than we expected.

Joseph Alfred Ritchie: Maybe this is just a follow on to Mike's question from earlier, but was there anything in the quarter that either shifted out or potentially surprised you lose a little bit softer than you expected maybe it was just all in PSD, just just any comments around that would be helpful.

Vicente Reynal: Hey Joe, if you remember in the Q4 earnings calls, we talked about flattish organic revenue, and we feel that the results came in kind of roughly in line with that. And when you think about the difference between the Q1 results and the implied Q1 organic guidance, essentially, you know, the change was basically largely attributed to the couple revenue orders that that big mention on the call that got pushed out into Q2, roughly $15 million of orders are basically attributed, attributable mostly to two customers. And it was just basically site readiness; nothing to be worried about.

Joseph Alfred Ritchie: Yeah, Hey, Hey, Joe we are if you remember they were in the Q4 earnings calls, we talked about being flattish organic organic revenue and we feel that the results are came in kind of roughly in line with that and when you think about the difference between the Q1 results and imply Q1 organic organic guidance essentially you know the change was basically <unk>.

Joseph Alfred Ritchie: Can be attributed to the.

Joseph Alfred Ritchie: Couple of revenue orders that that big mentioned on the call.

Joseph Alfred Ritchie: It got pushed out into Q2, roughly $15 million of orders are basically attributed attributable mostly to two customers and they will just basically site readiness nothing to be worried about.

Vicente Reynal: Okay. All right.

Speaker Change: Okay, Alright, that's great to hear and then I guess you have been talking about the life Sciences business for a while now and the softness in that business. It was interesting to see that you've seen is this the sequential order improvement and <unk> are you starting to see green shoots in that business.

Vicente Reynal: That's great to hear. And then, I guess you've been talking about the life sciences business for a while now and the softness in that business. It was interesting to see that you've seen this sequential order improvement in one cue. Are you starting to kind of see green shoots in that business? Are you feeling better about the growth trajectory of that business throughout the rest of the year?

Speaker Change: Are you feeling better about the growth trajectory of that business throughout the rest of the year.

Vicente Reynal: We are, Joe. And particularly, not only because of the sequential improvement but also the conversations that we're having with customers, and even also including some of the biotech funding that we're starting to see here kind of coming through as well. So yeah, I mean, I think it's one that we're encouraged to see, not only from the numbers that we just posted, but also from the conversations that we're having with customers about new applications and new technologies. So, very encouraging.

We are Joe.

And particularly not only of the sequential improvement, but also the conversations that we're having with customers and even also including some of the biotech funding that we're starting to see here kind of coming through as well. So so yes, I mean, I think is one that.

Speaker Change: We're encouraged to see.

Speaker Change: Not only from the numbers that we just posted but also from the conversations that we're having with customers about new applications and new technology. So yes very encouraging.

Operator: Okay, great. Thanks, guys. Thank you.

Speaker Change: Okay, great. Thanks, guys.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Andy Kaplowitz from Citigroup. Your line is open.

Speaker Change: Your next question comes from the line of Andy Kaplowitz from Citigroup. Your line is open hey, good.

Andrew Alec Kaplowitz: Good morning, everyone.

Vicente Reynal: Andy, and Vicente, you mentioned large project order timing was a big reason why organic orders were down in Q1, but how would you characterize the large project order environment in 24? Do you have visibility that you'll see, you know, another large project bookings quarter like you had in that Q1 23 at some point soon? So it's truly a timing issue, or is it a more difficult market for large projects to get over the finish line?

Andrew Alec Kaplowitz: And they said they said you mentioned large project order timing was a big reason why organic orders were down in Q1, but how would you characterize the large project order environment in 'twenty four do you have visibility that you'll see you know another large project bookings quarter like you had in Q1 'twenty three at some point soon so it's truly a timing issue or is it more difficult.

Andrew Alec Kaplowitz: Market for large projects to get over the finish line.

Vicente Reynal: No, I think, you know, we definitely categorize it more as really timing. And we do because, as we mentioned in the prepared remarks, I mean, renewable natural gas saw a lot of acceleration early in 2023. And it has not stopped. But I mean, it was basically a very, very fast start and then kind of tapering off. Still, we're seeing renewable natural gas growth, or, you know, good orders. It's just that, comparable to what we saw back in Q1, it was just difficult to overcome.

Speaker Change: No I think we do.

Speaker Change: Definitely categorize it more it's really timing and.

Speaker Change: And we do because as we mentioned on the prepared remarks, I mean, these renewable natural gas. So a lot of acceleration on early are.

Speaker Change: In in 'twenty three.

Speaker Change: And he has not stopped but I mean, it was basically a very very fast start and then kind of tapering down still we're seeing renewal natural gas growth or good orders. It's just a comparable to what we saw back in in Q1, it was really difficult to to overcome and same thing.

Vicente Reynal: And same thing with the electric vehicle investments that happened in China. Again, very strong investments happening in terms of expansion in the first half of last year. And do we see electric vehicle investment continue?

Same thing with the electric vehicle Investor.

Speaker Change: Investments that happened in China, again, very strong investments happening in terms of expansion in the first half of last year and we see electric vehicle continue yes, we see it but not at the pace of what we saw there now having said that I think what what the remarks that we made on the on the web or one of the answers that they may before funnel activity is rooms.

Vicente Reynal: Yes, we see it, but not at the pace of what we saw there. Now, having said that, I think the remark that we made on the – or one of the answers that I made before, funnel activity is really strong. I mean, so I think that's what is very, very encouraging to us, is that – and it is not on those same projects. It's kind of now a new type of megaproject that we're seeing, whether, you know, in petro-chemical expansions or things of that nature that are kind of encouraging that we're seeing.

Speaker Change: I mean, so I think that that's what he is very very encouraging to us is that it is not on those same projects. It's been kind of on our new type of Mega projects that we're seeing whether you know in petrochemical spansion and sort of things things of that nature of that that are kind of encouraging that we're seeing.

Vicente Reynal: That does sound encouraging. So, Vicente, just following up on your geography comments, specifically on China, I think last quarter you suggested the Chinese team was pretty energized. It looks like APAC orders, you know, still had enough tough year-over-year comp. But, you know, does China turn here as you go over into the second half in terms of owners? Like, any sort of more characterization would be helpful. Yeah, I'd say...

Speaker Change: That does sound encouraging so.

Speaker Change: Just following up on your geography comments, specifically on China, I think last quarter you suggested the China team is pretty energized.

Speaker Change: It looks like APAC orders, you know still had enough tough year over year comp.

Speaker Change: But you know does China turn here as you go over into the second half in terms of owners like any sort of more characterization would be helpful.

Vicente Reynal: Yeah, I think the team is still very energized and very encouraged about what they're seeing. Clearly, tough comps, but even in the tough comp environment, when you look at, and we've done a lot of work with the team to better understand the core business, the core business is still pretty solid and is seeing some good momentum. It was just basically one of those where, again, difficult comps based on some of the expansion that we saw rapidly happening in China in the first half of last year, particularly electric vehicle and battery production and solar energy.

Speaker Change: Yeah, I'd say, Andy I think the team is still very energized and very encouraged about what theyre seeing.

Tough comps, but even in the tough comp environment. When you look at and we've done a lot of them kind of work with the team to better understand the kind of core business. The core business is still pretty solid.

Speaker Change: And seeing some good momentum it will just basically one of those where again difficult comps based on some of the expansion that we saw rapidly happening in China in the first half of last year, particularly on electric vehicle and battery production in solar energy.

Vicente Reynal: But again, we're encouraged by what we're seeing here. As a matter of fact, next week, I'm actually in Southeast Asia with a team to look at some of the growth initiatives that we have across Vietnam, Indonesia, and Singapore. And I'm super energized to just be with the team there next week. Thanks for the color.

Speaker Change: But again, we're encouraged with what we're seeing here. It's a matter of fact, I mean next week I am actually in southeast Asia with a team to look at the some of the growth initiatives that we have across Vietnam, Indonesia, and Singapore, and and I'm Super energized to just be with the team there next week.

Thanks for the color.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Nigel Coe from Wolf Research. Your line is open.

Speaker Change: Your next question comes from the line of Nigel Coe from Wolfe Research. Your line is open.

Operator: Thanks, everyone. Good morning.

Nigel Edward Coe: Thanks, everyone. Good morning.

Nigel Edward Coe: Maybe just a yeah, hey, guys I just wanted to perhaps come in the back of <unk> question, then I think you mentioned as well.

Vicente Reynal: Hey, guys, just wanted to perhaps come on the back of Andy's question. And I think you mentioned as well, Vicente, Europe, where you've seen sort of a pipeline of larger orders, kind of rather larger projects developing, and it sounds like it's more sort of reshoring into Europe. So I'd be curious, you know, if that's the case, whether you think this could be something we see happening pretty quickly, or is this more so 25, 26, and any sort of color on some of the sectors where you see that activity?

Nigel Edward Coe: Europe what.

Nigel Edward Coe: Where are you seeing that sort of a pipeline of.

Nigel Edward Coe: Larger orders.

Nigel Edward Coe: Kind of a low of about the larger projects developing and it sounds like it's more sort of reassuring.

Nigel Edward Coe: Into Europe, so I'd be curious to know if thats. The case, whether you think this could be.

Nigel Edward Coe: Suddenly, we see happening pretty quickly or is this more for 'twenty five 'twenty six and any sort of color on some of the sectors, where you see that activity.

Vicente Reynal: Yeah, it's definitely a little bit reassuring. And even I was actually talking to a very large chip manufacturing company, you know, earlier this week. And it is also about the color, the quote, unquote, Chips Act put in Europe.

Speaker Change: Yeah, it's definitely alliterative reassuring uneven, even though I was actually talking to a very large chip manufacturing.

Speaker Change: Company, you know earlier this week and it is also about their color their quote Unquote chips Act put in Europe. So there's also some investments of that happening.

Vicente Reynal: I mean, there's also some investments in that happening, whether you think about it in the UK. So there's some of that. There are some, you know, going back to the energy crisis, there were some projects that got scoped around nuclear facilities and upgrading things like that, whether in France or in other locations. And that takes time.

Whether you think about it in the U K, so theres some of that.

Speaker Change: Theres some of.

Speaker Change: Going back to the energy crisis, there were some projects that got scoped.

Around nuclear facilities, and upgrading things like that where they are in France or in other locations and that takes time, but we're seeing that.

Vicente Reynal: But, you know, we're seeing that better, you know, approvals coming through. So perhaps that is another bucket area that we're seeing some good excitement there, where we have a very unique application with our blower technology that is already expected. And the third area that we like is the Middle East. I mean, we're seeing a lot of good investments happening in the Middle East; our team in the Middle East and India are seeing the fruits of that. And even also India, in particular that, as we have said in the past, doubling down on some of the investments in India are paying off based on the results that the team is driving.

Speaker Change: That better.

Approvals coming through so perhaps that is another bucket area that we see some good excitement there where we have a very unique application with our blower technology that is already expecting.

Speaker Change: And the third area that that we that we like is middle East I mean, we're seeing a lot of good investments happening in the middle East are deeming middle East and India are seeing the fruits of that and even also India and particularly as we have said in the past doubling down in some of the investments in India are paying off based on the results that the team is driving.

Vicente Reynal: Okay, that's great. And then ILC Dover, you know, the 25% that's, you know, space and defense. I think the question we were asking ourselves was, you know, how strategic is this business? It sounds like it's very strategic, and it feels like you could actually, this sounds like you want to be a space player, for want of a better word. So is that the case? Do you think that it's not just life sciences here, but an A&E play as well?

Speaker Change: Okay, that's great and then.

Speaker Change: I am a feed drove a 20.

Speaker Change: 25%.

Speaker Change: Space and defense.

Speaker Change: I think the question.

Speaker Change: We are asking ourselves was how strategic is this business.

And it sounds like it's very strategic and it feels like you could actually the scheme as it sounds like you want to be a space player.

Speaker Change: But that it would so.

Is that the case do you think that.

Speaker Change: It's not just a lifetime.

Speaker Change: Also in A&D play as well.

Vicente Reynal: Yeah, I mean, I think that's why we call it very highly opportunistic in the sense that, I mean, we're learning a lot. But even before owning this space business, we were already looking at some compression technology and pump technology that is actually used in space. And even ourselves internally within PST, we have a company called Haskell. And Haskell is already a big player, providing compression technology for SpaceX, as an example.

Speaker Change: Yeah, that's right I mean, I think that that's what I call, a very highly opportunistic and the fans at our I mean, we're learning a lot, but even before owning these SaaS based business. We were looking at already some compression technology and pump technology that is actually used in space and even our sales internally within PSD, we had a company called <unk> and <unk>.

Speaker Change: He is already a big player providing compression.

Speaker Change: Compression technology for Spacex.

Speaker Change: As an example, so so we were all ready to kind of playing on the on the peripheries Ah I think this is now giving us a deeper penetration with some very strong customer base like NASA.

Vicente Reynal: So we were already kind of playing on the peripheries. I think this is now giving us deeper penetration with some very strong customer bases, like NASA, Boeing, and Sierra Space. And we're learning a ton. So at this point in time, yeah, I mean, we're very excited with what we see here. And we'll continue to progress our learning. But yeah, I mean, the funnel for Boltons is there. We have it.

Speaker Change: Boeing and Sierra space, and we're learning a ton. So at this point in time, yes, we're very excited with what we see here.

Speaker Change: And we're continuing to progress our learnings, but yeah I mean, the funnel for bolt ons is there we have it okay.

Operator: Good. Great. Thanks. Thanks, Vicente. Thank you.

Okay, great. Thanks, Thanks for attending thank you.

Speaker Change: Yeah.

Operator: Your next question comes from a line of Joe O'Day from Wells Fargo. Your line is open.

Speaker Change: Your next question comes from the line of Joe O'dea from Wells Fargo. Your line is open.

Joseph Alfred Ritchie: Hi, good morning, everyone.

Joseph Alfred Ritchie: Joe.

Vicente Reynal: Can you just expand on the MQL trends during the quarter, the degree to which that surprised you? Not sure if it was primarily China and Europe that drove that increase over the course of the quarter, if there was anything in North America, but just any additional color on what you attribute that to?

Joseph Alfred Ritchie: Can you just expand on the <unk> trends during the quarter.

Joseph Alfred Ritchie: The degree to which that surprised you.

Joseph Alfred Ritchie: Not sure if it was primarily China and Europe that drove that increase over the course of the quarter. If there was anything in North America, but just any additional color on what you attribute that to.

Vicente Reynal: Yeah, Joe, I'll say that the reason why we wanted to kind of share the data points with everyone is because of not only the MQL but also the intra-quarter momentum that we saw that we also put on that page. It was just much more accelerated than what we have historically seen in the first quarter. And I would say that MQL is fairly balanced across all the regions, believe it or not, one of the regions that we saw good acceleration was around EMEA, but call it EMEA as well as the Americas. I mean, very, very strong on that. But yes, I mean, I think it was just fairly good across all the regions.

Speaker Change: Yeah, Joe I would say that the.

Speaker Change: The reason why we wanted to kind of share that data points with everyone is because of not only <unk>, but also the intra quarter momentum that we saw that we also put on that page.

Speaker Change: It was just more much more accelerated than what we have historically have seen in the first quarter and I will say that the MQM fairly fairly balanced across all the regions.

Speaker Change: Believe it or not particularly one of the reasons that we saw good acceleration was around Uh huh.

Speaker Change: EMEA.

Speaker Change: But call it EMEA as well as Americas, I mean, very very strong on that end.

Speaker Change: But yes, I mean, I think it was just fairly fairly good across all the regions.

Vicente Reynal: And that continues in April.

Speaker Change: And that continues in April.

Vicente Reynal: Yes, I mean, April MQL activity was actually strong, you know, 14% year over year growth on top of 5% growth in 2023. So again, it shows that good, good solar momentum. I mean, I think 14% is very good. And, you know, and I will also say April MQL shipments were also up 9% sequentially for March.

Speaker Change: Yes, I mean April MQM activity was actually strong 14% year over year growth on top of 5% growth in 2023, so again.

Speaker Change: Does that are there.

Speaker Change: Good good solid momentum I mean, I think 14% is very good and you know.

Speaker Change: Sales of April <unk> were also up 9% sequentially from March.

Vicente Reynal: Okay, very helpful. And then another one on ILC Dover. And I think the legacy of that business is aerospace and defense, and that the life sciences is a relatively newer kind of addition to it. Could you just expand on what they did to build that out? And you're now a $300 million business. And so what happened over the last several years to sort of put that together?

Speaker Change: Okay.

Speaker Change: And then another one on ILC Dover.

Speaker Change: And I think the legacy of that business is aerospace and defense and that the life Sciences.

Relatively newer kind of addition to it.

Speaker Change: But could you just expand on what they did to build that out and now have $300 million business and so what happened over the last several years to sort of put that together.

Vicente Reynal: Yeah, absolutely, Joe. So you're absolutely right. I mean, I think the legacy here comes from space. And you remember that Dover is the one that put man on the moon, basically with the spacesuits and leveraging a lot of that kind of layering technology to really expand into inflatable habitats and things like that. So, very, very specialized material technology that basically requires multiple layers. I mean, call it nine different layers in order to create containment, in this case, for humans.

Speaker Change: Yeah, absolutely yeah, so you're absolutely right I mean, I think the legacy here comes in from the space.

Speaker Change: And you remember that we mentioned that.

Speaker Change: The Dover is the one that put the demand in the morning basically with the space.

Speaker Change: And leveraging a lot of that kind of layer in technology to really expand into inflatable habitat and things like that so very very specialized material technology, well basically requires multiple layers I mean call. It nine different layers in order to create containment can escape containment of humans.

Vicente Reynal: So what they did is that they took a lot of these kinds of layering technology and material technology and knowledge and know-how to then move into biopharma. And biopharma is basically about the containment of powders and liquids. And that's why they have single-use powder and liquid containers. And then from there, they took it to, how do they continue to expand? And then they acquire basically a CDMO, Flexon, the Flexon business.

Speaker Change: What they did is they took a lot of these kind of layering technology material technology, and knowledge and knowhow to them moving to the Biopharma and into Biopharma is basically about the containment of powders and liquids and that's why they have the single use powder and liquid containment and then from there. They took it today and how do they continue to expand and.

Speaker Change: Then they acquire.

Speaker Change: Basically as CMO flex in the flex business and they acquired a particularly because of the technology specialized technology around silicon.

Vicente Reynal: And they acquired it particularly because of the specialized technology around silicon molding and extrusion. Again, all thinking about containment. And in this case, leveraging that very niche silicon production to create tubing for the containment of liquids and move the liquids in a biopharma production. So yeah, I think the team was very strategic in terms of taking the core of the knowledge of the technology around material and material layering for containment to then go into other, very high-growth end markets. And I think that's just the beginning, I think, in our view.

Speaker Change: <unk> and exploration again, all thinking about containment.

Speaker Change: K leveraging that a very niche silly.

Speaker Change: Silicon production to create tubing for containment of liquids and moved the liquids are in our Biopharma production. So so yeah I think the team was very strategic in terms of taking the core of the knowledge of the technology around material and material even for containment to then go into other diversifying very high growth end markets.

Speaker Change: And I think that's just the beginning I think.

Vicente Reynal: So is that more inorganic than the inorganic building of that $300 million?

Speaker Change: So is that more an organic and inorganic building of that $300 million.

Vicente Reynal: For them, it was basically a good blend of both. I mean, they had to acquire some companies, but then, you know, once they acquired them, they continued that organic movement.

Speaker Change: <unk> was basically a good blend of both I mean, they have to acquire some companies, but then.

Speaker Change: One is when we acquired it continue that organic momentum.

Operator: Great, I appreciate it. Thank you. Yep, sure.

Speaker Change: Great I appreciate it thank you yeah sure.

Operator: Again, if you'd like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Nathan Jones from Stiefel. Your line is open. Good morning, everyone. Hey, Nathan.

Speaker Change: Again, if you'd like to ask a question press star one on your telephone keypad. Your next question comes from the line of Nathan Jones from Stifel. Your line is open.

Nathan Hardie Jones: Good morning, everyone.

Nathan Hardie Jones: Nathan.

Vicente Reynal: I'm going to pick up on ILC Dover as well. On the original acquisition call and again today, you guys have been highlighting revenue synergies opportunities with the current portfolio. Can you talk a little bit more about that? Are the products that you have today directly transferable? Does there need to be some investment and development? And then just talk about what you think the market size for that potential revenue synergy is.

Nathan Hardie Jones: I'm going to pick up on the IFA deliver as well on the original acquisition call and again today, you guys have been highlighting revenue synergy opportunities with the current portfolio.

Nathan Hardie Jones: Can you just talk a little bit more about that.

Nathan Hardie Jones: The products that you have today directly transferable does that need to be some investment in development and then just talk about what you think the market size for that potential.

Nathan Hardie Jones: Revenue synergies.

Vicente Reynal: It is. The products are definitely transferable. This is basically taking the pump technology that we have today in the industrial space, like peristaltic technology, and taking that and then penetrating that into the biopharma market. I think that what we get from ILC Dover is basically that they have a phenomenal commercial footprint. So they go direct to a lot of this customer base, so we get immediate access from that perspective. I think the other thing that we get here is access to new customer bases. So if you look at that CDMO, very, very solid met technology customer end base that we're not doing a lot of work with today.

Nathan Hardie Jones: The products are definitely transferable.

Nathan Hardie Jones: This is basically picking the pump technology that today, we have in the industrial space like Peristaltic technology, and taking bad and then penetrating that into the into the Biopharma market.

Nathan Hardie Jones: I think that the what we get from ILC Dover is basically they have a phenomenal commercial footprint. So they go direct to a lot of these customer base. So we get we get immediate access from that perspective, I think the only thing that we get here is the the access of new customer.

Nathan Hardie Jones: So if you look at that CMO.

Nathan Hardie Jones: You know very very solid met technology customer and base that today, we're not doing a lot of work now what I also would over hires in these in these facilities is very large clean room facilities a lot of our customers that are in the medical space have been asking us to create sub assembly in many cases, so I think the pump and <unk>.

Vicente Reynal: Now, what ILC Dover has in these facilities is very large clean room facilities. A lot of our customers that are in the medical space have been asking us to create subassemblies. In many cases, we take the pump and connect it to create a subassembly that is much easier for the customer to be able to put it onto the end device. For many of these applications, we needed a clean room. We don't have clean room facilities.

Nathan Hardie Jones: Two and create a sub assembly that is much easier for the customer to be able to put it onto the end device.

For many of these applications, we needed a clean room, we don't have clean room facility. So in many cases, we have to pass on that now we have that access we have that access of the clean room facilities as well as we ISO procedures and standards from a quality management system perspective to be able to penetrate these customer base that has a high level of requirement because of beef.

Vicente Reynal: So in many cases, we have to pass on that. Now we have that access. We have that access to the clean room facilities, as well as ISO procedures and standards from a quality management system perspective to be able to penetrate this customer base that has a high level of requirements because of the customer base being FDA regulated. So I think that's clearly the exciting piece here is that we get not only the use of our products and penetrate that through that customer base, but we also get access to new customers that we never had access to before. I mean, in terms of the size of the potential of the rain in Synergy, I mean, we haven't disclosed that yet, Nathan, but we will.

Nathan Hardie Jones: The customer base being a FDA regulated so so I think that that's clearly the exciting piece here is that we get not only the use of our products and penetrate that sort of that customer base, but we also get access to new customer base.

Nathan Hardie Jones: We never had access before.

Nathan Hardie Jones: I mean in terms of in terms of the size of.

Speaker Change: The potential or the range of synergies I mean, we haven't disclosed that yet Nathan.

Speaker Change: And but we did say that with the acquisition of Io suite over.

Speaker Change: We're expanding our addressable market by like $10 billion. So it's basically the potential is there.

Vicente Reynal: Still figuring out how to do with the revenue synergies, I'm sure just one clarification or something I

Speaker Change: Still figuring out the revenue synergies I'm sure just.

One clarification of something I don't know in Npls, which maybe I should know it.

Speaker Change: What's the average duration for you guys for getting in and QL to an order.

Speaker Change: Im just trying to figure out how far is that a leading indicator of potential improvement in demand.

Vicente Reynal: For us, it's anywhere, and it's averaging between six to eight weeks.

Speaker Change: <unk> is anywhere is averaging between six to eight six to eight weeks.

Vicente Reynal: Great. Thanks for taking my question. Thank you, everyone. That concludes our question and answer session. I will now turn the call back over to Vicente Reynal for some final closing remarks.

Speaker Change: Great. Thanks for taking my questions. Thank you.

Speaker Change: That concludes our question and answer session I will now turn the call back over to the center right now for some final closing remarks.

Operator: Thank you. I just want to say thank you for your interest in Ingersoll-Rand. And most important, thank you again to the entire team at Ingersoll-Rand for another solid quarter performance. And I know that everyone is focused here on continuing to make life better for the employees, the customers, the planet, and the shareholders. And we look forward to closing ILC Dover later this quarter, and we can tell you that our integration planning is going well. And we look forward to formally welcoming that team to our family. With that, we close the call. Thank you again.

Speaker Change: Thank you.

Speaker Change: When I say, thank you for the interesting thing is Iran, and and most important. Thank you again to the entire team of Ingersoll Rand for another solid quarter performance and and know that everyone's focus here on continuing to make life better for for the employees our customers our planet and the shareholders and we look forward to closing IOC Dover later here in the <unk>.

Speaker Change: In a quarter and we can tell you that our integration planning is going well and we look forward to formally welcoming that team to our family with that we'll close the call. Thank you again.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].