Q2 2026 Ingersoll Rand Inc Earnings Call

July 31, 2026

Operator 2: Hello, and welcome to the Ingersoll Rand Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. I would now like to turn the conference over to Max Vorcheimer, Director of Investor Relations. You may begin.

Operator: Hello, and welcome to the Ingersoll Rand Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. I would now like to turn the conference over to Max Vorcheimer, Director of Investor Relations. You may begin.

Speaker #1: Hello, and welcome to the Ingersoll Rand second quarter 2026 earnings 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.

Speaker #1: If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to turn the conference over to Max Vorsteimer, Director of Investor Relations.

Speaker #1: You may begin.

Max Vorcheimer: Thank you for joining Ingersoll Rand's Q2 2026 earnings call. I'm Max Vorcheimer, Director of Investor Relations, and joining me this morning are Vicente Reynal, our Chairman and CEO, and Vik Kini, our Chief Financial Officer. Our earnings release and presentation were issued yesterday afternoon and are available on the Investor Relations section of our website, where a replay of this call will also be posted. Before we begin, please note that today's discussion will include forward-looking statements subject to the risks and uncertainties described in our SEC filings and on slide two of this presentation, which you should read in conjunction with the information provided on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in our earnings release and this presentation, both of which are available on the Investor Relations section of our website.

Speaker #2: Thank you for joining Ingersoll Rand's second quarter 2026 earnings call. I'm Max Vorsteimer, Director of Investor Relations, and joining me this morning are Vicente Reynal, our Chairman and CEO, and Vikram Kini, our Chief Financial Officer.

Speaker #2: Our earnings release and presentation were issued yesterday afternoon and are available on the Investor Relations section of our website. A replay of this call will also be posted.

Speaker #2: Before we begin, please note that today's discussion will include forward-looking statements subject to the risks and uncertainties described in our SEC filings and on slide 2 of this presentation, which you should read in conjunction with the information provided on this call.

Speaker #2: We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in our earnings release and this presentation, both of which are available on the Investor Relations section of our website.

Max Vorcheimer: Today, we will review our Q2 results, discuss segment performance, and provide an update to our full year 2026 guidance. During Q&A, please limit yourself to one question and one follow-up to allow time for other participants. With that, I'll turn the call over to Vicente.

Speaker #2: Today, we will review our second quarter results, discuss segment performance, and provide an update to our full-year 2026 guidance. During Q&A, please limit yourself to one question and one follow-up to allow time for other participants.

Speaker #2: With that, I'll turn the call over to Vicente.

Vicente Reynal: Morning, everyone, and thank you for joining. Before we get started, I wanted to take the opportunity to formally introduce Max Vorcheimer, who has added Investor Relations responsibilities to his current role on our M&A team. You will be seeing and hearing from him going forward, and I know he looks forward to engaging with many of you. Beginning on slide three, the Q2 and H1 overall reflected continued strong execution and improved demand momentum in our business. In Q2, we saw organic order growth of 2%, organic revenue growth of 4%, and adjusted EPS growth of 7%, demonstrating the strength and resiliency of our business. Our growth this quarter was broad-based across our diversified end market base. Every main region this quarter delivered positive organic revenue growth, and we continue to focus investments towards durable, structurally growing end markets.

Speaker #3: Good morning, everyone, and thank you for joining. Before we get started, I wanted to take the opportunity to formally introduce Max Vorsteimer, who has added investor relations responsibilities to his current role on our M&A team.

Speaker #3: He will be seen and heard from going forward, and I know he looks forward to engaging with many of you. Beginning on slide 3, the second quarter and first half overall reflected continued strong execution and improved demand momentum in our business.

Speaker #3: In the second quarter, we saw organic order growth of 2%, organic revenue growth of 4%, and adjusted EPS growth of 7%, demonstrating the strength and resiliency of our business.

Speaker #3: Our growth this quarter was broad-based, across our diversified end-market base. Every main region this quarter delivered positive organic revenue growth. And we continue to focus investments towards durable, structurally growing end-markets.

Vicente Reynal: Importantly, our H1 performance and the healthy demand trends we continue to see across much of the business reinforce our confidence in our outlook for the remainder of the year. As we will walk you through this morning, we are raising our full-year revenue guidance and expect adjusted EPS to land towards the higher end of our previously communicated range. We also remain disciplined in our approach to capital allocation. Our acquisition pipeline continues to be robust, including two new announcements today, and remains focused on targeted bolt-on opportunities that strengthen our core technologies, expand our aftermarket presence, and enhance our long-term growth profile. Our teams around the world remain focused on controlling what we can control. Through the use of IRX and our economic growth engine, we continue to drive operational execution, support our customers, and outperform in the markets we serve. Turning to slide four.

Speaker #3: Importantly, our first-half performance and the healthy demand trends we continue to see across much of the business reinforce our confidence in our outlook for the remainder of the year.

Speaker #3: As we will walk you through this morning, we are raising our full-year revenue guidance and expect adjusted EPS to land towards the higher end of our previously communicated range.

Speaker #3: We also remain disciplined in our approach to capital allocation. Our acquisition pipeline continues to be robust, including two new announcements today, and remains focused on targeted bolt-on opportunities that strengthen our core technologies, expand our aftermarket presence, and enhance our long-term growth profile.

Speaker #3: Our teams around the world remain focused on controlling what we can control. Through the use of IRX and our economic growth engine, we continue to drive operational execution, support our customers, and outperform in the markets we serve.

Speaker #3: Turning to slide 4, before moving to our operational and financial results, I would like to briefly acknowledge the continued recognition we have received for our sustainability leadership and employee ownership culture.

Vicente Reynal: Before moving to our operational and financial results, I would like to briefly acknowledge the continued recognition we have received for our sustainability leadership and employee ownership culture. During the last year, we were recognized across multiple leading ESG, workplace, and corporate citizenship rankings, including joining the 2026 Fortune 500, a milestone that reflects the scale, discipline, and momentum we have built as the Ingersoll Rand we are today. These recognitions, further outlined in our recently published sustainability report, reflect the strength of our ownership mindset culture, and our commitment to making life better for our employees, our customers, our shareholders, and our planet. Turning to slide five. I am excited today to announce the closing of one acquisition and the signing of another. Just this morning, we closed on the acquisition of Lone Star Blowers, the company referenced as a US-based blower manufacturer in the presentation.

Speaker #3: During the last year, we were recognized across multiple leading ESG, workplace, and corporate citizenship rankings, including joining the 2026 Fortune 500—a milestone that reflects the scale, discipline, and momentum we have built as the Ingersoll Rand we are today.

Speaker #3: This recognition is further outlined in our recently published Sustainability Report, reflecting the strength of our ownership mindset and culture, as well as our commitment to making life better for our employees, our customers, our shareholders, and our planet.

Speaker #3: Turning to slide 5, I am excited today to announce the closing of one acquisition and signing of another. Just this morning, we closed on the acquisition of Lone Star Blowers.

Speaker #3: The company referenced as a US-based blower manufacturer in the presentation. Lone Star Blowers expands our expertise in key blower technologies and solutions, and expands our after-market presence through an established service business and rental fleet.

Vicente Reynal: Lone Star Blowers expands our expertise in key blower technologies and solutions and expands our aftermarket presence through an established service business and rental fleet. This acquisition will add approximately $50 million in annual revenue. We're also excited to announce the signing of the acquisition of Fai Filtri, a manufacturer of industrial filters based in Italy. This acquisition will expand our filtration capabilities and also strengthen our aftermarket offerings. We expect this acquisition to close in Q4 and add approximately $30 million in annual revenue. Both of these transactions are highly consistent with our strategy of acquiring market-leading technologies that strengthen our core while maintaining disciplined valuation standards. Notably, both acquisitions strengthen our aftermarket capabilities, a key focus area as we continue to increase the resiliency and recurring revenue characteristics of our portfolio.

Speaker #3: These acquisitions will add approximately $50 million in annual revenue. We're also excited to announce the signing of the acquisition of Five Filtery, a manufacturer of industrial filters based in Italy.

Speaker #3: This acquisition will expand our filtration capabilities and also strengthen our aftermarket offerings. We expect this acquisition to close in Q4 and add approximately $30 million in annual revenue.

Speaker #3: Both of these transactions are highly consistent with our strategy of acquiring market-leading technologies that strengthen our core while maintaining disciplined valuation standards. Notably, both acquisitions strengthen our aftermarket capabilities.

Speaker #3: A key focus area, as we continue to increase the resiliency and recurring revenue characteristics of our portfolio. We have 11 additional transactions under LOI.

Vicente Reynal: We have 11 additional transactions under LOI, our funnel remains strong, focused on proprietary and internally sourced deals. Our disciplined M&A strategy remains a key differentiator and continues to be an important driver for long-term value creation. I'll hand it over to Vik, who will review our financial performance.

Speaker #3: And our funnel remains strong. We continue to focus on proprietary and internally sourced deals. Our disciplined M&A strategy remains a key differentiator and continues to be an important driver for long-term value creation.

Speaker #3: Now, I'll hand it over to Vik, who will review our financial performance.

Max Vorcheimer: Thanks, Vicente. Starting on slide six. Q2 represented another solid quarter of execution. Orders finished just over $2 billion, up 5% year over year, with organic orders up 2%.

Vik Kini: Thanks, Vicente. Starting on slide six. Q2 represented another solid quarter of execution. Orders finished just over $2 billion, up 5% year over year, with organic orders up 2%.

Speaker #2: Thanks, Vicente. Starting on slide 6, the second quarter represented another solid quarter of execution. Orders finished just over $2 billion, up 5% year over year, with organic orders up 2%.

Vik Kini: Book-to-bill finished at 1.0 times, slightly lower than we typically see in Q2, primarily reflecting the delayed timing of several large project orders. Important to note that we continue to see solid momentum in our short to medium cycle business, where orders were up mid-single digits. We expect these longer cycle projects to recover in the back half of the year, Vicente will provide some color on what we have seen thus far through July. Revenue grew 9% year over year to approximately $2 billion, with organic revenue growth of 4%. Aftermarket revenue represented 36% of total revenue during the quarter and continues to be an important contributor of the resiliency of our portfolio. Adjusted EBITDA was $520 million, an increase of 2% year over year, with an adjusted EBITDA margin of 25.4%.

Speaker #2: Book-to-bill finished at $1.0 turns, slightly lower than we typically see in the second quarter, primarily reflecting the delayed timing of several large project orders.

Speaker #2: It's important to note that we continue to see solid momentum in our short- to medium-cycle business, where orders were up mid-single digits. In addition, we expect these longer-cycle projects to recover in the back half of the year, and Vicente will provide some color on what we have seen thus far through July.

Speaker #2: Revenue grew 9% year over year to approximately $2 billion, with organic revenue growth of 4%. Aftermarket revenue represented 36% of total revenue during the quarter and continues to be an important contributor to the resiliency of our portfolio.

Speaker #2: Adjusted EBITDA was $520 million, an increase of 2% year over year, with an adjusted EBITDA margin of 25.4%. Adjusted EBITDA margin was down 160 basis points year over year, with the decline driven primarily by three factors.

Vik Kini: Adjusted EBITDA margin was down 160 basis points year over year, with the decline driven primarily by three factors. First, inflationary pressures, particularly in China, where it is more challenging to offset inflation with price. Second, continued investment to support growth around new technology and commercial applications. Third, higher corporate costs. The higher corporate costs were largely driven by year-to-date true-up of management incentive costs reflecting incentive compensation adjustments aligned with performance, which we do not expect to recur at this level in H2. Unallocated corporate costs were $49 million in the quarter versus $34.6 million a year ago, driven largely by the incentive true-up, we continue to expect approximately $170 million in corporate costs for the full year.

Speaker #2: First, inflationary pressures, particularly in China, where it is more challenging to offset inflation with price. Second, continued investments to support growth around new technology and commercial applications.

Speaker #2: And third, higher corporate costs. The higher corporate costs were largely driven by a year-to-date true-up of management incentive costs, reflecting incentive compensation adjustments aligned with performance.

Speaker #2: Which we do not expect to recur at this level in the back half of the year. Unallocated corporate costs were $49 million in the quarter, versus $34.6 million a year ago.

Speaker #2: Driven largely by the incentive true-up, we continue to expect approximately $170 million in corporate costs for the full year. Despite this quarter's year-over-year margin rate pressures, we remain confident in our ability to deliver within our previously communicated adjusted EBITDA range through continued operational execution and productivity actions.

Vik Kini: Despite this quarter's year-over-year margin rate pressures, we remain confident in our ability to deliver within our previously communicated adjusted EBITDA range through continued operational execution and productivity actions. In terms of the sequential margin expansion we expect to see in H2, the margin ramp in H2 is normal course for us, as H1 pricing actions and benefits from H1 productivity projects are realized. We also had the incentive comp true-up here in Q2 that we do not expect to repeat to the same magnitude in H2. Adjusted EPS was $0.86 for the quarter, up 7% year over year. Turning to slide seven. Free cash flow for the quarter was $269 million, up roughly 28% year over year.

Speaker #2: In terms of the sequential margin expansion, we expect to see, in the second half of the year, the margin ramp in the back half of the year is normal course for us, as first-half pricing actions and benefits from first-half productivity projects are realized.

Speaker #2: We also had the incentive comp true-up here in the second quarter, which we do not expect to repeat to the same magnitude in the back half of the year.

Speaker #2: Adjusted EPS was $0.86 for the quarter, up 7% year over year. Turning to slide 7, free cash flow for the quarter was $269 million, up roughly 28% year over year.

Vik Kini: We ended the quarter with approximately $3.8 billion of total available liquidity, including approximately $1.2 billion of cash and $2.6 billion of available revolving credit facility capacity. Leverage remained at 1.7 times, providing significant balance sheet flexibility. During the quarter, we deployed $110 million towards acquisitions and returned approximately $248 million to shareholders through share repurchases and dividends. We were also pleased to receive a one-notch upgrade from Moody's to Baa1 during the quarter, further reinforcing the strength of our balance sheet and capital allocation strategy. Overall, our balance sheet remains a strategic asset and positions us well to continue investing in attractive growth opportunities.

Speaker #2: We ended the quarter with approximately $3.8 billion of total available liquidity, including approximately $1.2 billion of cash and $2.6 billion of available revolving credit facility capacity.

Speaker #2: Leverage remained at 1.7 times, providing significant balance sheet flexibility. During the quarter, we deployed $110 million toward acquisitions and returned approximately $248 million to shareholders through share repurchases and dividends.

Speaker #2: We were also pleased to receive a one-notch upgrade from Moody's to Baa1 during the quarter, further reinforcing the strength of our balance sheet and capital allocation strategy.

Speaker #2: Overall, our balance sheet remains a strategic asset and positions us well to continue investing in attractive growth opportunities. One other update I wanted to provide here—as you will see disclosed in our 10-Q for the second quarter—we reached an agreement on an initial $187.5 million recovery with certain insurers on the RWI claim that we filed last year related to the ILC Dover transaction.

Vik Kini: One other update I wanted to provide here, as you will see disclosed in our 10-Q for Q2, we reached an agreement on an initial $187.5 million recovery with certain insurers on the RWI claim that we filed last year related to the ILC Dover transaction. We collected the first $25 million in Q2, and this is reflected in free cash flow for the quarter, with the remaining $162.5 million to be received during 2026. This is a significant and favorable initial recovery, and we continue to actively pursue additional meaningful recoveries related to the ILC Dover transaction beyond the $187.5 million. Consistent with our focus on earnings quality, these recoveries are excluded from adjusted earnings, and the incremental cash that we expect to collect in H2 of 2026 is not reflected in our free cash flow guidance.

Speaker #2: We collected the first $25 million in the second quarter, and this is reflected in free cash flow for the quarter, with the remaining $162.5 million to be received during 2026.

Speaker #2: This is a significant and favorable initial recovery, and we continue to actively pursue additional meaningful recoveries related to the ILC Dover transactions beyond the $187.5 million.

Speaker #2: Consistent with our focus on earnings quality, these recoveries are excluded from adjusted earnings, and the incremental cash that we expect to collect in the second half of 2026 is not reflected in our free cash flow guidance.

Vik Kini: We therefore view it as pure upside that directly strengthens our capital allocation firepower. I'll now turn the call back to Vicente to discuss our segment performance.

Speaker #2: We therefore view it as pure upside that directly strengthens our capital allocation firepower. I'll now turn the call back to Vicente to discuss our segment performance.

Vicente Reynal: Thanks, Rick. Turning to slide 8, ITS delivered another solid quarter. Revenue increased nearly 9% year over year, including organic revenue growth of 4%. Organic revenue growth was positive across all regions. Orders were approximately flat organically, resulting in a book-to-bill ratio of one time. Within our compressor business, we continue to see healthy activity, particularly in North America, where organic orders were up high single digits. Overall compressor orders increased by low double digits globally. Organic order growth was impacted by the timing of several long-cycle blower and vacuum projects in Europe, as well as a continuing impact on the Middle East, where specific project activity remains delayed rather than canceled. ITS generated adjusted EBITDA of $435 million, with margins of 26.8%. Margin performance was impacted primarily by challenges offsetting inflationary impacts with price, primarily in China, and continued commercial investments to support future growth.

Vicente Reynal: Thanks, Vik. Turning to slide 8, ITS delivered another solid quarter. Revenue increased nearly 9% year over year, including organic revenue growth of 4%. Organic revenue growth was positive across all regions. Orders were approximately flat organically, resulting in a book-to-bill ratio of one time. Within our compressor business, we continue to see healthy activity, particularly in North America, where organic orders were up high single digits. Overall compressor orders increased by low double digits globally. Organic order growth was impacted by the timing of several long-cycle blower and vacuum projects in Europe, as well as a continuing impact on the Middle East, where specific project activity remains delayed rather than canceled. ITS generated adjusted EBITDA of $435 million, with margins of 26.8%. Margin performance was impacted primarily by challenges offsetting inflationary impacts with price, primarily in China, and continued commercial investments to support future growth.

Speaker #3: Thanks, Vic. Turning to slide 8, ITAs deliver another solid quarter. Revenue increased nearly 9% year over year, including organic revenue growth of 4%. Organic revenue growth was positive across all regions.

Speaker #3: Orders were approximately flat organically, resulting in a book-to-bill ratio of one time. Within our compressor business, we continue to see healthy activity, particularly in North America, where organic orders were up high single digits.

Speaker #3: Overall, compressor orders increased by low single digits globally. Organic order growth was impacted by the timing of several long-cycle blower and vacuum projects in Europe.

Speaker #3: As well as the continued impact from the Middle East, where specific project activity remains delayed rather than canceled. ITAs generated adjusted EBITDA of $435 million, with margins of 26.8%.

Speaker #3: Margin performance was impacted primarily by challenges in offsetting inflationary impacts with price, primarily in China, and continued commercial investments to support future growth. For our Innovation in Action highlight, we're showcasing a plug-and-play, on-site nitrogen generation solution that integrates multiple products from our portfolio into a single, factory-tested system.

Vicente Reynal: For our innovation in action highlight, we're showcasing a plug-and-play on-site nitrogen generation solution that integrates multiple products from our portfolio into a single factory-tested system. The solution enables faster deployment, simplified commissioning, and full lifecycle support, demonstrating our ability to leverage the breadth of our technology portfolio to solve critical customer needs. This solution also demonstrates the commercial synergies we continue to realize through M&A. The system combines technologies from our Oxywise, Gardner Denver, and ARO brands into a single integrated solution for customers. Turning to slide 9, PST delivered an excellent quarter and continues to demonstrate the strength of the platform we have built. Orders increased 11% year over year, including 7% organic growth. Life sciences delivered low double-digit organic order growth, while Precision Technologies grew mid-single digits organically. Revenue increased by 8% year over year, including 4% organic growth.

Speaker #3: The solution enables faster deployment, simplified commissioning, and full life cycle support, demonstrating our ability to leverage the breadth of our technology portfolio to solve critical customer needs.

Speaker #3: This solution also demonstrates the commercial synergies we continue to realize through M&A. The system combines technologies from our OxyWise, Garner Denver, and York brands into a single integrated solution for customers.

Speaker #3: Turning to slide 9, PST delivered an excellent quarter and continues to demonstrate the strength of the platform we have built. Orders increased 11% year over year, including 7% organic growth.

Speaker #3: Life Sciences delivered low double-digit organic order growth, while Precision Technologies grew mid-single digits organically. Revenue increased by 8% year-over-year, including 4% organic growth.

Vicente Reynal: Importantly, both Life sciences and Precision Technologies delivered positive organic revenue growth in the quarter. Adjusted EBITDA increased 15% year over year to $135 million. Adjusted EBITDA margin expanded 200 basis points year over year to 31.5%, reflecting strong execution across the portfolio and the continued benefits of IRX. We're encouraged by the breadth of growth we're seeing across the segment and remain excited about the long-term opportunities within both Life science and Precision Technologies. For our innovation in action, we're showcasing Dosatron's installation-ready dosing systems. This standardized solution simplify deployment, improve reliability, and reduce installation complexity for customers while supporting strong commercial momentum across the business. I'm also proud to share that following the significant earthquake that recently struck the Philippines, Ingersoll Rand partnered with Planet Water Foundation to deploy safe drinking water stations across the hardest hit areas.

Speaker #3: Importantly, both Life Sciences and Precision Technologies delivered positive organic revenue growth in the quarter. Adjusted EBITDA increased 15% year over year to $135 million.

Speaker #3: Adjusted EBITDA margin expanded 200 basis points year over year to 31.5%, reflecting strong execution across the portfolio and the continued benefits of IRX. We're encouraged by the breadth of growth we're seeing across the segment and remain excited about the long-term opportunities within both Life Sciences and Precision Technologies.

Speaker #3: For our Innovation In Action, we're showcasing those Trends installation-ready dosing systems. This standardized solution simplified deployment, improved reliability, and reduced installation complexity for customers.

Speaker #3: While supporting strong commercial momentum across the business, I'm also proud to share that, following the significant earthquake that recently struck the Philippines, Ingersoll Rand partnered with Planet Water Foundation to deploy safe drinking water stations across the hardest-hit areas. Planet Water Foundation is not only a partner but also a valued Dosatron customer, as our pumps are a key component of the AquaBlock kiosks that deliver safe drinking water in these situations without the need for electricity.

Vicente Reynal: Planet Water Foundation is not only a partner but also a valued Dosatron customer, as our pumps are a key component of the AquaBlok kiosks that deliver safe drinking water in these situations without the need for electricity. It serves as a good reminder of the mission-critical nature of our portfolio and an example of our purpose of making life better in action. Turning to slide 10, given our momentum through H1 of the year, today we are updating our full year guidance. Starting with revenue, we now expect revenue growth of 4.5% to 6.5%, 200 basis points higher at the midpoint, driven primarily by organic volume, reflecting a strong H1 and healthy demand, particularly in the short to medium cycle side of the business. This outlook assumes approximately 1% to 3% organic growth, approximately 2.5% growth from M&A, and approximately 1% growth from FX.

Speaker #3: It serves as a good reminder of the mission-critical nature of our portfolio, and an example of our purpose of making life better in action. Turning to slide 10, given our momentum through the first half of the year, today we are updating our full-year guidance.

Speaker #3: Starting with revenue, we now expect revenue growth of 4.5% to 6.5%—200 basis points higher at the midpoint—driven primarily by organic volume, reflecting a strong first half and healthy demand, particularly in the short- to medium-cycle side of the business.

Speaker #3: This outlook assumes approximately 1% to 3% organic growth, approximately 2.5% growth from M&A, and approximately 1% growth from FX. We're maintaining our adjusted EBITDA guidance range of $2.13 billion to $2.19 billion.

Vicente Reynal: We're maintaining our adjusted EBITDA guidance range of $2.13 to 2.19 billion. As Vic mentioned, the margin ramp we see in H2 is largely driven by H1 pricing actions taking effect, the non-recurrence of the incentive compensation true-up in Q2, and benefit from stronger productivity in H2 from projects executed in H1, all of which is normal course and consistent with prior years. Adjusted EPS remains projected at $3.45 to 3.57. Based on our current expectations, we expect results to finish near the high end of the range. Free cash flow conversion is currently expected to remain approximately 95%. The phasing of revenue, adjusted EBITDA, and adjusted EPS remains consistent with prior years.

Speaker #3: As Vikram mentioned, the margin ramp we see in the second half is largely driven by first-half pricing actions taking effect, the non-recurrence of the incentive compensation true-up in Q2, and benefit from stronger productivity in the back half of the year from projects executed in the first half.

Speaker #3: All of which is normal course and consistent with prior years. Adjusted EPS remains projected at $3.45 to $3.57, and, based on our current expectations, we expect results to finish near the high end of the range.

Speaker #3: Free cash flow conversion is currently expected to remain at approximately 95%. The phasing of revenue, adjusted EBITDA, and adjusted EPS remains consistent with prior years.

Vicente Reynal: One additional clarification on our guidance is that our adjusted EBITDA and adjusted EPS ranges exclude any benefit from IEEPA tariff refunds we expect in H2, which we will view as upside. We will update guidance once those amounts are materially received. To give a bit of color on our start to Q3, while we don't guide on orders, I am happy to share that we have had a great start to July, where we have seen double-digit order growth through the first four weeks of the month. We have seen strong realization of several long cycle orders, which were delayed in H1 across all of our main regions, along with continuation of the short to medium cycle strength that Vic mentioned earlier.

Speaker #3: One additional clarification on our guidance is that our adjusted EBITDA and adjusted EPS ranges exclude any benefit from IEPA tariff refunds we expect in the second half of the year.

Speaker #3: Which we will view as upside. We will update guidance once those amounts are materially received. And to give a bit of color on our start to Q3, while we don't guide on orders, I am happy to share that we have had a great start to July, where we have seen double-digit order growth through the first four weeks of the month.

Speaker #3: We have seen strong realization of several long-cycle orders, which were delayed in the first half across all of our main regions, along with continuation of the short- to medium-cycle strength that Vic mentioned earlier.

Vicente Reynal: We're encouraged in what we're seeing and we're confident in achieving our updated guidance for the remainder of the year. Finally, on slide 11, as we conclude this portion of the call, I am encouraged by the momentum we continue to see across the business. Demand remains healthy across the portfolio. Our teams continue to execute at a high level, and our M&A pipeline remains robust. We remain well-positioned with a strong balance sheet, ample liquidity, and significant flexibility to continue investing in growth. IRX remains the backbone of our organization and continues to enable execution and outperformance across the company. As we look ahead in H2, we believe we're well-positioned to continue to deliver durable growth, strong cash flow generation, and long-term value creation for our shareholders.

Speaker #3: We're encouraged by what we're seeing, and we're confident in achieving our updated guidance for the remainder of the year. Finally, on slide 11, as we conclude this portion of the call, I am encouraged by the momentum we continue to see across the business.

Speaker #3: Demand remains healthy across the portfolio. Our teams continue to execute at a high level, and our M&A pipeline remains robust. We remain well-positioned with a strong balance sheet, ample liquidity, and significant flexibility to continue investing in growth.

Speaker #3: IRX remains the backbone of our organization and continues to enable execution and outperformance across the company. As we look ahead to the second half of the year, we believe we're well positioned to continue to deliver durable growth, strong cash flow generation, and long-term value creation for our shareholders.

Vicente Reynal: Finally, more important, I want to thank our employees around the world for their continued commitment, dedication, and ownership mindset. Your efforts continue to drive our success and help us deliver strong results for all stakeholders. With that, I'll turn the call back to the operator and open the line for questions.

Speaker #3: Finally, and more importantly, I want to thank our employees around the world for their continued commitment, dedication, and ownership mindset. Your efforts continue to drive our success and help us deliver strong results for all stakeholders.

Speaker #3: With that, I'll turn the call back to the operator and open the line for questions.

Operator 2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. As a reminder, we ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Michael Halloran with Baird. Your line is open.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. As a reminder, we ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Michael Halloran with Baird. Your line is open.

Speaker #1: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again.

Speaker #1: As a reminder, we ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Michael Halloran with Baird.

Speaker #1: Your line is open.

Michael Halloran: Hey, thank you. Morning, everyone, and welcome, Max.

Speaker #4: Hey, thank you. Good morning, everyone, and welcome, Max.

Vicente Reynal: Morning, Mike.

Speaker #3: Morning, Mike.

Speaker #5: Morning, Mike.

Michael Halloran: Can we talk a little bit about the momentum you're seeing on the short and medium side of things now? Maybe just drill in a little bit more on regional dynamics and then any end markets in particular that you're seeing that momentum. It seems like you're pretty comfortable that that momentum can sustain as we're exiting the Q2 through July and onward. Any thoughts on how that momentum phases out?

Speaker #4: So, can we talk a little bit about the momentum you're seeing on the short- and medium-term side of things now? Maybe just drill in a little bit more on regional dynamics, and then any end markets in particular where you're seeing that momentum.

Speaker #4: And it seems like you're pretty comfortable that that momentum can sustain as we're exiting the second quarter through July and onward. But any thoughts on how that momentum phases out?

Vicente Reynal: Mike, let me first give you by region. Americas is roughly 50% of our revenue, and it's been the strongest region so far. ITS orders up high single digits, healthy compressor activity. We're seeing the short cycle indicators that are the best in the portfolio. EMEA is about a third of the revenue. Orders were down low double digits organically, and I want to be precise about why. It is two things, both timing rather than demand, is the phasing of some long cycle projects orders in our blower and vacuum side of the business in Europe and it's also the Middle East. Underneath that, core compressor orders in the region were up low single digits organically, which is better read on the underlying market. Asia Pacific, which is about 15%, with China around 10% of total.

Speaker #5: Yeah, Mike. Let me first give it to you by region. So, America is roughly 50% of our revenue, and it's been the strongest region so far.

Speaker #5: ITS orders up high single digits, healthy compressor activity, and we're seeing the short cycle indicators that are the best in the portfolio. EMEA is about a third of the revenue; orders were down low double digits organically.

Speaker #5: And I want to be precise about why. It is two things, both timing rather than demand. It's a phasing of some long-cycle project orders in our blower and vacuum side of the business in Europe.

Speaker #5: And it's also the Middle East. Underneath that, core compressor orders in the region were up low single digits organically, which is a better read on the underlying market.

Speaker #5: And then Asia Pacific, which is about 15%, with China around 10% of total. China organic revenue was up low double digits in the quarter.

Vicente Reynal: China organic revenue was up low double digits in the quarter. The volume story there is very good, as we indicated in the prepared remarks, this continues to be the most challenged market from a pricing perspective. We're encouraged by how our original equipment is getting into the market, again in China, for China, in some very kind of unique applications that we expect will generate some very good aftermarket in future years. From end-market perspective, PST, we mentioned life sciences, obviously up mid-teens, driven mainly in this case here, biopharma. Biopharma, we continue to see that low double-digit growth there and very encouraged about the timing of bringing the full Ingersoll Rand portfolio into biopharma. Not just what we get in PST, but now the team is driving pull-through of other technology into biopharma. In the ITS, it's broad-based.

Speaker #5: The volume story there is very good, but as we indicated in the prepared remarks, this continues to be the most challenged market from a pricing perspective. However, we're encouraged by how our original equipment is getting into the market—again, in China for China—in some very unique applications that we expect will generate some very good aftermarket in future years.

Speaker #5: From an end-market perspective, PST—we mentioned life sciences, obviously up in the teens, driven mainly, in this case, by biopharma. In biopharma, we continue to see that low double-digit growth there.

Speaker #5: I'm very encouraged about the timing of bringing the full Ingersoll Rand portfolio into biopharma—so not just what we get in PST, but now the team is driving pull-through of other technologies into biopharma.

Speaker #5: And then in the ITS, it's broad-based. I mean, in America, we saw momentum in PowerGen, electricity infrastructure, and some air separation for semiconductor. In Europe, resiliency continues in general industrial, food, beverage—kind of the more normal industrial side.

Vicente Reynal: I mean, Americas, we saw momentum in power gen, electricity infrastructure, some air separation for semiconductor. Europe is resiliency, continues in general industrial, food, beverage, kind of the more normal industrial side. We still expect maybe defense picking up here soon, hopefully. Asia Pacific is growing in kind of electronics, shipbuilding, among others. You can see kind of multiple, fairly broad-based in many cases.

Speaker #5: We still expect maybe defense picking up here soon, hopefully. And Asia Pacific is growing in electronics, shipbuilding, among others. So you can see multiple, fairly broad-based drivers in many cases.

Michael Halloran: No, that makes sense. Maybe just on the larger projects, I know you referenced some of it there, the longer cycle projects. Are you at the point where project pushouts are starting to roll through, and people are willing to move forward with projects? Are we still seeing delays on a global basis? How do you think that long cycle activity plays out as we look forward?

Speaker #4: No, that makes sense. And then maybe just on the larger projects—I know you referenced some of it there, the longer-cycle projects—are you at the point where project push-outs are starting to roll through and people are willing to move forward with projects?

Speaker #4: Are we still seeing delays on a global basis? And how do you think that long-cycle activity plays out as we look forward?

Vicente Reynal: I think, Mike, that's where we are getting more and more encouraged. For a while, we were talking about this elongation and kind of what we're seeing now is basically customers getting more enthusiastic and projects getting kind of moved in a better direction. We're seeing better momentum on the long cycle projects, yes.

Speaker #5: Yeah, I think, Mike, that's where we are getting more and more encouraged. For a while, we were talking about these elongations, and kind of what we're seeing now is basically customers getting more enthusiastic and projects getting moved in a better direction.

Speaker #5: So, we're seeing better momentum on the long-cycle projects, yes.

Michael Halloran: Thanks, gentlemen. Appreciate it.

Speaker #4: Thanks, gentlemen. Appreciate it.

Vicente Reynal: Thank you.

Speaker #5: Thank you.

Operator 2: Your next question comes from Jeff Sprague with Vertical Research. Your line is open.

Operator: Your next question comes from Jeff Sprague with Vertical Research. Your line is open.

Speaker #1: Your next question comes from Jeff Sprague with Vertical Research. Your line is open.

Jeff Sprague: Hey, thanks. Good morning, everyone.

Speaker #4: Hey, thanks. Good morning, everyone. Hey, just a quick follow-up on the long-cycle first. Is there any sort of common thread in what is now being released, and previously held up and released—perhaps more energy, or some other vertical market?

Vicente Reynal: Morning, Jeff.

Jeff Sprague: Hey, just a quick follow-up on the long cycle. First, is there any sort of common thread in what is now being released and previously held up and released, perhaps more energy or some other vertical market? Any real common thread you'd point to there?

Speaker #4: Any real common thread you'd point to there?

Vicente Reynal: Yeah, Jeff, good point. This is actually one of the more encouraging conversations we're having in terms of that energy efficiency. As you know, I mean, compressed air is typically 30% of the industrial electricity consumption in a manufacturing facility, and it could be higher based on application. We're seeing more as power prices have moved up, the payback on replacing an older, less efficient machine, it's getting shorter. Definitely that is one of the key indicators here that we're seeing that is driving some better momentum, among other things. I think historically, past few earnings calls, we were talking about kind of delays in project just due to engineering capacity, or it could be EPC, and a lot of that is also kind of freeing up, too, as well.

Speaker #5: Yeah, Jeff, good point. I mean, this is actually one of the more encouraging conversations we're having in terms of that energy efficiency. I mean, as you know, compressed air is typically 30% of the industrial electricity consumption in a manufacturing facility.

Speaker #5: And it could be higher based on application. So we're seeing more, as power prices have moved up, the payback on replacing an older, less efficient machine is getting shorter.

Speaker #5: So definitely that is definitely one of the key indicators here that we're seeing that is driving some better momentum, among other things. I think historically, past few earnings calls, we were talking about kind of delays in projects just due to engineering capacity or it could be EPC and a lot of that is also kind of freeing up too as well.

Jeff Sprague: Great. Maybe then just a quick one for Vic also. Just on the organic revenue guide, is this primarily a reflection of going after additional price, or is there actually some improved volume sort of underpinning that bump? Where-

Jeff Sprague: Great. Maybe then just a quick one for Vik also. Just on the organic revenue guide, is this primarily a reflection of going after additional price, or is there actually some improved volume sort of underpinning that bump? Where-

Speaker #4: Great. Maybe then just a quick one for Vic also. Just on the organic revenue guide, is this primarily a reflection of going after additional price, or is there actually some improved volume sort of underpinning that bump?

Vik Kini: Yeah, Jeff.

Vik Kini: -would the volume improvement be, if there is some?

Speaker #4: And where would the volume improvement be, if there is some?

Vik Kini: Yeah. Jeff, I think it's more the latter. It's the volumes, the organic volumes. I think as we indicated in the prepared comments here, encouraged by what we saw in Q2, where you saw 4% overall organic growth. I think volume was obviously relatively healthy there, particularly on the short and medium cycle side of the business.

Speaker #3: Yeah, so Jeff, I think it's more the latter—so it's the volumes, the organic volumes. As we indicated in the prepared comments here, we're encouraged by what we saw in Q2, where you saw 4% overall organic growth. I think volume was obviously relatively healthy there, particularly on the short- and medium-cycle side of the business.

Vik Kini: I think that's where you're really seeing the uptick. The incremental 1% organic for the full year is really volume-driven. I think as Vicente said here, encouraged by what we're seeing both on the Americas front. China continues to show good momentum there. That's really where we're seeing it. Price, we have taken certain pricing actions in H1, which was consistent with our expectations. Those are starting to more materialize into H2. I would say that's fairly consistent with what we had expected in previous guidance.

Speaker #3: So I think that's where you're really seeing the uptick. So the incremental 1% organic for the full year is really volume-driven. And I think, as Vicente said here, we're encouraged by what we're seeing both on the Americas front, and China continues to show good momentum there.

Speaker #3: And so that's really where we're seeing it. We have taken certain pricing actions in the first half of the year, which was consistent with our expectations.

Speaker #3: And those are starting to kind of more materialize into the back half of the year. But I would say that's fairly consistent with what we had expected in previous guidance.

Jeff Sprague: Okay, great. I'll leave it there. Thanks.

Speaker #4: Okay, great. I'll leave it there. Thanks.

Vicente Reynal: Thank you.

Speaker #5: Thank you, Jeff.

Operator 2: Your next question comes from Nigel Coe with Wolfe Research. Your line is open.

Operator: Your next question comes from Nigel Coe with Wolfe Research. Your line is open.

Speaker #1: Your next question comes from Nigel Koh with Wolf Research. Your line is open.

Nigel Coe: Good morning, guys. Max, I look forward to meeting you in due course. Just on the orders in July, obviously really encouraging to see that the longer cycle orders starting to kick in. Can I just clarify, when you say double digits, if we strip out acquisitions, et cetera, we're still seeing double-digit organic orders? Just want to clarify that one first of all. Are we seeing the backlog building for 2027, given that these are longer cycle projects, or could these hit in H2? It doesn't feel like you're baking these orders into H2.

Speaker #2: Oh, hey, good morning, guys. I'm Max. I look forward to meeting you in due course. Just on the orders in July—obviously, it's really encouraging to see that the longer cycle orders are starting to kick in.

Speaker #2: Can I just clarify—when you say double digits, if we strip out acquisitions, et cetera, we're still seeing double-digit organic orders? I just want to clarify that one first of all.

Speaker #2: And then, are we seeing the backlog building for '27, given that these are longer-cycle projects? Or could these hit in the back half of the year?

Speaker #2: It doesn't feel like you're baking these orders into the back half of the year.

Vicente Reynal: Nigel, let me take the first one and let Vic comment about the second one. Yes, organic is low double digit to mid-teens, basically, is what we're seeing here in the month of July.

Vicente Reynal: Nigel, let me take the first one and let Vik comment about the second one. Yes, organic is low double digit to mid-teens, basically, is what we're seeing here in the month of July.

Speaker #5: Yeah, Nigel, let me take the first one and let Vic comment about the second one. Yes, I mean, organic is low double-digit to mid-teens, basically is what we're seeing here in the month of July.

Vik Kini: Nigel, just to follow up on that. As far as the long cycle projects, definitely building the backlog out for 2027. As you would expect, most of these are long cycle projects or the typical 6 to 18-month type duration in terms of projects typical to what you've seen. They're largely building out the backlog for 2027. That's not to say that some won't have some revenue recognition here in H2, yes, solid backlog build more as we move into 2027 with regards to some of those longer cycle projects.

Speaker #3: Yeah. And then Nigel, just to follow up on that, as far as the long cycle projects, definitely building the backlog out for 2027, as you would expect, most of these are long cycle projects are the typical 6 to 18 month type duration in terms of projects typical to what you've seen.

Speaker #3: So, they're largely building out the backlog for 2027. That's not to say that some won't have some revenue recognition here in the back half of the year, but yes.

Speaker #3: Solid backlog builds more as we move into 2027, with regards to some of those longer-cycle projects.

Nigel Coe: Okay. That's great. Just maybe just a bit more details on the ITS margin momentum through H2. Can you just maybe just clarify, was the sort of the margin weakness in the quarter, was that confined to China and the price pressure in China, or was it a bit broader than that?

Speaker #2: Okay, that's great. And then just maybe just a bit more detailed on the ITS margin momentum through the back half of the year. And can you just maybe just clarify, was sort of the margin weakness in the quarter, was that confined to China and the price pressure in China?

Speaker #2: Was it a bit broader than that?

Vicente Reynal: No, Nigel, it's really confined to China, basically, in addition to some of the investments that we're making. You saw we made an announcement earlier in the quarter about a partnership that we made for some new technology as well. It continues to be some good investments that we're doing, despite what kind of market conditions might be. On top of that has been the pricing challenge in China.

Speaker #5: No, Nigel, it's really confined to China, basically. And in addition to some of the investments that we're making—I mean, you saw we made an announcement earlier in the quarter about a partnership that we made for some new technology as well.

Speaker #5: So, it continues to be some good investments that we're doing. I mean, despite what kind of market conditions might be. And on top of that, it's been the pricing that's been a challenge in China.

Nigel Coe: Great. Thank you.

Speaker #2: Great, thank you.

Vicente Reynal: Thank you.

Operator 2: Your next question comes from Rob Wertheimer with Melius Research. Your line is open.

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

Speaker #1: Your next question comes from Rob Wertheimer with Melius Research. Your line is open.

Rob Wertheimer: Yeah, thanks. Good morning. I wanted to check in on trends in life sciences and PST. It seems like you had pretty good orders. Comp was a little bit easy, and there were some kind of crosscurrents around the industry that don't seem to have affected you in the quarter. I wonder if you could just sort of characterize the market. Is it steadily rolling? Is it accelerating? How do you see it right now? Thank you.

Speaker #4: Yeah, thanks. Good morning. I wanted to check in on trends in Life Sciences and PST. It seems like you had pretty good orders. Comp was a little bit easy, and there were some kind of cross-currents around the industry that don't seem to have affected you in the quarter.

Speaker #4: So, I wonder if you could just sort of characterize the market. Is it steadily rolling? Is it accelerating? How do you see it right now?

Speaker #4: Thank you.

Vicente Reynal: Yeah. Hey, Rob. We see good momentum on the life science business as we kind of alluded here. We see that is largely driven by the biopharma. In our case, the exposure that we continue to have to GLP-1 is very strong. As that market continues to grow and seeing some investments, we're pleased to see that. In addition, we have made some investments to play in the larger biopharma side, and are working on what you also kind of hear in the news on the biopharma expansion. Now, a lot of that hasn't come to fruition yet, but we're excited about what the potential of that could be as we move into the H2 or even 2027, based on the new facilities that are kind of getting invested now.

Speaker #5: Yeah, hey, Rob. So, we see good momentum in the life science business, as we kind of alluded to here. We see that it's largely driven by biopharma in our case. The exposure that we continue to have to GLP-1 is very strong.

Speaker #5: So that as that market continues to grow and seeing some investments, we're pleased to see that. In addition, we have made some investments to play in the larger biopharma side and are working on what you also kind of hear in the news on the biopharma expansion now.

Speaker #5: A lot of that hasn't come to fruition yet, but we're excited about the potential of what that could be as we move into the second half, or even 2027, based on the new facilities that are getting invested in now.

Vicente Reynal: Again, we see continued stability in that market and good growth, based on, again, the investments that we're making and the focus that we're putting in to really accelerate our penetration in the biopharma side.

Speaker #5: So again, we see continued stability in that market and good growth based on, again, the investments that we're making and the focus that we're putting in to really accelerate our penetration in the biopharma side.

Operator 2: Your next question comes from Nathan Jones with Stifel. Your line is open.

Operator: Your next question comes from Nathan Jones with Stifel. Your line is open.

Speaker #1: Your next question comes from Nathan Jones with Stifel. Your line is open.

Nathan Jones: Good morning, everyone.

Speaker #4: Good morning, everyone. I guess I'll ask the same question I ask on most of these calls, Vicente, about quote to order times. Obviously, you had a few of these longer cycle projects get delayed in the quarter, but if you kind of exclude those, are you seeing any changes in that quote to order time?

Vicente Reynal: Morning, Nathan.

Nathan Jones: I guess I'll ask the same question I ask on most of these calls, Vicente, about quote-to-order times. Obviously, you had a few of these longer cycle projects get delayed in the quarter. If you kind of exclude those, are you seeing any changes in that quote-to-order time? Maybe in the US you are, maybe in Europe you're not. Any details you could give us on, I guess, the customer's willingness to accelerate these orders.

Speaker #4: Maybe in the US you are, maybe in Europe you're not, but any details you could give us on, I guess, the customers' willingness to accelerate these orders?

Vicente Reynal: I would say, Nathan, nothing dramatically significant. Obviously, you're seeing the short-cycle business, and Vic mentioned that. Mid-single digit organic order growth on kind of our short-cycle business. We continue to see momentum and when we see sequentially continue to improve, and obviously now here in July as well. In terms of that quote-to-order, I don't think anything that customers are trying, at least not on our products or the end markets of where we play, that we have seen that customer quote-to-order cycle get shortened dramatically.

Speaker #5: I would say, Nathan, nothing dramatically significant. I mean, obviously you're seeing the short-cycle business, and Vic mentioned that. I mean, mid-single-digit organic order growth on kind of our short-cycle business.

Speaker #5: So we continue to see momentum. And when you see about our sequentially continue to improve and obviously now here in July as well, but in terms of that quote to order, I don't think anything that customers are trying, at least not on our products, or the end markets where we play, that we have seen that customer quote to order cycle get shortened.

Nathan Jones: Okay, fair enough. Maybe just a question on China and the pricing power over there. Ingersoll Rand has always tended to try and play in areas and products where it has significant differentiation and can command price. Are there opportunities here for you to consider what you want to sell in China, how you want to sell it, and look at the portfolio overall through that kind of lens where, maybe some of these products you're selling in China don't have pricing power and you don't need to be in that business? Or anything from that perspective?

Speaker #5: Dramatically.

Speaker #4: Okay, fair enough. Maybe you see a question on China and the pricing power over there. Ingersoll Rand has always tended to try and play in areas and products where it has significant differentiation and can command price.

Speaker #4: Are there opportunities here for you to consider what you want to sell in China, how you want to sell it, and look at the portfolio overall through that kind of lens, where maybe some of these products you're selling in China don't have pricing power and you don't need to be in that business?

Speaker #4: Or anything from that perspective?

Vicente Reynal: Sure, Nathan. I would say, we're always going to play mission-critical products where total cost is low based on the total process in the equation. Right now what you see in China is just basically a timing issue in our view. More broadly, we're spending quite a bit of time localizing newly acquired technologies into China, and typically under an existing brand that we have in China. I will not say that we're cutting back on our product portfolio, but rather investing in new technologies in the market where we have seen success from acquired businesses elsewhere and kind of have unique technology that we can have. The second big piece is that a lot of the growth that we see in China is related to original equipment whole goods, which comes at a lower margin typically than the aftermarket.

Speaker #5: Sure, Nathan. No, I would say—I mean, we're always going to play mission-critical products where total cost is low, based on the total process in the equation.

Speaker #5: So, I mean, right now what you see in China is just basically a timing issue. In our view, more broadly, we're spending quite a bit of time localizing newly acquired technologies into China, and typically under an existing brand that we have in China.

Speaker #5: So I will not say that we're cutting back on our product portfolio, but rather investing in new technologies in the market where we have seen success from acquired businesses elsewhere.

Speaker #5: And kind of have unique technology that we can have. The second big piece is that a lot of the growth that we see in China is related to original equipment, whole goods.

Speaker #5: Which come at a lower margin typically than the aftermarket. And in some cases, what we have done here in China, as there have been some very unique applications with a specific customers that we never had before, but that we see that can have a great potential in the future for us, we're making some commercial investments to really penetrate those new applications.

Vicente Reynal: In some cases, what we have done here in China, as there have been some very unique applications with specific customers that we never had before, but that we see that can have a great potential in the future for us, we're making some commercial investments to really penetrate those new applications. Again, in China for China. I say we feel good about the product portfolio we have in China, and we continue to invest in China for China.

Speaker #5: And again, in China, for China. So I say we feel good about the product portfolio we have in China and we continue to invest in China for China.

Nathan Jones: Okay, the pricing is a bit more transient an issue.

Speaker #4: Okay, so the pricing is a bit more of a transient issue?

Vicente Reynal: It is definitely more transient, yes.

Speaker #5: It is definitely more transient, yes.

Nathan Jones: Great. Thanks for taking the questions.

Speaker #4: Great, thanks for taking the questions.

Vicente Reynal: Yeah. No, thank you.

Speaker #5: Yeah, no, thank you.

Operator 2: Your next question comes from Andy Kaplowitz with Citigroup. Your line is open.

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

Speaker #1: Your next question comes from Andy Kaplewitz with Citigroup. Your line is open.

Andy Kaplowitz: Good morning, everyone.

Speaker #3: Good morning, everyone.

Vik Kini: Morning, Andy.

Vicente Reynal: Morning, Andy.

Vik Kini: Hey, Andy.

Speaker #5: Good morning, Andy.

Speaker #4: Hey, Andy.

Andy Kaplowitz: Vicente, it looks like you've continued to have nice acceleration in your Precision Technologies business. Could you talk about the durability of that growth? What are the biggest drivers? I think Precision is mostly comprised of shorter cycle markets, so is it fair to expect continued acceleration from that mid-single-digit growth from here?

Speaker #3: Vicente, Vic, it looks like you've continued to have a nice acceleration in your precision technologies business. Could you talk about the durability of that growth?

Speaker #3: What are the biggest drivers? And I think precision is mostly comprised of shorter-cycle markets, so is it fair to expect continued acceleration from that mid–single-digit growth from here?

Vicente Reynal: Yeah, Andy. I think we're very pleased with what we're seeing on the PST side. As you remember, even going back to our last Investor Day, we said that this segment should be kind of that mid-30 EBITDA. Not just a mid-single digit grower organically, and we're getting back to that. Again, great progress that we're seeing here on the growth, but also on the margin expansion.

Speaker #5: Yeah, Andy. I mean, I think we're very pleased with what we're seeing on the PST side. I mean, as you remember, even going back to our last investor day, we said that this segment should be in kind of that mid-30 EBITDA, so not just and mid-single digit grower organically.

Speaker #5: And we're getting back to that. So again, great progress that we're seeing here on the growth, but also on the margin expansion.

Vik Kini: Yeah. Andy, specific to the Precision Technologies side, we would agree. You're seeing solid momentum. That business has a comparable look and feel in some respects to ITS. Yes, you have seen good continued momentum on what I'll call some of the shorter cycle kind of core pump businesses. There is longer cycle project activity there as well, and I think we're working through that just like you'd see on the ITS side. I'd say fairly comparable trends specifically on the Precision Technologies side as to kind of what you've seen on the ITS side.

Speaker #4: Yeah, and then Andy, specifically on the precision technology side, we would agree—you're seeing solid momentum. That business has a comparable look and feel, in some respects, to ITS.

Speaker #4: So yes, you have seen good, continued momentum on what I'll call some of the shorter-cycle kind of core pump businesses. There is longer-cycle project activity there as well.

Speaker #4: And I think we're working through that, just like you'd see on the ITS side. So, I'd say fairly comparable trends specifically on the precision technology side, as to kind of what you've seen on the ITS side.

Andy Kaplowitz: Great. On M&A, Vicente, you raised your contribution to two and a half for 2026 from closed deals, which I think puts you right on target for your usual algorithm. You had a couple of nice announcements today, but I look back at the last few years, you've tended to be a little further along at this point in the year. How would you characterize the M&A environment in general this year versus past years?

Speaker #3: Great. And then on M&A, Vicente, you raised your contribution to $2.5 billion for '26 from closed deals, which I think puts you right on target for your usual algorithm.

Speaker #3: And you had a couple of nice announcements today, but if I look back at the last few years, you've tended to be a little further along at this point in the year.

Speaker #3: So how would you characterize the M&A environment in general this year versus past years?

Vicente Reynal: I would say very healthy. Our funnel is very healthy, over 200 companies that we have in the funnel. No difference. Right now, so far, including these transactions that we announced today on a year to date, we're kind of halfway point to the commitment of the annualized acquire. I think we're making some good progress, and I think it's difficult to compare the cadence of deal activity each year against another. We're excited where we are. We got great prospects. You learn transactions on their LOI and healthy activity, and with a very good discipline pre synergy multiple.

Speaker #5: I would say very healthy. I mean, our funnel is very healthy over 200 companies that we have in the funnel. And so no difference.

Speaker #5: I mean, right now, so far, including these transactions that we announced today, on a year—I mean, we're kind of at the halfway point to the commitment of the annualized acquire.

Speaker #5: So I think we're making some good progress, and I think it's difficult to compare the cadence of deal activity each year against another. But, I mean, we're excited where we are.

Speaker #5: We have great prospects, 11 transactions under LOI, and healthy activity. And we have a very good, disciplined pre-synergy multiple.

Andy Kaplowitz: Very nice. Thanks, guys.

Speaker #3: Very nice. Thanks, guys.

Vicente Reynal: Thank you.

Speaker #5: Thank you.

Operator 2: Your next question comes from Joe Ritchie of Goldman Sachs. Your line is open.

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

Speaker #1: Your next question comes from Joe Richie of Goldman Sachs. Your line is open.

Joe Ritchie: Hey. Hey guys, morning.

Speaker #4: Hey, hey guys, good morning. Hey, Joe.

Vicente Reynal: Morning, Joe.

Vik Kini: Hey, Joe.

Joe Ritchie: Hey. ITS, I'm curious, would your margins have expanded this quarter, absent the China headwind that you guys described? And then also as you kind of think about the year, is your expectation that you can kind of still hold margins kind of like flattish, with where ITS margins were a year ago?

Speaker #3: Hey, so ITS, I'm curious, would your margins have expanded this quarter absent the China headwind that you guys described? And then also, as you kind of think about the year, is your expectation that you can kind of still hold margins kind of like flattish, which with where ITS margins were a year ago?

Vik Kini: Yeah, Joe, I'll take that in two pieces here. On the first part here, China was without question the biggest piece, obviously. I would say would've been much more comparable is probably the best way to say it. That's not obviously the only moving factor, but that is without question the single biggest driver for the factors that Vicente indicated with regards to much more the pricing side comparatively speaking to some of the inflationary headwinds. As far as on the full year and kind of what the guide kind of implies into the H2, I think as we exit the year, particularly in the Q4, I think you're much more in line with prior and actually probably even slightly above the exit rates we had for prior year.

Speaker #5: Yeah, Joe, I'll take that in two pieces here. So in the first part here, China was without question the biggest piece obviously. So I would say it would have been much more comparable is probably the best way to say it.

Speaker #5: That's not, obviously, the only moving factor, but that is, without question, the single biggest driver for the factors that Vicente indicated with regards to much more the pricing side, comparatively speaking to some of the inflationary headwinds.

Speaker #5: As far as on the full year, and kind of what the guide implies for the back half, I think as we exit the year—particularly in the fourth quarter—I think you're much more in line with the prior year, and actually probably even slightly above the exit rates we had for the prior year.

Vik Kini: I would say on a full year basis. It's still probably trending a little bit below on a full year basis, comparatively speaking, to where we were in full year 2025. Again, I think we view that, as Vicente said, a lot more timing oriented here. I think with the momentum we continue to see, particularly on the organic volume front as we exit the year, as well as some of the China items that we view as a bit more transient, for lack of a better way to say it. We don't see any reason why the ITS business can't continue to have that earnings power approaching that 30% EBITDA margin profile, consistent with what we've talked about in our prior investor days.

Speaker #5: But I would say, on a full-year basis, it's still probably trending a little bit below, on a full-year basis comparatively speaking, to where we were in full year '25.

Speaker #5: But again, I think we view that, as Vicente said, a lot more timing-oriented here. I think with the momentum we continue to see, particularly on the organic volume front as we exit the year, as well as some of the China items that we view as a bit more transient, for lack of a better way to say it, we don't see any reason why the ITS business can't continue to have that earnings power of approaching that 30% EBITDA margin profile, consistent with what we've talked about in our prior investor day.

Joe Ritchie: Got it. That's clear, Vic. Thank you. Vicente, just touching on those longer cycle orders from July, I'm curious, maybe I didn't hear it, but from an end market standpoint, does a particular end market stand out to you on what's converting into orders? As you think about your pipeline for the rest of the year, how does that large project pipeline look?

Joe Ritchie: Got it. That's clear, Vik. Thank you. Vicente, just touching on those longer cycle orders from July, I'm curious, maybe I didn't hear it, but from an end market standpoint, does a particular end market stand out to you on what's converting into orders? As you think about your pipeline for the rest of the year, how does that large project pipeline look?

Speaker #3: Got it. That's clear, Vic. Thank you. And then, Vicente, just touching on those longer-cycle orders from July—I'm curious, maybe I didn't hear it, but from an end market standpoint, does a particular end market stand out to you in terms of what's converting into orders?

Speaker #3: And then as you kind of think about your pipeline for the rest of the year, how does that large project pipeline look?

Vicente Reynal: Yeah, Joe, I say nothing that I will say one specific end market focus. It's kind of becoming a bit very nicely broad-based, food, beverage, pharma, power gen, air separation for semiconductors. It's actually a very good blend on multiple end markets, which we like. As we think about the rest of the year in terms of the pipeline, very consistent with that. Consistent with having a good blend of multiple end markets in the long cycle.

Speaker #5: Yeah, Joe, I see nothing that I will say one specific end market focus. I mean, it was it's kind of becoming a bit very nicely broad-based food, beverage, pharma, power gen, air separation for semiconductors.

Speaker #5: So it's actually a very good blend on multiple end markets. And as we, which we like, and as we think about kind of the rest of the year in terms of the pipeline, very consistent with that.

Speaker #5: Consistent with having a good blend of multiple end markets in the loan cycle.

Joe Ritchie: Okay, great. Thank you, guys.

Speaker #3: Okay, great. Thank you, guys.

Vicente Reynal: Thank you.

Speaker #5: Thank you.

Operator 2: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Operator: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Speaker #1: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Chris Snyder: Thank you. At least on my math, it seems like this H2 margin ramp off of that Q2 base is a bit stronger, at least on the higher end of what you guys typically deliver. It seems like a lot of that is driven by this price cost catch-up. I guess could you just maybe talk about the drivers of that sequential margin expansion off Q2, and then since it seems like it's mostly driven on price, any color on just how much incremental price is coming into the H2 following some of the actions you guys took, I guess, in Q2? Thank you.

Speaker #4: Thank you. At least on my math, it seems like this back-half margin ramp off of that Q2 base is a bit stronger—at least on the higher end of what you guys typically deliver.

Speaker #4: It seems like a lot of that is driven by this price-cost catch-up. So, I guess, could you just maybe kind of talk about the drivers of that sequential margin expansion off Q2?

Speaker #4: And then since it seems like it's mostly driven on price, any color on just how much incremental price is coming into the back half following some of the actions you guys took, I guess, in Q2?

Speaker #4: Thank you.

Vik Kini: Chris, I'll kind of bucketize it to keep it simple here, maybe into three major kind of drivers here. First and foremost, in line with what you said, there is, I would say, better price realization just in the context of some of the actions that we took through the H1 of the year and executed in the Q2. Again, I would say that's kind of a third of it. A third, to kind of repeat on an enterprise-wide basis, obviously corporate, we expect to be a bit more normalized into the H2 of the year. Clearly, we had the incentive compensation true-up that we took in Q2 that we don't expect to repeat at the same level in the H2.

Speaker #2: Yeah, Chris, I'll kind of bucketize it to keep it simple here, maybe into kind of three major kind of drivers here. First and foremost, to kind of in line with what you said, there is, I would say, better price realization just in the context of some of the actions that we took through the first half of the year and executed in the second quarter.

Speaker #2: So again, I would say that was that's kind of a third of the or a third of it. A third, to kind of repeat, on an enterprise-wide basis, obviously corporate, we expect to be a bit more normalized into the back half of the year.

Speaker #2: Clearly, we had the incentive compensation true-up that we took in Q2 that we don't expect to repeat at the same level in the back half.

Vik Kini: The balance is what I would say is somewhat generally normal course here, is the expectation on the productivity and to some degree, some of the mix you would expect to see coming into the back half of the year. As a reminder, we typically see a lot more of our productivity benefits from actions taken, whether it be on the classical direct material or i2V side, as well as, to repeat some of the restructuring actions we took towards the end of last year into the beginning of this year, materialize more into the back half of the year. Remember that direct material productivity generally follows our cost of goods sold, and particularly as you typically have your strongest finish towards the Q4, that's where you tend to see a lot of that come through.

Speaker #2: And then the balance is what I would say is generally normal course here. It's the expectation on the productivity and, to some degree, some of the mix you would expect to see coming into the back half of the year.

Speaker #2: As a reminder, we typically see a lot more of our productivity benefits from actions taken, whether it be on the classical direct material or I2V side. And to repeat, some of the restructuring actions we took towards the end of last year and into the beginning of this year have materialized more into the back half of the year.

Speaker #2: And remember that direct material productivity generally follows our cost of goods sold, and particularly, as you typically have your strongest finish toward the fourth quarter, that's where you tend to see a lot of that come through.

Vik Kini: I'd say those are probably the three biggest drivers.

Speaker #2: So I'd say those are probably the three biggest drivers.

Chris Snyder: Thank you, Vic. I really appreciate that. Maybe tying that to the July order comment, which was obviously a really strong inflection for you guys on the long cycle side. I just want to confirm, it seems like this order inflection came after you guys put price in, which is more constructive than seeing the order inflection, of course, before the price action. Just if you could confirm that. Thank you.

Chris Snyder: Thank you, Vik. I really appreciate that. Maybe tying that to the July order comment, which was obviously a really strong inflection for you guys on the long cycle side. I just want to confirm, it seems like this order inflection came after you guys put price in, which is more constructive than seeing the order inflection, of course, before the price action. Just if you could confirm that. Thank you.

Speaker #4: Thank you, Vic. I really appreciate that. And then maybe tying that to the July order comment, which was obviously a, I mean, a really strong inflection for you guys on the long cycle side.

Speaker #4: I just want to confirm, it seems like this order inflection came after you guys put price in, which is more constructive than seeing the order inflection, of course, before the price action.

Speaker #4: So just if you could confirm that, thank you.

Vik Kini: Yeah, I think, Chris, that's a fair point here. The way I would probably think about it is, remember, a lot of these longer cycle projects that are booking through here in July, they've been in the funnel for some time. These have been active dialogue, negotiations, things of that nature. Yes, it's great to see them kind of now get to the finish line, for lack of a better way to say this. I wouldn't also lose track of the fact that in the midst of July, we're also seeing, I'd say, continued solid short cycle momentum. I think your comment is quite fair. Yes, the long cycle is probably the biggest driver of that number you're seeing in July, but that's not coming without some good contribution also from the short cycle side as well.

Speaker #5: Yeah, I think, Chris, that's a fair point here. So the way I would probably think about it is, remember, a lot of these longer-cycle projects that are booking through here in July have been in the funnel for some time.

Speaker #5: These have been active dialogue negotiations, things of that nature. So yes, I mean, it's great to see them kind of now get to the finish line, for lack of a better way to say this.

Speaker #5: But I wouldn't also lose track of the fact that in the midst of July, we're also seeing I'd say continued solid short cycle momentum.

Speaker #5: So I think your comment is quite fair. Yes, the long cycle is probably the biggest driver of that number you're seeing in July, but that's not coming without some good contribution also from the short cycle side as well.

Chris Snyder: Thank you.

Speaker #4: Thank you.

Operator 2: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Operator: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Speaker #1: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Amit Mehrotra: Thank you. Good morning.

Speaker #5: Thank you. Good morning. I guess, just following up on the July commentary, because I want to make sure that my, or the market's, expectations are correct.

Vik Kini: Morning.

Amit Mehrotra: I guess just following up on the July commentary, because I want to make sure that the market's expectations are correct. It really comes down to the attribution of these long cycle projects. Maybe there are a few of them, but is the positive implication of that disclosure that, hey, this is kind of the trend that we can build on or sustain? Or is it really a data point that's idiosyncratic to maybe a couple projects that hit in July? Because I don't want to be here in August, September saying we're back to low single digits because of that dynamic. Maybe you can give us a little bit of color on that.

Speaker #5: And it really comes down to the attribution of these long-cycle projects. Maybe there were a few of them. But is the positive implication of that disclosure that, hey, this is kind of the trend that we can build on or sustain?

Speaker #5: Or is it really a data point that's idiosyncratic to maybe a couple of projects that hit in July? Because I don't want to be here in August or September saying we're back to low single digits because of that dynamic.

Speaker #5: So maybe you can give us a little bit of color on that. Yeah, maybe I'll start here. So one, a couple of comments here.

Vik Kini: Yeah. Maybe I'll start here. A couple of comments here. One, I think if you go back over the course of several quarters, we've spoken to the health of the long cycle funnel, right? As Vicente has mentioned, we had acknowledged that there had been some elongation, and that had been some of the drivers of why you'd seen some of the timing on some of the long cycle comps and things like that, including even in Q2. I think first and foremost, encouraged by seeing some of those projects get to the finish line. I do think that's obviously what you're seeing in July. Now that being said, I think I would couple that to say that obviously we're continuing to be encouraged by the long cycle funnel, right?

Speaker #5: One, I think if you go back over the course of several quarters, we've spoken to the health of the long cycle funnel, right? And as Vicente has mentioned, we had acknowledged that there had been some elongation and that had been some of the drivers of why you'd seen some of the timing on some of the long cycle comps and things like that, including even in second quarter.

Speaker #5: So I think, first and foremost, we're encouraged by seeing some of those projects get to the finish line. I do think that's obviously what you're seeing in July.

Speaker #5: Now, that being said, I think I would couple that to say that, obviously, we continue to be encouraged by the long-cycle funnel, right?

Vik Kini: Obviously, I don't think we're necessarily implying that at these levels is the level to indicate on a consistent go-forward basis. I think it speaks to the fact that that long cycle funnel continues to remain healthy. As we've indicated, there really weren't cancellations. It was more timing. I think that's now proving itself out, and that obviously the short cycle side continues to be with pretty short to medium cycle side continues to be relatively strong and constructive. I take that all in totality. I think the July comment is just speaking of-

Speaker #5: Obviously, I don't think we're necessarily implying that these levels are the level to indicate on a consistent, go-forward basis. But I think it speaks to the fact that the long-cycle funnel continues to remain healthy.

Speaker #5: As we've indicated, there really weren't cancellations; it was more timing. So I think that's now proving itself out. Obviously, the short cycle side continues to be pretty short, and the medium cycle side continues to be relatively strong and constructive.

Speaker #5: So I'd take that all in totality. But I think the July comment is just speaking of inflecting and the fact that we're happy with what we're seeing there, getting to those finish lines on those projects.

Amit Mehrotra: Inflecting

Vik Kini: inflecting and the fact that we're happy with what we're seeing there, getting those to finish line on those projects.

Amit Mehrotra: Okay, great. That's helpful. A lot of our conversation talks about sort of the large compressor, blower, vacuum market, but there's obviously you sell stuff through distribution, smaller compressors, power tools, et cetera. Can you just maybe talk about how distributor behavior is, whether it's sell through or their willingness to hold more inventories as maybe sort of another leading indicator sign of how things are trending?

Speaker #5: Okay, great, that's helpful. And a lot of our conversation talks about sort of the large compressor, blower, and vacuum market, but obviously, you sell stuff through distribution—smaller compressors, power tools, etc.

Speaker #5: Can you just maybe talk about how distributor behavior is, whether it's sell through or they're willingness to hold more inventories as maybe sort of another leading indicator sign of how things are trending?

Vicente Reynal: I'll say that, we said this historically, our distributors, they don't typically hold inventory. I mean, a compressor gets customized for specific applications and even on the smaller side. We're not on the do-it-yourself kind of compressor type of product that is a very standard product. We tend to configure to order, in many cases, engineer to order. Those are more difficult to kind of keep in inventory. Our distribution is mostly kind of buy and sell pretty quickly.

Speaker #3: Yeah, I mean, I'll say that it's difficult for, and we've said this historically, our distributors—they don't typically hold inventory. I mean, a compressor gets customized for specific applications.

Speaker #3: And even on the smaller side, I mean, we're not on the do-it-yourself kind of compressor, the type of product that is a very standard product.

Speaker #3: I mean, we tend to configure to order in many cases—engineer to order. So those are more difficult to kind of keep in inventory.

Speaker #3: So our distribution is mostly kind of buy and sell pretty quickly.

Amit Mehrotra: Got it. Okay. Thank you very much. Appreciate it. Have a good weekend.

Speaker #5: it. Have a good weekend.

Vicente Reynal: Thank you.

Speaker #3: Thank you.

Operator 2: Once again, if you have a question, it is star one. Your next question comes from Nicole DeBlase with Deutsche Bank. Your line is open.

Operator: Once again, if you have a question, it is star one. Your next question comes from Nicole DeBlase with Deutsche Bank. Your line is open.

Speaker #1: Once again, if you have a question, please press star one. Your next question comes from Nicole DeBlaise with Deutsche Bank. Your line is open.

Nicole DeBlase: Yeah, thanks. Good morning, guys.

Speaker #6: Yeah, thanks. Good morning, guys.

Vicente Reynal: Morning.

Vik Kini: Hey, Nicole.

Speaker #5: Morning, Nicole.

Nicole DeBlase: Maybe just digging into the pricing environment a little bit more. Understand what's going on in China. There's been plenty of discourse around that. I guess, what are you guys seeing with respect to pricing in Americas for compressors? Any shifts at all in the dynamics or market share dynamics as well?

Speaker #6: Maybe just digging into the pricing environment a little bit more. I understand what's going on in China—there's been plenty of discourse around that. But I guess, what are you guys seeing with respect to pricing in the Americas for compressors?

Speaker #6: Any shifts at all in the dynamics, or market share dynamics, as well?

Vicente Reynal: No. Nothing I would say dramatic that we're seeing. Typically, we're back to this kind of 1% to 2% price that we see consistent and stable. Even having said that, you saw that we talked about order momentum to be high single digit in the Americas. Again, very encouraged that a lot of that kind of turns to be more volume related than pricing. Nothing that I will dramatically say that we're seeing changes in the pricing environment besides what the difficulty that happens in China. Again, China, I would categorize that as transitory due to some overcapacity that has happened over the past prior years of investing. We're definitely seeing inflecting better momentum in China as well. Again, from a pricing dynamic outside of China, fairly stable.

Speaker #3: No. I mean, nothing outside dramatic. I mean, that we're seeing. I mean, typically, we're back to this kind of 1 to 2 percent price that we see consistent and stable.

Speaker #3: And even having said that, you saw that we talked about order momentum to be high single digits in the Americas. So again, very encouraged that a lot of that tends to be more volume-related than pricing.

Speaker #3: So nothing that I would dramatically say that we're seeing changes in the pricing environment, besides the difficulty that happens in China. And again, China, I'll categorize that as transitory due to some of our capacity that hasn't happened over the prior years of investing.

Speaker #3: But we're definitely seeing inflecting better momentum in China as well. But again, from a pricing dynamic outside of China, fairly stable.

Nicole DeBlase: Okay, understood. Thanks, Vicente. Just wanted to ask the question on PST margins. Definitely a bright spot this quarter once again. Vic, is it possible to get your view on how H2 margins look within PST?

Nicole DeBlase: Okay, understood. Thanks, Vicente. Just wanted to ask the question on PST margins. Definitely a bright spot this quarter once again. Vik, is it possible to get your view on how H2 margins look within PST?

Speaker #6: Okay, understood. Thanks, Vicente. And then, I just wanted to ask a question on PST margins. Definitely a bright spot this quarter once again. Vic, is it possible to get your view on how second-half margins look within PST?

Vik Kini: Sure, yeah. I think the simplest way to say it here is we would expect to continue to see sequential momentum as the year plays itself out. Really encouraged that we were right around 31.5% EBITDA margin here in Q2. I think our expectations would be that number is slightly better as we move into the H2. In the 32% type range, if not slightly better. Definitely approaching that kind of mid-thirties EBITDA margin target that we've kind of historically laid out is definitely in sight and definitely the goal.

Speaker #5: Sure. Yeah, I think the simplest way to say it here is we would expect to continue to see sequential momentum as the year plays itself out.

Speaker #5: Really encouraged that we were right around 31 and a half percent EBITDA margin here. In Q2, I think our expectations would be that number is slightly better as we move into the back half of the year.

Speaker #5: So, in the 32% type range, if not slightly better. And definitely approaching that kind of mid-30s EBITDA margin target that we've kind of historically laid out is definitely in sight and definitely the goal.

Nicole DeBlase: Okay, got it. Thank you. I'll pass it on.

Speaker #6: Okay, got it. Thank you. I'll pass it on.

Operator 2: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Operator: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Speaker #1: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Andrew Buscaglia: Hey, good morning, everyone.

Speaker #7: Hey, good morning, everyone. Hey, Andrew. You guys indicated you're doing some M&A here and some LOIs, per usual, kind of like in the background.

Vicente Reynal: Morning.

Vik Kini: Morning, Andrew.

Andrew Buscaglia: You guys indicated you're doing some M&A here and some LOIs, per usual kind of like under in the background. What is the nature of the size of the deals that you're looking at? Are valuations attractive for larger size deals? Can you just give us a little more color there?

Speaker #7: What is the nature of the size of the deals that you're looking at? Are valuations attractive for larger sizes there?

Vicente Reynal: Yeah. The 11 that we talked about LOI-wise tend to be in same nature as kind of what you saw announced today. They're bolt-on in nature, low double-digit, pre-synergy multiple. Prior quarter, we spoke about having a couple of about a billion-dollar purchase price in the funnel. We actually decided to walk away from one of them due to valuation. Again, we remain pretty disciplined on the transactions that we're going after. Again, the 11 very similar to what you saw getting announced today.

Speaker #3: Yeah. The eleven that we talked about LOI-wise tend to be of the same nature as what you saw announced today—bolt-on in nature, low double-digit pre-synergy multiple.

Speaker #3: Prior quarter, we spoke about having a couple of about a billion dollar purchase price in the funnel. We actually decided to walk away from one of them due to valuation.

Speaker #3: So again, we remain pretty disciplined on the transactions that we're going after. So again, the 11, very similar to what you saw getting announced today.

Andrew Buscaglia: I got it. My second question is a little more high level. I think the back half guide's pretty picked over at this point. I want to ask your take on AI and infrastructure investment and how it pertains to Ingersoll Rand. Just given, we obviously have the build-out of a hyperscale data center that's ongoing, but as this infrastructure investment bleeds into areas like semis and power equipment we're reading a lot about, and just broader industrial capacity needed. Can you talk about the role of compressors and vacuums, the other precision fluid handling equipment you guys use, and how you see that helping Ingersoll Rand? Then whether it's Industrial Tech or your Precision Tech segment, I go back and forth where we would see this materialize more, but can you talk a little bit more about that, too? Thanks.

Speaker #7: I got it. And my second question is a little more high-level. I think the back half guy is pretty picked over at this point.

Speaker #7: So I want to ask your take on sort of AI and infrastructure investment and how it pertains to Ingersoll Rand, just given we obviously have the build-out of the hyperscale data centers that's ongoing.

Speaker #7: But as this infrastructure investment bleeds into areas like semis and power equipment, we're reading a lot about, and just broader, industrial capacity needed.

Speaker #7: Can you talk about the role compressors and vacuums and the other precision fluid handling equipment you guys use—how you see that helping Ingersoll Rand, and then where—whether it's the Industrial Tech or your Precision Tech segment?

Speaker #7: I go back and forth where we would see this materialize more, but can you talk a little bit more about that too? Thanks.

Vicente Reynal: Yeah, absolutely, Andrew. I appreciate the question. I mentioned at the beginning of the call that on some of the Q&A, as power gen as being one of the end markets or infrastructure where we play. Air compressors are definitely needed in the power generation and electricity infrastructure. As those investments kind of take on and pick up, definitely our compressor systems will definitely have a play. Clearly, a lot of conversations around the utilization of water and how to continue create closed loop systems in data centers, and again, we have pumps that can move water. We have blowers that can actually help with the aeration in some of these systems. It's kind of a pretty wide range, but it's very broad-based in many multiple different markets. Even including as new natural gas power is needed, we're the market leader of odorizing that natural gas.

Speaker #3: Yeah, absolutely, Andrew. I appreciate the question. I mentioned at the beginning of the call that, yeah, on some of the Q&A, power gen has been one of the end markets, or infrastructure, where we play.

Speaker #3: I mean, compressors, air compressors, are definitely needed in the power generation and electricity infrastructure. So as those investments take on and pick up, definitely our compressor systems will have a role to play.

Speaker #3: Clearly, there's a lot of conversation around the utilization of water and how to continue to create closed-loop systems in data centers. And again, we have pumps that can move water.

Speaker #3: We have blowers that can actually help with the aeration in some of the systems. So it's kind of a pretty wide range, but it's very, very broad-based in many different markets.

Speaker #3: Even including as new natural gas power is needed, we're the market leader of authorizing that natural gas. So that is on our precision technology, kind of PST segment side of things.

Vicente Reynal: That is on our precision technology, kind of PST segment side of things. As those projects kind of start coming up live, obviously those take a long time to get implemented, but we're pleased to see that we can play in that kind of broad-based end market application that is driven by a lot of the data center infrastructure investments.

Speaker #3: So as those projects kind of start coming up live—I mean, obviously, those take a long time to get implemented—but we're pleased to see that we can play in that kind of broad-based, end-market application that's driven by a lot of the data center infrastructure investments.

Andrew Buscaglia: Got it. Thank you.

Speaker #7: Got it. Thank you.

Operator 2: This concludes the question and answer session. I'll turn the call to Vicente Reynal for closing remarks.

Operator: This concludes the question-and-answer session. I'll turn the call to Vicente Reynal for closing remarks.

Speaker #1: This concludes the question and answer session. I'll turn the call over to Vicente Reynal for closing remarks.

Vicente Reynal: Thank you, Sarah. I just want to say one more time, thank you all for your time and continued interest in Ingersoll Rand. Another special call-out and thank you to our employees around the world whose ownership mindset and commitment while executing through IRX helps compound durable long-term value for all of our shareholders. Which, by the way, our employees are also share owners of the company. Again, thanks again, and we'll talk soon. Appreciate it.

Speaker #3: Thank you, Sarah. I just want to say one more time, thank you all for your time and continued interest in Ingersoll Rand. And I want to give a special call-out and thank you to our employees around the world, whose ownership mindset and commitment while executing through IRX helps compound durable, long-term value for all of our shareholders, which, by the way, our employees are also shareholders of the company.

Speaker #3: So again, thanks again, and we'll talk soon. Appreciate it.

Operator 2: This concludes today's conference call. Thank you for joining. You may now disconnect.

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

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