Ingersoll Rand delivered first quarter results that met Wall Street’s revenue expectations, though its non-GAAP profit came in modestly below consensus. Management emphasized robust order activity, with CEO Vicente Reynal highlighting a 10% total order increase and record free cash flow. Reynal credited the company’s "in-region, for-region" manufacturing footprint and recurring revenue strength for offsetting softer equipment demand. CFO Vik Kini noted that approximately $15 million in revenue was deferred to the next quarter at customer request, impacting this quarter’s margins.
Is now the time to buy IR? Find out in our full research report (it’s free).
Ingersoll Rand (IR) Q1 CY2025 Highlights:
- Revenue: $1.72 billion vs analyst estimates of $1.72 billion (2.8% year-on-year growth, in line)
- Adjusted EBITDA: $459.7 million vs analyst estimates of $473 million (26.8% margin, 2.8% miss)
- Management lowered its full-year Adjusted EPS guidance to $3.34 at the midpoint, a 2.9% decrease
- EBITDA guidance for the full year is $2.1 billion at the midpoint, below analyst estimates of $2.14 billion
- Operating Margin: 17.6%, in line with the same quarter last year
- Organic Revenue fell 3.9% year on year (-0.8% in the same quarter last year)
- Market Capitalization: $33.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Ingersoll Rand’s Q1 Earnings Call
- Mike Halloran (Baird) questioned the rationale for lowered volume guidance. CEO Vicente Reynal and CFO Vik Kini confirmed it was a precautionary move, not a response to current order trends.
- Julian Mitchell (Barclays) asked about the seasonality and margin trajectory for the year. Kini explained that organic growth is expected to improve in the second half, with tariff-related pricing and costs largely offsetting each other.
- Jeff Sprague (Vertical Research Partners) sought clarity on tariff mitigation and China exposure. Reynal noted the majority of tariff costs are China-related imports, and emphasized the company’s local-for-local strategy in China to avoid retaliation.
- Chris Snyder (Morgan Stanley) inquired whether strong Q1 orders reflected pull-forward ahead of tariffs. Reynal stated there was no evidence of inventory build or customer pull-forward, as most products are customized and tracked closely.
- Nathan Jones (Stifel) asked if recent price increases could impact customers’ investment decisions. Reynal responded that while project returns are closely evaluated by customers, no significant order hesitation had been observed to date.
Catalysts in Upcoming Quarters
As we look to the next few quarters, the StockStory team will be watching (1) the pace and effectiveness of tariff-related pricing actions and cost mitigation, (2) the integration and performance of newly acquired businesses, and (3) trends in recurring and aftermarket revenue as a counterbalance to variable equipment demand. Progress on operational efficiencies and further expansion into local markets could also be important drivers.
Ingersoll Rand currently trades at $84.94, up from $76.18 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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