Ingersoll Rand (IR) Q2 Revenue Rises 5%

Key Points

• Revenue (GAAP) reached a record $1,887.9 million for Q2 2025, beating expectations and rising 4.6% compared to Q2 2024.

• Adjusted earnings per share (Non-GAAP) matched analyst estimates at $0.80, but free cash flow (non-GAAP) dropped 25.7% compared to Q2 2024.

• Large non-cash impairments drove a GAAP net loss of $115 million, with margin compression and lower organic sales highlighting mixed underlying performance.

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Ingersoll Rand (NYSE:IR), a global provider of flow creation products and industrial solutions, released its earnings report for the quarter ended June 30, 2025, on July 31, 2025. The headline news was record GAAP revenue of $1,887.9 million, outpacing analyst expectations by $40.6 million. Adjusted earnings per share (EPS, Non-GAAP) landed at $0.80, matching estimates. However, while revenues (GAAP) grew, the company faced margin pressures, a sharp drop in free cash flow (non-GAAP), and reported a significant net loss due to non-cash impairments. Overall, the quarter showed solid top-line growth, with reported revenue of $1,888 million (GAAP), but several key metrics showed pressure beneath the surface.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Ingersoll Rand provides a broad portfolio of flow creation products, including compressors, pumps, vacuum, and blower equipment. These offerings are marketed across segments such as life sciences, food and beverage, clean energy, and general industrial manufacturing. The company operates under more than 80 brands, with a focus on both new equipment and recurring aftermarket services.

Recently, Ingersoll Rand has centered its business on three pillars: expanding its product portfolio, strengthening the aftermarket services that offer recurring revenue, and executing strategic acquisitions. Its global manufacturing and distribution scale gives the company flexibility, while investments in employee engagement support long-term growth and innovation. The stability of its aftermarket revenues (36.4% of total revenue in 2024), and its ability to grow through bolt-on acquisitions, are also important.

Quarterly Highlights and Key Developments

The quarter delivered record revenue of $1,888 million (GAAP), topping forecasts and marking a 4.6% increase from a year earlier. Order volume also reached a new high at $1,940 million, up 8% year over year. This outperformance was driven by acquisitions and proactive pricing actions, both of which helped offset softness in core, or "organic," business volumes. Organic revenue—revenue from the existing business, excluding new acquisitions and currency swings—actually declined 3.4%, a sign that underlying demand in legacy businesses was weaker. The total revenue gains instead came from recently acquired businesses and the benefit of foreign currency.

Profitability metrics showed mixed results. Adjusted EBITDA margin dipped to 27.0%, down 0.4 percentage points from the prior year. Margin pressure stemmed from lower organic volumes, acquisitions with lower margins, and pricing actions that neutralized increased tariff costs rather than boosting profits. Net income, when viewed by generally accepted accounting principles (GAAP), swung to a loss of $115 million, a sharp contrast to last year's Q2 2024 reported net income attributable to Ingersoll Rand Inc. of $186.5 million (GAAP). This net loss was primarily the result of substantial non-cash write-downs, including $229.7 million in goodwill and $36.1 million in other intangible assets.

By business segment, the Industrial Technologies & Services unit recorded GAAP revenue of $1,492 million, up 2% in total but down 3.8% organically. The segment's reported orders climbed 7%, but Adjusted EBITDA margin fell 1.1 percentage points to 28.6%. The Precision & Science Technologies segment, which includes advanced pumps and systems for biopharma and clean energy, posted a 17% revenue increase, with orders up 13%—yet the Underlying organic revenue fell 1.6%. These deals expand the company's life science and renewable natural gas technology portfolios.

Pricing actions, undertaken in response to new tariffs and cost pressures, were implemented in two waves starting April 1 and May 1. These pricing changes matched the cost increases and avoided profit loss but did not improve the underlying margin, as confirmed by management, who stated that tariff-related pricing actions were implemented to offset cost increases one-for-one, resulting in no improvement to margin. Cost-saving efforts, such as streamlining manufacturing or shifting supply sources, are expected to take longer and had minimal immediate effect in the period. Strong recurring sales from the services and parts business—aftermarket—continued to provide stability, a trend consistent with earlier reports that this category accounted for 36.4% of company-wide revenue in 2024.

The period's most notable one-time event was the large impairment of goodwill and intangible assets. These non-cash charges arose from lower performance forecasts and reduced business with major customers in certain acquired units, as well as broader shifts in industry valuation multiples.

Ingersoll Rand also deployed $47 million toward acquisitions and completed two further deals, Lead Fluid and TMIC, after the close. Management reiterated its disciplined approach to M&A—typically targeting smaller bolt-on purchases that can be integrated efficiently. Share buybacks reached $500 million, consistent with the company's capital allocation strategy, and a quarterly dividend of $8 million was paid. The company reports strong liquidity levels, with $3.9 billion available as of June 30, 2025.

Looking Ahead: Guidance and Investor Considerations

Management raised its revenue and adjusted earnings (non-GAAP) outlook for FY2025 following the results. New guidance calls for FY2025 revenue to rise 4% to 6% (previously 2% to 4%). Adjusted EBITDA is forecast at $2.10 billion to $2.16 billion, and adjusted EPS (non-GAAP) is targeted to reach between $3.34 and $3.46 per share. The organic revenue guide remains cautious at flat to a 2% decline, reflecting continued caution about demand growth in the company's core business. Both currency translation benefits and M&A activity are expected to provide the main lift in annual topline growth.

Key investor watchpoints in coming quarters will include the ability to manage further margin pressure. The company embedded volume contingencies in its outlook, signaling management's prudent stance. Free cash flow performance and the impact of future non-cash impairments will also be areas for scrutiny, given the sharp year-on-year decline in the quarter’s free cash flow (non-GAAP). Shareholder returns remain a priority, with capital allocated to both acquisitions and share repurchases.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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