Ingersoll Rand Inc at Citi Global Industrial Tech and Mobility Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Kaplowitz - Citi - Analyst : Vic, I'm going to walk over to you and while I'm doing that, let me just ask you sort of big picture question. It's been 5 years, almost exactly since your RMT. So maybe summarize the progress that Ingersoll made during that time to, I think what is your vision to be the premier industrial compounder? What's gone right? What if anything, could you do better?

Question: Andrew Kaplowitz - Citi - Analyst : That thanks for that, Vic. So, I want to get a 25 question out of the way. You just got it, a few days ago, basically. So, I think some of the feedback that I've gotten was, your organic growth guide doesn't look that conservative given supply, an implied step up from, flattish in the first half to maybe 4% in the second half. So maybe you could sort of respond to that first.

Question: Andrew Kaplowitz - Citi - Analyst : Run there. So, I definitely want to get to margin and M&A in a second but let me just respond to something you said. So, like, MQLs and sort of the longer cycle pipeline of projects, they all look good, right, from, leading indicator, but they haven't been that predictive of your growth lately. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 4:20PM, IR.N - Ingersoll Rand Inc at Citi Global Industrial Tech and Mobility Conference So how do you sort of think about that? And then I think you were said they talked about a higher rate of customer conversations lately. So, when did they start beginning to turn to orders or how do you think about that?

Question: Andrew Kaplowitz - Citi - Analyst : So, you've gone, I think you've done really well in ITS margins. We're going to talk about that in a second, but you got a lot of questions on your call about PST. Sure, everybody focuses on, let's say, glass half empty before they focus on glass half full, but let me just ask it to you like this. So, one of the things as an industrialized that we see, right, is companies that are acquisitive, like when you hit something like 30% margin, it becomes harder. I think that was the nature of a lot of questions you got in the earnings call. And again, you. There are temporary factors that impact the Q4. But how do you think about that? Because you still, you seem very confident in the mid-30s target. But I think, that's a big question that I got last week is, you had 30 and now you've pulled back and, you want to stay inquisitive, can you really do it in PST?

Question: Andrew Kaplowitz - Citi - Analyst : Very helpful and so maybe related questions around price versus cost. There there's, it's obviously very topical that given tariffs and what have you out there. I think in sort of 2018', 19', 21', 22', you did a really good job, better than most in staying ahead on both a dollar and margin basis, or should I say margin and dollar basis. So you feel like you can do that again here? Like, how well positioned are you? Are your contracts very flexible, so you can adjust price if you need to quickly? Like how do you. Feel about that in the current environment.

Question: Andrew Kaplowitz - Citi - Analyst : That's great. Thanks, Vik. So, just maybe digging into PST a little bit more. It's interesting. PST prior to Q4 had seen, I think a few quarters of positive organic order growth. You did have these comps, but then you obviously pulled back in Q4 pretty significantly. I think a lot of that was China, obviously, but you did mention PST organic orders were up low single digits, China. But it just was seemed kind of abrupt in that pullback. So was there anything else? Was it all China? Was there anything else that kind of slowed down for you?

Question: Andrew Kaplowitz - Citi - Analyst : So, Vik, I want to ask you a little bit more about ILC Dover but let me just ask you about the legacy business for a second, like. How do you know China orders don't take another leg down? Like how do you get visibility around that?

Question: Andrew Kaplowitz - Citi - Analyst : And China, as you enter 25, is down to low double digits of the company.

Question: Andrew Kaplowitz - Citi - Analyst : Got it helpful. And just one more analysis, Dover, you talked about targeted restructuring. Did you take any workforce out there, and then this $150 million spacesuit contract, does it help with the fixed cost, the operating leverage pretty quickly, so you should see Q1 better than Q4?

Question: Andrew Kaplowitz - Citi - Analyst : Over. Got it. And then just a related question on PST and then I'll shift the ITS I'll also the audience for questions. So, I think you've talked about, the path to 30% and 25 is pretty visible in PST, but it starts off, in the high 20s and then moves up. Is that kind of the way to think about it? Is there anything that you need to see to get back to 30 in terms of improvement in the business?

Question: Andrew Kaplowitz - Citi - Analyst : Got it. Any questions with the audience? Any questions? Okay, so let me, I have a question here that you partly answered already, which is in China percentage of business, all that kind of stuff, but part of the question I have here is, and I think I know what your answer is going to be is, do you at any point need to de-emphasize China a little bit cause you already talked about sort of other high growth regions, sort of picking up the slack. How much can other high growth regions pick up the slack and or are you, I know you care, it's still a big part of your business, but do you move a little bit away from China over time?

Question: Andrew Kaplowitz - Citi - Analyst : Specifically. And if I think about your 1% to 3% growth over. Is it fair to say US toward the higher, middle, higher end of that range in Europe to the middle lower end of that range, something like that? Yeah.

Question: Andrew Kaplowitz - Citi - Analyst : Got it. Okay, so shifting to ITS maybe just help us disaggregate your compressor growth a little. I think you were low single digits this past quarter, China down but basically everywhere else up, but maybe people ask me to divide the business maybe to large, longer cycle compressors versus smaller. Is it fair to say that small and mid-size are growing but large compressors aren't? I'll ask you a couple files, but let's start there.

Question: Andrew Kaplowitz - Citi - Analyst : I got a question there, yeah.

Question: Andrew Kaplowitz - Citi - Analyst : So, I'm going to ask you, I mean, you grew 50% then, in 204 and recurring from 200 to 300, like. Is this, if I think about 25 without some specific target, I assume strong double-digit growth is the way to think about it there.

Question: Andrew Kaplowitz - Citi - Analyst : And so, one thing that makes Ingersoll is the diversity and markets, which I get, right? But if I'm just going back to that large compressor question that I had, are there things like, is it energy transition or automotive? Like, what are the big projects these days that are being held up just out of curiosity? Can you give any examples?

Question: Andrew Kaplowitz - Citi - Analyst : So, compressors get a lot of the press, but you are obviously a big blower in vacuum businesses, and it looks like those orders have been accelerating in the past few quarters, low single digits in two, high single digits in 3Q, and 13% in 4Q. So maybe what's going on there and how durable are those tailwinds?

Question: Andrew Kaplowitz - Citi - Analyst : If I could see the 13% divided between organic and inorganic, would there be a decent organic component or would it be? Mostly inorganic.

Question: Andrew Kaplowitz - Citi - Analyst : Good. And then ITS margin, obviously PST got all the press this quarter, but ITS continues to be at or above 30%, which is actually your target. So maybe just talk about what you've done right there to really blow past your target 3 years early. You want to set a new target today, that's fine, but if you don't like to tell me. Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 4:20PM, IR.N - Ingersoll Rand Inc at Citi Global Industrial Tech and Mobility Conference

Question: Andrew Kaplowitz - Citi - Analyst : This is a slippery slope that, but like if I look at the two different segments, right? Like, is there anything on the execution side in terms of integrating acquisitions and stuff that you're doing better that maybe you can translate over to PST or something like that, exile see Dover, yeah.

Question: Andrew Kaplowitz - Citi - Analyst : Got it. And then just on the M&A. You said in the beginning you've got seven LOIs, 200-plus deals in your funnel. Would you say the deal environment is better, worse or the same as it as it was last year? Let's say. Yeah, I.

Question: Andrew Kaplowitz - Citi - Analyst : And valuations are such that you They are reasonable in those segments.

Question: Andrew Kaplowitz - Citi - Analyst : Got it. And just last question I've asked this a very company interview before. What are the top two or three innovations and structural changes affecting your company over the next five years? Are there any emerging industry trends it or perhaps being overlooked in the current discourse?

Question: Andrew Kaplowitz - Citi - Analyst : Very helpful, Vik. I think we're out of time, so we appreciate you being here. Yeah.