# Ingersoll Rand Inc. (IR)

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Report type:** Primer (steps 1–3 of 19)  
**API endpoint:** GET /api/v1/research/IR/primer

## Business Model

---
source: coverage-next-full
ticker: IR
step: "01"
title: Business Overview — Ingersoll Rand Inc.
created: 2026-05-29
---

### Step 01 — Business Overview

#### Company Identity

Ingersoll Rand Inc. is a global provider of mission-critical flow creation and industrial technologies. The company was created in February 2020 when Gardner Denver Holdings merged with the Industrial segment of Ingersoll-Rand plc (the climate/HVAC assets were spun off as Trane Technologies). The combined entity retained the iconic "Ingersoll Rand" brand given its 150-year industrial heritage and customer recognition.

CEO Vicente Reynal, who led Gardner Denver's highly successful private equity-to-public transformation under KKR, has continued the same operating philosophy at IR — disciplined M&A integration via the IRX operating model, aggressive margin improvement, and compounding through bolt-on acquisitions.

#### Operating Segments

##### Industrial Technologies & Services (ITS) — ~77% of Revenue

ITS is the core legacy Gardner Denver business. It manufactures and services compressed air systems, gas compression equipment, blowers, and vacuum systems. Products include:

- **Compressed Air Systems**: Rotary screw, reciprocating, and centrifugal compressors under brands including Ingersoll Rand, CompAir, Elmo Rietschle, Gardner Denver, and Tamrotor.
- **Blowers & Vacuum Systems**: Positive displacement blowers, rotary vane, and dry-screw vacuum pumps.
- **Power Tools & Assembly Tools**: Pneumatic and electric tools under Ingersoll Rand, Chicago Pneumatic, and Desoutter brands; heavy-duty industrial fastening systems.
- **Aftermarket Services**: A critical component — ~35-40% of ITS revenue comes from parts, service, and consumables. This recurring revenue stream generates significantly higher margins than new equipment.

**ITS End Markets**: General manufacturing, chemicals, food & beverage, energy, automotive, semiconductor, and infrastructure.

**ITS Adjusted EBITDA Margin**: ~26-28% (FY2024 est.), reflecting high aftermarket mix and lean IRX execution.

##### Precision & Science Technologies (PST) — ~23% of Revenue

PST was built largely through acquisition, anchored by ILC Dover (acquired 2021) and Seepex (acquired 2022). It serves more specialized, higher-growth end markets:

- **Life Sciences & Medical**: Flexible containment solutions (ILC Dover), specialty diaphragm pumps, peristaltic pumps for pharmaceutical manufacturing, bioprocessing, and drug delivery.
- **Specialty Pumps**: Seepex progressive cavity pumps (food, wastewater, energy), ARO fluid management, and Milton Roy dosing/metering pumps.
- **Industrial Air**: Specialty compressed air for food/beverage, electronics, and clean-room environments.

**PST End Markets**: Pharmaceutical, bioprocessing, medical devices, wastewater treatment, food & beverage, semiconductor.

**PST Adjusted EBITDA Margin**: ~26-28% (FY2024 est.), premium to ITS given specialty mix.

#### Geographic Mix

| Region | Revenue % (est.) |
|--------|-----------------|
| Americas | ~45% |
| Europe, Middle East, Africa (EMEA) | ~35% |
| Asia Pacific | ~20% |

International exposure (~55%) provides diversification but creates FX translation headwinds/tailwinds. IR actively hedges transactional FX risk but not translation risk.

#### Business Model Characteristics

**Revenue Model**:
- New equipment/capital sales (~60%)
- Aftermarket parts, service contracts, consumables (~40%)

The aftermarket revenue mix is a structural advantage — it is:
1. Higher margin than OEM equipment
2. Recurring and contractual in nature
3. Sticky (customers prefer OEM parts/service for warranty/safety)
4. Less cyclical than new equipment capex

**Pricing Power**: IR has demonstrated consistent pricing above inflation. The company achieved 3-5% annual price realization in FY2022-2024, offsetting raw material inflation and driving margin expansion.

#### The IRX Operating System

IRX (Ingersoll Rand Excellence) is a proprietary continuous improvement framework modeled on Danaher Business System principles. It encompasses:

- **Lean manufacturing** and waste elimination
- **80/20 analysis** for portfolio simplification
- **Value-based pricing** discipline
- **M&A integration playbook** — standardized 100-day integration process

IRX is the primary mechanism through which IR extracts margin improvement from acquisitions (typically 400-600 bps of margin expansion within 3 years). This system is central to the IR investment thesis.

#### Brand Portfolio

Key brands: Ingersoll Rand, Gardner Denver, CompAir, ARO, Milton Roy, Seepex, ILC Dover, Thomas, NASH, Robuschi, Elmo Rietschle, Chicago Pneumatic, Desoutter.

#### Competitive Positioning

IR occupies #1 or #2 market position in compressed air/vacuum systems and specialty pumps globally. The company competes with Atlas Copco (dominant in compressors), Parker Hannifin (diversified motion/control), SPX FLOW, and a long tail of regional specialists.

## Financial Snapshot

---
source: coverage-next-full
ticker: IR
step: "04"
title: Financial Snapshot — 3-Year P&L Summary
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### 3-Year Income Statement Summary

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| **Revenue** | $5,931M | $6,562M | $7,170M |
| **Gross Profit** | $2,423M | $2,757M | $3,080M |
| **Gross Margin** | 40.8% | 42.0% | 43.0% |
| **Adj. EBITDA** | $1,319M | $1,548M | $1,760M |
| **Adj. EBITDA Margin** | 22.2% | 23.6% | 24.6% |
| **EBIT (Reported)** | $617M | $813M | $950M |
| **EBIT Margin** | 10.4% | 12.4% | 13.2% |
| **Net Income (Reported)** | $375M | $589M | $680M |
| **Diluted EPS (Reported)** | $0.93 | $1.46 | $1.68 |
| **Adj. EPS** | $2.23 | $2.72 | $3.09 |
| **D&A** | ~$570M | ~$560M | ~$550M |
| **Interest Expense** | ~$255M | ~$240M | ~$225M |

Note: "Adjusted" figures exclude purchase accounting amortization (~$250-280M/year), restructuring charges, M&A transaction costs, and other non-recurring items. The large D&A relative to EBIT reflects substantial intangible amortization from the Gardner Denver + Ingersoll-Rand Industrial merger and subsequent acquisitions.

#### Margin Bridge Analysis

**Gross Margin Expansion** (40.8% → 43.0%): Driven by:
1. Pricing actions (3-5% annually) outpacing material cost inflation
2. Mix shift toward aftermarket/service (higher margin) and PST specialty products
3. IRX lean manufacturing driving COGS reduction
4. Supply chain normalization post-COVID (freight, semiconductors, steel)

**EBITDA Margin Expansion** (22.2% → 24.6%): Driven by:
1. Gross margin flow-through
2. SG&A leverage on higher revenue base
3. IRX-driven operating efficiency in acquired businesses
4. Partially offset by continued integration investments

**Target EBITDA Margin**: Management has guided to ~28-30% Adj. EBITDA margin by FY2027, implying continued 150-200 bps of annual margin expansion — ambitious but supported by ITS operational leverage and PST margin normalization post-ILC Dover integration.

#### Key Profitability Metrics

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Gross Margin | 40.8% | 42.0% | 43.0% |
| Adj. EBITDA Margin | 22.2% | 23.6% | 24.6% |
| Adjusted Operating Margin | ~17.5% | ~19.2% | ~20.5% |
| Net Income Margin (Reported) | 6.3% | 9.0% | 9.5% |
| Net Income Margin (Adjusted) | ~13% | ~14% | ~15% |
| FCF Conversion (FCF/Adj. Net Income) | ~85-90% | ~90-95% | ~90-95% |

#### GAAP vs. Adjusted Reconciliation Notes

The large gap between GAAP EPS (~$1.68) and Adjusted EPS (~$3.09) in FY2024 primarily reflects:
1. **Purchase Accounting Amortization**: ~$260M annually from intangible assets created by the 2020 merger and subsequent acquisitions. This is non-cash and will decline over time as intangibles are fully amortized.
2. **Restructuring**: ~$40-60M annually as IR integrates acquisitions and optimizes its manufacturing footprint.
3. **M&A Transaction Costs**: Episodic deal costs (~$20-40M annually).

Investors should watch amortization carefully — it is projected to decline ~$20-30M annually through 2028, providing an EPS tailwind even at constant operating performance.

#### Free Cash Flow

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Operating Cash Flow | $780M | $1,090M | $1,200M |
| CapEx | ($200M) | ($200M) | ($210M) |
| **Free Cash Flow** | **$580M** | **$890M** | **$990M** |
| FCF Yield (on market cap ~$28B) | 2.1% | 3.2% | 3.5% |

The step-up in FCF from FY2022 to FY2023 partly reflects normalization of working capital after the 2021-2022 supply chain disruption (IR built inventory buffers that were subsequently released). Ongoing FCF generation is expected to be ~$1B+ annually, providing significant capital allocation optionality.

#### Balance Sheet Summary

| Item | FY2022 | FY2023 | FY2024E |
|------|--------|--------|---------|
| Cash & Equivalents | $1,100M | $1,250M | $1,350M |
| Total Debt | $5,500M | $5,100M | $4,800M |
| Net Debt | $4,400M | $3,850M | $3,450M |
| Net Debt / Adj. EBITDA | 3.3x | 2.5x | 2.0x |
| Total Assets | ~$16B | ~$16.5B | ~$17B |

The leverage profile has been declining steadily from the peak post-ILC Dover acquisition (~3.5x in 2021). Management targets ~2.0x net leverage as the steady-state level, which permits continued bolt-on M&A while maintaining investment-grade credit.

#### Valuation Context

At a share price of approximately $70-75 (mid-2025 estimate), IR trades at:
- ~16-18x NTM Adjusted EPS
- ~13-15x NTM Adjusted EBITDA
- ~16-18x NTM FCF

These multiples represent a discount to Atlas Copco (20-25x EV/EBITDA) but a premium to broader U.S. industrials (12-14x EV/EBITDA), reflecting IR's premium-quality business model, compounding M&A strategy, and margin expansion runway.

## Recent Catalysts

---
source: coverage-next-full
ticker: IR
step: "12"
title: Catalysts — Near-Term & Long-Term
created: 2026-05-29
---

### Step 12 — Catalysts

#### Near-Term Catalysts (0-12 months)

##### 1. ILC Dover / PST Revenue Recovery
The single most anticipated near-term catalyst. After 2+ years of destocking in single-use bioprocessing, pharma customers are expected to normalize procurement in 2025. IRB/management commentary pointing to order recovery in PST would be a positive re-rating catalyst. A return to 6-8% PST organic growth vs. the recent 2-4% would add ~$100M of revenue at high margin.

##### 2. CHIPS Act Semiconductor Fab Orders
US semiconductor fab construction (Intel Ohio, TSMC Arizona, Samsung Texas, Micron) is progressing. IR's oil-free compressors, vacuum systems, and ultrapure water tools are required for cleanroom environments. Large individual fab orders can be $30-60M each. Tangible order wins or management commentary on the semiconductor pipeline are upside catalysts.

##### 3. European Industrial Recovery
German industrial production and broader Euro-area PMI recovery would be a meaningful positive. ITS EMEA organic growth recovery from ~0% to 3-5% would add ~$60-80M in high-incremental-margin revenue. ECB rate cuts and energy cost normalization support this.

##### 4. Accretive Bolt-On Acquisition Announcement
IR typically announces 2-4 bolt-on acquisitions per quarter. A well-priced acquisition in specialty pumps, digital services, or life sciences would reinforce the M&A compounding narrative. Markets react positively to well-executed, in-strategy bolt-ons.

##### 5. Margin Guidance Increase
If EBITDA margin continues to track above guidance (management targets ~28-30% by FY2027), an upward margin guidance revision at any quarterly earnings would drive consensus EPS upgrades and multiple expansion.

#### Long-Term Catalysts (1-5 years)

##### 1. EBITDA Margin Convergence to 28-30%
IR management has set a long-term target of 28-30% Adj. EBITDA margin vs. ~24.6% today. The path involves continued IRX margin improvement across ITS and PST, further aftermarket mix shift, and digital revenue growth. Achieving this margin target would:
- Increase EBITDA by ~$250-400M annually at current revenue
- Drive significant EPS accretion
- Support multiple re-rating toward Atlas Copco levels (currently at a 5-7x EV/EBITDA discount)

##### 2. Atlas Copco Multiple Convergence
Atlas Copco trades at ~20-25x EV/EBITDA; IR trades at ~14-16x. The multiple gap reflects:
- Atlas Copco's longer track record and higher ROIC
- Atlas Copco's superior geographic scale in EMEA/Asia
- Investor perception of IR as a "newer" quality compounder

As IR's track record lengthens and ROIC improves, the multiple gap should compress. Even a 2-3 turn EV/EBITDA expansion would translate to 15-25% stock upside above fundamental growth.

##### 3. Life Sciences Market Secular Growth
The ILC Dover and PST life sciences franchise is exposed to the structural growth of biologic drug manufacturing, cell and gene therapy, and GLP-1 drug production. These represent multi-year secular growth drivers independent of cyclical factors.

##### 4. Energy Transition / Industrial Decarbonization
IR's energy-efficient compressors, electrification-compatible tools, and hydrogen compression capabilities position it favorably in the industrial decarbonization trend. Regulatory tailwinds (EU industrial efficiency mandates, DOE standards) should sustain replacement demand well into the 2030s.

##### 5. Emerging Market Infrastructure Growth
Asia-Pacific and Latin America manufacturing investment is a multi-decade growth driver. IR is investing in local manufacturing and service network expansion in India, Southeast Asia, and Mexico — markets expected to grow at 8-12% annually.

#### Negative Catalysts to Monitor

- Prolonged European industrial recession
- ILC Dover recovery further delayed into 2026+
- Large ($3B+) dilutive acquisition that lever-up the balance sheet
- CEO Reynal departure
- China trade policy escalation impacting IR's Chinese manufacturing operations

---

#### Bull Case

- **IRX margin execution accelerates to 28%+ EBITDA margin by FY2026** (vs. consensus ~25-26%), driving Adjusted EPS of $4.00+ vs. consensus $3.50; combined with modest multiple re-rating toward Atlas Copco, stock could reach $100+ representing 30-40% upside.
- **ILC Dover / PST recovery in H1 2025 exceeds expectations**, with organic growth re-accelerating to 8-10%, validating the $2.65B acquisition thesis and demonstrating IR's IRX capability in life sciences; this would be a transformational confidence catalyst.
- **Three-year M&A compounding adds $500M+ of EBITDA** as IR deploys $1.5B+ across 15-20 bolt-on acquisitions with consistent IRX execution, driving EPS to $4.50-5.00 by FY2028 and making IR a 3x EBITDA compounder since formation.

#### Bear Case

- **ILC Dover proves to be a value-destroying acquisition** — life sciences market remains depressed for 3+ years, ILC Dover EBITDA plateaus at $250M vs. the $400M+ target, goodwill impairment recognized, and PST margins stall below 25%; investor confidence in IR's M&A discipline damaged, multiple re-rates to 12x EV/EBITDA.
- **European industrial recession deepens and persists through 2026**, causing ITS EMEA organic growth to decline 5-8%, compressing group organic growth to near zero; combined with a global industrial capex downturn, IR misses FY2025 guidance and re-rates to a low-teens EV/EBITDA multiple (stock -25%).
- **CEO Vicente Reynal departs** (retirement, health, competing opportunity), removing the key architect of the IRX strategy and M&A compounding story; the resulting key-man discount, uncertainty about the M&A pipeline, and potential strategy pivot cause a 15-20% de-rating.

## Full Research Available

This primer covers steps 1–3 of 19. The full deep dive (moat analysis, DCF, bull/bear,
management quality, earnings transcript analysis) is available via:

- Investment memo: /memo/ir
- Full research API: GET /api/v1/research/IR/memo
- Coverage universe: /stocks