Q4 2025 Ingersoll Rand Inc Earnings Call

February 13, 2026

Operator: Hello, and welcome to the Ingersoll Rand Q4 2025 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 Matthew Fort, Vice President, Investor Relations. You may begin.

Speaker #2: After the speakers' remarks, there will be a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad.

Speaker #2: I would now like to turn the conference over to Matthew Fort, Vice President, Investor Relations. You may begin.

Speaker #1: Thank you, and welcome to the Ingersoll Rand 2025 Fourth Quarter earnings call. I'm Matthew Fort, Vice President of Investor Relations, and joining me this morning are Vicente Reynal, Chairman and CEO, and Vikram Kini, Chief Financial Officer.

Matthew Fort: Thank you, and welcome to the Ingersoll Rand 2025 Q4 earnings call. I'm Matthew Fort, Vice President of Investor Relations, and joining me this morning are Vicente Reynal, Chairman and CEO, and Vic Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday afternoon, and we will reference these during the call. Both are available on the investor relations section of our website. In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide 2 for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures.

Matthew Fort: Thank you, and welcome to the Ingersoll Rand 2025 Q4 earnings call. I'm Matthew Fort, Vice President of Investor Relations, and joining me this morning are Vicente Reynal, Chairman and CEO, and Vik Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday afternoon, and we will reference these during the call. Both are available on the investor relations section of our website. In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call.

Speaker #1: We issued our earnings release and presentation yesterday afternoon, and we will reference these during the call. Both are available on the Investor Relations section of our website.

Speaker #1: In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings.

Speaker #1: You should read this in conjunction with the information provided on this call. Please review the forward-looking statements on Slide 2 for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures.

Matthew Fort: Please review the forward-looking statements on slide two for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures to the most comparable measure, calculated and presented in accordance with GAAP, in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website. On today's call, we will review our company and segment financial highlights and provide our full year 2026 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Speaker #1: You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the Investor Relations section of our website.

Matthew Fort: You can find a reconciliation of these measures to the most comparable measure, calculated and presented in accordance with GAAP, in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website. On today's call, we will review our company and segment financial highlights and provide our full year 2026 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Speaker #1: On today's call, we will review our company and segment financial highlights and provide our full year 2026 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants.

Speaker #1: At this time, I will turn the call over to Vicente.

Speaker #2: Thanks, Matthew. And good morning to all. Beginning on slide 3, we ended the year on a strong note, delivering low single-digit organic order growth for both the fourth quarter and the full year.

Vicente Reynal: Thanks, Matthew, and good morning to all. Beginning on slide 3, we ended the year on a strong note, delivering low single-digit organic order growth for both Q4 and the full year. Additionally, our return to organic revenue growth reflects positive momentum heading into 2026. We're also very pleased with the momentum we continue to see on our recurring revenue initiative, which exceeded $450 million in 2025, with a backlog of recurring revenue of approximately $1.1 billion in future revenue from existing contracts. This is a clear demonstration of how we continue to make great progress towards achieving our recurring revenue targets. Turning to inorganic growth, our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, with a strategic focus on enhancing our existing portfolio.

Vicente Reynal: Thanks, Matthew, and good morning to all. Beginning on slide three, we ended the year on a strong note, delivering low single-digit organic order growth for both Q4 and the full year. Additionally, our return to organic revenue growth reflects positive momentum heading into 2026. We're also very pleased with the momentum we continue to see on our recurring revenue initiative, which exceeded $450 million in 2025, with a backlog of recurring revenue of approximately $1.1 billion in future revenue from existing contracts. This is a clear demonstration of how we continue to make great progress towards achieving our recurring revenue targets. Turning to inorganic growth, our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, with a strategic focus on enhancing our existing portfolio.

Speaker #2: Additionally, our return to organic revenue growth reflects positive momentum heading into 2026. We're also very pleased with the momentum we continue to see on our recurrent revenue initiative.

Speaker #2: Which exceeded $450 million in 2025, with a backlog of recurrent revenue of approximately $1.1 billion in future revenue from existing contracts. This is a clear demonstration of how we continue to make great progress towards achieving our recurrent revenue target.

Speaker #2: Turning to inorganic growth, our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, with a strategic focus on enhancing our existing portfolio.

Speaker #2: Finally, our teams remain nimble through the use of IRX and continue to leverage our economic growth engine to outperform in the markets in which we serve.

Vicente Reynal: Finally, our teams remain nimble through the use of IRX and continue to leverage our economic growth engine to outperform in the markets in which we serve. On slide four, our inorganic growth flywheel remains robust, underpinned by a strong pipeline and disciplined deal execution. The value creation flywheel remains a core engine of performance, delivering durable free cash flow and enabling consistent high return capital deployment. In 2025, we demonstrated both efficiency and precision in our execution, investing $525 million across 16 transactions, which collectively generated approximately $275 million in annualized inorganic revenue. These high return acquisitions averaged a 9x pre-synergy multiple and expanded our technological capabilities, demonstrating that our M&A engine continues to help us drive above-market growth. We're off to a great start heading into 2026, with nine additional transactions currently under LOI.

Speaker #2: On slide 4, our inorganic growth flywheel remains robust, underpinned by a strong pipeline and disciplined deal execution. The value creation flywheel remains a core engine of performance.

Speaker #2: Delivering durable free cash flow and enabling consistent, high-return capital deployment. In 2025, we demonstrated both efficiency and precision in our execution, investing $525 million across 16 transactions, which collectively generated approximately $275 million in annualized inorganic revenue.

Speaker #2: These high-return acquisitions average a 9-times pre-synergy multiple and expanded our technological capabilities, demonstrating that our M&A engine continues to help us drive above-market growth.

Speaker #2: And we're off to a great start heading into 2026. With nine additional transactions currently under LOI, in January we completed our first acquisition of 2026 with Synomix.

Vicente Reynal: In January, we completed our first acquisition of 2026 with Scinomix, a leading manufacturer specializing in technologies that optimize workflow solutions to improve throughput, accuracy, and traceability across multiple life science and markets. The Scinomix acquisition advances our life science strategy by combining complementary technologies to deliver high value end-to-end laboratory solutions. Now, I will hand it over to Vic, who will share an update on our financial performance for Q4 and the full year.

Vicente Reynal: In January, we completed our first acquisition of 2026 with Scinomix, a leading manufacturer specializing in technologies that optimize workflow solutions to improve throughput, accuracy, and traceability across multiple life science and markets. The Scinomix acquisition advances our life science strategy by combining complementary technologies to deliver high value end-to-end laboratory solutions. Now, I will hand it over to Vik, who will share an update on our financial performance for Q4 and the full year.

Speaker #2: A leading manufacturer specializing in technologies that optimize workflow solutions to improve throughput, accuracy, and traceability across multiple life science and markets. The Synomix acquisition advances our life science strategy by combining complementary technologies to deliver high-value end-to-end laboratory solutions.

Speaker #2: Now, I will hand it over to Vik, who will share an update on our financial performance for Q4 and the full year.

Speaker #1: Thanks, Vicente. Starting on slide 5, orders showed continued strength in the fourth quarter, up 8% year over year, or up 1% organically, with both our ITS and PST segments delivering low single-digit organic order growth.

Matthew Fort: Thanks, Vicente. Starting on slide five, orders showed continued strength in Q4, up 8% year-over-year or up 1% organically, with both our ITS and PST segments delivering low single-digit organic order growth. Consistent with normal seasonality, Q4 book-to-bill finished at 0.93 turns. As Vicente mentioned earlier in the call, we finished the year strong with revenue up 10%. Organic revenue grew 3% year-over-year, which included both positive price and volume. We delivered Q4 Adjusted EBITDA of $580 million, and Adjusted EBITDA margins remained strong at 27.7%, reflecting the durability of our operating model, with year-over-year margin pressure primarily driven by tariff impacts and intentional commercial investments for growth. Corporate costs were $31 million.

Vik Kini: Thanks, Vicente. Starting on slide five, orders showed continued strength in Q4, up 8% year-over-year or up 1% organically, with both our ITS and PST segments delivering low single-digit organic order growth. Consistent with normal seasonality, Q4 book-to-bill finished at 0.93 turns. As Vicente mentioned earlier in the call, we finished the year strong with revenue up 10%. Organic revenue grew 3% year-over-year, which included both positive price and volume. We delivered Q4 Adjusted EBITDA of $580 million, and Adjusted EBITDA margins remained strong at 27.7%, reflecting the durability of our operating model, with year-over-year margin pressure primarily driven by tariff impacts and intentional commercial investments for growth. Corporate costs were $31 million. Our Q4 adjusted tax rate was 21.2%, and adjusted earnings per share was $0.96 for the quarter, up 14% year-over-year.

Speaker #1: Consistent with normal seasonality, fourth quarter book-to-bill finished at 0.93 turns. As Vicente mentioned earlier on the call, we finished the year strong, with revenue up 10%.

Speaker #1: Organic revenue grew 3% year over year, which included both positive price and volume. We delivered fourth quarter adjusted EBITDA of $580 million, and adjusted EBITDA margins remained strong at 27.7%, reflecting the durability of our operating model, with year-over-year margin pressure primarily driven by tariff impacts and intentional commercial investments for growth.

Speaker #1: Corporate costs were $31 million; our Q4 adjusted tax rate was 21.2%, and adjusted earnings per share was $96 for the quarter, up 14% year over year.

Matthew Fort: Our Q4 adjusted tax rate was 21.2%, and adjusted earnings per share was $0.96 for the quarter, up 14% year-over-year. Moving to the full year results on slide 6, orders were up 9% year-over-year, or up 1% organically. Heading into 2026, we are well positioned, finishing 2025 with a Book-to-Bill above 1 and both the ITS and PST segments delivering low single-digit organic order growth for the full year. Total revenue was up 6% year-over-year, while organic revenue finished the year down 1%, due in large part to tough first half comps, with a clear improvement in trajectory as the year progressed and positive momentum exiting 2025. For the full year, our results exceeded the upper end of our prior guidance range for both Adjusted EBITDA and adjusted earnings per share.

Speaker #1: Moving to the full year results on slide 6, orders were up 9% year-over-year, or up 1% organically. Heading into 2026, we are well positioned, finishing 2025 with a book-to-bill above 1, and both the ITS and PST segments delivering low single-digit organic order growth for the full year.

Vik Kini: Moving to the full year results on slide 6, orders were up 9% year-over-year, or up 1% organically. Heading into 2026, we are well positioned, finishing 2025 with a Book-to-Bill above 1 and both the ITS and PST segments delivering low single-digit organic order growth for the full year. Total revenue was up 6% year-over-year, while organic revenue finished the year down 1%, due in large part to tough first half comps, with a clear improvement in trajectory as the year progressed and positive momentum exiting 2025. For the full year, our results exceeded the upper end of our prior guidance range for both Adjusted EBITDA and adjusted earnings per share. The company delivered Adjusted EBITDA of approximately $2.1 billion, with an Adjusted EBITDA margin of 27.4%.

Speaker #1: Total revenue was up 6% year over year, while organic revenue finished the year down 1%, due in large part to tough first-half comps, with a clear improvement in trajectory as the year progressed and positive momentum exiting 2025.

Speaker #1: For the full year, our results exceeded the upper end of our prior guidance range for both adjusted EBITDA and adjusted earnings per share. The company delivered adjusted EBITDA of approximately $2.1 billion, with an adjusted EBITDA margin of 27.4%.

Matthew Fort: The company delivered Adjusted EBITDA of approximately $2.1 billion, with an Adjusted EBITDA margin of 27.4%. Adjusted earnings per share for the year was $3.34, up 2% year-over-year, including a full year adjusted tax rate of 22.8%. On the next slide, free cash flow for the fourth quarter was $462 million. With $3.8 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high return opportunities. Leverage continues to be well under 2x, even as we continue to strongly deploy capital in 2025, including $525 million in M&A, $1 billion in share repurchases, and $32 million in dividends. This performance reinforces our ability to effectively deploy capital while maintaining top-tier balance sheet flexibility.

Speaker #1: Adjusted earnings per share for the year were $3.34, up 2% year over year, including a full-year adjusted tax rate of 22.8%. On the next slide, free cash flow for the fourth quarter was $462 million.

Vik Kini: Adjusted earnings per share for the year was $3.34, up 2% year-over-year, including a full year adjusted tax rate of 22.8%. On the next slide, free cash flow for the fourth quarter was $462 million. With $3.8 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high return opportunities. Leverage continues to be well under 2x, even as we continue to strongly deploy capital in 2025, including $525 million in M&A, $1 billion in share repurchases, and $32 million in dividends. This performance reinforces our ability to effectively deploy capital while maintaining top-tier balance sheet flexibility. Now I'll hand the call over to Vicente, who will go over our segment results.

Speaker #1: With $3.8 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high-return opportunities. Leverage continues to be well under 2 times, even as we continue to strongly deploy capital in 2025, including $525 million in M&A, $1 billion in share repurchases, and $32 million in dividends.

Speaker #1: This performance reinforces our ability to effectively deploy capital while maintaining top-tier balance sheet flexibility. Now, I'll hand the call over to Vicente, who will go over our segment results.

Matthew Fort: Now I'll hand the call over to Vicente, who will go over our segment results.

Speaker #2: Thanks, Vik. On slide 8, ITS orders finished up 9% in the fourth quarter. Book-to-bill for the quarter was 0.93 and finished above 1 for the full year.

Vicente Reynal: Thanks, Rick. On slide 8, ITS orders finished up 9% in Q4. Book-to-bill for the quarter was 0.93 and finished above 1 for the full year. The segment delivered organic orders growth in the low single digits, making all 4 quarters of positive organic order growth in 2025. All 3 regions, Americas, EMEA, and Asia Pacific, saw positive organic order growth for the full year. Revenue grew 11% year-over-year, including organic revenue growth of 3%. Adjusted EBITDA margins finished at 28.9%, which was down year-over-year, largely driven by the dilutive impact of tariffs and continued commercial investments for growth.

Vicente Reynal: Thanks, Vik. On slide eight, ITS orders finished up 9% in Q4. Book-to-bill for the quarter was 0.93 and finished above 1 for the full year. The segment delivered organic orders growth in the low single digits, making all 4 quarters of positive organic order growth in 2025. All 3 regions, Americas, EMEA, and Asia Pacific, saw positive organic order growth for the full year. Revenue grew 11% year-over-year, including organic revenue growth of 3%. Adjusted EBITDA margins finished at 28.9%, which was down year-over-year, largely driven by the dilutive impact of tariffs and continued commercial investments for growth.

Speaker #2: The segment delivered organic orders growth in the low single digits, making all four quarters of positive organic order growth in 2025. All three regions—Americas, EMEA, and Asia Pacific—saw positive organic order growth for the full year.

Speaker #2: Revenue grew 11% year over year, including organic revenue growth of 3%. Adjusted EBITDA margins finished at 28.9%, which was down year over year, largely driven by the diluted impact of tariffs.

Speaker #2: And continued commercial investments for growth. For a more detailed breakdown on organic orders at a regional level for Q4: Americas was up low single digits, EMEA was down mid-single digits, and Asia Pacific was up low double digits, driven by China up low single digits and the rest of Asia up mid-20s.

Vicente Reynal: For a more detailed breakdown on organic orders at a regional level for Q4, Americas was up low single digits, EMEA was down mid-single digits, and Asia Pacific was up low double digits, driven by China up low single digits and the rest of Asia up mid-twenties. Compressor organic order trends were in line with the regional trends just mentioned for Americas, EMEA, and China. This marks the third quarter in a row where we saw organic order growth in China, underscoring our agility through the effective use of IRX and the success of our demand generation activities, delivering consistent growth in what remains a very challenging market. In our innovation in action section, we're pleased to introduce the latest aeration technology for wastewater applications developed by one of our recent acquisitions.

Speaker #2: Compressor organic order trends were in line with the regional trends just mentioned for the Americas, EMEA, and China. This marks the third quarter in a row where we saw organic order growth in China.

Speaker #2: Underscoring our agility through the effective use of IRX and the success of our demand generation activities, delivering consistent growth in what remains a very challenging market.

Speaker #2: In our Innovation in Action section, we're pleased to introduce the latest aeration technology for wastewater applications developed by one of our recent acquisitions. This advanced technology has been integrated with one of our high-efficiency blowers, allowing us to deliver increased oxygen while reducing power consumption.

Vicente Reynal: This advanced technology has been integrated with one of our high-efficiency blowers, allowing us to deliver increased oxygen while reducing power consumption. This combination allows us to achieve up to 34% energy savings, creating a strong return on investment for the customer. This initiative demonstrates our commitment to leveraging both established and new acquired technologies to offer greater energy efficiency to our customers and expand our aftermarket revenue opportunities. Turning to slide 9. Q4 orders in PST were up 6% year-over-year, with a Book-to-Bill of 0.96. Organic orders were up 1%, including our life science businesses, which delivered mid-teens organic order growth. For the full year, PST delivered organic order growth of 2%, with a Book-to-Bill of 1.0.

Speaker #2: This combination allows us to achieve up to 34% energy savings, creating a strong return on investment for the customer. This initiative demonstrates our commitment to leveraging both established and newly acquired technologies to offer greater energy efficiency to our customers and expand our aftermarket revenue opportunities.

Speaker #2: Turning to slide 9, Q4 orders in PST were up 6% year over year, with a book-to-bill of 0.96. Organic orders were up 1%, including our life science businesses, which delivered mid-teens organic order growth.

Speaker #2: For the full year, PST delivered organic order growth of 2%, with a book-to-bill of 1 time. We're also pleased to highlight that both our Precision Technologies and Life Science Technologies businesses saw positive organic order growth for the full year.

Vicente Reynal: We're also pleased to highlight that both our precision technologies and life science technologies businesses saw positive organic order growth for the full year. Additionally, we are encouraged by the acceleration in the organic order momentum as the second half of the year finished up mid-single digits. Fourth quarter revenue finished up at 8% year-over-year, with organic revenue growth of 4%. PST delivered Adjusted EBITDA of $127 million, which was up 19% year-over-year, with a margin of 30.4%. Adjusted EBITDA margin improved 280 basis points year-over-year, demonstrating continued strong execution against a relatively easy comp from Q4 of prior year. For the full year, Adjusted EBITDA margin finished at 30%, which is up 40 basis points year-over-year.

Speaker #2: Additionally, we are encouraged by the acceleration in the organic orders momentum, as the second half of the year finished up mid-single digits. Fourth quarter revenue finished up at 8% year over year, with organic revenue growth of 4%.

Speaker #2: PST delivered adjusted EBITDA of $127 million, which was up 19% year over year, with a margin of 30.4%. Adjusted EBITDA margin improved 280 basis points year over year, demonstrating continued strong execution against the relatively easy comp from Q4 of the prior year.

Speaker #2: For the full year, adjusted EBITDA margin finished at 30%, which is up 40 basis points year over year. For our PST Innovation in Action, we're showcasing our award-winning EasyJet Flow product from our Life Science business.

Vicente Reynal: For our PST innovation in action, we're showcasing our award-winning EasyJet Flow product from our life science business. EasyJet Flow is a disposable, single-use mixer designed for biopharma production, featuring a sealed transfer system that improves safety by reducing cross-contamination risks and shielding operator from airborne powders. When paired with Easy BioPak bags, it allows for fast turnaround without the need for cleaning or validation, while delivering straightforward operation for quicker powder dissolution compared to competitive alternatives. As we move to slide 10, we're issuing our full year guidance for 2026.

Speaker #2: EasyJetFlow is a disposable, single-use mixer designed for biopharma production. Featuring a sealed transfer system, it improves safety by reducing cross-contamination risks and shielding operators from airborne powders.

Vicente Reynal: EasyJet Flow is a disposable, single-use mixer designed for biopharma production, featuring a sealed transfer system that improves safety by reducing cross-contamination risks and shielding operator from airborne powders. When paired with Easy BioPak bags, it allows for fast turnaround without the need for cleaning or validation, while delivering straightforward operation for quicker powder dissolution compared to competitive alternatives. As we move to slide 10, we're issuing our full year guidance for 2026. Total company revenue is expected to grow between 2.5% and 4.5%, driven by organic order growth of 1% at the midpoint, 1.5% growth from M&A, which includes a carryover from all transactions completed in 2025, as well as the previously announced iNomics acquisition, and 1% FX tailwind. Total Adjusted EBITDA for the company is expected to be in the range of $2.13 to 2.19 billion.

Speaker #2: When paired with EasyBio pack bags, it allows for fast turnaround without the need for cleaning or validation, while delivering straightforward operation for quicker powder dissolution compared to competitive alternatives.

Speaker #2: As we move to slide 10, we're issuing our full-year guidance for 2026. Total company revenue is expected to grow between 2.5% and 4.5%.

Vicente Reynal: Total company revenue is expected to grow between 2.5% and 4.5%, driven by organic order growth of 1% at the midpoint, 1.5% growth from M&A, which includes a carryover from all transactions completed in 2025, as well as the previously announced iNomics acquisition, and 1% FX tailwind. Total Adjusted EBITDA for the company is expected to be in the range of $2.13 to 2.19 billion. Corporate costs are planned at $170 million, and they're expected to be incurred evenly per quarter throughout the year. Adjusted EPS is projected to fall within the range of $3.45 and $3.57, which is approximately 5% growth at the midpoint.

Speaker #2: Driven by organic order growth of 1% at the midpoint. 1.5% growth from M&A, which includes a carryover from all transactions completed in 2025, as well as the previously announced Synomics acquisition.

Speaker #2: And 1% FX delaway. Total adjusted EBITDA for the company is expected to be in the range of $2.13 billion to $2.19 billion. Corporate costs are planned at $170 million and are expected to be incurred evenly per quarter throughout the year.

Vicente Reynal: Corporate costs are planned at $170 million, and they're expected to be incurred evenly per quarter throughout the year. Adjusted EPS is projected to fall within the range of $3.45 and $3.57, which is approximately 5% growth at the midpoint. We anticipate our adjusted tax rate to be approximately 23%, net interest expense to be about $230 million, and share count to be approximately 394 million. Free cash flow to adjusted net income conversion will be around 95%. The phasing of revenue, adjusted EBITDA, and adjusted EPS is expected to be consistent with what we have seen in prior years, as outlined in the table. In addition, based on our guidance at the midpoint, we expect EPS to grow at a similar mid-single-digit growth rate in both the first and second half of the year.

Speaker #2: Adjusted EPS is projected to fall within the range of $3.45 and $3.57, which is approximately 5% growth at the midpoint. We anticipate our adjusted tax rate to be approximately 23%.

Vicente Reynal: We anticipate our adjusted tax rate to be approximately 23%, net interest expense to be about $230 million, and share count to be approximately 394 million. Free cash flow to adjusted net income conversion will be around 95%. The phasing of revenue, adjusted EBITDA, and adjusted EPS is expected to be consistent with what we have seen in prior years, as outlined in the table. In addition, based on our guidance at the midpoint, we expect EPS to grow at a similar mid-single-digit growth rate in both the first and second half of the year. Finally, on slide 11, as we wrap up this part of the call, I'm confident that our strong finish in 2025 puts us in an excellent position for success in 2026.

Speaker #2: Net interest expense to be about $230 million and share count to be approximately 394 million. Free cash flow to adjusted net income conversion will be around 95%.

Speaker #2: The phasing of revenue, adjusted EBITDA, and adjusted EPS is expected to be consistent with what we have seen in prior years, as outlined in the table.

Speaker #2: In addition, based on our guidance at the midpoint, we expect EPS to grow at a similar mid-single-digit growth rate in both the first and second half of the year.

Speaker #2: Finally, on slide 11, as we wrap up this part of the call, I'm confident that our strong finish in 2025 puts us in an excellent position for success in 2026.

Vicente Reynal: Finally, on slide 11, as we wrap up this part of the call, I'm confident that our strong finish in 2025 puts us in an excellent position for success in 2026. We maintain agility and readiness to adapt to the ongoing changes in the global market landscape. Our teams have consistently demonstrated resilience and high level of execution, achieving strong results in this very complex environment. We remain disciplined with our approach of capital allocation, leveraging our robust balance sheet to generate durable earnings growth and long-term shareholder value. Finally, I would like to thank our employees for your ongoing dedication and commitment to embracing an ownership mindset. Thank you for your help in delivering another robust quarter and full year. Now, I will hand the call back to the operator and open it for Q&A.

Speaker #2: We maintain agility and readiness to adapt to the ongoing changes in the global market landscape. Our teams have consistently demonstrated resilience and a high level of execution, achieving strong results in these very complex environments.

Vicente Reynal: We maintain agility and readiness to adapt to the ongoing changes in the global market landscape. Our teams have consistently demonstrated resilience and high level of execution, achieving strong results in this very complex environment. We remain disciplined with our approach of capital allocation, leveraging our robust balance sheet to generate durable earnings growth and long-term shareholder value. Finally, I would like to thank our employees for your ongoing dedication and commitment to embracing an ownership mindset. Thank you for your help in delivering another robust quarter and full year. Now, I will hand the call back to the operator and open it for Q&A.

Speaker #2: We remain disciplined in our approach to capital allocation, leveraging our robust balance sheet to generate durable earnings growth and long-term shareholder value. Finally, I would like to thank our employees for your ongoing dedication and commitment to embracing an ownership mindset.

Speaker #2: Thank you for your help in delivering another robust quarter and full year. Now, I will hand the call back to the operator and open it for Q&A.

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.

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 Mike Halloran with Baird. Your line is open.

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 Mike Halloran with Baird.

Speaker #1: Your line is open.

Speaker #3: Thank you. Morning, everyone.

Mike Halloran: Thank you. Morning, everyone.

Vicente Reynal: Morning.

Speaker #2: Morning.

Speaker #3: Start at the end in the guidance. What sort of end market trajectory is embedded in the guidance, and on the shorter cycle side of your businesses?

Mike Halloran: So, start on the guidance. What sort of end market trajectory is embedded in the guidance? And on the shorter cycle side of your businesses, are you seeing any signs of change, and what would the businesses that you would look at internally for leading indicators on your side?

Speaker #3: Are you seeing any signs of change, and what would be the businesses that you would look at internally for leading indicators on your side?

Speaker #2: Sure, Mike. So let me start with the end market commentary first. As it relates to what we're currently seeing in the market, which is the basis of our initial guide here, the portfolio continues to demonstrate resiliency, as you have seen.

Vicente Reynal: Sure, Mike. So let me start with the end market commentary first, as it relates to what we're currently seeing in the market, which is the basis of our initial guide here. You know, portfolio continues to demonstrate resiliency, as you have seen. I mean, as a reminder, 40% of our revenue is aftermarket, which tends to be very stable. And from a high level, some end market commentary, life sciences is progressing and improving sequentially. As a reminder, we demonstrated outgrowth with orders in the mid-teens during the Q4 performance. And kind of to double click on the life sciences more, you know, pharma and biopharma production, we continue to see very good funnel and booking activity, both in the US and outside the US.

Speaker #2: I mean, as a reminder, 40% of our revenue is aftermarket, which tends to be very stable. And from a high level, some end market commentary: life sciences is progressing and improving sequentially.

Speaker #2: As a reminder, we demonstrated outgrowth with orders in the mid-teens during the Q4 performance and to kind of double-click on the life sciences, more pharma and biopharma production, we continue to see very good funnel and booking activity both in the US and outside the US.

Speaker #2: Our medical device business, which is very in region-for-region, is driving some very good funnel activity. I was actually with a team in China last week, and there's just a lot of good potential to serve our customers in China, for example, on the medical device side.

Vicente Reynal: Our medical device business, which is very in region for region, is driving some very good funnel activity. I was actually with a team in China last week, and there's just a lot of good potential to serve our customers in China, for example, on the medical device side. In the lab, analytical diagnostic equipment market, very good pipeline activity, given some of the US reshoring of drug discovery and development, and the need for automation to mitigate reshoring costs; therefore, the acquisition that we made with Scinomix, which plays very well in that kind of end market. On the general industrial side, we have seen more stability, especially in the back half of 2025, as we kind of have passed the peak of uncertainty related to tariffs.

Speaker #2: The lab analytical diagnostic equipment market—very good pipeline activity, given some of the US re-shoring of drug discovery and development, and the need for automation to mitigate re-shoring cost.

Speaker #2: Therefore, the acquisition that we made with Synomics plays very well in that kind of end market. On the general industrial side, we have seen more stability, especially in the back half of 2025, as we have passed the peak of uncertainty related to tariffs.

Vicente Reynal: And that being said, you know, we're cautiously optimistic about the improving trends moving into 2026. You know, long cycle project perspective, we haven't seen any kind of dramatic changes as the funnel remains very healthy. And I think it's, you know, the other important point of note is we're continuing to remain very encouraged about the recurring revenue. You know, in terms of some of the indicators that you were asking, Mike, I mean, PMI for us continues to serve as a good overall gauge for our short cycle businesses, and we're optimistic about the uptick we recently saw in the US PMI here in January.

Speaker #2: And that being said, we're cautiously optimistic about the improving trends moving into 2026. From a long-cycle project perspective, we haven't seen any kind of dramatic changes, as the funnel remains very healthy.

Speaker #2: And I think it's the other important point of note is we're continuing to remain very encouraged about the recurring revenue. In terms of some of the indicators that you were asking Mike, I mean, PMI for us continues to serve as a good overall gauge for short cycle businesses and we're optimistic about the optic we recently saw in the US PMI here in January and however, we think it's too early to call a meaningful inflection.

Vicente Reynal: However, we think it's too early to call a meaningful inflection as a result of just one data point, which has been down for such a long period of time, and therefore, the reason why we took a prudent approach here as we started the year of 2026.

Speaker #2: And as a result of just one data point, which has been down for such a long period of time, and therefore, the reason why we took a prudent approach here as we started the year of 2026.

Speaker #3: Thanks for that. So it sounds like the guidance itself assumes just the current trajectory continues, as opposed to some sort of inflection up in any of the pieces.

Mike Halloran: Thanks for that. So it sounds like your, you-- the guidance itself assumes just the current trajectory continues as opposed to some sort of inflection up in any of the pieces. And then, you know, related to that, are there any end markets that you're specifically worried about this year? Maybe a better put, if you look at the last couple of years where there's been headwinds, do you think those persist into 2026 here? Or are we at the point where we've at least flushed out a lot of the headwinds? I know the China piece has been a headwind from a market perspective, but you've turned to growth. Any other things there you would point to or areas you would point to?

Mike Halloran: Thanks for that. So it sounds like your, you the guidance itself assumes just the current trajectory continues as opposed to some sort of inflection up in any of the pieces. And then, you know, related to that, are there any end markets that you're specifically worried about this year? Maybe a better put, if you look at the last couple of years where there's been headwinds, do you think those persist into 2026 here? Or are we at the point where we've at least flushed out a lot of the headwinds? I know the China piece has been a headwind from a market perspective, but you've turned to growth. Any other things there you would point to or areas you would point to?

Speaker #3: And then, related to that, are there any end markets that you're specifically worried about this year—maybe better put, if you look at the last couple of years where there's been headwinds?

Speaker #3: Do you think those persist into 2026 here, or are we at the point where we've at least flushed out a lot of the headwinds?

Speaker #3: I know the China piece has been a headwind from a market perspective, but you’ve turned to growth. Any other things there you would point to, or areas you would point to?

Speaker #2: Yeah. So related to the guidance, you're exactly right, Mike. We're not embedding any market recovery here, and I'm very stable sequentially here from what we are seeing today.

Vicente Reynal: Yeah. So, so related to the guidance, you're exactly as you said, Mike, we're, we're not embedding any market recovery here, and I'm very stable sequentially here from from what we are seeing today. So, that, that's what we're embedding the guidance. In terms of the end market, some of the headwinds, as you very well... as we kind of articulated, you know, whether, you know, RNG, electric vehicle, photovoltaic, a lot of that is behind us.

Vicente Reynal: Yeah. So, so related to the guidance, you're exactly as you said, Mike, we're, we're not embedding any market recovery here, and I'm very stable sequentially here from from what we are seeing today. So, that, that's what we're embedding the guidance. In terms of the end market, some of the headwinds, as you very well as we kind of articulated, you know, whether, you know, RNG, electric vehicle, photovoltaic, a lot of that is behind us.

Speaker #2: So that's what we're embedding in the guidance. In terms of the end market, some of the headwinds, as you very well—as we kind of articulated—whether R&G, electric vehicle, photovoltaic—a lot of that is behind us.

Vicente Reynal: And I think also the good news here, too, as well as I mentioned on the early remarks, you know, our team in China now three quarters of delivering positive organic order growth the past three quarters in a row. Not what the market is doing, but also speaks loudly as to what the team is doing. I was with the team in China last week, and it's very impressive, the amount of innovation, technology, new end markets, and new solutions that they're launching in order to penetrate the market and see that organic growth.

Speaker #2: And I think also the good news here, too, as well, as I mentioned in the early remarks, our team in China now has three quarters of delivering positive organic order growth, the past three quarters in a row.

Speaker #2: What the market is doing, but also speaks loudly as to what the team is doing, and what's with the team in China last week.

Speaker #2: And it's very impressive, the amount of innovation and technology, and new end markets and new solutions that they're launching in order to penetrate the market and see that organic growth.

Speaker #3: Thanks for that. I appreciate it.

Vikram Kini: Thanks, Vicente. I appreciate it.

Mike Halloran: Thanks, Vicente. I appreciate it.

Speaker #2: Thank you.

Vicente Reynal: Thank you.

Speaker #1: The next question comes from Julian Mitchell with Barclays. Your line is open.

Operator: The next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker #4: Hi, good morning. Just trying to understand the seasonality through the year a little bit better. So is it fair to assume the guidance is based on roughly that 1 point of organic revenue growth year on year, fairly evenly through the year?

Julian Mitchell: Hi, good morning. Just trying to understand the seasonality through the year a little bit better. So is it fair to assume the guidance is based on roughly, you know, that 1 point of organic revenue growth year on year, fairly evenly through the year? And then on EPS growth, I think you mentioned mid-single digits year on year in both halves. Are you starting out first quarter around that mid-single digit EPS growth as well? Thank you.

Speaker #4: And then, on EPS growth, I think you mentioned mid-single digits year-on-year in both halves. Are you starting out first quarter around that mid-single-digit EPS growth as well?

Speaker #4: Thank you.

Speaker #2: Yeah, Julian, I'll take that one here. So as far as the organic growth comment, first and foremost, starting with Q1, we expect Q1 organic to be, I'd say, roughly flat to maybe very slightly down.

Vikram Kini: Yeah, Julian, I'll take that one here. So as far as the, the organic growth, comment, first and foremost, you know, starting with Q1, we expect Q1 organic to be, you know, I'd say roughly flat to maybe very slightly down. But then as we move through the balance of the year, we expect, I would call it comparable low single digit growth, organic growth for Q2, Q3, and Q4. So, you know, as Vicente said here, a bit of normalization, perhaps as we get from Q2 to Q4, but, you know, no meaningful market recovery or anything like that necessarily baked in, to the guide. As far as, the EPS, question, generally, the way you're characterizing it, is a fair way to think about it here.

Vik Kini: Yeah, Julian, I'll take that one here. So as far as the, the organic growth, comment, first and foremost, you know, starting with Q1, we expect Q1 organic to be, you know, I'd say roughly flat to maybe very slightly down. But then as we move through the balance of the year, we expect, I would call it comparable low single digit growth, organic growth for Q2, Q3, and Q4. So, you know, as Vicente said here, a bit of normalization, perhaps as we get from Q2 to Q4, but, you know, no meaningful market recovery or anything like that necessarily baked in, to the guide. As far as, the EPS, question, generally, the way you're characterizing it, is a fair way to think about it here.

Speaker #2: But then, as we move through the balance of the year, we expect, I would call it, comparable low single-digit organic growth for Q2, Q3, and Q4.

Speaker #2: So as Vicente said here, a bit of normalization, perhaps, as we get from Q2 to Q4, but no meaningful market recovery or anything like that necessarily baked into the guide.

Speaker #2: As far as the EPS question, generally, the way you're characterizing it is a fair way to think about it here. As we indicated, we expect to see relatively even earnings growth on a quarterly basis, and particularly on the first half versus second half as well.

Vikram Kini: And as we indicated, we expect to see, you know, relatively even earnings growth, you know, on a quarterly basis, and, and particularly on the first half versus second half as well.

Vik Kini: And as we indicated, we expect to see, you know, relatively even earnings growth, you know, on a quarterly basis, and, and particularly on the first half versus second half as well.

Speaker #4: That's helpful. Thank you, Vik. And then maybe my follow-up would be on the EBITDA margins. So I think the guidance embeds full-year EBITDA margins are flattish.

Julian Mitchell: That's helpful. Thank you, Vic. And then maybe my follow-up would be on the EBITDA margins. So I think the guidance embeds fully EBITDA margins are flattish. And is the way to think about that, maybe a small decline year-on-year in the first half, because of price cost, and then that flips around? And, you know, in light of some of the commentary in the last sort of eight hours or so, maybe help us understand kind of the scale of the price cost headwinds that you have been seeing, whether dollars or margin percent.

Speaker #4: And is the way to think about that maybe a small decline year-on-year in the first half because of price/cost, and then that flips around?

Speaker #4: And in light of some of the commentary in the last sort of eight hours or so, maybe help us understand kind of the scale of the price/cost headwinds that you have been seeing—where the dollars or margin percent.

Speaker #2: Yeah, sure, Julian, I'll start. As far as the margin profile and kind of the way you've talked about it, you're completely correct. I think even as we talked about in our last earnings call, we did expect some headwinds on the margin front, particularly in the first half of the year, particularly as we lap some of the annualizing of the tariffs.

Vikram Kini: Yeah, sure. Julian, I'll start. You know, as far as the margin profile and kind of the way you've talked about it, you're completely correct. I think even as we talked about, you know, on our last earnings call, we did expect, you know, some headwinds on the margin front, particularly in the first half of the year, particularly as we lap kind of some of the annualizing of the tariffs. So, you know, that's largely impacting the first half of 2026.

Vik Kini: Yeah, sure. Julian, I'll start. You know, as far as the margin profile and kind of the way you've talked about it, you're completely correct. I think even as we talked about, you know, on our last earnings call, we did expect, you know, some headwinds on the margin front, particularly in the first half of the year, particularly as we lap kind of some of the annualizing of the tariffs. So, you know, that's largely impacting the first half of 2026.

Speaker #2: So that's largely impacting the first half of 2026. And then, clearly, as we move into the second half of the year, we would expect some of the results of what I would call in-year pricing actions, some of the productivity measures, as well as some of the controllable, I would say, actions that we've taken internally to drive a better margin profile into the back half of the year.

Vikram Kini: And then, you know, clearly, as we move to the second half of the year, we would expect, you know, some of the, the results of, what I'll call, you know, in-year pricing actions, some of the productivity measures, as well as some of the, you know, controllable, I would say, you know, actions that we've taken internally, to drive, you know, a better margin profile into the back half of the year. You know, as far as the price cost piece of the equation, you know, let me just start by saying, you know, one, I think the fourth quarter largely played itself out as expected. Worth noting, though, that I think the teams executed really well, which you saw specifically in that Q4 performance.

Vik Kini: And then, you know, clearly, as we move to the second half of the year, we would expect, you know, some of the, the results of, what I'll call, you know, in-year pricing actions, some of the productivity measures, as well as some of the, you know, controllable, I would say, you know, actions that we've taken internally, to drive, you know, a better margin profile into the back half of the year. You know, as far as the price cost piece of the equation, you know, let me just start by saying, you know, one, I think the fourth quarter largely played itself out as expected. Worth noting, though, that I think the teams executed really well, which you saw specifically in that Q4 performance.

Speaker #2: As far as the price-cost piece of the equation, let me just start by saying, one, I think the fourth quarter largely played itself out as expected.

Speaker #2: Worth noting, though, that I think the team's executed really well, which you saw specifically in that Q4 performance. And as far as the price-cost equation and things of that nature, kind of going back to my earlier comments—one, we do expect price-cost to be positive for the full year.

Vikram Kini: You know, and as far as the price cost equation and things of that nature, kind of going back to my earlier comments, we do expect price cost to be positive for the full year. Now, if we take that in terms of the two components, first half, and second half, like I said, price costs expect to be a bit more constrained in the first half of the year, given the timing of the tariff impact. However, we do expect to be price cost neutral in the first half, and then we expect to see that margin expansion take hold in the second half for the factors I kind of earlier described.

Vik Kini: You know, and as far as the price cost equation and things of that nature, kind of going back to my earlier comments, we do expect price cost to be positive for the full year. Now, if we take that in terms of the two components, first half, and second half, like I said, price costs expect to be a bit more constrained in the first half of the year, given the timing of the tariff impact. However, we do expect to be price cost neutral in the first half, and then we expect to see that margin expansion take hold in the second half for the factors I kind of earlier described.

Speaker #2: Now, if we take that in terms of the two components—the first half and second half—like I said, price-cost is expected to be a bit more constrained in the first half of the year, given the timing of the tariff impact.

Speaker #2: However, we do expect to be price-cost neutral in the first half. And then we expect to see that margin expansion take hold in the second half, for the factors I kind of earlier described.

Speaker #4: That's great. Thank you.

Julian Mitchell: That's great. Thank you.

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

Vikram Kini: Thank you.

Vik Kini: Thank you.

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

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

Speaker #3: Hey, thank you. Good morning, everyone. Hey, just a couple of things. First, just back on the short cycle. Yeah, we've all seen the PMI.

Vicente Reynal: Hey, thank you. Good morning, everyone. Hey, just a couple of things. First, just back on the short cycle. Yeah, we've all seen the PMI. Vicente, I just wanna kind of clarify a little bit, though. Are you not seeing any actual pickup in short cycle pockets, whether it's, I don't know, tools or small compressors or the like? Is sort of question number one. And then, does the guide actually anticipate volumes turning positive by the time we get to the back half of the year? Obviously, you've been running on negative volumes, positive price for what? The better part of eight quarters here, I guess.

Jeff Sprague: Hey, thank you. Good morning, everyone. Hey, just a couple of things. First, just back on the short cycle. Yeah, we've all seen the PMI. Vicente, I just wanna kind of clarify a little bit, though. Are you not seeing any actual pickup in short cycle pockets, whether it's, I don't know, tools or small compressors or the like? Is sort of question number one. And then, does the guide actually anticipate volumes turning positive by the time we get to the back half of the year? Obviously, you've been running on negative volumes, positive price for what? The better part of eight quarters here, I guess.

Speaker #3: Vicente, I just want to kind of clarify a little bit, though. Are you not seeing any actual pickup in the short-cycle pockets, whether it's, I don't know, tools or small compressors or the like?

Speaker #3: This is sort of question number one. And then, does the guide actually anticipate volumes turning positive by the time we get to the back half of the year?

Speaker #3: Obviously, you've been running on negative volumes, positive price for what the better part of eight quarters here, I guess.

Speaker #2: Yeah, no, Jeff, we're seeing some pickup in the short cycle, clearly. I mean, as you saw from the order rates as we kind of deliver here in the fourth quarter, and we see somewhat of the momentum continuing here.

Vikram Kini: Yeah, no, Jeff, I, we're seeing some pickup in the short cycle, clearly. I mean, as you saw from the order rates, as we kind of deliver here in Q4, and we see somewhat of a momentum continuing here as we enter 2026 and into January. So the order momentum, I'll say, continues. I think what, with the remark that I made is that, you know, PMI just turned above 50 in the US for the first time in 38 months or so in January. And we're just saying, "Hey, that's only one data point." But we're seeing definitely-

Vik Kini: Yeah, no, Jeff, I, we're seeing some pickup in the short cycle, clearly. I mean, as you saw from the order rates, as we kind of deliver here in Q4, and we see somewhat of a momentum continuing here as we enter 2026 and into January. So the order momentum, I'll say, continues. I think what, with the remark that I made is that, you know, PMI just turned above 50 in the US for the first time in 38 months or so in January. And we're just saying, "Hey, that's only one data point." But we're seeing definitely-

Speaker #2: As we enter 2026 and into January, so the order momentum, I'd say, continues. I think what the remark that I made is that PMI just turned above 50 in the US for the first time in 38 months or so.

Speaker #2: In January, and we're just saying, hey, that's only one data point. But we're definitely seeing better momentum and kind of inflecting points. We just want to see more data points of continual, better market performance.

Vicente Reynal: ... that, that better momentum and kind of inflection points. We just want to see more data points of kind of continued better market performance.

Speaker #3: Yeah, Jeff, in terms of your— Or, go ahead. Yeah. Yeah, go ahead. Sorry.

Vikram Kini: Yeah, Jeff, then in terms of your question-

Vik Kini: Yeah, Jeff, then in terms of your question-

Jeff Sprague: I'll go ahead. Yeah. Yeah, go ahead, sorry.

Speaker #4: I was just saying your question on the volume side of the equation. Again, the best way I would probably describe this is we do expect volume performance to improve as we think about the second half versus the first half.

Vikram Kini: Just a question on the volume side of the equation. You know, again, the best way I would probably describe this as, we do expect volume performance to improve as we think about the second half versus the first half. You know, I think it's, you know, probably closer to, you know, probably somewhere in the flattish realm, if you kind of think about it as we get to the back half of the year and as we exit the year. But, you know, as Vicente said here, we haven't baked any, what I'll call, meaningful recovery per se in. And obviously, you know, as markets continue to hopefully, you know, improve, we would expect that to be an area for, you know, potential outperformance in the future. We just obviously want to see it materialize first.

Vik Kini: Just a question on the volume side of the equation. You know, again, the best way I would probably describe this as, we do expect volume performance to improve as we think about the second half versus the first half. You know, I think it's, you know, probably closer to, you know, probably somewhere in the flattish realm, if you kind of think about it as we get to the back half of the year and as we exit the year. But, you know, as Vicente said here, we haven't baked any, what I'll call, meaningful recovery per se in. And obviously, you know, as markets continue to hopefully, you know, improve, we would expect that to be an area for, you know, potential outperformance in the future. We just obviously want to see it materialize first.

Speaker #4: I think it's probably closer to, probably, somewhere in the flattish realm if you kind of think about it as we get to the back half of the year and as we exit the year.

Speaker #4: But as Vicente said here, we haven't baked in any, what I'll call, meaningful recovery per se. And obviously, as markets continue to hopefully improve, we would expect that to be an area for potential outperformance in the future.

Speaker #4: We just, obviously, want to see it materialize first.

Speaker #3: And just a follow-up on the capital deployment, if I could. It's not clear to me you have capital deployment in the guide. The share count number—maybe we can get close to that just on the annualization of what you did on the repo.

Jeff Sprague: Just a follow-up on capital deployment, if I could. It's not clear to me you have capital deployment in the guide, the share count number. Maybe we can get close to that just on the annualization of what you did on the repo. I do see interest expense coming down a little bit, though I don't know if that's rates or cash generation and debt reduction. Can you just clarify what, if anything, is in the guide from a capital deployment standpoint?

Speaker #3: I do see interest expense coming down a little bit, though. I don't know if that's rates or cash generation and debt reduction. Can you just clarify what, if anything, is in the guide from a capital deployment standpoint?

Speaker #2: Yeah, sure, Jeff. I would say the approach is very consistent with how we've historically—so essentially, I'll take the pieces here. One, from the share count perspective, you're just seeing the annualization of the actions already taken in 2025, where we did approximately $1 billion of share repurchases.

Vikram Kini: Yeah, sure, Jeff. I, I would say the approach is very consistent with how we've historically. So essentially, I'll take the pieces here. One, from the share count perspective, you're just seeing the annualization of the actions already taken in 2025, where we did approximately $1 billion of share repurchases. So you're just seeing that now materialize into the share count piece of the equation. From an M&A perspective, consistent with how we've historically kind of guided, you're seeing the M&A impact is just the carryover of acquisitions completed in 2025, as well as the one deal that we have completed here thus far in 2026, which is the Scinomix acquisition that that Vicente indicated.

Vik Kini: Yeah, sure, Jeff. I, I would say the approach is very consistent with how we've historically. So essentially, I'll take the pieces here. One, from the share count perspective, you're just seeing the annualization of the actions already taken in 2025, where we did approximately $1 billion of share repurchases. So you're just seeing that now materialize into the share count piece of the equation. From an M&A perspective, consistent with how we've historically kind of guided, you're seeing the M&A impact is just the carryover of acquisitions completed in 2025, as well as the one deal that we have completed here thus far in 2026, which is the Scinomix acquisition that that Vicente indicated.

Speaker #2: So you're just seeing that now materialize into the share count piece of the equation. From an M&A perspective, consistent with how we've historically kind of guided, you're seeing the M&A impact is just the carryover of acquisitions completed in 2025, as well as the one deal that we have completed here thus far in 2026, which is the Synomics acquisition that Vicente indicated.

Speaker #2: As far as the balance of the equation, whether it be interest expense or things of that nature, I would say it's fairly consistent with 2025 levels.

Vikram Kini: As far as the balance of the equation, whether it be interest expense or things of that nature, I would say it's fairly consistent with 2025 levels. So, you know, everything there is generally as we've historically indicated and guided.

Vik Kini: As far as the balance of the equation, whether it be interest expense or things of that nature, I would say it's fairly consistent with 2025 levels. So, you know, everything there is generally as we've historically indicated and guided.

Speaker #2: So, everything there is generally as we've historically indicated and guided.

Speaker #3: Great. Thanks.

Jeff Sprague: Great. Thanks.

Operator: The next question comes from Joe O'Dea with Wells Fargo. Your line is open.

Speaker #1: The next question comes from Joe O'Day with Wells Fargo. Your line is open.

Speaker #3: Hi, good morning. Can you dig in a little bit on the acquisition opportunity set when you talk about the 400, 500 basis points of annualized revenue?

Joe O'Dea: Hi, good morning. Can you dig in a little bit on the acquisition opportunity set when you talk about the 400, 500 BPS of annualized revenue expected to be acquired in 2026? Just in terms of the composition of the pipeline right now, sounds like primarily in the bolt-on side of things, but anything that could be in the larger side as well, you know, what that would mean, what your appetite is for anything in that kind of larger category?

Speaker #3: Expected to be acquired in ’26. Just in terms of the composition of the pipeline right now, it sounds like primarily on the bolt-on side of things.

Speaker #3: But anything that could be on the larger side as well—what that would mean, what your appetite is for anything in that kind of larger category.

Speaker #2: Sure. So the opportunity in the funnel remains really strong. We’ve already executed one acquisition with Synomics and currently have nine companies under LOI. I’d characterize the pipeline as still being bolt-on in nature.

Vicente Reynal: Sure, Joe. So the opportunity in the funnel remains really strong. You know, already executed one acquisition with Cynomics, and currently have nine companies under LOI. I'll characterize the pipeline still as being bolt-on in nature, but there's definitely a couple that we have been cultivating for quite some time that could be on the larger purchase price of maybe a $1 billion or so. But again, it's the current pipeline is bolt-on in nature today. But we're definitely seeing a lot of good activity, and particularly on what I just referred to. I mean, this, the our cultivation process continues to remain very strong, and we're seeing better movement here, too, as well.

Speaker #2: But there’s definitely a couple that we have been cultivating for quite some time. That could be on the larger purchase price—maybe $1 billion or so.

Speaker #2: But again, the current pipeline is bolt-on in nature today. But we're definitely seeing a lot of good activity, and particularly on what I just referred to.

Speaker #2: I mean, our cultivation process continues to remain very strong, and we're seeing better movement here too, as well.

Speaker #3: And then on the recurring revenue side, I think this has gone from $200 million a couple of years ago, to $300 million, to now over $450 million.

Joe O'Dea: Then on the recurring revenue side, I think this has gone from $200 million a couple of years ago to $300 million, to now over $450 million. Just, you know, a little bit of color around, you know, what's kind of driving some of the traction there, you know, where you're most pleased. And then, you know, how you think about the opportunity in 2026 and sort of where that could get to?

Speaker #3: Just a little bit of color around what’s kind of driving some of the traction there, where you’re most pleased, and then how you think about the opportunity in ’26 and sort of where that could get to.

Speaker #2: Yes, absolutely. I mean, we're very excited about some of the milestones that we achieved here in 2025. Not only the $450 million of revenue, which, as you very well said, a couple of years ago was approximately $200 million.

Vicente Reynal: Yes. Absolutely. I mean, we're very excited about some of the milestones that we achieved here in 2025. You know, not only the $450 million of revenue, which, as you very well said, a couple of years ago, was approximately $200 million, but the fact that we now have approximately $1.1 billion in future revenue from existing contracts in what we call in the backlog or in the bank. So that gives us good confidence here as we kind of continue. The ramp, we always said that will not be linear and will require continued ramp to achieve our long-term Investor Day target. And we will provide an update to that on our next Investor Day.

Speaker #2: But the fact that we now have approximately $1.1 billion in future revenue from existing contracts in what we call the backlog, or in the bank.

Speaker #2: So that gives us good confidence here as we kind of continue. The ramp, we always said, will not be linear and will require continued ramp to achieve our long-term Investor Day target.

Speaker #2: And we will provide an update to that on our next investor day. But I think we're seeing good resiliency from the team, not only as we expand into some of the regions, but as we expand the recurrent revenue into many other technologies.

Vicente Reynal: But I think it's we're seeing the good resiliency from the team, not only as we expand into some of the regions, but as we expand the recurring revenue into many other technologies. But we're pleased with the performance so far, and the teams are working very hard to continue to accelerate.

Speaker #2: But we're pleased with the performance so far, and the teams are working very hard to continue to accelerate.

Speaker #3: Thank you.

Joe O'Dea: Thank you.

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

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

Speaker #4: Oh, thanks. Good morning, everyone. I hope all is well. Lots of details so far. Vic, I just wanted to go back to your comments on Q1 being flat to maybe slightly down.

Nigel Coe: Thanks. Good morning, everyone. I hope all is well. Lots of details so far. Vic, I just wanted to go back to your comments on Q1 being flat to maybe slightly down, you know, relative to the, call it, 3% organic you posted in Q4. So, you know, that would imply, you know, pretty significant, kind of quarter-over-quarter deceleration. So just wondering, was there any timing of shipments that benefited Q4 that informs that view? And then just maybe if you could just dimensionalize the price cost and investment spending that you are highlighting and, you know, any sense on how we should think about ITS margins again, the first half versus the second half?

Speaker #4: Relative to the, call it, 3% organic you posted in Q4, that would imply a pretty significant kind of quarter-over-quarter deceleration. So just wondering, was there any timing of shipments that benefited Q4 that informs that view?

Speaker #4: And then, just maybe, if we could just dimensionalize the price, cost, and investment spending that you are highlighting, and any sense on how we should think about ITS margins?

Speaker #4: Again, first off is the second half.

Speaker #2: Yeah, sure, Nigel. Let me take the first one. So as far as I'd say the revenue from Q4 to Q1, remember, I would characterize what you're seeing really as normal seasonality.

Vikram Kini: ... Yeah, sure, Nigel, let me, let me take the first one. So, you know, as far as I'd say, the revenue, you know, from Q4 to Q1, remember, I would characterize what you're seeing really as normal seasonality. You know, if you look at typically speaking, you know, in any cadence of the year, you know, you typically have Q4 is typically our strongest quarter of the year, typically characterized by a lot of the shipments in some of our longer cycle project businesses. You know, that business typically has a little bit more of a stronger orders profile in the first half of the year, a little stronger shipment profile in the back half of the year. 2025 was very much in line with that.

Vik Kini: ... Yeah, sure, Nigel, let me, let me take the first one. So, you know, as far as I'd say, the revenue, you know, from Q4 to Q1, remember, I would characterize what you're seeing really as normal seasonality. You know, if you look at typically speaking, you know, in any cadence of the year, you know, you typically have Q4 is typically our strongest quarter of the year, typically characterized by a lot of the shipments in some of our longer cycle project businesses. You know, that business typically has a little bit more of a stronger orders profile in the first half of the year, a little stronger shipment profile in the back half of the year. 2025 was very much in line with that.

Speaker #2: If you look at, typically speaking, in any cadence of the year, you typically have Q4 as typically our strongest quarter of the year. Typically, characterized by a lot of the shipments and some of our longer-cycle project businesses.

Speaker #2: That business typically has a little bit more of a stronger orders profile in the first half of the year, and a little stronger shipment profile in the back half of the year.

Speaker #2: 2025 was very much in line with that. So I think what you're referring to here, as far as the sequential move between Q4 and Q1, is very standard.

Vikram Kini: So I think what you're referring to here, as far as kind of the sequential move between Q4 and Q1, very standard. And in fact, I would say the revenue and earnings seasonality, that's baked into our 2026 guide is almost, you know, actually exactly what you saw in prior years. So again, I would characterize that as standard and nothing atypical compared to kind of what you've seen in prior years.

Vik Kini: So I think what you're referring to here, as far as kind of the sequential move between Q4 and Q1, very standard. And in fact, I would say the revenue and earnings seasonality, that's baked into our 2026 guide is almost, you know, actually exactly what you saw in prior years. So again, I would characterize that as standard and nothing atypical compared to kind of what you've seen in prior years.

Speaker #2: And in fact, I would say the revenue and earnings seasonality that's baked into our 2026 guide is—almost, it's actually exactly what you saw in prior years.

Speaker #2: So again, I would characterize that as standard and nothing atypical compared to kind of what you've seen in prior years. As far as the price, cost, and really more so the investments, obviously, we haven't necessarily quantified the exact number here for you.

Vikram Kini: You know, as far as the price cost and really more so the investments, you know, obviously we haven't necessarily quantified the exact number here for you, but what I would characterize it as is a couple of kind of moving factors, and we can also talk about kind of the ITS margin profile as well. You know, I think in terms of the investments, it's the same continued, I would say, commercial investments that you've seen us talk about historically. So whether that be at the corporate level, things around centralized demand generation, things of that nature, some of the kind of normal course investments for growth, as well as within the actual business, really much more front-end commercial engineering and NPD-related innovation, if I will say, in commercial-related investments.

Vik Kini: You know, as far as the price cost and really more so the investments, you know, obviously we haven't necessarily quantified the exact number here for you, but what I would characterize it as is a couple of kind of moving factors, and we can also talk about kind of the ITS margin profile as well. You know, I think in terms of the investments, it's the same continued, I would say, commercial investments that you've seen us talk about historically. So whether that be at the corporate level, things around centralized demand generation, things of that nature, some of the kind of normal course investments for growth, as well as within the actual business, really much more front-end commercial engineering and NPD-related innovation, if I will say, in commercial-related investments.

Speaker #2: But what I would characterize it as is a couple of kind of moving factors. And we can also talk about kind of the ITS margin profile as well.

Speaker #2: I think in terms of the investments, it’s the same continued, I would say, commercial investments that you’ve seen us talk about historically. So whether that be at the corporate level—things around centralized demand generation, things of that nature—some of the kind of normal course investments for growth, as well as within the actual business, really much more front-end commercial engineering and NPD-related innovation, if I will say, in commercial-related investments.

Speaker #2: So again, I would say that's a continued trend and theme—you saw us have been very consistent with that in 2025 as well. So, I think 2026 is much more of a, I'll call it, continuation in that respect.

Vikram Kini: So, again, I would say that's a continued trend and theme. You've seen us been very consistent with that in 2025 as well. So I think 2026 is much more of a, I'll call it, continuation in that, in that respect. As far as the margin question, I think you asked about, you know, ITS. You know, I think the best way to kind of describe it here is our expectation for ITS margins is that on a total year basis we do expect to be, you know, relatively flattish year-over-year on a full year basis. That's largely driven, I would say, by the two factors that we've mentioned here, the tariff-related expenses, really the carryover there.

Vik Kini: So, again, I would say that's a continued trend and theme. You've seen us been very consistent with that in 2025 as well. So I think 2026 is much more of a, I'll call it, continuation in that, in that respect. As far as the margin question, I think you asked about, you know, ITS. You know, I think the best way to kind of describe it here is our expectation for ITS margins is that on a total year basis we do expect to be, you know, relatively flattish year-over-year on a full year basis. That's largely driven, I would say, by the two factors that we've mentioned here, the tariff-related expenses, really the carryover there.

Speaker #2: As far as the margin question, I think you asked about ITS. I think the best way to kind of describe it here is our expectation for ITS margins is that, on a total-year basis, we do expect to be relatively flattish year over year.

Speaker #2: On a full year basis, that's largely driven, I would say, by the two factors that we've mentioned here, the tariff-related expenses, really the carryover there.

Speaker #2: We are offsetting with price, but obviously that's still kind of diluted from a margin perspective, as well as the, I'd say, continued targeted commercial investment for growth.

Vikram Kini: We are offsetting with price, but obviously, that's still kind of dilutive from a margin perspective, as well as the, I'd say, continued targeted commercial investment for growth. PST, we do expect to be up, you know, triple-digit margin expansion, you know, in the sense, really, you know, frankly, strong operational execution. I would say, the continued integration, and execution on some of the acquired assets. And then, you know, what I would say is probably a slightly easier comps, particularly in the first half of the year, comparatively to the rest of the business. And then we obviously highlighted, you know, kind of corporate costs at a total company level, which we expect to be, you know, roughly even per quarter through the course of 2026.

Vik Kini: We are offsetting with price, but obviously, that's still kind of dilutive from a margin perspective, as well as the, I'd say, continued targeted commercial investment for growth. PST, we do expect to be up, you know, triple-digit margin expansion, you know, in the sense, really, you know, frankly, strong operational execution. I would say, the continued integration, and execution on some of the acquired assets. And then, you know, what I would say is probably a slightly easier comps, particularly in the first half of the year, comparatively to the rest of the business. And then we obviously highlighted, you know, kind of corporate costs at a total company level, which we expect to be, you know, roughly even per quarter through the course of 2026.

Speaker #2: PST, we do expect to be up triple-digit margin expansion in the sense really frankly strong operational execution. I would say the continued integration and execution on some of the acquired assets.

Speaker #2: And then what I would say is probably a slightly easier comps, particularly in the first half of the year, comparatively to the rest of the business.

Speaker #2: And then we obviously highlighted kind of corporate costs at a total company level, which we expect to be roughly even per quarter through the course of 2026.

Speaker #4: Vic, that was great, Keller. Thanks. And just a quick one on the PST orders—obviously, great momentum in Life Sciences. I think you said up mid-teens.

Nigel Coe: Vic, that was great color. Thanks. And just a quick one on the PST orders. Obviously, great momentum in life sciences. I think you set up mid-teens, but that implies there was a significant decline in other business units. Just wondering if you could just touch on that quickly.

Speaker #4: But that implies there was a significant decline in other business units. Just wondering if you could just touch on that quickly.

Speaker #2: Yeah, sure. So, I mean, basically, very, very happy and excited with what we're seeing on the Life Sciences side. The Precision Technology also delivered fairly nicely, which is about 60% of the total segment.

Vikram Kini: Yeah, sure. So I mean, basically, you know, very, very happy and excited with what we're seeing on the, on the life sciences side. You know, the, the precision technology also delivery - deliver fairly, fairly, fairly, fairly nice, which is about 60% of the total segment, and that business is performing in line with what you have seen in the ITS. So the, the last piece is basically the aerospace and defense business, which is down, due to order timing. Nothing unexpected, as the business is generally moving sideways from 2025 to 2026, but that was basically, kind of the offset in the segment.

Vik Kini: Yeah, sure. So I mean, basically, you know, very, very happy and excited with what we're seeing on the, on the life sciences side. You know, the, the precision technology also delivery - deliver fairly, fairly, fairly, fairly nice, which is about 60% of the total segment, and that business is performing in line with what you have seen in the ITS. So the, the last piece is basically the aerospace and defense business, which is down, due to order timing. Nothing unexpected, as the business is generally moving sideways from 2025 to 2026, but that was basically, kind of the offset in the segment.

Speaker #2: And that business is performing in line with what you have seen in the ITS. So the last piece is basically the aerospace and defense business which is down due to order timing.

Speaker #2: Nothing unexpected, as the business is generally moving sideways from 2025 to 2026. But that was basically kind of the offset in the segment.

Speaker #4: Oh, got it. Okay, thanks for sending.

Nigel Coe: Oh, got it. Okay, thanks, Vicente.

Speaker #2: Yeah. Thank you.

Vikram Kini: Yeah. Thank you.

Vik Kini: Yeah. Thank you.

Speaker #1: The next question comes from Nicole DuBlaise with Deutsche Bank. Your line is open.

Operator: The next question comes from Nicole DeBlase with Deutsche Bank. Your line is open.

Speaker #5: Yeah. Thanks. Good morning, guys.

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

Speaker #2: Good morning.

Vikram Kini: Morning.

Vik Kini: Morning.

Nicole DeBlase: Can we just start with, when you look at the full year guidance for organic flat to up to, are you looking for something similar, a similar magnitude in both PST and ITS?

Speaker #5: Can we just start with, when you look at the full-year guidance for organic flat to up, are you looking for something of similar magnitude in both PST and ITS?

Nicole DeBlase: Can we just start with, when you look at the full year guidance for organic flat to up to, are you looking for something similar, a similar magnitude in both PST and ITS?

Speaker #4: Sure, Nicole. I'll take that one. Yeah, I think the simple answer is it's comparable, right? I think, in terms of the overall, I would say we expect a slightly healthier overall full year from PST as compared to ITS.

Vikram Kini: Sure, Nicole, I'll take that one. Yeah, I think the simple answer is: it's comparable, right? I think, you know, in terms of the overall, I would say we expect, you know, a slightly healthier overall full year from PST as compared to ITS. Obviously, that kind of blends to the midpoint, if you will, of what you see as far as the overall guide. But yes, I think, you know, relatively, comparable trajectory as you think about the sequential movement from Q1 into the back half of the year.

Vik Kini: Sure, Nicole, I'll take that one. Yeah, I think the simple answer is: it's comparable, right? I think, you know, in terms of the overall, I would say we expect, you know, a slightly healthier overall full year from PST as compared to ITS. Obviously, that kind of blends to the midpoint, if you will, of what you see as far as the overall guide. But yes, I think, you know, relatively, comparable trajectory as you think about the sequential movement from Q1 into the back half of the year.

Speaker #4: Obviously, that kind of blends to the midpoint, if you will, of what you see as far as the overall guide. But yes, I think relatively comparable trajectory as you think about the sequential movement from Q1 into the back half of the year.

Speaker #5: Okay, understood. Thanks, Vic. And then can we just dig a little bit more into what you're seeing from a longer-cycle project perspective? Vicente, you had talked about delays in decision-making activity or the decision-making process from your customers for several quarters into 2025.

Nicole DeBlase: Okay, understood. Thanks, Vic. And then, can we just dig a little bit more into what you're seeing from a longer cycle project perspective? Vicente, you had talked about for several quarters in 2025, like, delays in decision-making activity or decision-making process from your customers. How did that kind of go in Q4 and into the early part of 2026? Thank you.

Speaker #5: How did that kind of go in the fourth quarter and into the early part of 2026? Thank you.

Speaker #2: Yeah, I mean, I'll say that the positive side is that the loan cycle project funnel continues to be very, very active. We saw even some resurgence of adding more into the funnel as we were kind of gravitating here at the end of the year.

Vikram Kini: Yeah. I mean, I'd say that the positive side is that the long cycle project funnel continues to be very, very active. We saw even some resurgence of adding more into the funnel as we were kind of gravitating here at the end of the year, and a very good start here into the beginning of 2026. In terms of the delays in decision making and kind of what we call about the elongation, that kind of continues to still be there. But the good news is that projects are not getting canceled, and that we continue to see some good momentum. So again, it continues to build upon basically seeing that the funnel continues to grow.

Vik Kini: Yeah. I mean, I'd say that the positive side is that the long cycle project funnel continues to be very, very active. We saw even some resurgence of adding more into the funnel as we were kind of gravitating here at the end of the year, and a very good start here into the beginning of 2026. In terms of the delays in decision making and kind of what we call about the elongation, that kind of continues to still be there. But the good news is that projects are not getting canceled, and that we continue to see some good momentum. So again, it continues to build upon basically seeing that the funnel continues to grow.

Speaker #2: And a very good start here into the beginning of 2026. In terms of the delays in decision-making and kind of what we talk about—the elongation—that kind of continues to still be there.

Speaker #2: But the good news is that projects are not getting canceled, and that we continue to see some good momentum. So again, it continues to build upon basically seeing that the funnel continues to grow, which bodes well for us as we kind of come here into 2026 from an order perspective.

Vicente Reynal: ... and, which bodes well for us as we kind of come here into 2026 from an order perspective.

Speaker #5: Thanks, Vicente. I'll pass it on.

Chris Snyder: Thanks, Vicente. I'll pass it on.

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

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

Speaker #4: Good morning, everyone.

Nathan Jones: Good morning, everyone.

Speaker #2: Good morning.

Vicente Reynal: Morning, Nathan.

Speaker #6: Hi, Nathan.

Nathan Jones: I guess I'll just start off with a question on the EBITDA guidance. I mean, it's pretty clear you're not planning on much in the way of volume growth. You get a little bit of addition to EBITDA from M&A. It doesn't seem to really embed any cost actions or any productivity in the guide. Can you talk about any expectations you have there for cost out or for productivity gains during 2026?

Speaker #4: I guess I'll just start off with a question on the EBITDA guidance. I mean, it's pretty clear you're not planning on much in the way of volume growth.

Speaker #4: Do you get a little bit of addition to EBITDA from M&A? It doesn't seem to really embed any cost actions or any productivity in the guide.

Speaker #4: Can you talk about any expectations you have there for cost-out or for productivity gains during 2026?

Speaker #2: Yeah, sure, Nathan. I'll start with that one here. So, I think the guide does include some requisite, I would say, productivity or cost actions.

Vikram Kini: Yeah, sure, Nathan. I'll start with that one here. So, you know, I think the guide does include some requisite, you know, I would say, productivity or cost actions. Let me kind of take those in pieces here. So clearly, I'd say the headwind from a margin perspective, I kind of earlier stated, is really the carryover of the tariffs, right? So even though there are pricing actions that are offsetting, on a full year basis, that still is a little bit of a headwind from a margin perspective. Despite that, you're still seeing that we are growing earnings per share, you know, in a requisite comparable manner, quarterly or first half, second half.

Vik Kini: Yeah, sure, Nathan. I'll start with that one here. So, you know, I think the guide does include some requisite, you know, I would say, productivity or cost actions. Let me kind of take those in pieces here. So clearly, I'd say the headwind from a margin perspective, I kind of earlier stated, is really the carryover of the tariffs, right? So even though there are pricing actions that are offsetting, on a full year basis, that still is a little bit of a headwind from a margin perspective. Despite that, you're still seeing that we are growing earnings per share, you know, in a requisite comparable manner, quarterly or first half, second half.

Speaker #2: Let me kind of take those in pieces here. So clearly, I'd say the headwind from a margin perspective and I've kind of earlier stated is really kind of the carryover of the tariffs, right?

Speaker #2: So even though there are pricing actions that are offsetting on a full year basis, that still is a little bit of a headwind from a margin perspective.

Speaker #2: Despite that, you're still seeing that we are growing earnings per share in a requisite comparable manner quarterly or first half, second half. The driver of that or kind of the offset tends to come from some of those cost actions.

Vikram Kini: You know, the driver of that or the kind of the offset, you know, tends to come from some of those cost actions. So, first and foremost, you know, you have seen in our financials here, that we have taken some proactive restructuring actions, in the back half of 2025. Those will continue to materialize into savings into 2026. I'd say payback periods on those actions are very much in line with what you've seen us do historically. So that clearly is, I'd say, kind of the first item. The second one is, what I would call the kind of normal course productivity. So that would be, you know, direct material as well as kind of I2V.

Vik Kini: You know, the driver of that or the kind of the offset, you know, tends to come from some of those cost actions. So, first and foremost, you know, you have seen in our financials here, that we have taken some proactive restructuring actions, in the back half of 2025. Those will continue to materialize into savings into 2026. I'd say payback periods on those actions are very much in line with what you've seen us do historically. So that clearly is, I'd say, kind of the first item. The second one is, what I would call the kind of normal course productivity. So that would be, you know, direct material as well as kind of I2V.

Speaker #2: So first and foremost, you have seen in our financials here that we have taken some proactive restructuring actions in the back half of 2025.

Speaker #2: Those will continue to materialize into savings into 2026. I'd say payback periods on those actions are very much in line with what you've seen us do historically.

Speaker #2: So that clearly is, I'd say, kind of the first item. The second one is what I would call the kind of normal-course productivity.

Speaker #2: So that would be direct material as well as kind of I2V. Remember, those tend to follow, I'd say, the phasing of revenue very similarly to what you've seen in prior years.

Vikram Kini: Remember, those tend to follow, I'd say, the phasing of revenue, very similarly to what you've seen in prior years. So those do tend to have a little bit more of a second half waiting, but that's just because they follow kind of the shipments. And then the other piece, you know, Nathan, would be that we are, you know, obviously taking, I'd say, some targeted pricing actions in the course of the year, like we typically do. Those will obviously be taken, you know, business by business, region by region, through the course of the year, and you'll start to see some of that materialize, you know, in the revenue base, particularly as we move into the second half of the year.

Vik Kini: Remember, those tend to follow, I'd say, the phasing of revenue, very similarly to what you've seen in prior years. So those do tend to have a little bit more of a second half waiting, but that's just because they follow kind of the shipments. And then the other piece, you know, Nathan, would be that we are, you know, obviously taking, I'd say, some targeted pricing actions in the course of the year, like we typically do. Those will obviously be taken, you know, business by business, region by region, through the course of the year, and you'll start to see some of that materialize, you know, in the revenue base, particularly as we move into the second half of the year.

Speaker #2: So those do tend to have a little bit more of a second half weighting, but that's just because they follow kind of the shipments.

Speaker #2: And then the other piece Nathan would be that we are obviously taking, I'd say, some targeted pricing actions in the course of the year like we typically do.

Speaker #2: Those will obviously be taken business by business, region by region, through the course of the year. And you'll start to see some of that materialize in the revenue base, particularly as we move into the second half of the year.

Speaker #2: So I'd say those are kind of the moving factors here that are, I would say, offsetting both some of the tariff-related headwinds, some of the kind of, I'd say, reinvestments that you're seeing from a commercial growth perspective, as well as some of the increased corporate cost on a year-over-year basis.

Vikram Kini: So I'd say those are kind of the moving factors here that are, I would say, offsetting both some of the tariff related headwinds, some of the kind of, I'd say, reinvestments that you're seeing from a commercial growth perspective, as well as some of the increased corporate costs on a year-over-year basis.

Vik Kini: So I'd say those are kind of the moving factors here that are, I would say, offsetting both some of the tariff related headwinds, some of the kind of, I'd say, reinvestments that you're seeing from a commercial growth perspective, as well as some of the increased corporate costs on a year-over-year basis.

Speaker #4: Thanks for that. And then I guess, in terms of forward-looking indicators, you talked about PMI getting a good reading in January in the US, obviously.

Nathan Jones: Thanks for that. And then I guess in terms of forward-looking indicators, you talked about PMI getting a, you know, a good reading in January in the US, obviously. You guys just have, over the last few years, talked about marketing qualified leads.

Speaker #4: You guys just have, over the last few years, talked about marketing qualified leads. As an indicator for your own business, can you talk about what that's telling you in various regions, and whether that's giving you any more confidence in the order rates in the short term here?

Vikram Kini: Mm-hmm.

Vik Kini: Mm-hmm.

Nathan Jones: as an indicator for your own business. Can you talk about, you know, what that's telling you in various regions and whether that's giving you any more confidence in the order rates in the short term here? Thanks for taking the questions.

Speaker #4: Thanks for taking the questions.

Speaker #2: Yeah. Sure. Nathan. So absolutely. I mean, I think our marketing qualified leads is part of core of what we track ourselves internally by region, by product line, by even by end market.

Vicente Reynal: Yeah, sure, Nathan. So, absolutely. I mean, I think our marketing qualified leads is part of core of what we track ourselves internally, you know, by region, by product line, by even by end market. We continue to see some very, fairly good momentum on how the marketing qualified leads continue to grow. Now, a lot of that is because of obviously our kind of self-help engine on how we reach new customer accounts. So roughly half of those marketing qualified leads are coming in from new customer accounts as we try to obviously continue to take share. So that's why we're seeing some good, you know, acceleration in terms of MQL continue to be strong.

Speaker #2: We continue to see some fairly good momentum on how the marketing qualified leads continue to grow. Now, a lot of that is because of, obviously, our kind of self-help engine on how we reach new customer accounts.

Speaker #2: So roughly half of those marketing qualified leads are coming in from new customer accounts. As we try to, obviously, continue to take share. So that's why we're seeing some good acceleration in terms of MQLs continuing to be strong.

Vicente Reynal: But as I said before, you know, decision-making is kind of this elongation, but again, all indicators, PMIs, and MQLs, looking to be, you know, on the proper trend as we see to the year.

Speaker #2: But as I said before, decision-making is kind of these elongation. But again, all indicators—PMIs and MQLs—looking to be on the proper trend as we see.

Speaker #2: Sit here.

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

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

Speaker #4: Thank you. When we look at the pickup in Q4 organic growth, was this more so driven by momentum in the short-cycle businesses, or did some of the longer-cycle orders in the backlog begin to convert?

Chris Snyder: Thank you. When we look at the pickup in Q4 organic growth, was this more so driven by momentum in the short cycle businesses, or did some of the longer cycle orders in the backlog begin to convert? And I ask because I noticed that this was the first quarter since the first half of 2024, where organic sales outpaced orders. So maybe it's signaling some level of backlog release, and I'm just wondering if, you know, could that remain a tailwind for the business into the first half of 2026? Thank you.

Speaker #4: And I ask because I noticed that this was the first quarter since the first half of '24 where organic sales outpaced orders. So it maybe it's signaling some level of backlog release.

Speaker #4: And I'm just wondering if that could remain a tailwind for the business into the first half of '26? Thank you.

Speaker #2: Yeah. Chris, great question. So I'd start with first and foremost, the Q4 performance. I saw, I would say, had a requisite I'd say component of both what I'd say the base business or short cycle inclusive of aftermarket and recurring revenue, as well as the long cycle.

Vikram Kini: Yeah, Chris, great question. So, you know, I'd start with, first and foremost, the, the Q4 performance I saw, I would say, had a requisite, I'd say, component of both what I say the base business or short cycle, inclusive of aftermarket, and recurring revenue, as well as the long cycle. I go back to my earlier comment that, you know, the second half of the year, particularly Q4, tends to be a heavier shipment quarter, particularly on the long cycle project side of the equation. Q4 25 was no exception to that. So I think that, you know, probably speaks to, you know, the drivers of that 3% organic kind of pickup that you saw.

Vik Kini: Yeah, Chris, great question. So, you know, I'd start with, first and foremost, the, the Q4 performance I saw, I would say, had a requisite, I'd say, component of both what I say the base business or short cycle, inclusive of aftermarket, and recurring revenue, as well as the long cycle. I go back to my earlier comment that, you know, the second half of the year, particularly Q4, tends to be a heavier shipment quarter, particularly on the long cycle project side of the equation. Q4 25 was no exception to that. So I think that, you know, probably speaks to, you know, the drivers of that 3% organic kind of pickup that you saw.

Speaker #2: I go back to my earlier comment that the second half of the year, particularly Q4, tends to be a heavier shipment quarter, particularly on the long-cycle project side of the equation.

Speaker #2: Q4 '25 was no exception to that. So I think that probably speaks to the drivers of that 3% organic kind of pickup that you saw.

Speaker #2: And then as far as the organic orders versus organic sales, the probably the simplest way I'd probably describe that is the book-to-bill first of all from a full year perspective, slightly over one.

Vikram Kini: And then as far as, you know, the organic order versus organic sales, you know, probably the simplest way I'd probably describe that is, you know, the book-to-bill, you know, first of all, from a full year perspective, slightly over one. So one, you know, we're encouraged by the fact that you have seen, you know, some backlog build, which I think also provides, you know, some increased visibility, but also, you know, just some of that backlog that we can execute as we move into 2026. I think as far as the absolute book-to-bill in Q4, slightly below one, again, I would call that very standard, you know, just again, because of the long cycle nature and dynamics of the shipments we see.

Vik Kini: And then as far as, you know, the organic order versus organic sales, you know, probably the simplest way I'd probably describe that is, you know, the book-to-bill, you know, first of all, from a full year perspective, slightly over one. So one, you know, we're encouraged by the fact that you have seen, you know, some backlog build, which I think also provides, you know, some increased visibility, but also, you know, just some of that backlog that we can execute as we move into 2026. I think as far as the absolute book-to-bill in Q4, slightly below one, again, I would call that very standard, you know, just again, because of the long cycle nature and dynamics of the shipments we see.

Speaker #2: So, one, we're encouraged by the fact that you have seen some backlog build, which I think also provides some of that increased visibility, but also just some of that backlog that we can execute as we move into 2026.

Speaker #2: I think, as far as the absolute book-to-bill in Q4, it's slightly below one. Again, I would call that very standard, just again because of the long-cycle nature and dynamics of the shipments we see.

Speaker #2: So again, I think to your point, encouraged by what we saw in Q4, and clearly we continue to kind of watch the leading indicators and see that hopefully continue here as we move into 2026.

Vikram Kini: So again, I think to your point, encouraged by what we saw in Q4. And, you know, clearly, you know, we continue to kind of watch the leading indicators and, you know, see that hopefully continue here as we move into 2026. But encouraged by the contribution of both short cycle and the project side in Q4.

Vik Kini: So again, I think to your point, encouraged by what we saw in Q4. And, you know, clearly, you know, we continue to kind of watch the leading indicators and, you know, see that hopefully continue here as we move into 2026. But encouraged by the contribution of both short cycle and the project side in Q4.

Speaker #2: But encouraged by the contribution of both short cycle and the project side in Q4.

Speaker #4: Thank you, I appreciate that. And then maybe just to follow up, could you provide some color on what's expected for the Life Science organic growth in 2026 within the guide?

Chris Snyder: Thank you. I appreciate that. And then maybe just to follow up, could you provide some color on what's, you know, expected for the life science, organic growth in 2026, within the guide? And, you know, it seems like obviously still really good momentum there with the Q4 order rates up mid-teens. But anything to call out on the slope of organic growth? Because I do imagine that the comps into 2026 are getting a good deal more difficult than they were in 2025, on the organic growth side. Thank you.

Speaker #4: And it seems like, obviously, there's still really good momentum there with the Q4 order rates up mid-teens. But is there anything to call out on the slope of organic growth?

Speaker #4: Because I do imagine that the comps into '26 are getting a good deal more difficult than they were in '25 on the organic growth side.

Speaker #4: Thank you.

Speaker #5: Yeah, sure, Chris. As far as the guy, we're not going to kind of break the PST component into the different components. But what we can say here is I think the way you've described it is exactly the way we're thinking about it.

Vikram Kini: Yeah, sure, Chris. I, you know, as far as the guide, we're not gonna kind of break the PST component, you know, into the different components. But what we can say here is, I think the way you've described it is exactly the way we're thinking about it. One, definitely encouraged, and Vicente kind of provided a little bit of color on kind of the drivers we're seeing at the kind of differing components of the life sciences business. So I think we're incredibly encouraged by what we're seeing, whether it be on, you know, really in the biopharma side or even kind of the legacy kind of Ingersoll Rand medical business that we've had in terms of some of the improving trends.

Vik Kini: Yeah, sure, Chris. I, you know, as far as the guide, we're not gonna kind of break the PST component, you know, into the different components. But what we can say here is, I think the way you've described it is exactly the way we're thinking about it. One, definitely encouraged, and Vicente kind of provided a little bit of color on kind of the drivers we're seeing at the kind of differing components of the life sciences business. So I think we're incredibly encouraged by what we're seeing, whether it be on, you know, really in the biopharma side or even kind of the legacy kind of Ingersoll Rand medical business that we've had in terms of some of the improving trends.

Speaker #5: One, definitely encouraged, and Vicente kind of provided a little bit of color on the drivers we're seeing at the different components of the life sciences business.

Speaker #5: So I think we're incredibly encouraged by what we're seeing whether it be on really in the biopharma side or even kind of the legacy kind of Ingersoll Rand medical business that we've had in terms of some of the improving trends.

Vikram Kini: You know, clearly, you know, we talked about the aerospace piece, which is really kind of moving sideways from 2025 to 2026, which is kind of a little bit of that, I would call it more of the offset, comparatively speaking, as it's kind of just part of that overall umbrella of businesses. So I think the simple answer here is, I think we continue to be really encouraged. The other piece I would mention here is the fact that, you know, the bolt-on M&A, you, you know, kind of playbook is really taking root as well in our life sciences portfolio. You see a number of bolt-ons in 2025 that will obviously become organic here at parts during the course of 2026, which we think will continue to contribute.

Speaker #5: Clearly, we talked about the aerospace piece, which is really kind of moving sideways from '25 to '26, which is kind of a little bit of what I would call more of the offset, comparatively speaking, as it's kind of just part of that overall umbrella of businesses.

Vik Kini: You know, clearly, you know, we talked about the aerospace piece, which is really kind of moving sideways from 2025 to 2026, which is kind of a little bit of that, I would call it more of the offset, comparatively speaking, as it's kind of just part of that overall umbrella of businesses. So I think the simple answer here is, I think we continue to be really encouraged. The other piece I would mention here is the fact that, you know, the bolt-on M&A, you, you know, kind of playbook is really taking root as well in our life sciences portfolio. You see a number of bolt-ons in 2025 that will obviously become organic here at parts during the course of 2026, which we think will continue to contribute.

Speaker #5: So, I think the simple answer here is, I think we continue to be really encouraged. The other piece I would mention here is the fact that the bolt-on M&A kind of playbook is really taking root as well in our Life Sciences portfolio.

Speaker #5: You see a number of bolt-ons in 2025 that will obviously become organic here at parts during the course of 2026, which we think will continue to contribute.

Speaker #5: And then the Synomics acquisition that we just did here in January, which we think is a very attractive kind of nice additive complementary bolt-on to our existing kind of life sciences portfolio.

Vikram Kini: Then the Scinomix acquisition that we just did here in January, which we think is a you know very attractive kind of nice additive complementary bolt-on to our existing kind of life sciences portfolio. So again you know I think your point is very valid. I think the comps you know clearly are you know they're there, but I think we're still encouraged by the momentum we're seeing, which you saw in the Q4 order rate.

Vik Kini: Then the Scinomix acquisition that we just did here in January, which we think is a you know very attractive kind of nice additive complementary bolt-on to our existing kind of life sciences portfolio. So again you know I think your point is very valid. I think the comps you know clearly are you know they're there, but I think we're still encouraged by the momentum we're seeing, which you saw in the Q4 order rate.

Speaker #5: So again, I think your point is very valid. I think the comps clearly are there, but I think we're still encouraged by the momentum we're seeing, which you saw in the Q4 order rate.

Speaker #2: Thank you, Vic. Appreciate all the color.

Chris Snyder: Thank you, Vic. Appreciate all the color.

Speaker #1: The next question comes from Stephen Volkman with Jefferies. Your line is open.

Operator: The next question comes from Stephen Volkmann with Jefferies. Your line is open.

Speaker #6: Hi, good morning, guys. Happy Friday. Just a couple very quick ones from me. I'm curious—it seems like valuations are kind of going up across the board, not just yours, but I'm presuming in the M&A funnel as well.

Stephen Volkmann: Hi. Good morning, guys. Happy Friday. Just a couple very quick ones for me. I'm curious. It seems like valuations are kind of going up across the board, not just yours, but I'm presuming in the M&A funnel as well. Just does that change anything in terms of how you manage your capital deployment?

Speaker #6: Does that change anything in terms of how you manage your capital deployment?

Vicente Reynal: No. No, Steve. I mean, we continue to actually, as you have seen, do really well with the pre-synergy multiple. You know, in 2025, we averaged roughly 9.2 times, to be exact, pre-synergy multiple, and even the one that we acquired here in January continues to be in that kind of range. So I think we're continue to be very encouraged with what we're seeing now. In our case, as you know, our M&A flywheel is differentiated in the sense that a lot of these transactions are sole source, cultivation happens, family-owned companies. So I think we have a bit of an advantage here for us to be able to continue with that and be able to have a very good price multiple.

Speaker #2: No. No. No, Steve. I mean, we continue to actually, as you have seen, do really well with the pre-synergy multiple. In 2025, we average roughly, I mean, 9.2 times to be exact, pre-synergy multiple.

Speaker #2: And even the one that we acquire here in January continues to be in that kind of range. So I think we continue to be very encouraged by what we're seeing now.

Speaker #2: But in our case, as you know, our M&A flywheel is differentiated in the sense that a lot of these transactions are sole source cultivation happens family-owned companies.

Speaker #2: So, I think we have a bit of an advantage here for us to be able to continue with that and be able to have a very good price multiple.

Speaker #6: Got it. Thank you. And then, just with respect to the order cadence, is there anything that you can see now that would make that different in '26, relative to the last couple of years?

Stephen Volkmann: Got it. Thank you. And then just, with respect to kind of the order cadence, is there anything that you can see now that would make that different in 2026 relative to kind of the last couple of years?

Speaker #5: Yeah. Sure, Steve. So we obviously don't guide on orders, but I think the simple way to think about it here is we don't expect anything here to be dramatically different in terms of, I'll just say, the book-to-bill being one on a full-year basis and typically a little bit healthier than that in the first half and a little below on the second half just given normal seasonality and some of the dynamics I mentioned on our long cycle business.

Vikram Kini: Yeah, sure, Steve. So we obviously don't guide on orders, but, you know, I think the simple way to think about it here is we don't expect anything here to be dramatically different in terms of, I'll just say, you know, the Book-to-Bill, you know, being 1 on a full year basis and, you know, typically a little bit healthier than that in the first half and a little below on the second half, just given normal seasonality and some of the dynamics I mentioned on our long cycle business. So nothing at this point we would point to that we expect to be dramatically different.

Vik Kini: Yeah, sure, Steve. So we obviously don't guide on orders, but, you know, I think the simple way to think about it here is we don't expect anything here to be dramatically different in terms of, I'll just say, you know, the Book-to-Bill, you know, being 1 on a full year basis and, you know, typically a little bit healthier than that in the first half and a little below on the second half, just given normal seasonality and some of the dynamics I mentioned on our long cycle business. So nothing at this point we would point to that we expect to be dramatically different.

Speaker #5: So nothing at this point we would point to that we expect to be dramatically different.

Speaker #6: Super. Thank you, guys.

Stephen Volkmann: Superb. Thank you, guys.

Speaker #2: Thank you.

Vicente Reynal: Thank you.

Speaker #1: The next question comes from Joe Ritchie with Goldman Sachs. Your line is open.

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

Chris Snyder: Thanks. Good morning, guys.

Speaker #7: Thanks, good morning, guys.

Joe Ritchie: Thanks. Good morning, guys.

Speaker #2: Good morning.

Vikram Kini: Good morning, Joe.

Vik Kini: Good morning, Joe.

Speaker #8: Hi, Joe.

Speaker #7: Hey, can you just touch on the margin profile of the recurring revenue business, the 450 million plus that you referenced, Vicente? I recall you guys talking about a gross margin profile that was north of 60%.

Chris Snyder: Hey, can you, can you just touch on the margin profile of the recurring revenue business, the $450 million plus that you referenced, Vicente? I recall you guys talking about a gross margin profile that was north of 60%. I'm just wondering if that's actually coming through as expected. And maybe, maybe that'll be question number one.

Speaker #7: I'm just wondering if that's actually coming through as expected, and maybe that'll be question number one.

Speaker #5: Sure, Joe. Let me start with that. So, I think in general, the recurring revenue business—whether it be at its gold standard, what we call Package Care, or any of the other components—yes, it is across the entire enterprise typically a higher margin profile, comparatively speaking, to, I'd say, the balance of our kind of normal course business.

Vikram Kini: Sure, Joe. Let me start with that. You know, I think in general, the recurring revenue business, you know, whether it be, you know, at its gold standard, what we call package care or any of the other components, yes, it is, you know, across the entire enterprise, typically a higher margin profile, comparatively speaking, to, I'd say, you know, the balance of our kind of normal course business. Now, that being said, you know, yes, margins can play in that range that you're speaking to. You know, what I would probably tell you here, though, is we're also making sure that we're taking that opportunity to reinvest appropriately, in the business. I've mentioned a few times here some of those commercial reinvestments, even on the recurring revenue side.

Vik Kini: Sure, Joe. Let me start with that. You know, I think in general, the recurring revenue business, you know, whether it be, you know, at its gold standard, what we call package care or any of the other components, yes, it is, you know, across the entire enterprise, typically a higher margin profile, comparatively speaking, to, I'd say, you know, the balance of our kind of normal course business. Now, that being said, you know, yes, margins can play in that range that you're speaking to. You know, what I would probably tell you here, though, is we're also making sure that we're taking that opportunity to reinvest appropriately, in the business. I've mentioned a few times here some of those commercial reinvestments, even on the recurring revenue side.

Speaker #5: Now, that being said, yes, margins can play in that range that you're speaking to. What I would probably tell you here, though, is we're also making sure that we're taking that opportunity to reinvest appropriately in the business.

Speaker #5: I've mentioned a few times here some of those commercial reinvestments. Even on the recurring revenue side, a lot of our commercial reinvestments are in areas like service technicians and things of that nature to make sure that we can continue to grow our recurring revenue base on a go-forward basis.

Vikram Kini: You know, a lot of our commercial reinvestments are in areas like, you know, service technicians and things of that nature, to make sure that we can continue to grow our recurring revenue base on a go-forward basis. So, you know, again, you know, I think, yes, margin profiles that play in and around the areas that you've mentioned, but also certainly reinvesting and making sure we can drive the growth.

Vik Kini: You know, a lot of our commercial reinvestments are in areas like, you know, service technicians and things of that nature, to make sure that we can continue to grow our recurring revenue base on a go-forward basis. So, you know, again, you know, I think, yes, margin profiles that play in and around the areas that you've mentioned, but also certainly reinvesting and making sure we can drive the growth.

Speaker #5: So again, I think generally, yes, margin profiles that play in and around areas that you've mentioned, but also certainly reinvesting to make sure we can drive future growth.

Speaker #7: Got it, got it. So, the way to think about it is, when you get the full run rate, you'll see probably a more accretive margin profile than what you're seeing today.

Andrew Buscaglia: Got it. Got it. So the way to think about it is that, like, you know, when you get the full run rate, you'll see probably a more accretive margin profile than what you're seeing today coming out of the business because of some of the reinvestment that you're doing. Is that a fair-

Speaker #7: Coming out of the business because of some of the reinvestments that you're doing. Is that a fair way to characterize it?

Vikram Kini: Mm-hmm.

Vik Kini: Mm-hmm.

Andrew Buscaglia: way to characterize it?

Speaker #5: Yeah, yeah. No, that's definitely fair.

Vikram Kini: Yeah.

Vik Kini: Yeah.

Andrew Buscaglia: Okay.

Vikram Kini: Yeah, no, that definitely agree.

Vik Kini: Yeah, no, that definitely agree.

Speaker #7: Yeah. And then I guess the following question is, look, I know that the M&A that's not completed is not part of the guide. But given your expectation that you'll do about, potentially, four to five points of revenue contribution this year, what does the first-year margin profile look like for the things that you're looking at or hoping to complete in your pipeline today?

Andrew Buscaglia: Yeah, and then I guess the following question is, and look, I know that the M&A that's not completed is not part of the guide. But given your expectation that you'll do about, you know, potentially 4- to 5-point, you know, revenue contribution this year, what is the, like, first year margin profile look like for the things that you're looking at, that you're hoping to complete in your pipeline today?

Speaker #5: Yeah, Joe. I'll start here. So, obviously, a bit speculative because, quite frankly, year to year and deal to deal, the margin profiles can clearly be a little bit different.

Vikram Kini: Yeah, John, I'll start here. So yeah, obviously, a bit speculative, because quite frankly, you know, year to year and deal to deal, the margin profiles can, you know, clearly, be a little bit different. You know, probably the best way I would describe it is that, as Vicente said here, one, you know, purchase multiple is quite prudent. The ability to derive, you know, double-digit returns, if not mid-teens returns by year three, and as such, take multiple turns out from controllable cost action, synergies, things of that nature, clearly is still the playbook.

Vik Kini: Yeah, John, I'll start here. So yeah, obviously, a bit speculative, because quite frankly, you know, year to year and deal to deal, the margin profiles can, you know, clearly, be a little bit different. You know, probably the best way I would describe it is that, as Vicente said here, one, you know, purchase multiple is quite prudent. The ability to derive, you know, double-digit returns, if not mid-teens returns by year three, and as such, take multiple turns out from controllable cost action, synergies, things of that nature, clearly is still the playbook.

Speaker #5: Probably the best way I would describe it is that, as Vicente said here, one, purchase multiples—quite prudent. The ability to drive double-digit returns, if not mid-teens returns by year three, and as such, take multiple turns out from controllable cost action synergies.

Speaker #5: Things of that nature, clearly, are still the playbook. If I had to put a broad, kind of sweeping statement around it, the acquisitions that are, maybe upon acquisition, maybe in the lower 20s margin profile—but ones that we see a pretty direct path to being in line with, if not better than, segment average margin profile—is probably the best way to maybe explain it.

Vikram Kini: You know, if I had to put, you know, a broad, kind of, sweeping statement around it, you know, the acquisitions that are, you know, maybe upon acquisition, you know, maybe in the lower 20s margin profile, but ones that we see, you know, pretty direct path to being in line with, if not better than segment average margin profile, is probably a best way to maybe explain it. But clearly, each acquisition is a little bit different. And frankly, you've seen acquisitions that are immediately accretive upon acquisition in certain cases. So again, not all made equal, but that's probably the best way I would describe it.

Vik Kini: You know, if I had to put, you know, a broad, kind of, sweeping statement around it, you know, the acquisitions that are, you know, maybe upon acquisition, you know, maybe in the lower 20s margin profile, but ones that we see, you know, pretty direct path to being in line with, if not better than segment average margin profile, is probably a best way to maybe explain it. But clearly, each acquisition is a little bit different. And frankly, you've seen acquisitions that are immediately accretive upon acquisition in certain cases. So again, not all made equal, but that's probably the best way I would describe it.

Speaker #5: But clearly, each acquisition is a little bit different. And frankly, you've seen acquisitions that are immediately accretive upon acquisition in certain cases. So again, not all made equal, but that's probably the best way I would describe it.

Andrew Buscaglia: Helpful. Thank you, guys.

Speaker #7: Helpful. Thank you, guys.

Andrew Buscaglia: Helpful. Thank you, guys.

Speaker #2: Thank you.

Vikram Kini: Thank you.

Vik Kini: Thank you.

Operator: The next question comes from David Raso with Evercore ISI. Your line is open.

Speaker #1: The next question comes from David Rasso with Evercore ISI. Your line is open.

Speaker #6: Thank you. I was interested to see the ITS organic orders in the quarter that Ameya was down mid-single digits. We’ve heard generally more constructive things out of Europe.

David Raso: Thank you. I was interested to see the ITS organic orders in the quarter, that EMEA was down mid-single digit. Just, we've heard generally more constructive things out of Europe, and I'm just curious if you're seeing... Is that sort of a comp, sort of temporary? I'm just trying to see where there's areas that, you know, things that were down, maybe, you know, are inflecting a little bit or just a unique dynamic. Can you explain the, the Europe? And then I have a quick follow-up.

Speaker #6: And I'm just curious if you're seeing, is that sort of a comp, sort of temporary? I'm just trying to see where there's areas that things that were down maybe are inflecting a little bit or just a unique dynamic.

Speaker #6: Can you explain the Europe? And then I have a quick follow-up.

Speaker #2: Yeah, no, I mean, nothing to read into it. I mean, just project timing, basically, and that was basically it. I mean, but again, we're continuing to be really encouraged.

Vicente Reynal: Yeah, no, they just, I mean, nothing to read into it. I mean, just project timing, basically. And that was basically it. I mean, but again, we continue to be, you know, really encouraged. I mean, you saw our EMEA business, you know, was basically driving, you know, very nice positive order growth for the full year. So even ITS, with that Q4 commentary being negative, still for the full year, was up orders, kind of positive low single digit organic from a full year perspective.

Speaker #2: I mean, you saw our Ameya business was basically driving very nice, positive order growth for the full year. So even in ITS, with that Q4 commentary being negative, still, for the full year, orders were kind of positive—low single-digit organic from a full-year perspective.

Speaker #6: Joe, that's what I was curious. I mean, do you see that business as up or the order rates back up in Europe or are they truly running at a negative level?

David Raso: No, that's why I was just curious. I mean, do you see that business as up the, or the order rates back up in Europe, or are they truly running at a negative level? Because, I mean, year to date, we don't have a K yet, but year to date, the revenues have been up in EMEA with an ITS. I'm just curious if there's-

Speaker #6: Because I mean, year to date, we don't have a K yet, but year to date, the revenues have been up in Ameya within ITS.

Speaker #6: I'm just curious if there's.

Speaker #2: Yeah. No, sure. No, not an issue in the fourth quarter. No. I mean, again, some countries are doing better than others. I mean, Mediterranean countries like Spain, Italy, France, seem to be actually growing faster than the Central European like Germany at this point in time.

Vicente Reynal: Yeah, no.

David Raso: Sure, sure.

Vicente Reynal: Mm-hmm. No, no, not an issue in the fourth quarter. No. I mean, again, some countries are doing better than others. I mean, Mediterranean countries like Spain, Italy, France seem to be actually growing faster than the Central European, like Germany at this point in time. But obviously, a lot of good activity that we see moving through for the Central European countries as we kind of move forward. But yeah, mm-hmm.

Speaker #2: But obviously, a lot of good activity that we see moving through for the Central European countries as we kind of move forward. But yeah.

Speaker #6: And then for a follow-up, maybe I missed it, but we're now essentially almost halfway through the quarter. Our organic sales currently running to your flat to down a little bit?

David Raso: Then for a follow-up, maybe I missed it, but we're now essentially almost halfway through the quarter. Are organic sales currently running true to your flat to down a little bit? Or you're just kind of giving that guide and see how the rest of the quarter plays out? You just sound a little more positive in the start of the year than the down, you know, flat to down first quarter organically.

Speaker #6: Or you're just kind of giving that guide and see how the rest of the quarter plays out? You just sound a little more positive in the start of the year than a down flat to down first quarter organically.

Speaker #5: Yeah, David, I'll take that one. So, I think the best way to say it here is that, as we've moved through January—and I'll probably reflect a little bit more on the orders side of the equation—generally, it's playing itself out as expected, nothing that we would consider to be atypical, whether it be from a seasonality perspective or even moving into 2026.

Vikram Kini: Yeah, David, I'll, I'll take that one. So yeah, I think the best way to say it here is that, I think as we've moved through January, and I'll, I'll probably reflect a little bit more on the orders side of the equation. Generally playing itself out as expected, nothing that we would consider to be, you know, atypical, whether it be from a seasonality perspective or even moving into 2026. So, you know, again, nothing, nothing that's happened thus far that would, you know, say anything different from either the guidance or kind of even the commentary that Vicente's provided earlier.

Vik Kini: Yeah, David, I'll, I'll take that one. So yeah, I think the best way to say it here is that, I think as we've moved through January, and I'll, I'll probably reflect a little bit more on the orders side of the equation. Generally playing itself out as expected, nothing that we would consider to be, you know, atypical, whether it be from a seasonality perspective or even moving into 2026. So, you know, again, nothing, nothing that's happened thus far that would, you know, say anything different from either the guidance or kind of even the commentary that Vicente's provided earlier.

Speaker #5: So again, nothing that's happened thus far that would say anything different from either the guidance or kind of even the commentary that Vicente has provided earlier.

Speaker #6: All right. Thank you very much.

David Raso: All right. Thank you very much.

Speaker #2: Thank you.

Vicente Reynal: Thank you.

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

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

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

Speaker #6: Hi, good morning, everyone.

Andrew Buscaglia: Hi, good morning, everyone.

Speaker #5: Morning, Andrew.

Vicente Reynal: Hey, Andrew.

Andrew Buscaglia: You know, you made a comment earlier on China, just that it is improving, and that's been a little bit of a change, I'd say, in the last quarter or two. And other companies are kind of talking about that a little bit more. Where can you get more specific about where you're seeing this improvement and, yeah, how you see that playing out in 2026?

Speaker #6: You made a comment earlier on China just that it is improving and that's been a little bit of a change in the last quarter or two.

Speaker #6: In other companies, you’re kind of talking about that a little bit more. Where can you get more specific about where you’re seeing this improvement, and how you see that playing out in 2026?

Vicente Reynal: Mm-hmm. Yeah, I mean, I think the improvement is really coming from a lot of the launch of new products and technologies that our team is doing into the market. So taking also acquisitions that we have done in the US and also Europe, and taking that technology, localizing in China, and then selling in China for China. So it's a good combination of really what I would call a lot of the self-help initiatives that our team is driving, more so than there's an overall market improvement in China.

Speaker #2: Yeah, I mean, I think the improvement is really coming from a lot of the launch of new products and technologies that our team is doing into the market.

Speaker #2: So taking also acquisitions that we have done in the US and also Europe and taking that technology localizing in China and then selling in China for China.

Speaker #2: So it's a good combination of really what I would call a lot of the self-help initiatives that our team is driving, more so than there's an overall market improvement in China.

Speaker #2: So I think the encouragement—I spent the last week with the team in China—is just seeing that the level of innovation and the level of speed on understanding how we can combine technologies to create differentiated solutions for our customers is pretty unique.

Vicente Reynal: So, I think the encouragement, you know, I spent the last week with the team in China, is just seeing that, is that the level of innovation and the level of speed on understanding how we can combine technologies to create differentiated solutions for our customers is pretty unique. You know, we gave one example about the blower combined with aeration. That's actually something new that now the team in China is launching. Gives them a competitive advantage against some other companies, and again, taking technologies that we acquired in the US and localizing and driving that in China, for example.

Speaker #2: We gave one example about the blower combined with aeration. That's actually something new that now the team in China is launching. It gives them a competitive advantage against some other companies.

Speaker #2: And again, taking technologies that we acquired in the US and localizing and driving that in China, for example.

Speaker #6: Yeah. It's more company-specific.

[Analyst] (BNP Paribas Exane): Yeah. It's more of a company-specific stuff.

Vicente Reynal: Yeah. It's more of a company-specific stuff.

Speaker #2: Yes.

Vicente Reynal: Yes.

Speaker #6: Yeah. And you sound encouraging on life sciences. And again, that's kind of something else other companies are getting a little more constructive on for '26.

[Analyst] (BNP Paribas Exane): Yeah, and I, you know, you sound encouraging on life sciences, and again, that's kind of something else other companies are getting a little more constructive on for 2026. You know, I wanna touch on ILC Dover, only 'cause it... You know, with these acquisitions, sometimes they go quiet and, you know, the growth, you know, sort of moderated or I don't know if I'd say slowed, but for that business specifically, I just wanna check, are we- is this could this be a source of sneaky upside if this acquisition kind of comes back? And are there things you've done to it where we could potentially see it contributing to both overall growth and margins this year?

Vicente Reynal: Yeah, and I, you know, you sound encouraging on life sciences, and again, that's kind of something else other companies are getting a little more constructive on for 2026. You know, I wanna touch on ILC Dover, only 'cause it... You know, with these acquisitions, sometimes they go quiet and, you know, the growth, you know, sort of moderated or I don't know if I'd say slowed, but for that business specifically, I just wanna check, are we- is this could this be a source of sneaky upside if this acquisition kind of comes back? And are there things you've done to it where we could potentially see it contributing to both overall growth and margins this year?

Speaker #6: I want to touch on ILC Dover only because with these acquisitions, sometimes they go quiet and the growth is sort of moderated or—I don't know if you want to say slowed—but for that business specifically, I just want to check, could this be a source of sneaky upside if this acquisition kind of comes back? And are there things you've done to it where we could potentially see it contributing to both overall growth and margins this year?

Speaker #2: Yeah, I mean, we definitely have done a lot. And I encourage, whether it is the setup with putting new leaders every creation or kind of creating the P&Ls that were needed to really drive execution, the investments that were needed to really penetrate in some of the better end markets and things of that nature, that we have done a lot of work.

Vicente Reynal: Yeah, I mean, we definitely have done a lot and encourage, you know, whether it is the setup with putting new leaders, every creation or kind of creating the P&Ls that were needed to really drive execution, the investments that were needed to really penetrate in some of better end markets and things of that nature, that we have done a lot of work. And what we have done here is then created a platform for then the acquisitions. And, so far we have done 4 into that kind of platform that we have. So that is just a lot of work that we have done and, you know, we that we continue to push hard to do better.

Speaker #2: And what we have done here is then created a platform for then the acquisitions. And so far, we have done four into that kind of platform that we have.

Speaker #2: So it's just a lot of work that we have done. And that we continue to push hard to do better.

Speaker #6: Yeah. Okay. Thank you.

[Analyst] (BNP Paribas Exane): Yeah. Okay. Thank you.

Vicente Reynal: Yeah. Okay. Thank you.

Speaker #1: The next question comes from Andrew Kaplowitz with Citi. Your line is open.

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

Operator: The next question comes from Andrew Kaplowitz with Citi. Your line is open.

Speaker #7: Hi. Good morning. This is Natalia on behalf of Andy Kaplowitz.

Andrew Kaplowitz: Hi, good morning. This is Natalia on behalf of Andy Kaplowitz.

Natalia Bak: Hi, good morning. This is Natalia on behalf of Andy Kaplowitz.

Speaker #2: Good morning.

Vicente Reynal: Morning.

Andrew Kaplowitz: Maybe the first question that I'll ask, not trying to be nitpicky here, but historically, you guide to 100 percent FCF conversion. This year, your guidance is under 100 percent. Is there anything holding you back in terms of free cash flow guidance? Any color you can provide there?

Speaker #7: It was the first question that I'll ask. Not trying to be nitpicky here, but historically, you guys do 100% SCF conversion. This year, your guidance is under 100%.

Natalia Bak: Maybe the first question that I'll ask, not trying to be nitpicky here, but historically, you guide to 100 percent FCF conversion. This year, your guidance is under 100 percent. Is there anything holding you back in terms of free cash flow guidance? Any color you can provide there?

Speaker #7: Is there anything holding you back in terms of free cash flow guidance, any color you can provide there?

Speaker #5: Sure, Natalia. I'll start with that one. So, I think first of all, if you kind of look over the course of the last few years, we've been in that kind of low to mid-90s realm.

Vikram Kini: Sure, Natalia, I'll start with that one. So, you know, I think first and foremost, I think if you kind of look over the course of the last few years, we've been in that kind of low to mid-90s realm. So I think, you know, 95% free cash flow conversion is, I would say not just even consistent, but even, you know, frankly, a touch better than what you've seen in the last few years. Now, that being said, clearly targeting, you know, closer to 100%, I think is, clearly the... I'd say the, you know, the goal, if you will. You know, I think there's not necessarily anything holding us back.

Vik Kini: Sure, Natalia, I'll start with that one. So, you know, I think first and foremost, I think if you kind of look over the course of the last few years, we've been in that kind of low to mid-90s realm. So I think, you know, 95% free cash flow conversion is, I would say not just even consistent, but even, you know, frankly, a touch better than what you've seen in the last few years. Now, that being said, clearly targeting, you know, closer to 100%, I think is, clearly the... I'd say the, you know, the goal, if you will. You know, I think there's not necessarily anything holding us back.

Speaker #5: So, I think 95% free cash flow conversion is, I would say, not just even consistent, but even, frankly, a touch better than what you've seen the last few years.

Speaker #5: Now, that being said, clearly, targeting closer to 100%, I think, is clearly the—I'd say—the goal, if you will. I think there's not necessarily anything holding us back.

Speaker #5: I do think that clearly, not just earnings growth, but I would call it working capital efficiency, probably continues to be one of our kind of major areas for opportunity as we move forward, not surprisingly, areas around inventory and things like that, particularly coming out of 2025 where some of the tariff dynamics created some inventory build and things like that is probably our biggest source of opportunity as we move through 2026.

Vikram Kini: I do think that, you know, clearly not just earnings growth, but, you know, I would call it working capital efficiency, probably continues to be, one of our kind of major areas, for opportunity as we move forward. Not surprisingly, you know, areas around inventory and things like that, particularly coming out of 2025, where some of the tariff dynamics created some inventory build and things like that, is probably our biggest source of opportunity as we move through 2026. But, no, I would say generally otherwise, we expect very consistent, you know, cash flow conversion, if not even slightly better than what you've seen, in the last, couple years.

Vik Kini: I do think that, you know, clearly not just earnings growth, but, you know, I would call it working capital efficiency, probably continues to be, one of our kind of major areas, for opportunity as we move forward. Not surprisingly, you know, areas around inventory and things like that, particularly coming out of 2025, where some of the tariff dynamics created some inventory build and things like that, is probably our biggest source of opportunity as we move through 2026. But, no, I would say generally otherwise, we expect very consistent, you know, cash flow conversion, if not even slightly better than what you've seen, in the last, couple years.

Speaker #5: But no, I would say generally, otherwise we expect very consistent cash flow conversion, if not even slightly better than what you've seen in the last couple of years.

Speaker #1: Got it. That's helpful. And then, just curious about industrials, energy, and efficiency—in the sense that, when I think about compressors consuming energy in a factory, can you maybe just talk about the customer payback that you're seeing right now?

Andrew Kaplowitz: Got it. That's helpful. And then, just curious about just industrial's energy efficiency, in the sense that when I think about compressors, you know, consuming energy in a factory, can we talk about the customer payback that you're seeing right now? Has that improved over the past year? Where do you see it going? Any color around there would be helpful.

Natalia Bak: Got it. That's helpful. And then, just curious about just industrial's energy efficiency, in the sense that when I think about compressors, you know, consuming energy in a factory, can we talk about the customer payback that you're seeing right now? Has that improved over the past year? Where do you see it going? Any color around there would be helpful.

Speaker #1: Has that improved over the past year? Where do you see it going? Any color on there would be helpful.

Speaker #2: Yeah, sure, Natalia. I'll say that as the price of electricity continues to rise, then for sure, we'll drive better performance in terms of that return on the investment for the customer.

Vicente Reynal: Yeah, sure, Natalia. I'd say that as price of electricity continues to rise, then that for sure will drive better performance in terms of that return on the investment for the customer. So, we continue to see these paybacks clearly under two years. You know, I mentioned me being in China. I was actually visiting a very large customer in China, where compressors were consuming roughly 50% of the total energy at that facility. Now, this is a very, very, very, very large customer, but shows you the conversation was all about that. It was all about how can we help them connect that compressor and fine-tune it to reduce that energy and therefore drive more efficiency for that customer.

Speaker #2: So we continue to see this payback clearly under two years. I mentioned me being in China. I was actually visiting a very large customer in China where compressors were consuming roughly 50% of the total energy at that facility.

Speaker #2: Now, this is a very, very, very large customer. But it shows you the conversation was all about that. It was all about how can we help them connect that compressor and fine-tune it to reduce that energy, and therefore drive more efficiency for that customer.

Speaker #2: So I think it's encouraging to see that obviously, we have the right solutions here.

Vicente Reynal: So I think it's encouraging to see that obviously we have the right solutions here.

Speaker #1: Got it. That's helpful. Thank you.

Andrew Kaplowitz: All right. That's helpful. Thank you.

Natalia Bak: All right. That's helpful. Thank you.

Speaker #3: That is all the time we have for questions. I'll turn the call over to Vicente Reynal for closing remarks.

Operator: That is all the time we have for questions. I'll turn the call to Vicente Reynal for closing remarks.

Speaker #2: Thank you, Sarah. Well, so as we wrap, I just want to say thank you for the continued interest in Ingersoll Rand and, more important, thank again to all of our employees or ownership mindset and the culture of ownership is what creates a differentiation of us, our team, things.

Vicente Reynal: Thank you, Sarah. Well, so as we wrap, I just want to say thank you for the continued interest in Ingersoll Rand, and, more important, thanks again to all of our employees. Our ownership mindset and the culture of ownership is what differentiates us. Our team thinks and acts like owners every day because they are. So we remain focused on disciplined execution, very thoughtful capital allocation, and building a company designed to outperform across the cycle. So thanks again, and we'll talk soon.

Speaker #2: And I'd like owners every day because they are. And so we remain focused on discipline execution, very thoughtful capital allocation, and building a company designed to perform across the cycle.

Speaker #2: So, thanks again, and we'll talk soon.

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

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