Business Context and Reporting Period
Company: Ingersoll Rand Inc. (IR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Ingersoll Rand is a global provider of mission-critical flow creation products (compressors, pumps, vacuums, blowers) and industrial/life science solutions. The company operates through two segments: Industrial Technologies and Services and Precision and Science Technologies. As of December 31, 2025, the company employed over 21,000 people worldwide and maintained over 60 key manufacturing facilities.
Key Financial Metrics
| Metric (in millions) | 2025 | 2024 |
|---|---|---|
| Revenues | $7,650.9 | $7,235.0 |
| Gross Profit | $3,336.3 | $3,170.0 |
| Operating Income | $1,144.6 | $1,300.1 |
| Net Income (GAAP) | $588.8 | $846.3 |
| Net Income Attributable to IR | $581.4 | $838.6 |
| Adjusted EBITDA | $2,093.8 | $2,018.1 |
| Free Cash Flow | $1,220.1 | $1,247.6 |
| Total Debt | $4,784.7 | $4,757.5 |
| Cash and Cash Equivalents | $1,248.8 | $1,541.2 |
Margins (2025 vs 2024):
- Gross Margin: 43.6% (vs 43.8%)
- Operating Margin: 15.0% (vs 18.0%)
- Net Income Margin: 7.7% (vs 11.7%)
- Adjusted EBITDA Margin: 27.4% (vs 27.9%)
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 5.7% to $7.65 billion, driven by acquisitions ($419.9M) and favorable foreign currency impacts ($92.0M), partially offset by a decline in organic revenues ($96.0M).
- Profitability Decline: GAAP Net Income decreased 30.4% to $588.8 million. This decline was primarily due to significant non-cash impairment charges and a loss on an equity method investment.
- Impairments: The company recorded $229.7 million in goodwill impairments and $43.7 million in other intangible asset impairments, primarily within the Precision and Science Technologies segment (Biopharma and Aerospace & Defense reporting units).
- Equity Investment Loss: A $127.1 million loss was recognized on an equity method investment (High Pressure Solutions) deemed other-than-temporarily impaired.
- Acquisitions: Completed several acquisitions in 2025, including SSI Aeration ($97.8M) and Termomeccanica Industrial Compressors ($193.2M), contributing to revenue growth.
- Share Repurchases: The company repurchased $1.018 billion of common stock in 2025, significantly higher than the $260.7 million repurchased in 2024.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management expects capital expenditures to be approximately 2% of consolidated revenues in 2026.
- The company continues to pursue inorganic growth through acquisitions to strengthen core product categories and expand into high-growth markets.
- Organic revenue declined in 2025 due to unfavorable cost leverage on lower volumes and tariff-related pricing pressures.
Key Risks and Contingencies:
- Goodwill and Intangible Assets: 70% of total assets consist of goodwill and other intangibles ($12.7 billion), creating significant exposure to future impairment charges if economic conditions or forecasts deteriorate.
- Geopolitical and Currency Risk: 58% of revenues are from non-U.S. jurisdictions. The company faces risks from currency fluctuations (USD, Euro, GBP, Renminbi), tariffs, and geopolitical instability (e.g., Russia-Ukraine war, Middle East conflicts).
- Debt Obligations: Total indebtedness is $4.78 billion. While the company has $2.6 billion in unused credit facility availability, high debt levels limit financial flexibility and increase vulnerability to interest rate changes.
- Supply Chain: Exposure to raw material price volatility (steel, aluminum, copper) and potential supply disruptions.
- Legal/Environmental: The company has divested its asbestos liabilities but remains subject to environmental cleanup obligations and litigation risks.
Investor Verification Checklist
- Impairment Sustainability: Verify the assumptions used in the goodwill impairment tests for the Biopharma and Aerospace & Defense units, specifically regarding discount rates and long-term growth forecasts.
- Organic Growth Trends: Monitor the trajectory of organic revenue, which declined in 2025, to assess if the decline is a temporary cyclical issue or a structural shift in demand.
- Debt Service Capacity: Review the company's ability to service $4.78 billion in debt given the decline in GAAP operating income and the impact of rising interest rates on variable-rate portions of debt.
- Acquisition Integration: Assess the integration progress and synergy realization of 2025 acquisitions (SSI, TMIC/Adicomp) to ensure they offset organic headwinds.
- Equity Investment Status: Confirm the status of the High Pressure Solutions equity investment and whether further impairments are likely given the $127.1 million charge already taken.