インガソール・ランド（IR）2026年第3四半期決算説明会：受注急増、業績予想を引き上げ

インガソール・ランド（NYSE: IR）は、広範な産業分野の改善と1億9500万ドルのデータセンターインフラ受注に牽引され、2026年第3四半期の受注モメンタムが強化されたと発表しました。同社は通期の売上高および調整後EPSの業績予想を引き上げる一方、調整後EBITDAの予想範囲は維持しました。

主要ハイライト

• 第3四半期の受注額は23億5000万ドルに達し、前年同期比21%増、オーガニックベースで18%増となりました。BBレシオ（Book-to-bill）は1.14倍でした。
• 売上高は6%増の21億ドルとなり、うちオーガニック成長率は4%でした。アフターマーケット売上高は全体の36%を占め、1桁台半ばのペースで成長しました。
• 調整後EBITDAは5億8400万ドルでした。IEEPA（国際緊急経済権限法）関連の関税払い戻し3200万ドルを除く調整後EBITDAは5億5200万ドル（1%増）で、マージンは26.7%でした。
• 調整後EPSは1.07ドルでした。関税払い戻しを除く調整後EPSは17%増の1.01ドルとなりました。
• ITS部門は、約1億9500万ドルの受注生産型データセンタープロジェクトを獲得しました。工事進行基準に基づき、売上高の大部分は2027年中に計上される見込みです。
• 経営陣は通期の調整後EPS予想を3.58ドル〜3.70ドルに、売上高成長率予想を5.5%〜7%に引き上げました。

主要財務データ

事業および業績動向

インダストリアル・テクノロジーズ＆サービス

ITS部門の受注額は25%増（オーガニック成長率22%増）となり、BBレシオは1.17倍に達しました。1億9500万ドルのデータセンター案件を除いても、ITSのオーガニック受注額は1桁台後半のペースで成長しました。同案件を除くロングサイクルのオーガニック受注額は20%以上増加しました。

売上高は5%増加し、オーガニック成長率は4%でした。すべての地域で2四半期連続してプラスのオーガニック売上成長を達成しました。

関税払い戻しを除く調整後EBITDAは4億5100万ドル、マージンは27.8%でした。マージンは主にインフレと中国での価格競争圧力により前年同期比で120ベーシスポイント低下したものの、前四半期比では100ベーシスポイント改善しました。

データセンターの受注は、単一拠点向けの統合バックアップ電源およびろ過ソリューションに関するものです。生産能力、エンジニアリング、サプライヤー認定への投資により、初期マージンは20%台前半になる見込みです。経営陣は、今後の注文には偏りが生じる可能性があることを認めつつも、出荷量の拡大に伴いマージンはポートフォリオ全体と同等の水準へ推移すると予想しています。

プレシジョン＆サイエンス・テクノロジーズ

PST部門の受注額は7%増（オーガニック成長率4%増）となり、BBレシオは1.01倍でした。売上高は7%増（オーガニック成長率6%増）となりました。

ライフサイエンス・テクノロジーズは受注・売上高ともに10%台前半の成長を達成しました。関税払い戻しを除く調整後EBITDAは1億4500万ドルとなり、マージンは前年同期比で180ベーシスポイント、前四半期比で110ベーシスポイント拡大し、32.6%となりました。

PST部門は5四半期連続で40%を超える限界利益率を達成しました。経営陣は、同部門のEBITDAマージン目標である30%台半ばの達成が視野に入ったと述べています。

資本配分とM&A

インガソール・ランドは、決算発表日に精密液体計量・吐出システムプロバイダーの買収を完了しました。買収した事業はPST部門のライフサイエンス事業に年間約4000万ドルの売上高をもたらし、買収マルチプルは10倍台前半でした。

年初来で同社は8件の案件を完了または契約締結し、さらに7件が基本合意書（LOI）の段階にあります。買収パイプラインには200社以上の企業が含まれており、案件の約90%は自社内で発掘されたものです。

取締役会は、前回の承認に基づく残額3億1300万ドルに加え、自社株買いプログラムの20億ドルの増枠を承認しました。経営陣は、M&Aが引き続き資本配分の最優先事項であると主張しました。

業績予想

第4四半期について、経営陣は全社のオーガニック成長率が2%を超えると示し、2つのセグメントは概ね同程度のペースで推移すると予想しています。ITSのマージンは、価格とコストのバランス改善、季節的な売上増、生産性向上によるコスト削減に支えられ、前四半期比で約100ベーシスポイント改善する見込みです。

リスクおよび注視事項

• 第3四半期の価格とコストの差額（プライス・コスト）は金額ベースでわずかにプラスとなったものの、依然としてマージンの逆風となっています。経営陣は2026年の残りの期間から2027年にかけて一段の改善を見込んでいます。
• 中国における価格競争圧力は続いていますが、経営陣は状況が概ね安定化しつつあると説明しました。同社は2027年上半期までにこの影響が一巡し始めると見込んでいます。
• 初期のデータセンタープロジェクトのマージンは全社平均を下回る見通しであり、今後の受注タイミングにはばらつきが生じる可能性があります。
• 電気自動車（EV）および再生可能天然ガス（RNG）分野の最終市場は低迷または横ばいが続いており、当四半期中に顕著な回復は見られませんでした。
• 経営陣は、主に取引のタイミングを理由に、2026年の年換算の非オーガニック（M&A）売上寄与度を約200〜300ベーシスポイントと予想しており、サイクルを通じて不変の目標値である400〜500ベーシスポイントを下回ると見込んでいます。

アナリスト質疑応答の要点

• 需要動向：経営陣は全地域で広範なモメンタムが見られると報告し、食品・飲料、バイオ医薬品、発電、廃水処理、一部の原子力関連用途における好調さを挙げました。短期〜中期のサイクル受注は第3四半期を通じて1桁台半ばの安定した成長を維持しました。
• データセンター市場の機会：同社は、ハイパースケーラーやコロケーション顧客全体で案件パイプラインが大幅かつ拡大傾向にあると述べました。拡大はアジア太平洋地域から始まり、米国やインドにも広がっています。
• 2027年のデータセンター売上高：1億9500万ドルの受注の大部分は2027年中に売上計上される見込みです。経営陣は、その後のプロジェクトはやや高いマージンで開始され、プラットフォーム全体の収益性は時間の経過とともに全社平均に近づくと予想しています。
• ITSの収益性：データセンター事業の立ち上げの影響を除くと、経営陣は中核となるITS事業の限界利益率が30%〜40%の範囲、場合によってはそのレンジの下限寄りで推移できると考えています。
• 先行指標：見積依頼（RFQ）の動きが加速しており、完了に至るプロジェクトが増加していますが、見積もりから受注までのサイクルは大幅には短縮されていません。
• M&Aのタイミング：経営陣は遅れの一因として地政学的不確実性、デューデリジェンスの長期化、企業価値評価の規律を挙げたものの、買収パイプラインは引き続き活発であると述べました。

決算説明会文字起こし全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to Ingersoll Rand's Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Max Vorcheimer, Director of Investor Relations. Max, please go ahead.

Max Vorcheimer

Thank you for joining Ingersoll Rand's Third Quarter 2026 Earnings Call. I'm Max Vorcheimer, Director of Investor Relations. And joining me this morning are Vicente Reynal, our Chairman and CEO; and Vik Kini, our Chief Financial Officer. Our earnings release and presentation were issued yesterday afternoon and are available on the Investor Relations section of our website, where a replay of this call will also be posted.

Before we begin, please note that today's discussion will include forward-looking statements subject to the risks and uncertainties described in our SEC filings and on Slide 2 of this presentation, which you should read in conjunction with the information provided on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in our earnings release and this presentation, both of which are available on the Investor Relations section of our website.

Today, we will review our third quarter results, discuss segment performance and provide an update to our full year 2026 guidance. During Q&A, please limit yourself to one question and one follow-up to allow time for other participants.

With that, I'll turn the call over to Vicente.

Vicente Reynal

Thanks, Max, and good morning to everyone, and thank you for joining today.

Beginning on Slide 3, we delivered robust financial performance in the third quarter, highlighted by 18% organic orders growth, 4% organic revenue growth and a 17% year-over-year increase in adjusted EPS, excluding the benefit of IEEPA tariff refunds received during the quarter. Organic orders growth accelerated across both short to medium cycle and long cycle businesses, including a particularly large engineered-to-order solution win that we'll discuss in more detail shortly.

Important to note that excluding these [indiscernible] order, organic orders still grew high single digits. As we will discuss this morning, we're raising our full year revenue and adjusted EPS guidance. The Board has also authorized a $2 billion increase to our share repurchase program, providing greater flexibility to compound shareholder value. M&A continues to be our top priority for capital deployment supported by a robust pipeline of attractive strategic bolt-on opportunities. We're excited about the momentum we're building, including another acquisition that we successfully closed this morning, which I will look forward to sharing more about in a moment.

Turning to Slide 4. Underpinning our performance is IRX, or Ingersoll Rand Execution Excellence. IRX remains our key enabler of execution and it is how our teams around the world stay focused on controlling what we can control, supporting our customers, driving productivity and allocating capital effectively. A key strategic imperative of the IRX process, as you can see on the slide, is to deploy talent. Earlier this morning, we announced new leadership appointments. Scott Watson, who was previously leading our Life Science business has been named Senior Vice President and Group President of ITS North America and ITS EMEA. And Shaun Carlson, who was previously leading our precision technology business, has been named Senior Vice President and Group President of the PST segment. These appointments reflect the growth of our businesses and the depth of our leadership bench. The leadership in these roles will position us to move faster execute with greater focus and better serve our customers.

I also want to recognize Mike Weatherred, who will transition to an advisory role through May 2028 before retiring. A longtime member of our leadership team, Mike helped drive IRX adoption across the company, where it is now very firmly embedded in our culture. We thank him for his many contributions and wish him well in his next chapter.

Turning to Slide 5. I am pleased to share that this morning, we closed on the acquisition of [indiscernible] Corporation, a leading provider of small volume precision liquid metering and dispensing systems. The business adds approximately $40 million in annual revenue and we'll see it within our PST segment specifically in the Life Science business. It expands our expertise in key precision pump technologies and strengthens our solution for life science customers. and was acquired at a low double-digit multiple consistent with our disciplined valuation standards. Year-to-date, we have closed or signed 8 transactions, and we have an additional 7 transactions at the LOI stage. Our funnel remains healthy with more than 200 companies and approximately 90% of our deals continue to be internally sourced.

For 2026, we now expect to be approximately 200 to 300 basis points of annualized inorganic revenue. Our 400 to 500 basis point target is an average over the cycle and not a single year goal, and it remains unchanged. This year simply reflects transaction timing, not any change in our strategy or the strength of our funnel. Our disciplined M&A strategy remains a key differentiator and an important driver of long-term value creation.

Now I will hand it over to Vik, who will review our financial performance.

Vikram Kini

Thanks, Vicente. Starting on Slide 6. The third quarter was a strong quarter of execution. Orders finished at $2.35 billion, up 21% year-over-year, with organic orders up 18%. Book-to-bill finished at 1.14x, well above what we typically see in the third quarter, with the pickup in short to medium cycle business, coupled with long cycle project bookings improving meaningfully.

Revenue grew 6% year-over-year to $2.1 billion, with organic revenue growth of 4%. Aftermarket revenue represented 36% of total revenue during the quarter and continues to be an important contributor to the resiliency of our portfolio. Important to note, aftermarket grew mid-single digits in Q3. Adjusted EBITDA was $584 million. This includes $32 million of IEEPA tariff refunds received in the quarter, $25 million in ITS and $7 million in PST. Excluding those refunds, adjusted EBITDA was $552 million, up 1% year-over-year with a margin of 26.7%. The year-over-year margin decline was driven primarily by the known inflationary pressures and pricing dynamics in China. Importantly, margins improved meaningfully on a sequential basis, up 130 basis points from Q2, excluding tariff refunds consistent with what we outlined last quarter. Unallocated corporate costs were $44 million in the quarter, and we continue to expect approximately $170 million for the full year.

Notably, our adjusted tax rate for the quarter was approximately 17%. We have been simplifying our global legal energy structure since the 2020 merger, aligning it with how we operate the business. Through strong planning and execution, we are able to now use foreign tax credits we previously could not, which drove a discrete benefit in Q3. We expect these changes to provide a durable benefit to our tax rate and cash repatriation efforts going forward. As you'll see in our updated guidance, we now expect a full year adjusted tax rate of approximately 20%. Adjusted EPS was $1.07 for the quarter. And excluding IEEPA tariff refunds in Q3, adjusted EPS was $1.01, up 17% year-over-year.

Turning to Slide 7. Free cash flow for the quarter was $623 million, which includes $162.5 million of ILC Dover transaction-related recoveries collected in the quarter. Excluding those recoveries, free cash flow was approximately $461 million, up roughly 40% year-over-year. We ended the quarter with approximately $3.9 billion of total available liquidity, including approximately $1.3 billion of cash and $2.6 billion of available revolving credit facility capacity. Leverage improved to 1.6x, down from 1.7x last quarter and 1.8x a year ago.

During the quarter, we deployed $90 million towards acquisitions and returned $358 million to shareholders through a $350 million of share repurchases and our quarterly dividend. As Vicente noted, the Board authorized a $2 billion increase to our share repurchase program incremental to the $313 million remaining under the existing authorization. This gives us flexibility for additional opportunistic repurchases over the short and medium term while M&A remains our first priority. Our balance sheet remains a strategic asset and this authorization does not change our ability to execute on the acquisition funnel.

As an update on the ILC Dover transaction, last quarter, we announced an initial recovery of $187.5 million. Since then, we have reached a series of additional settlement agreements that brings total gross recoveries to approximately $425.1 million. We collected $25 million in Q2 and $162.5 million in Q3, and we expect to collect the remainder of the recoveries in the fourth quarter. Consistent with our focus on earnings quality, these recoveries are excluded from adjusted earnings. We are very pleased with the final outcome of the recovery process with respect to the ILC Dover transaction and intend to use the proceeds in line with our capital allocation strategy.

I'll now turn the call back to Vicente to discuss our segment performance.

Vicente Reynal

Thanks, Vik. Turning to Slide 8. ITS delivered a strong quarter. Orders increased 25% year-over-year, including 22% organic growth, resulting in a book-to-bill of 1.17x. Organic orders were driven by continued momentum in the short to medium cycle businesses as well as a significant pickup in long cycle activity.

On our last call, we noted the acceleration in loan cycle bookings during the first 4 weeks of July. That momentum held throughout the quarter. And later in the period, we booked an approximately $195 million order that is an engineered-to-order solution for mission-critical data center infrastructure. This order covers integrated back of power solutions for mission-critical data center operations, paired with a differentiated filtration system engineered to the customer specifications for maximum uptime, longevity and reliability.

Let me give you some further color on how we have positioned ourselves to enter new growing markets and data center is just one example. We're taking technologies proven in demand in industrial applications and bring them to a new end market. Several companies we have acquired in recent years had power generation and thermal management capabilities that historically served industrial customers, and we were able to adapt them very quickly for data centers. We're getting faster at combining technologies from across our portfolio into differentiated solutions that competitors cannot easily copy. We're also win on engineering depth and extensive network of service technicians.

Let me work through the economics of this large order. This order is accretive to EBITDA dollars and adjusted EPS from the start. As we ramp, we're investing in dedicated capacity, engineering resources and supplier qualification so initial shipments will carry margins below our company average. That's a deliberate choice. We're investing now to secure a position in a fast-moving market where speed and reliability decide who wins. IRX gives us a proven playbook to drive productivity, pricing discipline and aftermarket pull-through as volumes scale, and we expect margins to move towards portfolio levels as the rent matures and additional orders follow.

Revenue in this order will convert over the coming quarters, most meaningfully in 2027, and we expect future orders in this space to be a bit lumpy. Our entry into data centers show how IRX let us move fast and win in new markets. A year ago, we had no presence here. And in less than 12 months, we have built a sizable funnel and established partnerships with several customers. That did not happen by chance. With the massive investment flowing into data centers, we have been deliberate about looking across our portfolio and bringing our unique capabilities together for this end market. Our technology breadth gives us a clear competitive advantage. We combine power generation, thermal management, including chillers and water cooling pumping skids and other critical flow technologies leveraging our proven legacy portfolio and acquired innovations. Combined with our global engineered-to-order capabilities that let us deliver complete customized solutions faster than customers can get them elsewhere, which positions us to capture profitable share in these markets.

I would like to also highlight that excluding this award, ITS organic orders were up high single digits and long cycle organic orders were up over 20% on in the quarter, building solid backlog for 2027. Revenue increased 5% year-over-year, including organic growth of 4%, with all regions contributing positive organic revenue growth for the second consecutive quarter. ITS adjusted EBITDA, excluding IEEPA tariff refunds was $451 million with a 27.8% margin, down 120 basis points year-over-year, driven primarily by known inflationary pressures and the China pricing dynamics noted earlier. Both margins rose 100 basis points sequentially from Q2 as price/cost continues to improve. Over time, we still believe the ITS business outside of the data center ramp we just discussed has the right to play in the 30% to 40% incremental margin range, and we believe the current pressures are transitory.

For our innovation in action highlights, we're showcasing our new line of oil-free rotary screw compressors, redesigned for world-class energy efficiency performance and reliability including a new rotor design and an optimized cooling jacket. Advanced in-store technology transmits real-time operating data to the Ingersoll Rand service network, enabling proactive monitoring and maintenance. That connectivity supports our customers' uptime and also strengthens our aftermarket and recurring revenue opportunity over the life of the installed base.

Turning to Slide 9. PST delivered another excellent quarter and continues to demonstrate the strength of the platform we have built. Orders increased 7% year-over-year, including 4% organic growth with a book-to-bill of 1.01x. Revenue increased 7%, including 6% organic growth. Life Science Technologies continued to deliver solid momentum with low double-digit growth in both orders and revenue. Excluding IEEPA tariff refund, adjusted EBITDA was $145 million with a 32.6% margin, up 180 basis points year-over-year and 110 basis points sequentially. Margins expanded in both Precision Technologies and Life Science Technologies, reflecting strong execution and continued IRX benefits. We're pleased with the PST sustained margin improvement including 5 consecutive quarters of incremental margins above 40%.

For our Innovation in Action, we're highlighting YZ System's Zero Emission Authorization or ZEO platform. Gas direction is a critical safety requirement that ensures communities have a safe supply of natural gas. ZEO incorporates a Milton Roy electric pump to dramatically reduce utility company's carbon footprint across the pipeline network and an average sized utility can reduce methane emissions by up to 15 million cubic feet per year using this next-generation platform. It is a great example of commercial synergies across our brands and how our portfolio supports mission-critical infrastructure.

Turning to Slide 10. Given our performance through the first 9 months. Today, we are updating our full year guidance. Starting with revenue. We now expect revenue growth for the year to be in the range of 5.5% and 7%. The increase in outlook is driven by an increase in organic growth expectations, now expected between 2% to 3.5% for the year. We continue to expect approximately 2.5% growth from M&A and approximately 1% from FX. Our adjusted EBITDA guidance, excluding Q3 IEEPA tariff refunds is unchanged at $2.13 billion to $2.19 billion. Despite ongoing inflationary pressures and challenging pricing environment in China, we're holding our range and we currently expect to finish at the bottom half of the range. Our corporate cost estimate remains on track at approximately $170 million for the year.

We're raising adjusted EPS, excluding Q3 IEEPA tariff refunds to $3.58 to $3.70. The increase is driven primarily by lower adjusted tax rate, now approximately at 20% and a lower share count of approximately 390.5 million, reflecting our year-to-date repurchases. Net interest expenses is still expected to finish at approximately $230 million. For free cash flow, we now expect to deliver more than 100% conversion of adjusted net income, including the ILC Dover related recoveries our underlying operational free cash flow conversion remains unchanged at approximately 95%. Our CapEx forecast remains at approximately 2% of sales.

Finally, on Slide 11, as we continue this portion of the call, I am encouraged by the momentum we're seeing across the business. Demand continues to improve across both short and long cycle activity. Our teams continue to execute at a high level and our M&A pipeline remains very robust. In a complex global environment, we continue to stay nimble, leveraging our in-region-for-region manufacturing footprint and pivoting quickly toward the most attractive end markets. Our strong balance sheet, ample liquidity and expanded repurchase authorization gives us significant flexibility to keep executing on our disciplined capital allocation strategy, which compounds earnings and delivers durable value creation for shareholders. IRX remains the backbone of our organization and continues to enable execution and outperformance across the company. With a 1.14x book-to-bill and a growing loan cycle backlog, we believe we're well positioned to finish 2026 strong and carry real momentum into 2027.

Finally and most importantly, I want to thank you our employees around the world for their continued commitment, dedication and ownership mindset. Your efforts continue to drive our success and help us deliver strong results for all the stakeholders. With that, I will turn the call back to the operator and open the line for questions.

Operator

[Operator Instructions] Your first question comes from the line of Mike Halloran with Baird.

質疑応答

Michael Halloran

Maybe, Vik, if we just start on where you were ending there, Vicente and the momentum you've seen across the portfolio. Maybe just dig a little deeper on end markets, geographies, where you're seeing the most success right now? Any areas or pockets where you haven't seen that recovery curve materialize and then obviously, the sustainability as we move into next year?

Vicente Reynal

Mike, I'll say that we're very encouraged by the global momentum we're seeing across basically all the regions. So if I take, for example, ITS, let me break that by each of the respective regions. I mean, America, on the order side, Americas was up mid-single digits. EMEA was up low 20s, which included a very nice acceleration on some long cycle projects. And Asia Pacific ex that large data center, which is -- it is for Asia Pacific outside of China was definitely up also low single digits. So you can see that the momentum we saw really well into kind of all the regions.

From an end market perspective, I'll say anything related to food, beverage, I mean, kind of the more core fundamental end markets that we have always played into we're seeing better momentum across all of them. So I would say nothing in particular that I would categorize as negative, except the kind of known things such as, for example, electric vehicle and also renewable natural gas. Those are kind of end markets that are having kind of down and flattish here for now quite some time, but we're not seeing pickup. But in terms of kind of fundamental, I mean, mostly food beverage, I mean clearly, biopharma with the Life Science businesses that you saw, power generation, wastewater, some nuclear exposure to as well. That's where we're seeing good momentum now.

Michael Halloran

No, that's helpful. And then on the margin side, maybe just talk through kind of the 2 components versus the Chinese pricing. When do you think you start lapping that any signs of change there, at least stability? And then secondarily, on the price cost side, when do you think your margin and/or EBITDA dollar neutral? Just some updated thoughts there, please.

Vikram Kini

Yes. Sure, Mike. I'll take that one. So I'll start with your last question on the price cost side. So on the price cost side, I think we continue to be encouraged by kind of the momentum we're seeing. Fair to say here that in Q3, price/cost was slightly dollar positive, but obviously, still a margin headwind.

That being said, I think as we said in our last quarter call, we've been taking the requisite actions through the course of the year, and we did see, I'd say, some sequential improvement from Q2 now into Q3 and the back half of the year, which I think was a strong catalyst, obviously, of the sequential margin expansion you saw across the enterprise and particularly on the ITS side. So I think our view as we continue to move forward is that equation will continue to improve as we move through the balance of the year, but really into 2027.

And then on the China side of the equation, similar. I wouldn't say anything has dramatically changed there. We acknowledge that China still is a headwind from the pricing perspective in a very comparable range to what you saw in Q2, but we would acknowledge here that things are largely stabilizing in that respect from the levels we saw kind of exiting Q2. And we would expect that we will be lapping that really as we get through kind of by the first half of next year.

Operator

Your next question comes from the line of Nigel Coe with Wolfe Research.

Nigel Coe

Yes. So just -- well, first of all, congratulations on the large data center order. I just want to make sure that you're competing here against the likes of carrier trains at the traditional chiller manufacturers. Just want to make sure that's the case. And then obviously, ex this one order, high single digit, 9% order growth. If we took out other large orders in the larger compressor orders and -- how would you characterize the growth in the small, medium-sized compressors? And then, Vik, just maybe just clarify on this $195 million order, that will be accounted for sort of, over time, sort of completion accounting on that order?

Vicente Reynal

Yes. So on the first question around some of the data center capabilities. I'll say -- I'll talk more about kind of what's more unique and differentiated on what we're doing. I mean, I think we're playing here across both power and thermal management with technologies that can be more holistically put together. And as you have known, I mean, we do very good sizable of our business is engineered-to-order solutions. And that's the area where we are -- where we believe we have a competitive advantage. The ability to be able to create a combined engineered-to-order, mission-critical, where there's high density, low footprint, modularity and be able to kind of ship it to the location so you can do a plug-and-play, that is a unique capability that we have that we have been utilizing in other end markets. And now that we're kind of leveraging the power of the technology that we have and creating some unique solutions. So I think that's more on kind of where I would say, we have a competitive advantage.

On the second question around the high single-digit. So last quarter, as you remember, we reported low to mid-single-digit order growth in short to medium cycle. And this quarter, we were squarely in the mid-single-digit range. So that tells you that we continue to see that sequential acceleration and some very good kind of momentum here. I would say this was due to a continued broad-based industrial improvement, as we just kind of said and as well as that stern execution by our teams in the equipment that it was basically up low double digit, outpacing aftermarket, although aftermarket was still also high or positive in the kind of mid-single digits. So again, we're even excluding anything else. I mean we still see both short cycle -- short to medium cycle as well as a long cycle momentum here.

Vikram Kini

And then Nigel, on your question regarding the revenue cadence, the accounting treatment, yes, to answer your question, this will be -- the $195 million order will be POC with the majority expected to be kind of consumed or digested through the course of 2027.

Nigel Coe

It's great. I have 3 questions, however. If I can just have a quick follow-on. Really nice momentum, sequential momentum in ITS margins in 3Q. Just based on your commentary around the EBITDA for the full year, what should we expect for ITS margins in 4Q?

Vikram Kini

Yes. Nigel, I'll take that one. So I think the simplest way to think about Q4 is we expect to see essentially a similar level of sequential improvement from Q3 to Q4, as you saw from Q2 to Q3. So approximately 100 basis points. And I would point to a lot of the same drivers that we've called out before. I'd say slightly improving price cost equation, the Q4 volume that sequentially continues into Q4. Obviously, Q4 is our -- typically our strongest volume from a quarter from a seasonality perspective. And then obviously, the productivity equation, which generally follows that, which whether it be the classical procurement side or some of the I2V type initiatives. So very similar, I'd say, drivers, but comparable margin expansion sequentially in Q4.

Operator

Your next question comes from the line of Steve Volkmann with Jefferies.

Stephen Volkmann

Back to the big $195 million order, how should we think about that sort of more medium term? Is there a funnel of additional orders that could be similar? And would you be surprised if we didn't have more of these to talk about a year from now?

Vicente Reynal

Yes, Steve, I'll say that the funnel is fairly substantial and robust. I mean, I think it's -- this has been -- about a year ago, we were not playing in this end market. We obviously structure ourselves and selected a few team members. And over the past 12 months, that's what we've been able, being able to talk to a lot of hyperscalers, colocators and understanding voice of customer in terms of what's needed and what's missing, and that's where we're playing right now. Basically fulfilling those critical needs that are today, in some ways, unmet. And so yes, funnel is growing and continues to accelerate.

Stephen Volkmann

Okay. And then my follow-on, I guess, on sense, how do you sort of manage this from a top-down perspective? And what I mean is that there's a lot of angst around sort of the rate and cadence of data center spending and lots of views around what that's going to look like. But you're allocating some capital building out some supply chain, et cetera. Like is this a risk if things don't come out the way you think they should? Or can you somehow sort of this variable?

Vicente Reynal

Great question, Steve. I think the beauty of this one here is that we're taking products that we have in our portfolio that are widely used in the industrial landscape based on current solutions that we have. And I think if later down the road, some of these data center volume kind of goes down -- I mean, we still have the product that we're selling into the industrial space. So in terms of incremental CapEx and OpEx, I mean, just think about it from a CapEx perspective, we're still going to be well within our 2% of sales on that CapEx. So I think it's -- we're a low CapEx intensity and we're being very thoughtful in the places that we play.

I mean, we're not going super broad-based. We're going very focused on some specific customers. We've done a lot of customer segmentation and we're selecting either want to, call it, a few hand-select hyperscaler as well as colocators and that's basically we're very focused on deep customer relationships.

Operator

Your next question comes from the line of Rob Wertheimer with Melius Research.

Robert Wertheimer

I had a quick clarification on the data center? Is that a framework kind of agreement? Or is that specific to one site where you might see other sites of similar scope?

Vicente Reynal

This is one site.

Robert Wertheimer

Okay. Perfect. And then Vicente, this is a little bit of a bigger picture one. But you think about AI's impact across biopharma and there's already some kind of glimmerings of drug discovery, new applications. All sorts of things that are changing faster than we're used to. If you look ahead a few years, do you see this as a thing that changes your opportunity in this space? Do you see any momentum there? And maybe just talk about how that world is changing.

Vicente Reynal

Yes. Great question, Rob. We -- as you have seen, we have been investing actually in lab automation. We made an acquisition with Senomyx but also inside our business, we have another company called Zinsser Analytic. And those are companies that basically do robotic automation for drug discovery. And we are a participant of developing this machinery and actually providing this robotic automation to customers that are leveraging AI to actually create a recipe for personalization of medicine, particularly in the immunotherapies. So yes, so we think that as more customers continue to use AI and they continue to do these personalization, whether immunotherapy, therapies or other things that require some mixing of different compounds and that is going to be actually a very good play for us moving forward.

Operator

Your next question comes from the line of Nathan Jones with Stifel.

Nathan Jones

I guess I'll ask one on the PST side. You mentioned 5 quarters with incrementals above 40%. Is that kind of the way we should be thinking about the next 5 quarters? And longer term, how we should think about the path back to the targeted 35% margin level?

Vikram Kini

Yes, Nathan, I'll take that one. So we've always talked about the PST business being one that, obviously, it's a higher margin profile business. And you clearly are now seeing, I think, the benefits of, I'd say, solid pricing momentum, but obviously, the volume particularly led by areas like biopharma like Vicente just mentioned. So I think now, obviously, with the well integrated segment between the 2 platforms we have with Precision Technologies and Life Sciences. Yes, we think that this is one that with, I'd say, the kind of normal growth algorithm executing towards that 40% type incrementals is kind of where this business wants to operate.

And to your point here, we've now solidly been above -- well above 30% EBITDA margins here for several quarters, executing on that now above 32% range here in Q3 with expectations to be in a similar range here in Q4. So I think our exit momentum is quite solid. And clearly, the mid-30s kind of EBITDA target range that we put out is, I'd say, well within sight.

Nathan Jones

Okay. I'm going to ask about the same question that I'll ask, Vicente, on every call about [indiscernible] order times. Obviously, you've seen an improvement in engineered-to-order. You're talking about strengthening in end markets. Are you seeing that quote to order time start to shrink? Or are customers still fairly hesitant on pulling bigger?

Vicente Reynal

I mean, I said, we're seeing -- we're definitely seeing a better momentum and acceleration through the process, I don't say it's back to normal levels. But clearly, we're encouraged by the decision-making improvement. But quote-to-order cycle, as they have not shortened meaningfully improving. I would say projects getting to the finish line. Yes, definitely, we're not seeing cancellations. And I think the most important leading indicator here that we're tracking really extensive across the entire company, is the number and obviously, dollar amount of RFQs, so request for quotes and request for pricing. So these are customers trying to get a preliminary pricing on specific projects. And that, we're definitely seeing rapid acceleration.

Operator

Your next question comes from the line of Joe O'Dea with Vertical Research.

Joseph O'Dea

I'll start on the data center topic, but could you just go through a little bit the process that you went through for adapting technologies you have for data centers and expand on what you do internally, what technologies you use from partners? Did you need to establish some new partnerships and doing this? And then just regionally, do you have some advantages in Asia? Or what about the U.S. as an opportunity for you, just given the size of the market there?

Vicente Reynal

Yes. So we're taking technologies from companies that over the past few years, we acquired around thermal management and also combining our ability of developing very quick engineer-to-order skids solutions. They could be skids for filtration, it could be skids for moving liquids and fluids and that's core of what we have done for many, many, many years. I think what's very unique here is how we took the approach of basically, I personally spent a lot of time with a hand-selected group of teams on a global basis to go out and really understand what were the meaningful gaps that were not being offered to some of these customers. And then now we're going back into the kind of regional execution as we always do.

So in this case, it started with the Asia Pacific because in Asia Pacific, we had a bit more experience around the kind of power management and some thermal management solutions. And that's really why we started in Asia Pacific. Clearly, the U.S., we're seeing now as we always do. I mean, we typically start in one region and then we start kind of piloting that and then we move into the other regions, similar to what we have done in historical with like care solutions or recurring revenue, right? In this case, for the centers we turn in Asia Pacific, and now we're moving globally. So about 6, 9 months ago, then we kind of came to the U.S. and with a very similar approach in solutions, and now we're seeing good momentum there. And the last area of focus for us as well has now started to be in India, where I was there. We were there a few weeks ago, and we're seeing some rapid acceleration. And again, taking the same solutions that we developed in Asia Pacific and moving them to the other specific regions to offer something similar to the needs that are out there.

In terms of partnerships, I mean, for the most part, this is not too dissimilar to what we do in our engineered-to-order solution. So we always have a very good solid supply chain, and we're leveraging that supply chain to really create what we're creating here, specific kind of signed partnerships and things of that nature, nothing that I would call out.

Joseph O'Dea

Got it. That's great. And then just a near-term one, when we think about growth into the end of the year, the full year range gives pretty wide range of outcomes for fourth quarter organic. And so I mean is it a base case where the comp does get a little bit tougher, but there's some demand acceleration. Can you do a pretty similar level of organic growth in Q4 as you did in Q3, pretty similar between the segments. Just any color you're willing to provide there.

Vikram Kini

Yes, Joe, I'll take that one. So I think you're spot on here in the context of, obviously, Q4 has a little bit more of a meaningful comp on a year-over-year basis. So I think the way to think about Q4 is right now, expectation is in the 2% plus kind of range for the total company on an organic basis. And actually, both segments looking fairly comparable. So that's kind of the expectation at this point in time.

But I think as you've seen us before here with there's opportunity to obviously outperform that. Clearly, we'll continue to execute. But I think that's probably the right way to think about Q4 based on the guide at this point in time.

Operator

Your next question comes from the line of Joe Ritchie with Goldman Sachs.

Joseph Ritchie

I'm curious on the margin profile of this order, the data center order. It sounds like you're using a solution that you've used previously, you sold these types of products before. Is the fact that it is kind of dilutive to the portfolio margins a function of the investments that you're making is this type of solution typically dilutive? I just want -- and if there's any way to kind of like level set the margin profile of this particular award, that would be great.

Vicente Reynal

Yes, sure, Joe. So think about it similar to sometimes when we do an M&A, that typically, as we bring in M&A, it kind of comes in, in the kind of 20s and then obviously, we ramp it up to fleet average over the course -- over the medium term. So I think it's very similar here. I mean, this is all organic. But the investments in some of the OpEx that is needed to kind of do this ramp, it comes in at that kind of level start to be in the low 20s and then obviously, fairly quickly as we start seeing more incremental volume as well as the continued execution of the output this business can get to that fleet average that we have.

Joseph Ritchie

Got it. That's helpful context, Vicente. And then it sounds like the demand environment even outside of this award has been pretty healthy. I'm curious if you're willing to comment on October trends and how things have started so far this quarter.

Vicente Reynal

Yes, Joe, no commenting in October. I mean, I think last quarter, we were commenting on July just because it was a unique moment in time. I will say things continue to be healthy. We're seeing healthy demand, broad-based on a global basis. And we're just encouraged with how the teams continue to execute and are seeing some of the wins.

Operator

Your next question comes from the line of Andy Kaplowitz with Citi.

Andrew Kaplowitz

Vicente, I know you said transaction timing around M&A has been a bit more difficult this year. But with the financial metrics you want to get, can you get what you need here? And then it seems like you're laddering into repurchases a bit more. So in terms of your priorities around capital deployment, does it sort of -- are you adapting a bit to sort of the current environment?

Vicente Reynal

No, Andy, I mean, I think M&A continues to be that priority. I mean, I think we're -- we continue -- we're a very disciplined buyer. So we -- so we remain disciplined. But in terms of the funnel, I mean, funnel continues to be over 200 companies and very active. And I think it's nothing that we're worried about M&A flywheel at all. I think in some respects, we're very, very encouraged with what we're seeing here on the M&A front. And it's just basically a matter of year timing, nothing to worry about.

Andrew Kaplowitz

Great. And then can you give a little more color into what you're seeing in PST in the near term? I think your order comps are more difficult in Q3 than Q2, but growth seemed to stay strong, at least on the Life Sciences side of the business. So maybe just comment on the durability of the order and revenue strength you're seeing in PST.

Vikram Kini

Yes, Andy, I'll take that one. So I think we're -- we continue to be really encouraged by what we're seeing in PST. I think as we mentioned here, Life Sciences orders were up low double digits on an organic basis, which I think continues to speak the strength in just kind of the life sciences kind of platform and kind of the trends that Vicente mentioned earlier.

On the Precision Technologies side, obviously, when you look at the total and you see a lot of this for our Life Sciences, there was a slight headwind on the overall Precision Technology orders, which was really driven, I would say, by just the timing of some of our longer cycle pump projects, which was down roughly mid-single digits. When you actually look at the, what I'll call more short to medium cycle kind of core pump business within Precision Technologies, that grew low single digits on an organic basis.

So again, I think it speaks to, I'd say the durability of what we're seeing. To your point here, I think the strength in the orders profile that we've seen over the last few quarters is translating nice to revenue. And you see, obviously, the margins going with it. So again, we'll spare any commentary on 2027 guidance at this point in time. But I think we continue to feel encouraged by the momentum we're seeing and kind of the exit we're seeing here to the balance of the year.

Operator

Your next question comes from the line of Nicole DeBlase with Deutsche Bank.

Nicole DeBlase

Just after -- Vik, you said that you're not going to talk about 2027, I'm going to try to ask a question about 2027. So I guess, thinking about some of the puts and takes on ITS margins, right? Obviously, kind of impacted by price cost this year. Inflation has continued, but it sounds like from the opening remarks, you guys are feeling better about the price cost to roll forward into next year. But we've also got this dilutive large order that's going to ship in 2027. So what I'm trying to think through is the likelihood that you guys can kind of get back to expanding ITS margins like 50 bps a year next year? Or is that maybe too optimistic with some of these headwinds?

Vikram Kini

Yes. So Nicole, we'll obviously give a lot more color here in a few months when we get through when we give guidance or what not. But maybe just to give a little bit of color commentary here. Let's talk obviously about kind of, I'll say, the core ITS and I'll park the data center order here for a moment.

I think our view moving into next year is that we would expect kind of pricing, again, similar to what we talked about entering this year to be kind of in that normal 1% to 2% range. I think we will get some carryover, obviously, from the actions that we've taken through the course of 2026, not too dissimilar from what we've spoken about before. But I think the good news here is I don't think we're necessarily comping the tariff-driven pricing and things of that nature. So obviously, we'll continue to calibrate based on how any inflationary headwinds and things like that. You've seen us be able to be very proactive in that sense. And then obviously, we're going to continue to drive the productivity equation. And I think we're encouraged by at least how volumes have continued to trend here over the back half.

So I think back to kind of Vicente's prepared comments here, we do think that the core business kind of operate in that 30% to 40% incrementals range, probably maybe more towards the lower end of that range. But we think that that's a probably a prudent way to think about how we think expectations are, at least [indiscernible]. And as such, we'll obviously give a little bit more of a finer point on the overall margin equation. But I think we feel good about how ITS is trending. And now you see that obviously in the margin profile sequentially improving here as we move through the back half of this year.

Nicole DeBlase

Okay. Perfect. That's actually really helpful. And then just with respect to another orders question. The short and medium cycle orders that mid-single-digit figure that you guys gave for 2Q, was that pretty stable across the quarter? And did we kind of exit there in September?

Vikram Kini

Yes. Nicole, I'd say, it's fairly stable through the course of the quarter. So not the [indiscernible] I would point to in terms of any variability or anything like that during the course of the quarter, very comfortable and relatively stable.

Operator

Your next question comes from the line of Amit Mehrotra with UBS.

Amit Mehrotra

I just maybe I had a question on growth and what you're seeing sort of as a leading indicator. I know Vicente, you have some visibility into sort of the utilization of the assets in the field, not complete visibility, but some visibility. I know that was sort of inching up above 70%. Can you just maybe update us on that? And then ultimately, we're all trying to figure out if this order inflection, if I can't even call it that, ex the data centers is actually ultimately going to translate to accelerating growth. And so any color you can say about where we are today, obviously, low to mid- single-digit growth. What you're seeing on the utilization on the order front giving you confidence that we're going to be accelerating growth next year?

Vicente Reynal

I mean, I think based on everything that we're seeing here, I may at this point in time, whether it is the utilization of compressors in machines that are connected Yes. I mean we do think that, that momentum continues. I mean there's definitely -- you see it on the PMIs as well. We always said that typically, ITS will turn and accelerate as a couple of quarters after PMI has demonstrated to be above 50 for a few months. And obviously, you saw that in January in the Q1. And basically, now it's a couple of quarters later that we're seeing some of that acceleration.

So we always say that it just takes that tailwind to see for us. So I think at this point in time, I mean, despite some of the kind of geopolitical macro environment going on, I mean, we're seeing the good momentum and hopefully, things will continue to get better and improve moving from here. But yes, I mean, we're seeing things on that acceleration and positive momentum.

Amit Mehrotra

Okay. And then just back on the margin, I mean, it was nice to see the step up sequentially in margins as you guys expected. There's a pretty big sort of implied step up, obviously, in the fourth quarter, you talked about the 100 basis points sequentially. But if I just look at, I guess, the sequential change in profit versus the sequential change in revenue implied by the guidance, it's sort of like 65% which is a big number. So could you just help us think about maybe some of the puts and takes there that give you that type of drop through sequentially at least?

Vikram Kini

Sure, Amit. I'll take that one. So I think a couple of things to think about here. One, as we indicated here, we've been taking certain pricing actions for the course of the year, fairly standard for us. So I think the concept of continuing to see sequential slight improvements on the price/cost equation, I think is kind of what's embedded.

The other piece here that I think also is a piece of the equation here is, remember, a lot of our, I would say, direct material driven savings, whether it be classical procurement savings, I2V, they tend to follow kind of your cost of goods sold profile, which typically tends to be much better second half weighted and typically a lot more into the Q4 time frame. So I think between those factors as well as just some of the kind of, I'd say, normal course things we've been doing, whether it be some of the prior restructuring actions, things of that nature. That's kind of all what's kind of built into the, I'd say, the build from Q3 to Q4. And the way the way I kind of think about this here is the level of sequential margin expansion from Q3 to Q4, not too dissimilar from what you saw from Q2 to Q3. So obviously, we're going to continue to execute here. But obviously, that's kind of what's built in. And not too dissimilar, I think, from sequential improvements you've seen in years past as well in terms of the Q4, the high watermark on margins.

Operator

Your next question comes from the line of David Raso with Evercore ISI.

David Raso

A little minutia here, but I wanted to dig into the China business and ITS, how it's dragging on the margins. Can you help us a bit -- obviously, we have the revenue size, we don't have a Q yet, but it's roughly 11%, 12% of the segment. Are the China margins -- what's the relationship with the China margins to the segment average for ITS right now?

Vikram Kini

David, I'll take that one. So broad strokes, whether it's the China business or frankly, total Asia Pacific, but obviously, China is the biggest piece of it. It plays in a range that's very comparable. I would say, to the fleet average.

Now fair to say, obviously, it's been healthier than that historically. Clearly, we've seen headwinds for some of the aforementioned pricing dynamics. So I think right now, it's still in the general range of, I'd say, the total ITS segment, nothing dramatically different. We don't actually see a tremendous amount of mix between our regions, but you clearly see headwinds there. And I'd say the other piece that's become, I'd say, a little bit more relevant over the last few quarters is, obviously, off of a different baseline than where we were a few years ago. You are seeing good growth. We've talked about that low double-digit type volume type increases in the China type realm. But it is fair to say that that's obviously been much more original equipment driven than aftermarket at this point in time.

But again, we view that as a positive from a more medium-term perspective as, obviously, more installed base that we will then ultimately be able to serve through the aftermarket. But I think that point is -- your point about it being a headwind has clearly been the valid over the last number of quarters.

David Raso

And is the margin improvement sequentially for the whole group consistent with what we saw in China in the quarter or the China margin still flat to down sequentially? I'm just trying to get a sense, but you said that the segment has a right to play in the 30% to 40% incrementals. And I'm just trying to get a sense of China's impact on that for '27.

Vikram Kini

Yes. I would say from a sequential perspective, I'd say China is obviously seen, I'd say, sequential improvement, very similar to other regions. But on a year-over-year basis, obviously, continues to still be a bit of a headwind.

Operator

Your last question comes from the line of Brandon Knutson with Morgan Stanley.

Brandon Knutson

On the $195 million order, it sounds like as you. Take that -- or you want to start at a lower margins and then scale up the volumes there and get that to segment level margins. As you take this solution to other regions, do you also foresee if it's like a bigger initial order that those would come through at a margin dilutive level initially before ramping up to the segment level?

Vikram Kini

Yes, Brandon, I'd say again, as we continue to execute, probably for to say that they'll probably start a little bit better. But I would say we would expect to see a continued improvement over the medium term as we continue to kind of ramp up in this area. So I think the simplest way to say it is maybe a little bit better than probably what you see on this initial order. But again, take that as something about a starting point. And as Vicente said, we continue to ramp and almost see this kind of almost like acquired M&A and things like that as it continues to mature in the medium term, we would expect to get kind of this overall platform to closer to fleet average, as you've seen us do for other parts of the business as well.

Brandon Knutson

Great. And then to ask a question on M&A slightly differently. So you highlighted this year is going to be roughly 200 basis points below the through-cycle M&A target that you're looking to hit. What have been the factors that have been impacting deal timing this year? And do you see those factors in the environment around M&A getting better as we start looking towards '27?

Vicente Reynal

Yes, Brandon, I'll say, I mean, the couple of sectors have been mostly just one at the beginning of the year kind of with what was happening in the Middle East. I think some -- I mean, keep in mind, we're doing sole source family on entrepreneur companies. So some of the -- some of these companies kind of put a bit of a pause and kind of moved to the sidelines.

But again, deeper due diligence that we continue to do, obviously, in some cases, being prudent due to the pricing dynamics of some of the transactions that we were seeing. I mean, nothing else too dissimilar that is kind of really concerning to us. I think the only kind of aspect here that I will say maybe moving forward is maybe better, whether it is better Middle East or better or other things that geopolitical stability, I think that might be the only thing that could change. But again, with over 200 companies in the funnel, and I mean we have a pretty active funnel here. And like I said, I mean, nothing really to pinpoint exactly to one issue why the transition in terms of the delays, but we're not worry about continue to doing that 400 to 500 basis points through the cycle.

Vikram Kini

And Brandon, the only thing I'd add is even this morning here, the announcement of [ IVC ], I think, speaks to that. Obviously, one that's been the funnel, one that got to the finish line here. So I think it speaks to, obviously, the activity, and we would expect to see transactions like that continue to unfold here over the near term, if you will.

Operator

There are no further questions at this time. I will now turn the call back to Vicente Reynal for closing remarks.

Vicente Reynal

Thank you. And I'll say thank you all for your time and continued interest in Ingersoll Rand and one more special thank you to our employees around the world whose ownership mindset and commitment to executing through IRX helps compound durable long-term value for all of our shareholders, which again, of course, includes our employees who are shareholders of the company. So thanks again, and have a great day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.