Conference Transcript - IR 2026-02-18

Operator

Great. Thanks, everyone, for being here. It's my pleasure to have up next Ingersoll Rand, Vic Kinney, CFO. And thanks very much, Vic, for continuing to come to this conference.

Vic Kinney, CFO

Yeah, of course.

Operator

Maybe first question, just how have you seen the demand environment in recent months? I think a lot of investors' attention is focused on kind of prospects for a U.S. short-cycle industrial recovery. Are we seeing it yet, or it's all as usual, you know, X months into the future?

Vic Kinney, CFO

Yeah. So first of all, thank you again for having us. As far as the demand environment, you know, let me start. I'll start with the U.S. and then kind of make it a little bit broader. So, you know, I think in Q4, definitely encouraged, I think, by the momentum we saw, not just in the U.S., but kind of, I'd say, you know, across both segments, you know, with positive organic growth from an order's perspective. You know, in the U.S. side of the equation or North America, you know, definitely seeing, I'd say, kind of the peak of uncertainty kind of being behind us. You know, we're encouraged, I think, by some of the momentum we saw coming out of Q4. And I do think that's actually a comparable statement to what you've seen a little bit more globally, right? So even, for example, China, which for us is about 10% of our revenue, you've seen positive organic growth on the order side for the last roughly two to three quarters, obviously in a market that hasn't been seen that broadly speaking. And so I do think it speaks to some of the self-help and things of that nature. Now, Julian, as far as the go forward, I think we're encouraged by some of the momentum we're seeing. I think, obviously, with some of the leading indicators like PMI and whatnot starting to inflect a little bit more positively, I think we're encouraged. But I do think we still want to continue to be prudent, you know, in terms of expectations going forward. And I think you saw that in our guidance framework that we put forth on Friday in terms of, I'd say, prudency coming into 2026, just in terms of the organic growth equation. And, you know, hopefully an area that, you know, as we move through the year, hopefully an area for opportunity, particularly on the organic volume side, as we move into the balance of 2026. Perfect. And, you know, I think

Operator

in recent years there's been various kind of rolling headwinds you know you had the sort of ITS hangovers from the China EV build-outs the European bump post the Ukraine invasion you know COVID hangover in PST and then in the U.S. some of the sort of sustainability type projects got put on ice 12-15 months ago so when you look at all those things today is it fair to say they're kind of in the rearview mirror, anything else that's bubbled up recently that could be a new kind of headwind or roll-off to think about?

Vic Kinney, CFO

Yeah, you're absolutely right. I think the last few years, whether it was coming into 24 or 25, we had a market or a region that had some degree of a headwind. You mentioned a number of them. I think the simple answer here is moving to 26, no. We don't have something comparable to the U.S. RNG like you saw last year or the China AEV solar that you saw a couple years ago. So I think the comps in that respect are, you know, a little bit, you know, cleaner, comparatively speaking. No meaningful headwind of that nature. You know, obviously, quarter to quarter, you're always going to have some of the project timing and whatnot, but that's pretty normal. So generally speaking, no, it's a little bit cleaner in that respect as we move into the 2026 framework.

Operator

And as you think about the broad sort of U.S. customer base, you know, any difference in sort of behavior in terms of distribution versus OEMs or long-cycle projects versus kind of MRO activity?

Vic Kinney, CFO

Nothing dramatically different. Let me take those in pieces here. So on the distribution base, this is an area that we pay, and we do go multi-channel, so we go direct and distribution. On the distribution base, this is an area that, one, we watch very closely. It's not a channel that inherently builds a lot of inventory or things of that nature, just given inherently some of the customized nature of compression technology and things like that. So I'd say from that perspective, very comparable. And on the direct side, yeah, nothing dramatically different, I would say, as we've kind of exited the back half of the year. Like I said before, I think the peak of uncertainty is probably a little bit behind us, but we do want to continue to see a little bit more of that momentum on a go-forward basis. I think one area that we've been very strongly pushing on, I'm sure we'll talk about it here even more, is the recurring revenue side. where we continue to see, I'd say, nice uptick, not just in North America, but also on a global basis. You know, we mentioned during our earnings call in 2025, we eclipsed $450 million of recurring revenue on an, you know, an Ingersoll-wide enterprise basis. You know, just to put that in perspective, you know, back in 2023, that was, you know, circa $200 million and, you know, $100 million in years before that. So to see that part of the business more than double, obviously is very encouraging in the kind of, I'd say, ramp-up and the build-out of our recurring revenue initiative that we've talked about pretty explicitly over the last few years. I think the piece, though, for us that's even more encouraging is the fact that you're seeing it, I'd say, broadly based in terms of regions and product categories. Compressors in the U.S. are still, I'd say, the biggest piece of that equation, but you see a very measurable baseline now across, I'd say, the other product technologies as well as the other regions. We have nine P&Ls that kind of comprise Ingersoll Rand and generally speaking, every one of them now has some form or fashion of recurring revenue that they're operating to, some obviously much bigger than others. But today we're talking about recurring revenue in parts of blowers and pumps and things like that, which is frankly not something we talked about years ago. So encouraging, I'd say, to see the momentum that has kind of taken place over the last two years and frankly expect that to continue to ramp as we move here into 26 and 27.

Operator

And, you know, if you're looking about the demand environment, You said it's a little bit better signed on short-cycle exiting last year. It doesn't seem to be dialed into the guide for 26 in the sense that you have kind of pretty similar organic growth every quarter or both halves dialed in. Is there something to do with comps that explains that, or it's just, as you said, a determined effort to have a prudent guide this year?

Vic Kinney, CFO

Yeah, so let me start with, I'll answer kind of both sides of that. I'll start with first, I think what you're seeing is prudency in the context of, while we're encouraged to see some of the momentum in Q4 and some of the kind of leading indicators, we want to see a little bit more of sustainment of that. So obviously, you know, the guidance framework and the 1% organic growth at the midpoint, I think that just reflects the prudency as we come into the year. Now, as far as seasonality, comps, things of that nature, I think it's important to note that the seasonality for 2026, we expect to play itself out almost exactly like you've seen in years past, right? So inherently Q1 is a little bit of your lightest quarter, Q4 typically your heaviest. But the first half, second half, in terms of, let's call it phasing, whether it be on the revenue, earnings, EPS side, you're going to see it look exactly like it's seen in prior years. And that's also on the earnings growth. We have about 5% earnings at the midpoint on an EPS basis, and you're seeing a comparable level of earnings growth in both the first and second half at that kind of mid-single-digit realm. So I would say prudency in terms of the guidance framework, but continue to expect to see a comparable level of phasing from a growth and earnings perspective on the year.

Operator

Great. And, you know, you've touched on already recurring revenue and a broad push there. You know, how much of that recurring revenue base is kind of the care effort that you talked about a lot and invested a two to three years ago? And how much is kind of broader tools that you use depending on the P&L?

Vic Kinney, CFO

Yeah, for sure. So I think care and, you know, obviously as a gold standard, you have packaged care, but you also have planned care, parts care. You have differing kind of tiers of the care model. Clearly, that's the biggest piece. You know, compressor is obviously our biggest piece of our total portfolio. So the care model that follows it clearly will be, I'd say, the biggest piece. But what you've seen today is kind of, I'd say, a couple of different kind of differing kind of pushes as well in addition to care. One, you've seen a care-like model probably adapted, so it's not actually called care, but it has a kind of a similar look and feel, but adapted for other parts of the portfolio. So whether it be our blower portfolio or different pump technologies, they are adapting to what I would call differing recurring revenue type models that kind of mimic care in one way, shape, or form. But you also have other aspects of the portfolio, whether it be, you know, some of the air quality, the eco-plant, some of the other kind of, I'd say, offerings that are kind of now bundled into that kind of overall recurring revenue model, that are now starting to get, I'd say, much better traction. So I think we're kind of looking at this from all sides. CARE obviously will be, is, and will continue to be the biggest piece of that equation, but unlike two, three years ago, it's not the entirety of it. I think we're now starting to see good traction on other parts of the, I'd say, recurring revenue model, and clearly those are areas we're going to expect to see accelerating at a comparable, if not faster, growth trajectory as we move into the next few years as we kind of continue on that journey to a billion dollars.

Operator

And when you think about the profitability profile of the recurring sales, kind of how should we think about that?

Vic Kinney, CFO

You know, I think at its, I'll call it gold standard, you know, the risk transfer kind of package care, you can see, you know, gross margin profiles playing in that, you know, 60, 70. You know, they're very, very profitable. First and foremost, aftermarket in total, for Ingersoll right, it's quite profitable. This just probably happens to play at that kind of upper end. Clearly, though, there also are, you know, areas that we want to continue to invest in, right? You know, this model is, you know, I'd say based in large part based on service tech's, you know, density of your service kind of network across the globe. Clearly, there are areas we're going to continue to invest in. So I think you're seeing us take that opportunity. Even areas like the EcoPlant platform, that's a business that's, you know, more software oriented and, as such, requires kind of more investment today, comparatively speaking, to its earnings profile. So I think you're seeing that all kind of all happen today. So I think on a gross margin profile, quite healthy. I think we're taking the opportunity to reinvest for growth, both on recurring revenue and other areas. And that's, I think, what you're seeing kind of now in the kind of margin profile, which, you know, even for ITS, which is where the preponderance of recurring revenue sits, you know, we finished still operating at 29% EBITDA margin. So I think you're seeing a nice balance of continuing to see the growth and recurring revenue, but also continue to invest for future growth.

Operator

And then, you know, within the compressor side of ITS, you know, I think tariffs had a big impact last year on the cost base and still do, Section 232 and the preexisting sort of country-based tariffs. How have you seen the industry respond to those, so in the U.S. compressor market? How has pricing and kind of market share played out? And I realize it feels a long time, but it's fairly recent in a way, particularly Section 232.

Vic Kinney, CFO

Yeah, for sure. So, you know, I think the way you characterized it is quite appropriate. Obviously, ourselves as well as peers and, you know, have seen our requisite share of, I'd say, tariff exposure. And also, quite frankly, even the ebbs and flows as this has kind of, I'd say, migrated over the course of the last number, like the last year, even as of late, India now going from 50% back down to I think roughly 18%. So you continue to see ebbs and flows in terms of the tariff equation. I think as far as how has the market responded to pricing and whatnot, I think it's been quite rational. Obviously, our exposure tends to come much more from just our global supply chain. Otherwise said, it doesn't really come from what I will call intercompany dynamics or things like that, we tend to be much more in region for region, which has always been the strategy of the company. And I think even in this environment and this situation, I think it tends to be a nice, hopefully competitive differentiator in that respect as well. But we clearly have a global supply chain, and as such we've seen our fair share of tariff exposure. I think much like others, we've taken, I'd say, the requisite pricing actions to offset. For us, we've been very clear from day one that that pricing is meant to offset tariffs one for one. We're not necessarily looking to make margin on tariffs, and that's generally what you're still saying to this date. You know, yes, we do have, I'd say, a carryover impact into this year, clearly with tariffs really starting in the April-May timeframe last year and then ramping from there, you kind of have, you know, I'd say more of a first half of this year kind of carryover on the tariff side, but pricing is matching that fairly well. What I would call it is price-cost, you know, dollar neutral. Obviously, that's margin dilutive, and as such that, so it kind of plays a little bit more of a headwind on the ITS margin profile in the first half of the year, and we do expect that to kind of normalize and get back to, you know, margin expansion in the back half of 2026. So I think as far as share and things of that nature, you know, I think we're, you know, maintaining very nicely. We're encouraged, I think, by how the teams have operated, even in Q4, where we did mention, I think, in our, you know, in our last during cycle, there was maybe a little bit of timing on tariffs to get a little bit quicker than price. I think the teams executed very well. You saw us kind of delivering towards the high end on both revenue and earnings profile, which I think was the teams executing very well as we moved through Q4. And I think as we move here into 2026, no expectation that should be dramatically different. And, you know, when you

Operator

look at what competitors have done, I think a lot of them in compressors, they may have a more global sourced approach than you. You know, they're less in region for region. So in the U.S., did you see them respond yet with big price increases or they're more kind of trying to

Vic Kinney, CFO

balance out. Yeah. I mean, we've seen, I think we've seen a varying degree of responses for like a better way to say it. You know, I think what we're, you know, very focused on here is, you know, one, making sure that we, you know, from a quality of earnings perspective, are kind of protecting the bottom line, which I think we've done a nice job of. We obviously have, I'd say, certain degrees of tariff mitigation that have been in place and I think is, you know, in motion as we speak in terms of whether it be shifting sources of supply in very isolated instances, you know, shifting some of our internal supply dynamics. Like I said, we're very much in region for region, so that part's a little bit more limited for us. Clearly the pricing side of the equation taking requisite price. But, you know, I'd say this is a very rational market and I think continues to behave fairly rationally in that respect.

Operator

And, you know, ITS margins, they've got to a very high level the last few years. You know, you have been comparable with your main global peer on margins for a couple of years now. What's the sort of next leg to getting margins up if there is one? You know, is it around the recurring side or adjacent products to get bigger in away from compressors? How to think about where margins could go in ITS?

Vic Kinney, CFO

Yeah, so, you know, we've hit 30% EBITDA margins in ITS. We're planning around 29-ish percent now with some of the tariff headwinds. I think, you know, if you take a look at the last few years with some of the headwinds we've seen, particularly whether it be on tariff side or things like that, first and foremost, you know, given some of those headwinds, you know, and frankly, an environment that you haven't seen a lot of organic volume growth, actually quite encouraged by how the team has been able to maintain margins at that, you know, upper 20s to 30% level, which speaks to pricing discipline, productivity. you know we've been very explicit we've taken some restructuring actions and things of that nature including some in the second half of 2025 as we move forward you know we've said very explicitly you know we don't necessarily see a cap per se on margins right obviously playing against that 29 30 percent it's hard to see the level of margin expansion you saw back in the 2021 22 23 days but I think as far as going forward you know I'd say the concept of being able to deliver 1% to 2% price, continuing to see the productivity equation. Any requisite volume growth obviously comes with pretty healthy flow through, I think can be the catalyst inclusive of recurring revenue for continued margin expansion. But also, we're going to be very conscious of continuing to reinvest for growth. We've talked about it very explicitly, whether it be growth from an innovation perspective, recurring revenue, or quite frankly, just the feet on the street, the R&D, things of that nature, not just in the areas we talk about quite a bit of U.S. and Western Europe, but also those underpenetrated markets, right? And those underpenetrated markets being Latin America, India, Middle East, and, you know, I'd say Southeast Asia, kind of the balance of Asia that's not China. And just to give that a little color, you know, in Q4, you saw actually 20% plus orders growth in that non-China part of Asia, which I think speaks to some of that, you know, focus and some good project wins and things of that nature. Brazil has continued to show very nice growth. India tends to be kind of probably our best growth region if you look across a number of years. So I think we're going to continue to be balanced in terms of continuing to drive that reinvestment for growth. But absolutely, I think the concept of requisite pricing with, you know, organic volume and the productivity, there still is opportunities for margin expansion.

Operator

And then PST, you know, struggled for three, four years to get margins towards that mid-30s range. It's been much better performance the last kind of five quarters or so. So help us understand, like, what's driven that improvement and kind of what should we expect for margins? You know, I think this year is just over a point of margin. Is that a good, I don't know, placeholder until we get to the mid-30s and then we take a fresh look?

Vic Kinney, CFO

Yeah, I mean, you know, just to give it a little bit of color, you know, historically, to your point, this was a business that moved from, you know, approximately 30% EBITDA margins in, you know, the 2021 timeframe to about 30% EBITDA margins in 2024, 2025. And, you know, it's worth noting that, you know, there were a lot of ebbs and flows in between, you know, whether it be the legacy Ingersoll ran medical business, which was kind of probably the biggest beneficiary of COVID, and then obviously saw the biggest headwind thereafter, a business that plays above segment average margin profile. You know, you had some acquisitions like CPEX that were intentionally acquired at certain levels, but you've seen that get to fleet average. So as much as we've moved, you know, let's call it 30% to 30%, I would say a lot of good efforts from the team to be able to offset some known headwinds that were kind of occurring under the covers. Now, that being said, going forward, to your point, seeing a lot better momentum here over the last couple of quarters, and I think that's attributable to two big factors. One, continued integration of some of the recent acquisitions, particularly on the life sciences side, where you're seeing good growth, and now as those acquisitions are getting much more firmly embedded and integrated, as well as aspects of IRX and productivity starting to play themselves out, you've seen better margin performance. And then, two, we always mention that, particularly on the kind of more legacy part of PST, so the precision technology, the kind of legacy pump business, it's probably that, historically speaking, back post-merger, it probably didn't have as much of the focus in terms of the integration, and that's really just because a lot more of the effort was spent around ITS. Now, that being said, the concept of IRX taking hold, I2V, productivity, even some targeted cost actions, you're seeing that taking place now on the balance of that PST portfolio, which I think is helping to drive some of that margin expansion. And listen, similar story to ITS. With some of that kind of organic volume growth, you're seeing some of that leverage come through. So yes, 2026, the kind of guidance framework embeds a little over a point of expected margin expansion. Is there any reason that we shouldn't be able to expect similar levels of moving to 27? No, and I think that speaks very well to the expectation of continuing to drive this business to that mid-30s EBITDA margin profile, which has always been the target.

Operator

And ITS, I suppose, not a firm, you know, the target, you hit the target, and then we're sort of waiting, I suppose, for a new one at some point.

Vic Kinney, CFO

Yeah, I think that's probably the best way to say it. You know, I'll say, you know, one, is there still opportunities for margin expansion that we've talked about? Yes. Do we expect to be seeing the triple-digit margin expansion that you saw back in the, you know, three, four, five years post the merger? No, not to those levels, just given, you know, where the margin profile is, some of the opportunities that were, you know, evident back then in terms of the merger and things like that. Now, that being said, you know, I still think that margin expansion is still an opportunity there. We'll obviously recalibrate that as we move forward in terms of more forward looking expectations that are investor day and things of that nature. But, you know, clearly we've been at 30% plus EBITDA margins before. I don't think we see any reason why that can't, you know, exist again in the future. And we haven't, you know, we've said it before, we don't actually see a cap on margins, but I think we also want to be prudent in terms of the expectation there. It's not the same level of opportunity as what you saw back in, you know,

Operator

the few years post the merger. And when you mentioned the life sciences acquisitions in PST, you know, how is ILC Dover performing now? It's more than 18 months, I think, just since the close. Yeah. Organic growth, sort of progress on margins. Yeah, I think we're really encouraged

Vic Kinney, CFO

by what we're seeing. To your point, it's, I guess, coming up on two years here in the not the acquisition of ILC Dover, I think the life sciences side continues to execute and operate quite well. You know, we talked about in Q4, you saw double digit orders growth in that life sciences part of the business. You know, I think whether it be the biopharma side, which still has, you know, as many of the same kind of, you know, opportunities with GLP ones and things of that nature going forward, as well as kind of the more kind of med device business, which I think the way I think about that is, you know, continuing to see that multi-year trajectory as we kind of ramp up on platforms that you're kind of getting specced into. So that business, yes, does have a book and ship dynamic and kind of a shorter nature to it, but I look at it kind of more from a medium-term perspective in terms of those multi-year platforms you're getting specced into that you live that kind of duration of that life cycle with your end customer. And I think we're encouraged by what we're seeing on both ends. I think the other piece here that that team has done a really great job on is, we talked about it before, really adapting, I think, a lot to the, you know, a lot of the IRX processes. So whether it be IRX, demand generation, the productivity equation, you know, right-sizing the cost structure, you know, the first six to 12 months, there was a lot of change in that business, new GMs, new structure, changing from a more matrix and, you know, P&L environment to more straight line. Today, I'd say that's kind of really all cleaned up here. And so I think we're really encouraged by the momentum we're seeing going forward. and you're also now starting to see that bolt-on M&A approach, right? We've done multiple acquisitions, four or five acquisitions now that have been put into life sciences, including the one we just closed here in January of Cynomics. And I think we're really encouraged by now having that, we'll call it beachhead in life sciences, that you can now see the kind of Ingersoll Rand bolt-on M&A kind of playbook starting to replicate itself. And, you know, it's no different. We're doing low double-digit, you know, pre-synergy, adjust EBITDA, purchase multiple acquisitions there, driving a similar return profile and, you know, synergy deleveraging like you see in ITS and in the legacy pump business, and no reason why that can't continue on to go forward. So I think we're actually really encouraged by the momentum we're seeing there, as well as now that platform for future growth, both organically and inorganically.

Operator

And on the non-medical side of PST, any particular focus areas for share gain, whether on the type of pump or end market? You know, it can be hard from the outside to sort of understand what's happening in that non-medical part.

Vic Kinney, CFO

Yeah, I'd say the best way to probably describe it is it kind of behaves in a comparable manner to what you're seeing in ITS. So it's obviously got a number of different end market exposures, whether it be wastewater, you know, agritech, kind of core industrial, more process-oriented, but it's actually very global in nature. In fact, the revenue profile of the legacy, we call it precision technology, but the legacy pump portfolio looks very similar to what you're seeing in ITS. So generally speaking, and also has a long cycle component to it as well in some pieces. So similar, very similar, I'd say, to what you're seeing on the ITS side. And actually the growth trajectory there, inclusive in Q4, you saw a very comparable orders trajectory as what you saw in ITS. So I would correlate it fairly well to what you're seeing in ITS, which obviously we're encouraged by some of the momentum, them, but we want to stay prudent in terms of that expectation going forward.

Operator

Great. And in capital deployment, you know, ILC Dover was a large transaction announced about two years ago now, just under. What's the, I think you'd mentioned on the earnings call, a couple of billion dollar plus deals in the pipeline. So what's the likelihood that we see an ILC Dover-sized acquisition, you know, this year?

Vic Kinney, CFO

Yeah. So I think, you know, maybe just to take a broader kind of view on capital allocation, I think in 2025 you saw, you know, I'd say we did, you know, roughly a little over $500 million of M&A from a capital deployment perspective, 16 bolt-on acquisitions, right at kind of the lower end of that 400 to 500 basis points of annualized and organic growth. We did do a bit more outsized on the share repurchase, you know, close to a billion dollars, and obviously the dividend, you know, the same dividend profile we've seen before. As we move into 2026, what I would tell you is the expectation for continuing to see M&A being kind of the catalyst of capital allocation, absolutely. Typically speaking, historically, we've always targeted something around 80%, 85% of free cash flow typically goes towards M&A. I don't see any reason that should be dramatically different. Share repurchase at this point, probably targeted at that $350 million range on a full year basis, and really no expectation to change anything on the dividend side at this point To your question on the M&A front, yes, I think as Vicente mentioned on earnings call, a couple of slightly larger bolt-on acquisitions. I'll still call them bolt-on at a billion dollars, roughly speaking. So I think there's, you know, maybe opportunity for something a little bit more sized in that respect, still bolt-on in nature, much larger than that. Right now I wouldn't say that there is necessarily an expectation of, you know, the ILC Dover size per se, but, you know, still a billion dollars plus, complemented by, you know, I'd still say the concept of doing the smaller bolt-ons, just like you saw in 2025, no reason to expect anything different. In fact, we've already done one in January, actually in our life sciences business, nine more under LOI as we sit here today. So I think the funnel remains as healthy as it's been historically. No reason to expect that the equation to be dramatically different than what you saw in 2025.

Operator

And in terms of the type of asset that you'd look for, you mentioned EcoPlant as a sort of software business and the software sector has, you know, taken a bath recently because of AI concerns. Does that derating make it more appealing, potentially, for Ingersoll to do software M&A, or it's just not on the radar?

Vic Kinney, CFO

Yeah, I wouldn't go that far. I mean, I think for us, you know, where we've done software like an eco-plant, it's because it made sense for the ecosystem where we play, right? Connectivity of compressor assets are driving efficiency from a compressor perspective. So, you know, valuations and things like that aside, yeah, you know, I would say if there's something from a software perspective that makes sense from, you know, the ecosystem we play in or connectivity, perhaps, but I would expect that, you know, you're going to see M&A look very much like what you've seen in years past, meaning, you know, what I would call core compressor blower vacuum pump assets, something that's really close to core, targeted channel where it makes sense, and a good distribution between both segments. So we are allocating capital to both segments in an equitable, prudent manner. So you're not seeing M&A capital just going to life sciences or vice versa. So it's going to be a good spread, just like you saw in 2025.

Operator

Fantastic. Well, with that, I think we'll pivot to audience response survey questions, please. So the first one is current ownership of Ingersoll Rand. So 70% no, which is fairly typical of these answers. The second question is around sort of current bias to the stock today to fairly evenly spread. Third question is around EPS growth profile kind of versus the multi-industry average, sort of inline-ish to above. Next question is around cash usage. Where should, you know, we just talked about M&A, but what's the best use of cash? It's almost all bolt on M&A and very little appetite for larger deals. And I suppose the point on the buyback was the billion dollars. It was really because average purchase price, I think, was just under $80 a share. So you're quite a bit higher than that. For the buyback to be of a similar level, you'd need some kind of similar share price action.

Vic Kinney, CFO

And as such, you know, M&A is clearly the focal point as we move into 2026.

Operator

Great. And next question is on sort of valuation. You know, what's the right P.E. multiple for Ingersoll this year? so I don't know 20 times I guess and then last question what's the main reason why the multiple shouldn't be higher so organic growth yeah it's been tough for a couple of years so with that thanks everyone and thank you very much yeah thank you for being here thank you