Ingersoll Rand Takes A $195 Million Data Center Order At Margins It Calls 'A Deliberate Choice'
The industrial maker had no data center presence a year ago, and its first big order ships below company-average margins, with most revenue in 2027.
Ingersoll Rand will ship a roughly $195 million data center order at margins below its company average, and CEO Vicente Reynal said on the company's third-quarter earnings call that the choice is deliberate. The maker of compressors, vacuum pumps and flow equipment had "no presence" in the market a year ago, he said.
Low margins on purpose
Reynal, the company's chairman and chief executive, said the order is an engineer-to-order package: integrated backup power for data center operations, paired with a filtration system built to the customer's specifications. It adds to EBITDA dollars and adjusted earnings per share from the start, he said, but initial shipments carry margins below the company average because Ingersoll Rand is paying for dedicated capacity, engineering and supplier qualification. "That's a deliberate choice," he said.
Pressed on the margin by a Goldman Sachs analyst, Reynal compared the order to an acquisition, which typically comes in at margins in the 20s before ramping to the fleet average. He said this order starts around the low 20s and should get to the company average fairly quickly as volume and execution build.
CFO Vik Kinney told a Wolfe Research analyst the order will be booked under percentage-of-completion accounting, with the majority of revenue recognized through 2027. Kinney told a Morgan Stanley analyst that later data center orders should start "a little bit better" on margin than this one.
One site, and a thin track record
Asked by a Melius Research analyst whether the award is a framework agreement or specific to a site, Reynal answered: "This is one site." He said the company has built a sizable funnel in under 12 months, talking to hyperscalers and co-locators, and expects future orders to be lumpy.
A Jefferies analyst asked whether the build-out is a risk if data center spending slows. Reynal said the products are widely used in industry, and that incremental capital spending would stay "well within our 2% of sales."
Excluding the award, ITS organic orders rose high single digits, Reynal said. ITS is the Industrial Technologies and Services segment, which makes air and gas compression, vacuum and blower products, and lifting equipment.
M&A funnel and 2027 guidance
Reynal said the acquisition funnel holds more than 200 companies, with about 90% of deals sourced internally. Inorganic growth for 2026 is now seen at about 200 to 300 basis points of revenue, below the 400 to 500 basis point target he described as a cycle average, and he attributed the gap to timing. Ingersoll Rand closed its purchase of IVEC, which adds roughly $40 million in annual revenue, the morning of the call.
Kinney said full 2027 guidance will come in a few months, including how the data center order's dilution affects ITS margins.
Ingersoll Rand's market value was about $31.0 billion in Friday pre-market trading, and the 2027 outlook will show how much the data center order weighs on ITS margins.
Sources
- Ingersoll Rand (IR) Q3 Earnings and Revenues Surpass Estimates — Yahoo Finance
- Ingersoll Rand jumps after earnings great, strong industrial orders (IR:NYSE) | Seeking Alpha — seekingalpha.com
- Ingersoll (IR) Reports Q3 Earnings: What Key Metrics Have to Say — Yahoo Finance
- Ingersoll Rand Reports Third Quarter 2026 Results – Company Announcement - FT.com — Financial Times
- Ingersoll Rand Gears Up to Report Q3 Earnings: What's in the Offing? — Yahoo Finance
