Ingersoll Rand Inc. (IR) Earnings Call Transcript & Summary

Great. So I think the webcast is running. So let's recontinue with Ingersoll Rand. Very pleased to welcome back to the Wolfe conference, Vik Kini SVP and CFO of Ingersoll Rand. Vik, I think maybe some opening remarks, then we can get into Q&A.

Yes. So first of all, Nigel, thanks for having us. Always good to be here, albeit on a slightly rainy New York City day here. But first of foremost, thanks for everyone in attendance. I'll keep it brief here. It's -- I can't help but reflect -- we were just talking about it earlier, it's been now 5 years and a few months since the merger that created Ingersoll Rand. Five years has gone by very quickly, but I think we can say incredibly proud of kind of where we've come in the last 5 years. The transformation of the company -- we've had 2 major divestitures. We've done over 65 acquisitions. I know we'll talk about many of these in the context of where we're going, going forward. But continue to create, I'd say, a platform and a company incredibly resilient, two leading platforms in the ITS and PST business and plenty of runway ahead of us. both from an organic, inorganic perspective, cash generation and really being able to kind of redeploy that through this kind of compounding model that we've created. So Nigel, why don't we jump into it? I know we'll talk about a lot of those components, but really excited kind of what the team has done. And I have to say, done it through some very interesting times over the last 5 years, this being no exception where we are right now.

Yes. So the 5 years, has that been one what you describe as a normal year in those 5 years?

I'm not sure I'd go that far, but when you've had 5 of them in a row, maybe that's the new norm. I think the good news for us is the team has executed through quite a bit over those last 5 years. And we always tell the team that guys with 2 divestitures, the acquisitions, wars and conflicts, COVID. We actually did the merger literally when COVID was becoming a thing, to be honest with you, integrating 2 companies virtually and via Teams and Zoom and things of that nature. If we can work through all of that, we can work through tariffs and whatever else kind of maybe thrown at us. So the team has shown a lot of resiliency and give a lot of credit to the teams around the globe.

Right. Tariffs are piece of cake compared to that. So maybe just -- it's been 3 weeks, I think, since you reported results, which doesn't seem like a lot of time, but every week seems like a dog week. It seems like 7 weeks. So just maybe just bring us up to speed in terms of how the quarter is progressing. Any sort of new trends you're seeing out there?

Yes. To your point, it's been 2, 2.5, 3 weeks since earnings. So I'm not going to tell you that anything has dramatically changed. Let me kind of reflect on kind of what we spoke about at earnings in the sense that Q1 really encouraged by seeing organic orders momentum across both segments. First time we've seen that in a number of quarters, seeing approximately 3% organic order momentum across both ITS and PST. ITS actually saw organic orders momentum across all 3 regions. PST across the 2 largest regions in Americas and EMEA. And when you kind of dig under the surface here, a couple of things that we can point to. One, you saw good momentum on both what I'll call the short cycle as well as kind of the longer cycle. I think that's kind of very much supported by the leading indicators, MQLs, which continue to be up kind of low double digits, a little bit more akin to that short or medium cycle business. And we've been talking quite a bit about some of the elongation in that MQL funnel as well as elongation in the longer-cycle funnel. So it's encouraging to see that some of that is kind of now translating into the order momentum you've seen. And the same thing was true on the longer-cycle project side, did see some nice project activity kind of finally get into that finish line in terms of the POs there in Q1. And from us -- from our perspective, April kind of continued, I'd say, with the comparable kind of trajectory and our performance in line with expectations. So I would say, despite the fact that there's still a lot of uncertainty out in the market, encouraged by how the teams are executing, encouraged by, I'd say, the leading indicators and how we're seeing that translate into the orders momentum. And from our perspective, it gives us some nice backlog that we can continue to execute on as we move now into the second quarter as well as the balance of the year.

So would it be fair to say April was also growth in orders, just to make that clear?

Yes. I mean April was, I would say, continue to be in line with expectations. I would say comparable regional performance in the context of what you saw through Q1. So generally speaking, you saw the pockets of growth where you would expect. I wouldn't say order -- like regional trends have been much different in April than you saw through the balance of Q1.

Okay. That's great. I'm not going to push you on May, by the way. I'm not going to [indiscernible]. last week of May. But has there been any change in behavior that you've assessed? Because I think that's what we're trying to figure out is. Obviously, there's been a lot of news on tariffs. There's been the rollout of Liberation Day and then the pullback and whatever else. But any sort of weird behavior you're seeing out there?

Weird behavior or behavior that's different from what we've seen. I think the answer is no. Nigel, I think there is still -- clearly, people wanting to wait and see kind of how things materialize. Yes, we're in the midst of now this kind of pause for lack of a better way to say it, but it's just that it's a pause. We'll see where things kind of finally land here after that kind of 90-day window. But I think there still is a little bit of uncertainty as we move into, particularly, the back half of the year, which I think is reflected in the kind of the guidance construct we put forward. But have we seen dramatic shifts in behavior, whether it be in the last few weeks versus what we saw exiting Q1 or in April? Nothing I could point to, if any meaningful change at this point in time.

Okay. Okay. Great. So I think the quarter was a little bit confusing to some because you saw that, as you pointed out, the inflection to order growth, 3% order growth in both segments. But then you dialed back on your volume assumptions for the full year. So maybe just talk about that. And you did use the word contingency in the guide. So just maybe just touch on that because that's obviously a very important word.

Yes, for sure. So maybe to kind of recalibrate kind of the original guide to kind of the new guide construct. So as we kind of put forth on the guidance side, you had -- I'll take them in 2 buckets. You had the areas that were kind of that the tailwinds to the revenue equation. So first and foremost was the tariff pricing, size of around $150 million offsetting tariff costs effectively one for one. So really no bottom line impact, 0 on the bottom line. Clearly, I'd say, reassessing kind of through the lens of kind of what's happened last week. But I think the general answer here is, even at when tariff levels get reassessed, that equation will still hold in the context of pricing/surcharge actions, offsetting tariffs, really no impact to the bottom line. But that was 2% in terms of a revenue uptick in the context of the revised guidance. And then the other 2 components being FX and M&A. FX was about a 1.5% tailwind. M&A based on deals that we had closed and announced as of the deal [ as of earnings was another ] 0.5%. So when you put all those components together, that was 4%, 2% plus 1.5% plus 0.5%, 4 points of revenue kind of tailwinds and to use kind of the word to use contingency. Taking up revenue guidance in this environment, we just thought that it was more prudent and reasonable to kind of hold the line on the total revenue guidance. We recognize that the components underneath the covers are a little bit different. And as such, we took down organic volume expectations by about 4 points on a full year basis. Now from our perspective, a couple of things: One, contingency, but we think a prudent way to have kind of set the year; two, it probably derisks the back half of the year a little bit. But it's also worth noting that the back half, if you look at back half organic volume versus first half organic volume, there is an improvement in second half organic volume still embedded in the guide. And I think that, that's probably a construct of now back to kind of Nigel how we started the conversation, encouraged by the orders momentum we've seen encouraged by April, encouraged by the MQM long-cycle performance. And it is also worth noting that the second half probably does have slightly more moderating comps. So we think that this guidance construct, I think, is one that makes sense just given kind of the construct of the company, the visibility we currently have and our view here is we'll continue to execute through Q2. We'll continue to recalibrate as we move through the balance of the year. And if there is some potential volume upside, particularly as we get into the latter half of the year, great, we'll execute upon that. And we'll kind of let that come to fruition at that point in time.

Just continuously gets people like me very excited. So I just want [indiscernible] I'll take a couple more questions, and then I'll throw the -- open to the room. So the $150 million, I'm guessing the math has changed with the China pools, et cetera. So maybe under the surface mechanically, how does that $150 million look today based on what we know today? And then the counter measures the pricing surcharges, et cetera, how does that look as well?

Yes. So we're still kind of reassessing kind of that whole kind of construct because for us, we do it all the way through the lens of and maybe a little bit -- well, the way we've done it, even in the $150 million, we take that all the way back to what we call our Tier 2 supplier. So for example, Tier 2 for us means we're buying from the U.S. So on the surface, it may not look like you should expect any tariff impact. But our suppliers are sourcing from somewhere else. And as such, there's a pass-through that comes along for the ride. So Nigel, the simple answer here is still reassessing, I would say kind of how that $150 million is kind of settling down. But I think I go back to kind of what we said before. We've taken, I'd say, a mixed approach of both list price and surcharges. As such, you'll probably continue to see us recalibrate that and simply stated, that will -- we don't have any expectation that even when those tariff levels settle down and normalize at whatever that lower level is, the price surcharge will offset it one for one. There will not be margin dollars kind of made on that equation. It will still be margin dilutive just like in our current guide. And when you correlate that then to the second part of the equation, which is really some of the cost mitigation actions. Maybe to put in perspective kind of how we talked about this at the guide a few weeks ago, we have launched a tariff war room. I would say it's got good involvement from, I'd say, a very limited group of us from a corporate perspective, myself, our Chief Procurement Officer, trade compliance, pricing and then really partnering with the businesses, product management, commercial, supply chain procurement. And we're really looking at sort of a lens of multiple angles. One, as you know, we're in region for region. So I think one that actually sets us up probably fairly good in this environment from a resiliency perspective, but we're not 100% in region for region. So there may be some pockets where we do have areas to potentially look at moving product day A from X location to Y location. That's by no means the biggest piece. As you would expect, the biggest piece of the equation is much more just third-party procured materials. And so looking at potential opportunities to move source from X to Y and from supplier A to supplier B. The reality though is for all of those examples, they just take some time to execute, right? And so even in the $150 million at the original guidance, we actually said that none of that supply chain potential cost mitigation impact is included. We're absolutely executing to it. We're absolutely moving with speed. We are not accounting for any of that impact to materially deliver any upside in year to the degree we can accelerate and that can provide a little bit of a tailwind, maybe particularly in the fourth quarter, great, let that be potentially some -- potential upside. As far as how things are recalibrating as we speak right now, I think the simple answer here is we're continuing to run and execute generally how we were even 2 to 3 weeks ago, meaning we don't want to kind of light switch on and off activities. We want to see a little bit of stability and normalization in terms of what tariffs do settle down at. So we are still working hand-in-hand with the business teams to continue to contemplate and spec kind of what these moves would look like in certain cases, continue with the movements. Obviously, as you can expect, once things normalize, there may be certain actions that don't make sense anymore, just given the change in tariffs, at which point in time, we'll make those decisions. What we don't want to do, though, is start and stop the activities because that inherently will create just delays in the process. And so the good news here is the teams are, I would tell you, continuing to move forward. The actions today, the momentum, the daily meetings, everything the cadence is effectively exactly the same today as it was 3 weeks ago before the 90-day plus.

Yes, I think that's very wise. That's a great answer. I'm guessing it's still early days in terms of supply chain realignments, but we're certainly hearing companies that we cover deemphasis in China moving to Southeast Asia, Mexico, et cetera, maybe invest in the U.S. What does that mean for Ingersoll Rand? Because my thesis will be that we're creating redundancy, creating more capacity that sounds like good news longer term for you guys. But just how do you think about that, taking $1 of capacity out of China, putting into Vietnam.

Yes. So I think for us, I go back to kind of the model we've always been running. We've essentially always been -- continue to be, and you could argue, even more so going forward in region for region. So as an example, our China business is probably 98% supplying in region today, right? The amount of flows that go from China back overseas outside of the APAC region are extremely limited. And so for us, are we necessarily deemphasizing or shifting a bunch of capacity? The simple answer is no. I think this is an opportunity to maybe look at some of those one-off pockets, particularly on your supply chain from a third-party perspective where you can maybe build a little bit of redundancy, you can look at potential new sources in areas like Eastern Europe, India, things of that nature. But simply stated here, we continue to be in region for region. I go back to some of the things that we've been talking about over the last few years. Whether you go back, was it now 3, 4 years ago, we reopened up plant in Buffalo, New York as an example. Interestingly enough, for product that actually -- it was the large multistage gears [indiscernible] business that had been closed down that capacity had been moved to China. We moved it back to the U.S. for domestic purposes. So supply in domestic U.S., arguably 3, 4 years ago because we saw an opportunity to better serve the U.S. right? We've opened facilities in Brazil now. We have a new compressor manufacturing site going live in India as we speak. So I think, Nigel, while the current environment has maybe created a little bit more pressing urgency in certain pockets. The reality is what we've been doing and how we've been executing in region for region hasn't really changed. And our China business, for example, has largely always been in region serving itself anyway. So I don't think that there is a big need or a big concern or a big drive to shift dramatically from where we are today. I think it's just a matter of continuing to look for pockets of optimization, which interestingly enough, I think this tariff dynamic is continuing to push us in that direction.

Okay. Great. Any questions from the audience? If so, raise your hand. Right here. Maybe -- I think there's a mic coming.

Yes. I guess you guys talked about like shorter-term customer changes. But I'm just curious about like are you hearing anything on companies like in '26 or '27 or long-term decisions? Are those all on pause as well right now for you? Or are they still able to make decisions?

Yes. So I'll go back to -- great question. I'll go back to kind of the longer cycle side of our equation. I think the simple answer here is you still are seeing those projects come to fruition, right? We have roughly 20%, 25% of our original equipment business is longer cycle in nature. And just to put this in perspective, we have it across compressors, we have it across blower vacuum. You even have pockets of this in our PST business as well. So it's not just in one component, it's pervasive across the environment. And these are projects that are 6 to 18 months in lead time and typically speaking, just as much time in terms of speccing it out to get to the PO. So the good news is you actually saw good momentum on that. We had seen definitely an elongation in that funnel in terms of just some of the decision-making processes really through a lot of last year. Has that funnel completely, I'll use the word, declogged? No, it has not. But have you seen some of that starting to get to the finish line? Yes. You actually saw some healthy project momentum in Q1. I would expect to continue to see some of that momentum here into Q2 and the back half of the year. And so the simple answer to your question, at least for longer cycle projects for us, which can definitely feed into late 2026, 18 months from now, have we seen dramatic pause or anything like that? Not at this point in time.

Good question. Anything else? One more? Great. Just on that point on longer cycle projects. Obviously, there's a momentous backlog or front log, if you want, of the U.S. mega projects, many of which manufacturing, heavy manufacturing, right in the sweet spot of where you play. So what is the sort of -- I don't know, the color or context of the conversation you have right now with some of those E&Cs and end customers?

Yes. I mean I think the simple answer here is it continues to be constructive and healthy, right? Obviously, there's a number of factors out there that create -- do you pause, do you not, things of that nature. I think the good news for us is the necessity for our products in those projects is, to your point, we're absolutely kind of playing where one of the kind of the heart of any degree of an industrial manufacturing or process kind of application. So I think the simple answer here is -- and in fact, Vicente, it's one of the things that he is very much actively involved. As you know, he is very much engaged and involved in a lot of, I'd say, peer-to-peer conversations from his end about not just the applications of where our products make sense there, but then also bundling in probably [ a concept ] we'll talk about here, things around like recurring revenue and care and things of that nature. And so I think the simple answer here is when you look at where our projects play the necessity, the fact that there still is healthy momentum on a lot of those projects. And then, quite frankly, a very compelling value opportunity, not just for the product itself, but then how you actually serve said product over the course of its life cycle that makes sense and can be a win-win for our customer and ourselves in the form of care or recurring revenue, that really is becoming much more pervasive, I think. And Vicente is at the forefront with our commercial and product teams having those discussions. Not just in the U.S., I might add, these conversations and that type of momentum and opportunity we see in all 3 regions.

Okay. I do want to go into care and service in a second, and we're running down to 10 minutes here. So I just want to make sure I get in a few rapid fire rounds. But -- do you think that the incentives -- so we've seen the stick from Trump. We now have the [ carrots ] of tax incentives, et cetera. Do you think that accelerated depreciation, given that, obviously, a lot of these projects are long -- a very long cycle in nature, long-lived assets, theoretically, accelerated depreciation should be beneficial to getting these things moving. Do you think that's the case?

I think without question, conceptually it can be what Would I tell you that, that's been a huge piece of the dialogue or things of that nature to date? I can't say I can connect those dots just yet. So encouraging potentially a leading indicator, something that I will tell you comes up actively in discussions or things like that as an order driver, I'm not sure I connect those dots just yet.

Okay. Service is, obviously, a very important part of your business, high 30% of total revenues, 40% plus of ITS revenues. Just talk about how that's evolving from sort of a break fix sort of mechanical parts, wrench type of model to care and software IoT.

Yes. So first and foremost, I'd still say early days, right? And to use exactly how you described it, historical context of aftermarket is exactly what you think. It's parts, service, lubricants, oils, filters, wrench turning, and things of that nature, absolutely a great business, healthy margin profile, but can have a degree of break fix and things like that to it. And the way the model has been changing, we kind of were much more explicit about it a few years ago when we kind of gave this construct around recurring revenue, is how do we make what is probably a bit of a stickier part of our portfolio even stickier. And where we're looking at that is through the lens of this recurring revenue kind of initiative and really through the lens of what we call care. And CARE, for those of you who may not be as familiar with it, CARE is essentially with -- it's a subset of aftermarket. And it's really effectively at its core, it's about -- it's a risk transfer agreement with our customers, where our customers buy our equipment. Compressor is the hallmark product, an example. And we essentially say, instead of you servicing it, instead of you having an in-house service tech or maintenance tech who's doing whatever, even calling us on a break-fix basis, why don't we enter into a multiyear contractual agreement whereby at its gold standard, we will guarantee a certain percent uptime. In return, you essentially transfer all maintenance and all essential running of said compressor to us. And in return, we get an annuity flow stream of revenue, essentially, it's a multiyear contract every month, you're going to send us a check, and it's our responsibility to maintain that and maintain and ensure that it's up and running. And so why that's important, Nigel, is, one, it is, by definition, the stickiest component of the revenue base. Whether that compressor is working at 100% or 50%, we're going to be getting said payment. Two, it's a risk transfer agreement. And why that's important is, this isn't just normal pricing like within our organization, this is looking at years and years and years of run time across every application, across every horsepower because effectively what you're doing is you're ensuring that machine. So we're actually using actuaries to actually help us run the pricing and actually come up with the right algorithm to be able to price it appropriately. And generally speaking here, it makes a margin profile that's the closest thing that we would call like software-like margins for us. I done at its gold standard. This is a 60% plus gross margins, if not even better. And the beauty of this is customers love this, right? Essentially, the simple example is if they're paying $100,000 for a compressor just use an answer number, maybe they're paying $20,000 per year for a 5-year basis for the CARE model. So that's another 1x revenue just over 5 years. Typically speaking, the compressor is lasting at least 10 years. So there's probably a renewal that comes up after the first 5-year time frame. And then those customers, and we measure this pretty explicitly, they are most satisfied customers. Their Net Promoter Score or their customer satisfaction is typically 20 points higher than a typical customer. And that's because, one, this is really risk avoidance for them. The concept of the compressor going down in a manufacturing plant can be catastrophic, right? When you think about $20,000 per year, whatever that math is, the concept of the compressor being down for a day can be millions of dollars of lost revenue or profit. not to mention they don't have to maintain an in-house service tech and they have peace of mind. And so this is starting to gain much more foothold. To your point, this historically has been a legacy Ingersoll Rand compressor phenomenon in North America. We announced in 2023 that we are going to expand this globally. We aspire to be at $1 billion revenue base in 2027. We were around $200 million exiting 2023. Encouraged to say that 2024 was really a year where we kind of, I'd say, expanded this model across the balance of the portfolio where it makes sense, already over approximately $300 million exiting last year. So continue to be really encouraged on the good momentum and this will continue to be a nice, I'd say, driver of margin opportunity and expansion. Even in a business like ITS where we've pushed up across -- against 30% EBITDA margins. This should continue to be a tailwind to margins in the grand scheme of things.

It actually reminds me of the CSA concept at GE and other aerospace engine companies have been very successful business model. So the $3 million of revenues, what does that represent in terms of penetration of your installed base?

Yes, still relatively low. We don't necessarily disclose the exact number, but I'll just say this, not all of it, but it's still heavily a North America compressor model. As you can expect, with 2024 being that year, we're kind of now expanding it across the legacy Gardner Denver portfolio, Europe, Asia, Latin America, blowers, vacuums where they have, I'd say, applicability as well as certain aspects of the PST business, not all, but certain aspects. It's still early days in many of those cases. So I think the simple answer here Nigel, is that we're still in very early days. That penetration rate is still in that single digit, still very -- fairly early days in terms of the penetration. But for us, that's great. That just means that continues to be a big opportunity set ahead.

I do want to touch on M&A because it's a very important part of the story. But before that, maybe just talk about margins. You had roughly 30% margins for ITS. Your guidance is actually slightly above that this year. I believe your medium-term target is about 30%. So number one, confidence [ in blown past that medium-term target in ITS ]. And then secondly, PST. That's been a little bit lumpier, let's be fair. The guidance embeds sort of high 20% EBITDA margin in 1Q going to sort of low 30s in -- by 4Q, but still 35%. So just wondering what the path is to that ramp and then to 35%.

Yes. So I'll take them in 2 pieces and I'll keep it quick so we can get to the M&A. On the ITS side, encouraged -- absolutely, I'd say, very encouraged by kind of the momentum we've seen kind of hitting the 30%. Are we sitting here today and going to say, "Hey, there's -- we're going to set a new target?" No, we're not going to necessarily do that. But what I will tell you is this, we don't necessarily see a cap per se on ITS margins between what I just talked about in recurring revenues, which is really probably one of the upside between just any degree of normal organic growth, the price versus inflation equation, productivity, I2V, things of that nature, not to mention the accretion we typically get on M&A that has synergies. We continue to see a nice little tailwind there. Year-to-year, can we still be doing 50 basis points? It's probably not a bad proxy to use, maybe not the 100 basis points plus you've seen in years past, but still a nice margin accretion that still allows for a healthy amount of reinvestment to drive organic growth. On the PST side, absolutely right. I think we kind of are encouraged by sequentially from Q4 to Q1. You saw about 150 basis points improvement back up over 29%. We will continue to see step changes in the context of improvement over the course of the year. A couple of things. One, normal seasonality, I would say some of the normal productivity drivers as well as the continued integration of M&A, particularly on the ILC Dover side, which we'll continue to see some margin improvement as we move through the course of the year getting back to that 30% plus type ballpark. And then I think the answer in terms of the go forward is exactly that. PSt has clearly been the one that I think deployment of IRX, I2V, the productivity funnels, the full run rate on where synergies can get to on the M&A, that will be the kind of next catalyst to take us up into that closer to that mid-30s range over the next few years, but we don't see any reason why that runway can't exist. I think the thing that will change from maybe years past going forward is that in years past where you saw strong triple-digit margin expansion in ITS, lesser so in PST. We see an opportunity for that probably to change going forward where PST will be a little bit more of the margin leader in terms of the absolute margin, the basis point expansion. ITS will still have expansion, but maybe not at that triple-digit margin.

Okay. This is the last question. It's one question with probably 2 or 3 parts. You're good at unpacking these things. So I feel good about that. Maybe talk about the -- your LOIs, I think there's actually, I think, 11 LOIs signed, I think -- 9 or 11, I think it was...

9.

Nine, sorry. But you're confident in that in adding 4 to 5 basis points of annualized M&A this year. Just wondering kind of just give us a mark-to-market on the LOIs and sort of the time line to getting these LOIs into acquisitions. And then maybe just mark-to-market on ILC Dover. Obviously, a big deal. Talk about how that's trending.

Yes. Sure. So on the -- actually, on the M&A front, when we did earnings a couple of weeks ago, we said that we've actually done 6 acquisitions year-to-date. And that, just to be clear, the blended pre-synergy adjusted EBITDA purchase multiple for those 6 was actually 9x. And I think the equation is very much like you've seen historically. These are smaller bolt-ons. We probably see around 3 turns of multiple expansion or ability to take the turn -- the multiple down 3 turns with synergy delivery. So right in the wheelhouse of what you've seen us do. The 9 under LOI, very similar in nature. So I think the simple answer in terms of the M&A construct for the year is we see that path to the 400 to 500 basis points in year annualizing organic growth. It will be exclusively through smaller bolt-on acquisitions is kind of how we see the framework working now. Those acquisitions are very much piece and parcel of what you've seen us do historically. I would say they will have the purchase multiples very much in line. That 9, 10 -- in and around that ballpark is probably where you can see us play low double digits, high single digits and actually very good global dispersion. Meaning in that 9, you actually have Americas, Europe, Asia and you actually have good mix between ITS and PST, including, nice segue into your second part of your question, including a few in the life sciences platform. So the whole concept around ILC Dover being a, I'd say, a platform for bolt-on M&A in the Life Sciences, it's coming to fruition as we speak. You asked the question about what time frame it takes for LOI into acquisition? Listen, each one of them is different. The reality is you're dealing most, if not all of these are smaller private family held transactions, so they kind of move at the pace they do. But the concept of last year, we did, I think it was like [ 15 ] or something -- on average of 1 per month or even a little bit higher, would I expect that to be very different this year? No. As far as ILC Dover, I continue to be encouraged by the momentum we're seeing here. You saw a nice, I'd say, operational improvement from Q4 into Q1 of this year. if you look at the kind of life sciences piece, specifically kind of the hallmark product, the single-use powder containment saw a nice healthy order momentum, book-to-bill above 1. So I think the Life Sciences piece of the equation continues to be encouraging, playing itself out like you would expect. As you know, on the aerospace side, that business is now kind of reaching more stability. The whole kind of next-gen space [ things ] is kind of behind us, continuing to execute and kind of just move past that. I think the encouraging piece as I think about the entire ILC Dover platform here is that, one, the team is really adopting to kind of what I would say, IRX embedding things like demand generation and some of the core toolkits that we have used in Ingersoll Rand for years, those are really starting to now take hold within ILC Dover. Full disclosure, we've made investments. You've heard us say that. We're going to continue to invest. As such, the margin profile between those factors have been a little bit lower than one would have probably expected at the time of the acquisition. But the reality here is we continue to see good runway going forward, and that's part of, I think, the margin expansion story as we kind of move through 2025. So continue to be encouraged by the momentum we're seeing.

Thanks, Vik. That was a great conversation. Really appreciate all the detailed answers and [ covered all grounds ], but thank you very much.

You bet. Thank you, guys.

That was good. Thank you.