Ingersoll Rand Inc.

yesterday afternoon, and we will reference these during the call. Both are available on the investor relations section of our website. In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties as discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide two for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website. On today's call, we will review our company and segment financial highlights and provide full year 2025 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Thanks, Matthew, and good morning to all. Starting on slide three, the key to our financial durability is our economic growth engine, which helped us to deliver our performance in 2024 with double-digit adjusted EPS growth and strong free cash flow margin despite the very dynamic global market. Looking towards 2025, we see continued growth underpinned by organic investments and plenty of runway for our inorganic growth with over 200 active targets in the funnel. And we also expect strong operational execution through the use of our competitive differentiator, IRX. Most importantly, I want to thank all of our employees around the world for the contributions and always thinking and acting like owners of the company. On slide four, we're highlighting the differentiated compounded results delivered through our economic growth engine. With IRX underpinned by our innovative employee ownership model, we have created an increasingly durable financial profile with over 20,000 employees working towards our company's common goals. As shown on the page, over the cycle, we have either delivered or outperformed our long-term investor day targets across all targets. On slide five, we continue to be a leader in sustainability, delivering financial performance while also doing good for the planet, our community, and our employees. On the left-hand side of the page, for the third year in a row, we were named to the Dow Jones best-in-class indices, ranking number one in our industry and finishing in the top 1% of the corporate sustainability assessment. Also, for the second year in a row, Ingersoll Rand was named to the A-list for our commitment to global environmental leadership by CDP. CDP's annual environmental disclosure and scoring process is globally recognized as the gold standard for corporate transparency. As you can see on the right-hand side of the page, with the ownership equity grants provided and through the performance of the company to date, we have created approximately $700 million of incremental wealth for our employees. We strongly believe that the combination of our ownership mindset and creating a great place to work is a true catalyst for long-term performance. Moving to the next page, Since the merger with Ingersoll Ryan in 2020, we have transformed the company into a premier growth compounder. We reduced cyclicality through divesting our club card and HPS businesses, and we have reinvested approximately $5.4 billion into accretive acquisitions focused on high-growth, sustainable end markets. Through this transformation, in just three years, we have nearly doubled our total addressable market both through acquisitions and with continual organic investments in product and service innovation. We believe that we're very uniquely positioned to grow our market share within the $67 billion highly fragmented market through the combination of our innovative product portfolio, multi-channel, multi-brand strategy, and robust commercial and operational footprint, which is well positioned for the current dynamic macro environment. On the right-hand side of the page, I want to highlight that our M&A strategy remains unchanged and that we will continue to be disciplined in our approach for M&A execution, creating shareholder value while further positioning ourselves in highly attractive end markets. Turning to slide seven, we continue to diversify our products and portfolios into high-growth, sustainable end markets and have expanded our total addressable market by approximately $12 billion in 2024. We acquired approximately $625 million in annualized revenue from 18 acquisitions at less than 14 times pre-synergy adjusted EBITDA multiple purchase. And currently, we have seven additional transactions at the LOI stage, as shown on the right-hand side of the page. Since our Q3 earnings calls, we have closed on six companies, including channel acquisitions. We have added four new companies to the LOI stage and abandoned one transaction. Our M&A funnel remains strong, with over 200 companies currently in the funnel, and we expect to acquire an additional 400 to 500 basis points of annualized inorganic revenue in 2025, which will be incremental to our current guidance outlined later in this deck. On the next slide, having already closed on multiple transactions this year, we're off to a strong start to achieving our 2025 annualized inorganic revenue acquired target. On this page, we're highlighting three acquisitions which are highly aligned to our M&A strategy. Both in nature, these acquisitions expand our capabilities in core technologies focused in high-growth sustainable end markets. And with an average of less than 10 times pre-synergy adjusted EBITDA purchase multiple, we continue to demonstrate our disciplined approach to M&A and expect to meet a mid-teens ROIC on average for these deals by the end of the third year of ownership. I will now turn the presentation over to Vic to provide an update on our Q4 and full year 2024 financial performance.

Thanks, Vicente. Starting on slide nine, we delivered strong results through our competitive differentiator, IRX, despite a very dynamic global market. Total company orders and revenue improved sequentially, both of which finished largely in line with expectations. In our under-penetrated markets, which include Latin America, the Middle East, India, and APAC excluding China, we saw robust growth in both orders and revenue. These results underscored the focused investments for growth we continue to make in these markets. The company delivered third quarter adjusted EBITDA of $532 million, a 6% year-over-year improvement, and near record adjusted EBITDA margin of 28%, a 50 basis point year-over-year improvement driven predominantly through gross margin expansion. Adjusted earnings per share was $0.84 for the quarter and $3.29 for the full year. We continue to deliver on our long-term investor day targets of double-digit EPS growth, finishing up 11% for the full year compared to 2023. Free cash flow for the quarter was $491 million, delivering a robust 26% free cash flow margin in the quarter. Total liquidity was $4.1 billion, with $1.5 billion of cash on hand at quarter end, demonstrating the tremendous strength of our balance sheet. Turning to slide 10, for the total company, Q4 orders were up 8% and revenue increased by 4%. Book to bill for the quarter was 0.95, finishing in line with our previous guidance of above one time in the first half and below one time in the second half. Total company adjusted EBITDA increased 6% from the prior year, expanding margin 50 basis points year over year, with corporate costs coming in at $32 million for the quarter, which is down $15 million year over year due in large part to management incentive costs. Finally, adjusted EPS for the quarter finished 84 cents per share, including a Q4 adjusted tax rate of 23.4%. On slide 11, for the full year, total company orders were up 4% and revenue increased 5%. Book to bill finished the year at 0.98, which finished largely in line with expectations. Total company adjusted EBITDA increased 13% year over year with adjusted EBITDA margin Finishing at record levels of 27.9% up 190 basis points from the prior year. Corporate costs finished the year at approximately 155M dollars, which is down 18M dollars year over year. Year over year declines once again are largely attributable to reduction in management incentive costs as compared to the prior year.