Ingersoll Rand Inc

NYSE:IR

Earnings Call Analysis

Ingersoll Rand reports strong growth and adjusts 2024 guidance downward.

Ingersoll Rand delivered a solid Q3 with total company orders up 10% and revenue rising 7%. Adjusted EBITDA improved to $533 million, a 15% year-over-year increase, lifting margins by 210 basis points to 28.6%. EPS grew 9% to $0.84. However, the company revised its 2024 revenue growth guidance down to 5-7%, partly due to customer delivery delays. The adjusted EBITDA forecast is now between $2.01 billion and $2.04 billion, reflecting a yearly growth of around 13%, and EPS guidance is set at $3.28 to $3.34, a 12% increase year-over-year.

Strong Performance Amid Challenges

Ingersoll Rand reported a solid third quarter marked by resilience despite ongoing macroeconomic challenges. Total company orders rose 10%, showcasing a 1% increase organically, which largely met expectations. The book-to-bill ratio of 0.97 aligns with guidance, indicating a stable order environment. However, revenue reported a 7% increase overall, with a 2% decline organically, impacted by customers delaying orders due to site readiness and local approvals, although cancellations were not a significant risk.

Robust Financial Metrics

The company delivered impressive financial outcomes with an adjusted EBITDA of $533 million, reflecting a 15% increase year-over-year, and achieved EBITDA margins of 28.6%, a 210 basis point improvement from last year. Adjusted earnings per share rose to $0.84, up 9% year-over-year. Additionally, free cash flow for the quarter stood at $374 million, contributing to a robust free cash flow margin of 20%. With total liquidity of $4 billion and $1.4 billion in cash at quarter-end, Ingersoll Rand demonstrates a strong balance sheet.

Segment Highlights and Strategic Growth

The Industrial Technologies and Services (ITS) segment experienced a 3% growth in revenue, consolidating a significant 19% growth from the same period last year. Adjusted EBITDA margins in this segment reached a record high of 30.7%, attributed to gross margin expansion. Notably, the company highlighted a new patented oil-free technology poised to reduce total ownership costs by 30%, targeting high-growth markets such as food, beverage, and clean energy. Meanwhile, the Power Solutions Technologies (PST) segment saw organic order growth of 3% and retained an EBITDA margin of 30%.

Acquisition Strategy and Future Outlook

Ingersoll Rand has been active in the M&A landscape, having closed 15 transactions so far this year with another 10 in the pipeline. These acquisitions are fundamentally aimed at bolstering the company’s presence within high-growth end markets. The anticipated revenue from M&A contributions is projected at around $455 million, reflecting ongoing strategic efforts to enhance operational capabilities and market share.

Guidance Adjustments and Market Dynamics

For the entirety of 2024, Ingersoll Rand adjusted its revenue growth guidance to a range of 5% to 7%, slightly down from the previous guidance of 6% to 8%. The company projects adjusted EBITDA between $2.01 billion and $2.04 billion, indicating 13% growth at the midpoint, while adjusted EPS is anticipated between $3.28 and $3.34, reflecting a 12% year-over-year increase. The reduction in guidance is largely attributed to the timing of orders rather than a decline in demand.

Positive Market Indicators Moving Forward

Despite existing challenges, such as project push-outs primarily linked to customer site readiness, there are positive indicators for the future. The backlog grew year-over-year and sequentially, offering a glimpse of potential growth in 2025. Marketing qualified leads (MQLs) increased by 12% year-over-year, supporting future revenue generation efforts. The stability across various segments, alongside ongoing investments in innovation, positions Ingersoll Rand favorably for gradual recovery in the marketplace.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and welcome to the Ingersoll Rand Q3 2024 Earnings Call.

[Operator Instructions]

And finally, I would like to advise all participants that this call is being recorded.

I'd now like to welcome Matthew Fort, Vice President of Investor Relations to begin the conference. Matthew, over to you.

[Matthew Fort, executive]

Good morning, and welcome to the Ingersoll Rand 2024 Third Quarter Earnings Call. I'm Matthew Fort, Vice President of Investor Relations. And joining me this morning are Vicente Reynal, Chairman and CEO; and Vik Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday, 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 discussed in our previous SEC filings. Please review the forward-looking statements on Slide 2 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 an update to our 2024 guidance. For today's Q&A session, we ask that each caller keep to 1 question and 1 follow-up to allow time for other participants.

At this time, I will turn the call over to Vicente.

[Vicente Reynal, executive]

Thanks, Matthew, and good morning to all. Starting on Slide 3, our team delivered another strong quarter of results by leveraging our competitive differentiator, IRI. And for that, I want to thank and acknowledge our employees for continuing to think [indiscernible] owners. Our strong execution was highlighted by record orders and revenue. Over 200 basis points of adjusted EBITDA margin expansion, 9% adjusted EPS growth and 20% free cash flow margins. And despite the difficult macro environment, we expect to deliver on our long-term Investor Day targets of double-digit adjusted EPS growth and strong free cash flow generation in 2024.

Turning to Slide 4, our economic growth engine describes how we deliver durable compounding results. As stated on the right-hand side of the page, ultimately, the intended outcomes are double-digit earnings growth and strong free cash flow margins. We remain committed to our strategy of delivering over the cycle, our long-term Investor Day target as outlined on this page. Our unique culture of ownership, combined with IR is our competitive differentiator, which will help drive that long-term value creation.

With that in mind, let me provide a brief update on our growth initiatives. On the next slide, we'll start with our inorganic growth initiatives. I am pleased to highlight 4 transactions that closed this past month, which together are expected to achieve a mid-teens ROIC by year 3. Let me walk through these deals. First, APSCO which is a leader in the design and manufacturing of fluid power systems for mobile transport equipment. This is a great example of strategic market expansion, which further strengthens our position in the dry and liquid blower and vacuum markets with energy-efficient innovative solutions.

Next is Blutek, which expands industrial and technology capabilities, expertise and aftermarket potential in high-growth, sustainable end markets including biogas and carbon capture.

Continuing on Page 6, on the left-hand side of the page, we have UT Pumps, which adds new high-pressure pump technology to our portfolio in end markets, including water, wastewater, food, beverage and life sciences.

And finally is next is Penn Valley Pump, which is a leading manufacturer of positive displacement pumps with patented double disk pump technology for use in the municipal, industrial, chemical and food industries.

On the right-hand side of the page, I would like to highlight that year-to-date, we have already closed on a total of 15 transactions in 2024. And we have far exceeded our annualized inorganic revenue target, which bodes well as we look towards 2025. In addition, the funnel continues to grow and remain very active with 10 additional transactions currently under LOI, including deals that will fit into our recently created life sciences business. The funnel including the deals under LOI are primarily bolt-on in size.

Turning to Slide 7. I wanted to take a minute and highlight how we are driving organic growth across our digitally connected assets as we often get asked 2 questions. First, what do we do with the data we receive on our connected assets; and two, how do we leverage that data to drive additional revenue. As simply stated, our teams are focused on creating a meaningful positive impact for our customers around energy efficiency and uptime, example on the slide demonstrates the agility with which we operate. We recently gathered 45 employees across 7 countries over a period of just 2 days. The goal was to do a deep dive into real-time connected asset data to unlock new revenue opportunities. The outcome was that we identified over 40 different revenue-generating insights that collectively could translate to over $25 million in incremental revenue, a figure that speaks volumes about the potential of data-driven innovation for our products.

As you can see in the middle of the page, we have examples of those insights. And these range from the optimization of energy consumption and maximizing machine uptime. When we empower our people at every level of the organization to think and act like owners. They make us better by defining new customer experiences, improving our ways of working and bringing innovative thinking to advance our mission of making life better.

I will now turn the presentation over to Vik to provide an update on our Q3 financial performance.

[Vikram Kini, executive]

Thanks, Vicente. Starting on Slide 8. Utilizing our competitive differentiator of IRX, we were able to deliver strong results within the quarter despite the continued challenging macroeconomic environment. Total company orders grew 10% or up 1% organically, finishing largely in line with expectations.

Book-to-bill was 0.97, which is in line with our previous guidance of above onetime in the first half and below 1x in the second half. Total revenue was up 7% as reported or down 2% organically. Worth noting that we did see some customer pushing out orders due in large part to site readiness and local approvals. However, we have not seen order cancellations nor do we feel that cancellations are significant risk.

The company delivered third quarter adjusted EBITDA of $533 million, a 15% year-over-year improvement and adjusted EBITDA margins of 28.6% and a 210 basis point year-over-year improvement driven predominantly through gross margin expansion. Adjusted earnings per share was $0.84 for the quarter, which is up 9% compared to the prior year. Free cash flow for the quarter was $374 million, delivering a solid 20% free cash flow margin in the quarter, and total liquidity was $4 billion, with $1.4 billion of cash on hand at quarter end, which demonstrates the strength of our balance sheet. Our continued strength in free cash flow generation will enable us to remain focused on our capital allocation strategy.

As Vicente mentioned earlier, we still have 10 additional transactions currently under LOI, and we continue to have momentum in building our M&A funnel.

Turning to Slide 9. For the total company, on FX-adjusted basis, Q3 earnings were up 10% and revenue increased 7%. Total company adjusted EBITDA increased 15% from the prior year and ITS segment margin increased 190 basis points, reaching a new high of nearly 31%, while the PST segment margin decreased 30 basis points year-over-year, but remains above 30%.

Overall, Ingersoll Rand expanded adjusted EBITDA margin by 210 basis points and corporate costs came in at $35 million for the quarter, due in large part to a year-to-date true-up of management incentive costs.

Finally, adjusted EPS for the quarter was up 9% year-over-year to $0.84 per share, including an adjusted tax rate for the quarter of 22.8%.

On the next slide, free cash flow for the quarter was $374 million, including CapEx, which totaled $30 million. Total company liquidity now stands at $4 billion based on approximately $1.4 billion of cash and $2.6 billion of availability on our revolving credit facility. Leverage for the quarter was 1.7 turns, which was a 0.8 turn increase year-over-year and a 0.3 turn improvement sequentially versus Q2. The year-over-year increase was driven primarily due to the purchase of IOCs earlier this year. Specifically within the quarter, cash outflows included $15 million deployed to M&A as well as $71 million returned to shareholders through $63 million in share repurchases and $8 million for our dividend payment. Our capital allocation strategy remains unchanged with M&A being our top priority, and we continue to expect M&A to be our primary use of cash as we look ahead.

I will now turn the call back to Vicente to discuss our segment results.

[Vicente Reynal, executive]

Thanks, Vik. Moving to Slide 11. Our Industrial Technologies and Service segment delivered solid year-over-year revenue growth of approximately 3% on top of approximately 19% growth in Q3 of last year. Adjusted EBITDA margins finished at a record high of 30.7% with incrementals of over 100%. Adjusted EBITDA margins finished up 190 basis points from the prior year, which was driven primarily by gross margin expansion. Book-to-bill was 0.97x with organic orders up low single digits, finishing largely in line with expectations.

Moving to the product line highlights compared to our orders were up mid-single digits, and we continue to see positive orders globally, excluding China. Compressor revenue was up low single digits in the quarter, while Industrial Bank and an blower orders were up high single digits and revenue was up low single digits. For our innovation in action, we're highlighting our new patented oil-free technology. that is focused on high-growth, sustainable end markets like food, beverage and clean energy. This patented technology offers a 30% reduction in total cost of ownership, driving a great return on investment for the customer and helping our customers achieve their Scope 1 and Scope 2 emission reduction targets. Turning to Slide 12. The PST segment achieved 3% organic order growth and delivered adjusted EBITDA of approximately $18 million with a margin of 30%. We continue to see many encouraging signs within the PSC segment with sequential order growth of 13% and sequential revenue growth of 16%. The book-to-bill was 0.96 or $0.99 on an organic basis. In addition, short-cycle orders in PST segment remain positive, with book and ship orders up high single digits year-over-year, demonstrating the continued ongoing momentum of organic orders driven mainly by our demand generation efforts. We're pleased to see organic order growth stabilizing and we remain positive about the underlying health of the PST business.

Finally, I wanted to highlight the performance of ILC Dover within the quarter. Sequentially, total ILCA Dove revenue improved low double digits with the biopharma business up low 20s and the medical device component business up low double digits. Year-over-year, revenue for the biopharma business is up double digits. We're very pleased with the business performance and we're optimistic about the potential to drive above-market growth. Our PST innovation in action example shows how our mission-critical products can help a community in the Planet Water Foundation provides safe drinking water access in the wake of emergencies and natural disasters. Using our Dosatron pumps, the Planet Water System can provide clean drinking water for up to 6,000 people without the need of electricity. The system was recently deployed in Nashville, North Carolina, after Hurricane Helene.

I also would like to take a moment to talk about the recent hurricanes, which impacted our Dosatron site in the Tampa area, where several of our team members experienced floating the damage many of their homes. And despite this, they work late nights and weekends to support our customers. So to our Dosatron team, a special thank you for your dedication, hard work and resiliency. Your actions show what we can achieve with our ownership mindset and culture.

On the next slide, let me provide an update on the current market trends as we always get a lot of questions about our leading indicators. Marketing qualified leads or MQLs are a key leading indicator of our short- to medium cycle business. As illustrated in the chart on the left-hand side of the page, our MQLs continue to grow. For the quarter, organic MQLs are up 12% year-over-year and are up 7% sequentially. As for the longer cycle component of our portfolio. One key indicator we look at is the formal activity for engineered-to-order compressor systems, and we remain encouraged that the funnel activity for Q3 is up 22% year-over-year. Consistent with what we discussed last quarter, the decision-making process remains elongated. The feedback we here continues to be centered around customer site readiness and to many projects happening at the same time, which is impacting EPC engineering capacity.

As we look to Slide 14, we have updated our full year 2024 guidance for revenue adjusted EBITDA and adjusted EPS. Total company revenue is now expected to grow overall between 5% to 7%, which is down 100 basis points versus our prior guidance. For adjusting our organic revenue guidance down 200 basis points, driven predominantly by the timing of orders converting into shipments. While we are very encouraged by the improvement in Q3 organic order momentum and continued strength in market activity, we continue to see customer delivery delays driven largely by customer site readiness and other factors, including the upcoming election. We expect these orders to be delivered in 2025.

As we look at our MQL data, long cycle project funnel, and Q3 organic order growth, this situation remains encouraging as we move into 2025. FX is now expected to be approximately flat for the full year which is approximately 100 basis points as compared to our previous guide.

M&A is projected to contribute around $455 million, which reflects all completed and closed transactions as of October 31 and 2024. Corporate cost remains at approximately $170 million. Total adjusted EBITDA for the company is expected to be in the range of $21 billion and $2.04 billion, which is approximately 13% year-over-year at the midpoint. Adjusted EPS is projected to be within the range of $3.28 and $3.34, which is up approximately 12% year-over-year at the midpoint.

On the bottom right-hand side of the page, we have included a 2024 full year guidance bridge showing the changes in our latest guidance as compared to our previous guidance provided in August. No changes have been made towards our guidance on interest expenses, tax rate, CapEx spend, as a percentage of revenue and free cash flow to adjusted net income conversion all remain in line with our previous guidance.

Finally, as we turn into Slide 15, before we open the call for questions, let me wrap up by saying that I am very pleased with how our teams continue to execute despite the current market conditions. As we look to close out 2024, our teams continue to execute well in terms of targeted share gains and driving momentum in geographies where we have historically been underpenetrated. And despite lower organic growth expected in 2024, we're on track to deliver a nearly 10% organic growth CAGR for the total company over the past 4 years, which is 2x our stated goal. What continues to differentiate incision is our economic growth engine where even in a difficult macro environment, we're able to add differentiated technologies to the portfolio with a distinct focus in high-growth sustainable end markets. Year-to-date, we have added 15 companies through M&A with 10 more bolt-on targets under LOI and we don't see this momentum slowing down. The real power continues to be in the value we're able to unlock as part of this model. We're on track to deliver, again, triple-digit adjusted EBITDA margin expansion through strong initiatives focused on improving gross margins, which translate into strong double-digit earnings growth and solid free cash flow generation. We believe that we have created a durable model that will continue to deliver exceptional financial results, differentiating Ingersoll Rand as a premier growth compounder.

With that, I'll turn the call back to the operator to open the call for Q&A.

[Operator]

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

[Michael Halloran, analyst]

So let's start on Slide 13. And I certainly heard the prepared remarks commentary around project push-outs. But maybe you could put that slide in context to what you're seeing on an underlying basis right now because the -- I think the MQLs as an example, that's been improving as you worked through the year here, but the organic growth guidance has moved down, again, partially project pushouts. But maybe kind of correlate all those moving pieces because I'm guessing the MQLs is probably a little bit of a shorter-term lead time or a leading indicator, excuse me. And so kind of just maybe put all that in context and then related what needs to happen to have that slide sync with the order trends and the underlying demand and the underlying trend in your portfolio?

[Vicente Reynal, executive]

Yes, Mike, I mean, first of all, I'd say that we're definitely encouraged by what we see in terms of that margin activity. And I will also categorize the MQL market activity as you recall, we always said that's our demand generation engine that we're instigating demand. So basically, this is how we continue to penetrate new customer accounts. We always said that 50% of those MOLs going to customers that have not purchased anything from Ingersoll Rand over the past, call it, 2 years. So it's about how do we continue to take share. Now clearly, in the past, historically, we said that an MQL will translate into an order over a period of 6 to 8 weeks. But what we're saying now is that, that is definitely getting allocated. We're not making a commentary as to how elongated that is but it is definitely much longer than what historically has been. And a lot of that has to do with kind of what you see in the market. I mean, clearly, customer readiness, here lately could be some of the election instability or kind of predicting as to what might happen and [indiscernible] hold up to that, not only at but maybe the others are seeing. So I think the encouragement for us is that these are real customers really interested in real products. I mean, this is not just a customer asking a question, right? This is now a qualified lead of an activity that the customer is just very interested in putting a purchase order that is going through our funnel. The goods to as well is that we don't see cancellations. We don't see customers leaving our funnel. And it's just a matter of continuing to nurturing those customers until we get the closure. We have continued to see good close rates. And so that's why we continue to be very encouraged about the activity that we're seeing that we're generating. And as to the long cycle project are kind of fairly similar in scope. Keep in mind over the past few years, there's been a lot of mega projects that have been announced, and I think you have seen maybe in the market that not a lot of those have translated into the orders. And they have to do because they make a projects, when they get designed, they need to get design and process through typically large engineering companies, engineering contracting companies we call it EPCs, and there's just a lot of projects that are going through. What is encouraging is that we're seeing good movement on those. I spent over the past 2 weeks, I did a lot of travel around the world. I think actually any time of weekend in Middle East, in Dubai and Saudi just to even talk to customers about specific projects and just to get that perspective firsthand from those customers. And it's very encouraging with what we're seeing. What we're saying here is that it's just taking longer. But again, that to us bodes well as we continue to look forward. And in the meantime, we'll just continue to execute and control what we can control and deliver the performance that we can deliver.

[Michael Halloran, analyst]

So if I take your comments then the optimism, the fact that the viewing indicators are tracking the right way. Does that mean that when you think about next year, it starts tracking towards a more normal growth algorithm for the company? And if it doesn't, what prevents you from getting there at this point? Market, timing of these projects, any other variables?

[Vicente Reynal, executive]

Yes. I think, Mike, I think the way we view it is that, I mean, we don't view that the market is going to see a rate recovery. We're going to see that gradual recovery as we go into 2025. And as we always do, we want to kind of see continuation here in the fourth quarter, how everything kind of lays out in preparation for 2025, and we give guidance on our next earnings call. But the other point that bodes well for us is that here, even in the Q3, our backlog actually grew year-over-year and sequentially. So again, it kind of continues to bode well as we think about 2025 but we'll be able to provide better color and guidance as we go into our next earnings cycle.

[Operator]

Julian Mitchell from Barclays.

[Julian Mitchell, analyst]

Maybe just the first question, Vicente, around sort of current demand trend, just flesh that out a little bit more. I think the last quarter, it was very clear that China was the big headwind or size factor back in the early summer months. And I see your compressor orders ex China are good. But since the last call, have you seen kind of a broadening out of those project pushouts? Is there maybe weakness in more geographies, perhaps than just the China factor? And I understand that orders are good, backlogs are good. It's the conversion of those 2 things into sales that's sluggish at present. But when we take a step back and look at the overall kind of process industries exposure of ITS. Is it fair to say that those generally would lag kind of earlier cycle markets, and that speaks to your point on a very gradual recovery pace next year.

[Vicente Reynal, executive]

Yes. Thanks, Julian. China, back to the commentary about the travel. I actually 2 weeks ago, I spent a week in China with a team. And as I always do, spend a lot of good amount of time with customers. So I can also give you maybe a little bit of color on that as well. I said China, clearly, the market has been challenged this year and has remained largely, I'll say it could change as we move through Q3 and into early parts of I think the good thing, I guess, a good point as I spend time with customers and give you maybe at the point of this kind of customer that it's a very large account. It's a company that has over 400 facilities just in China alone and close to 1,000 facilities across the world. And the tone from this customer was fairly positive towards what we, I think Ingersoll Rand can do for them around our service-oriented initiatives. I mean, the customer was very enthusiastic on leveraging all the M&A in terms of technologies that we have done across not only in China for China, but also in the U.S. and bring technology back to China to be able to help them and particularly with the same growth themes and thematics that we say, energy efficiency and how do we continue to improve the operational ability of their facilities customer was very -- commented incredibly well about our ownership mindset and how they feel that our employees when they go to their factories kind of take incredible care of them. And the customer was, I'll say, positive in terms of what they're seeing around investments, not only in China, for China, but then now starting to expand outside of China, particularly in countries like even Africa. So I think we see customers are willing to invest and willing to continue to accelerate how they continue to see their efficiencies.

In terms of this question, do we see anything broadly across any other regions that inflected negatively. I'll say no for the most part. I mean I think the guidance here, as we said, is driven largely by the shipment timing. And this is just the willingness of the customers to take the product now versus we're saying, hey, we're seeing -- we have seen delays and customers getting to some of those pushouts and we're just going to say and assume that this is going to actually now move into 2025, some of them. And that's really the driver of our guidance -- organic guidance takedown.

In terms of your question about the ITS business driven process industries and how do we traditionally see you're absolutely right in the sense that we expect to see that gradual movement. I think we view ITS as a very diverse, diverse in nature and we have said always that we compete with our products and technologies to the pockets of growth that we may see. And clearly, you have seen PMIs that have been in contraction territory for over 24 months. We believe that we have outperformed that. I mean, example, last year, we grew organically double digit versus -- and this year will be more flattish. But again, we think it's better than contraction territory that PMS are showing. Well, yes, I mean, having said that, we believe that growth will continue to come more gradually as we expect these PMIs to improve, and we don't expect that V-shape recovery or kind of snap growth from 1 quarter to another, but more gradually.

[Julian Mitchell, analyst]

That's helpful. And just my follow-up on the margin front. So maybe just put a finer point on the sort of EBITDA margin rates in Q4. I think maybe it's down a little bit sequentially, but maybe I have that wrong, but that would be I know historically, you normally up sequentially in Q4. And as we think about 2025, exceptional incremental this year, any sort of give back or normalization of incrementals as you think about next year because of investment spend or anything like that?

[Vikram Kini, executive]

Yes. Julian, this is Vik. Let me take that one. So I think, first and foremost, frankly, exceptional margin performance by the teams in Q3, really proud of what the teams were able to deliver I think it's worth noting that largely driven by gross margin expansion and you really are starting to see, I'd say, the fruits of the labor and things like recurring revenue and things of that nature that we've been talking about for quite a while. I think as you move to Q4, I think sequentially, you're still going to see essentially 2 segments that are in the 30% EBITDA margin range. It's probably the easiest way to say it. I think corporate costs will probably normalize a little bit in that $40 million to $45 million range. And so that's kind of the way to think about that margin algorithm for Q4.

Now I think as you've always seen us do and say, we're going to continue to make the requisite investments for ongoing growth. And if there's room to probably outperform on the margin front, specifically in ITS, I think you've seen us do that for several quarters. I don't think you'll hopefully see anything necessarily different in Q4, but we think around 30% is probably the right levels as we think about Q4 specifically. To your question about 2025 and obviously, not giving necessarily guidance at this point, but is there anything that we would say is "giving back margins" or anything of that nature, no, I don't think that that's the way to think about it. We think that next year will be a bit of a normal margin expansion kind of in line with what we've historically laid out. But we feel really good about where we are. And most importantly, we continue to make the right investments in areas like innovation, demand generation and commercial resources.

[Operator]

Your next question comes from the line of Jeff Sprague from Vertical Research Partners.

[Jeffrey Sprague, analyst]

Just kind of back to the project delays and uncertainty. What you said about the EPCs is interesting. But a lot of companies are pointing to election uncertainty. What is your view on that? Is that a reality or an excuse and you see the outcome impacting your business substantially 1 way or the other or just having an outcome and getting this over with just list some uncertainty, we can kind of try to move on with whatever hand would dealt.

[Vicente Reynal, executive]

Yes. It's interesting. I mean, and the reason why we don't call it out too often is because it is we do a lot of voice of customer, and we are pretty close and intimate to them as they go through their buying cycle. And it doesn't come out of the table or top of the chart in terms of as the reason why the elongation. Now naturally, as we have been kind of getting closer to the election here. Has it been more verbally said more often. Also, yes, it is definitely not the top of the list. But it is definitely mentioned more often. So I think there's a little bit of that. I mean how big of a reality it is or how much pent-up demand is going to be after the election kind of snaps or can we go over with, and we see a better outcome. I think still a lot to be determined based on clearly what happens at the election time. But again, we'll remain focused on controlling what we can control and that's our play basically here, Jeff. So to answer your question, yes, how we heard that a little bit more often? I'll say maybe yes, but it is definitely not the #1 reason for the innovation.

[Jeffrey Sprague, analyst]

The project delays though skewed to the U.S.? It sounds like it's actually just quite global.

[Vicente Reynal, executive]

It is quite global, Jeff. Yes, very global. That's why the election is definitely not the only reason, to be honest, Saudi Arabia and spend time with customers, it is project delay because of site readiness and EPC. I mean it's basically those 2.

[Jeffrey Sprague, analyst]

And just pivoting real quick, just mix, obviously or seemingly would be positive, given equipment softer, and Vik just mentioned service. Can you just maybe give us a little bit of an update on how service is performing, sort of what the growth rate is, how you expect to close out 2024 on the service side.

[Vicente Reynal, executive]

Yes. Jeff, very encouraging on the service side. Service positive, good momentum that we saw clearly organically in the quarter. And I think everything that we said at Investor Day is working really well. That recurring revenue and the focus of the teams are giving it and not just, I mean, the U.S. is 1 of the biggest engines that we have, how we see now the momentum in Europe and even also in China and India. India was the other country that I spend amount of time with the team. And again, that service-oriented, it's a great solution that not only our teams are launching but also customers, they really want. So I will say, yes, it's good. Good momentum that we're seeing.

[Operator]

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

[Robert Wertheimer, analyst]

Your margin performance continues to be extraordinary. And I'm a little bit curious just about how much opportunity lies ahead, maybe we do IT versus behind if you still see as much potential there if you're shifting your workflows to be more growth-oriented than margin oriented. Just maybe comment that because obviously, you've done amazing things over the last couple of years.

[Vicente Reynal, executive]

Yes, Rob, I'd say internally, I'll start with the last question. Internally, we'd like to say is the power of the end is about growth and margin. So we always look at the quality of earnings. And we look at making sure that, yes, we're growing, but that we're growing profitably. So I'll say that we go for both. Yes, I mean year-to-date, we've seen exceptional incrementals, and that speaks to -- as Vik said, the gross margin activities that we have done despite the market volatility we continue to make a lot of investments, investments not only around recurring revenue streams and things like that, also new product technology. Part of my trip here in Asia spent a full day with the team in China, specifically on innovation. And I think the innovative solutions that the team has developed are very unique and very exciting to see and things that we're leveraging now also from a global basis. So the example that we put out here in terms of the cotton that will definitely drive some incremental revenue as well. That's also part of our investment. So I'll say we continue to be positive about where we have margin expansion here in ITS.

[Vikram Kini, executive]

And Rob, maybe I'll just add maybe to your question about thinking about the 2 segments to percentage point, I think we've been incredibly pleased with the momentum we've seen in '24. We're poised for another triple-digit margin expansion year and as you can -- the guidance implies and as you've seen, largely right on the ITS side, I think as we flash forward, it's kind of back to kind of how we laid things out. We expect that there still is opportunity in ITS. Are you going to see the pace probably as much in ITS as you've seen historically, maybe not as much. I think there's still opportunity there. But I do think there's probably a little bit more outsized opportunity in PST and that very much fits with our stated Investor Day targets of how to get back to closer to a mid-30s EBITDA margin. So still really pleased. And I think that we see a lot of great opportunity as we now think about the PST business and particularly also with the ILT Dover business now being fully integrated.

[Operator]

Your next question comes from the line of Andy Kaplowitz from Citigroup.

[Andrew Kaplowitz, analyst]

Vicente, can you talk about -- or give us a 1 color about the acquisition landscape as you start to think about '25. You obviously have been very active, as you said, for '24. Your LOIs, I think, went up a little bit sequentially. So do you see '25 as potentially as robust a year for incremental M&A activities 24? And I know you said the other is more bolt-on in nature. Is that generally the type of activity that you would expect in '25?

[Vicente Reynal, executive]

The answer -- the simple answer to that is yes. I mean we definitely see we're seeing a lot of good activity. Clearly, you heard on the opening remarks to as well with ILC over acquisition that gave us a $10 billion expansion into an addressable market and that comes in with looking in terms of bolt-on bolt-on acquisitions, and we already have a few of those in our funnel. So yes, I mean, 2025, I'll say, it looks to be still also very encouraging as we see the momentum that we have today. Yes.

[Andrew Kaplowitz, analyst]

Okay. Helpful, Vicente. And then you mentioned in PST book and ship, it's still up high single digits year-over-year. You mentioned sequential orders up 13%. I know organic revenue growth has been stubbornly negative for a while now in that segment. So does the better order environment suggests that you do you have relatively good visibility to improve growth in '25? Maybe just on ILC-Dover, in particular, a lot of positive commentary on it, but just an update there.

[Vikram Kini, executive]

Andy, this is Vik. Maybe I'll start, and I'll let Vicente add in. I think with regards to just kind of the base PST business, and we'll kind of comment on ILC Dover separately, we've been very encouraged by the positive order momentum that you've seen now for a few quarters. We are starting to see that translate a bit better. We do expect that, for example, in Q4, to be part of that growth algorithm, specifically as part of our Q4 guidance as you kind of get to the full year guide. We'll pause on necessarily 2025 commentary. But I think the good news here is a combination of both the base business as well as a lot of the acquisitions, which have now really been fully integrated, I think, positions us well as we move into 2025, and we're encouraged by kind of what I'll say, the base PST business. And Vicente, I'll let you comment [indiscernible].

[Vicente Reynal, executive]

And then on the LLC, I'll say that the integration continues to go very well. You saw some of the numbers in terms of biopharma and the medical device component business. are doing really well. And I think the most important piece is that we continue to make investments for growth in the IOC over already as we see opportunities to accelerate growth in both at the biopharma and the Medical Device business and investments are not only just on demand generation, target commercial and innovation of product investment but also investments in talent. We have multiple new general managers. We -- I think we said before, we structured the business now into 3 distinct P&Ls with new general managers in the P&L and we're reinforcing the functional support area. So we're making a lot of the good prerequisite investments to scale that up and scale that business as we move forward.

[Operator]

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

[Nigel Coe, analyst]

Just wondering if we could maybe just hone in on the PST sort of outlook for 4Q. It looks like we're sort of pointing towards a return to growth in the fourth quarter, obviously conflict and easier. I just wanted to make sure that's the case. And then I just wanted to just try and nail this M&A contribution. You definitely had a bit more revenue from, I guess, ILT-Dover and third quarter. And just want to know what your kind of penciling in the fourth quarter from ILC Dover. And just maybe just if you just within that address the book-to-bill 0.97 for reported 0.99 for core. Does that suggest there's a bit of book-to-bill below 0.9 for acquisitions. Just maybe just unpack that for us.

[Vikram Kini, executive]

Yes. Nigel, I'll try to answer all of those. So specifically, in terms of PST on the growth algorithm into Q4, return to a positive organic yes, that is the expectation, just to kind of state that 1 simply. In the context of the M&A contribution, specifically in Q4. I think you'll see it comparable, maybe a touch lower than what you saw in Q3. But again, I wouldn't take that as anything in the context of any market trend like that. Specifically with an ILC Dover, as Vicente said, I think the biopharma and the medical device business is very stable, continuing to see what you would expect to see the normal growth and the sequential momentum you expect a lot of what you're seeing and quite frankly, even now to your book-to-bill question, it really comes much more from the space. side of the equation, where typically, you see orders, they can be lumpy at times because they, quite frankly, are tied to larger what I'll call, platform level kind of tonic contracts. And then they tend to ship over a multi-quarter, multiyear time frame, that's exactly what you saw in Q3. So you did see a book-to-bill that was below fleet average. That was literally driven by the space business. And the reality is in subsequent and future quarters, you'll see the exact inverse once you book some of those normal course contracts, nothing that we would speak to that's outside the norm and actually very consistent with how the business operates. So again, we actually look -- I would say it's very consistent. We're very pleased with the performance there. A little bit of noise, but I think the way you have characterized it and the numbers you're calling are fairly accurate.

[Nigel Coe, analyst]

Okay. And then just to be clear, are we still on track for 215, 220 guide for ILC?

[Vikram Kini, executive]

Nigel, can you repeat the question?

[Nigel Coe, analyst]

Yes. Are we still on track for full year contribution from ILC at I think the 215, 220 is the range.

[Vikram Kini, executive]

Yes. I think that's in the right ballpark.

[Operator]

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

[Joseph Ritchie, analyst]

Vicente, could you just elaborate on what the site readiness actually means? I know you referenced the Middle East. I'm assuming this is brownfield project and very separate than the like EPC discussion that we had earlier. And then also -- and I know people are asking all these questions around orders and book-to-bill I guess that there's a concern that the book-to-bill will kind of nose dive in the fourth quarter. And so just any kind of comments around what the expectation is for the book-to-bill, fully recognizing that typically in the second half of your year, it is typically below 1 in.

[Vicente Reynal, executive]

Yes. Joe, in terms of the site readiness, I mean a pretty wide range in terms of -- as to the reason why in some cases, what I mean it could be permits you be permitting in terms of greenfields or even [indiscernible] about project expansion capacities is basically permitting, it is the labor to be able to get some of the things on. In some cases, we're a piece of the entire process. So in many cases, the other pieces are not ready, and we have to come in a certain time. So it has to do with just the logistics I'm just getting a lot of these activities kind of put in place. In terms of the book-to-bill, I mean, I think keep in mind that we said that we don't guide on that on orders, but we said that for the full year, we expect book-to-bill to be approximately 1%. And what you can see, kind of, basically, we are in that range. So we expect that book-to-bill to be and we said the first half of the year is going to be usually above 1. The second half of the year is usually less than [indiscernible]. And as we kind of came here in the third quarter, that kind of exactly -- that's exactly what happened. And as we will see in the fourth quarter, that will be the same case. So we'll continue to expect that for the full year, we expect that book-to-bill to be squiggly approximately 1, and that means basically organic orders should bode well in the fourth quarter.

[Joseph Ritchie, analyst]

Great. That's super helpful. And then I guess just -- maybe just elaborate a little bit more on biopharma, really nice to see out 20%. Typically, we thought of that as being very margin accretive to the business. And then we're hearing from others that there's places like radiopharma or theranostics that could see really good growth in the coming years. So just maybe elaborate on that piece of your business and specifically where you're seeing good momentum.

[Vicente Reynal, executive]

Yes. I think the exciting piece is that, as we said before, is that the biopharma is very well focused -- laser-focused on approach in terms of high potency APIs all of these high potency APIs, that is for the next generation of gene therapies and whether you think about presentation of cancer treatment research or even as simply stated as these GLP-1s and drug weight reduction medicines. And there's now even new developments. I mean, I think, so far, a lot of these drugs have been kind of on the monoclonal antibodies and now they're going into by model activity. But I think there's just a lot of good development. And for a lot of that development, you need these high potency compounds. And in order to generate these high potency compounds, you need to move the powder, and that's basically where we come in. We come in with a great customization of powder handling and powder containment processes that are single use in nature. And so I think our team intends to be very focused on accelerating growth, very focused on the early development on drug. So I'll say you said it very well. I mean, I think there's just a lot of good growth momentum on that biopharma business.

[Operator]

Your next question comes from the line of Chris Snyder from Morgan Stanley.

[Christopher Snyder, analyst]

I want to follow up on the commentary around site readiness. Much of it appears tied to labor capacity and constraints there. So when you speak with customers, is there an expectation that, that gets any better? Because I know that employment, at least here in the U.S. continues to go higher, and it seems like demand for these projects and the activity is pushing higher. So seems like that could remain a constraint.

[Vicente Reynal, executive]

Yes. No, Chris, I mean, I think it varies country by country, for sure. But yes, I mean, I think that's exactly why we are smart about thinking about how we think about this gradual recovery and the momentum because that's -- you said it very well. I mean labor will continue to be a constraint is a constraint here in the U.S. and continue to be constrained in many other countries across the world. And main cases is that skilled labor is very needed for this very highly complicated protect.

[Christopher Snyder, analyst]

I appreciate that. And then maybe on China specifically. I know you said you're not really seeing any impact in the operating environment or from the stimulus of the early part of Q4. But I guess, do you think that the stimulus will have an impact on the economy there into 2025? Any [indiscernible] to think about the timing between when that could filter through. And just for all of us in the [indiscernible]. When you look at the policy measures, I guess, is there anything that stands out as potentially being impactful to Ingersoll.

[Vicente Reynal, executive]

Yes, great question, Chris. I think the most impactful 1 is that these latest stimulus is really around upgrading all the equipment and you get a higher priority in many cases -- and again, this is at the total national level and then you got to go region by region. So -- but the high priority goes to those projects and those conversions are going to deliver energy efficiency. And clearly, this is exactly the story that we have been saying all along in terms of what we are capable of doing on energy efficiency improvement. So I think that is where we see that the stimulus could be impactful for Ingersoll Rand. In terms of timing, it takes time. I mean, central government announces the stimulus, and then it has to trickle down to the provinces and to the regions, and that takes time. Now when I was in China just a week ago, did we hear more often and the teams were talking a lot about? Yes. Have we seen it yet come to fruition? Not yet. But again, that's why we say it could bode well for 2025, and we'll see how kind of the fourth quarter on that perspective.

[Operator]

Your next question comes from the line of Joe O'Dea from Wells Fargo.

[Joseph O'Dea, analyst]

Vicente, could you talk about Ingersoll's kind of engagement in the time line of a large project when we think about a growing pipeline of what can be multiyear projects how to think about your involvement relative to when shovels go in the ground when you're engaged with the customer when you get an order, when you ship it relative to, say, shovels in the ground in a multiyear time frame?

[Vicente Reynal, executive]

Yes, sure. Also, Joe, from the early beginnings, we get involved. I mean, a lot of these large projects they have at the EP side, they have what they call SME, subject matter experts. They're subject matter experts on a typical specifically processing technology like rotating components. And so we have really great relationship and contact with those educating what our products can do. When the project gets decision, the typical lead time is call it 12 to 18 months between the order to the time of a shipment. And that could be maybe 12 months later after the shuttle goes into the ground. So call it, it could be up to 2 years by the time that when the initial kind of gets removed to the time the project gets to completion. But it varies. I mean it clearly varies on the size of the project and the scope of the project. But our lead time is -- could be anywhere between 12 to 18 months based on when the customer puts the order and when the customer is ready for the site.

[Joseph O'Dea, analyst]

Got it. That's helpful. And then just wanted to come back to PST and some of the trends. I mean when we look at the organic growth, the stacks, whether it's 2 years, 3 year actually softened sequentially from Q2 to Q3. The guide suggests that those would improve sequentially from Q3 to Q4. It seems like within sort of the order framework as well and book-to-bill outlook that PSD orders would sort of lead the growth in the fourth quarter. And so just looking for any color on lumpiness within the third quarter and how that's improving in the fourth quarter. Not sure if weather events were a factor, but any details there would be helpful.

[Vikram Kini, executive]

Yes, Joe, this is Vik. Maybe I'll start, and I'll let Vicente add in as well. Would I point one, I'll start with the latter part. Any major weather-related things or any of that nature? No, nothing of that note that I'd point to. I think the piece that we are -- continue to be encouraged about in terms of PST is that we've now had 2 sequential quarters of positive year-over-year organic growth. And obviously, I think we've kind of now fully consumed or comped a lot of those, what I'll call the legacy of Ingersoll Rand Medical or life sciences headwinds that we've been talking about for a while. Have we seen necessarily any meaningful recovery or anything there? No, not necessarily at this point in time. But I do think that, that was what was clouding and I would say a lot of the historical comps I think the good news, as we said in the prepared comments was, one, I think the kind of more what I'll call industrial or book and ship continues to do nicely. It's been multiple quarters of that. I'd say, showing good trends. And then remember, the PST business, it does also have some of the longer cycle type projects. that can create some of the noise that Vicente are speaking about. I think we talked about it much more prevalently in the ITS space, but there is some of that in PST. So I think the good news here is when you put that all together, and particularly a couple of sequential quarters now of positive organic orders growth. Now we expect to see that to start translating a little bit, and we do expect to see positive organic revenue growth, specifically in Q4.

[Operator]

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

[David Raso, analyst]

Just a quick question. The organic orders within ITS. I know Page 18 provides sort of the all-in ex currency. But just given the acquisitions, can you help us between compressors, vacuum, power tools and other the 0.4 million. I'm just trying to figure out how much -- what a bottoming China be as a boost to the organic is? It's not that easy on Page 18, just given those are all in ex currency. Can you give those same splits organically to get to the organic order of 0.4 for the quarter?

[Vikram Kini, executive]

Yes, David, I'll give you -- I think, probably the way to think about this, at least at a high level, a couple of components. Probably the 2, I'd say, detractors for lack of a better way to say that when you think about the stack and I'll do it by region was clearly Asia specific. And clearly, that's more of a China comment, and we called that out in the and there hasn't been, I would say, special China the commentary, that's essentially all organic, right? There isn't a lot of M&A impacting that on the China side has obviously been the big negative comp, negative organic meaningfully or negative. That's what's driving that number closer to flattish. The power tools business, again, a smaller piece of it. It was also, I'd say, below kind of overall fleet average, that's slightly bringing the numbers down. The more positive trends you're seeing are definitely in the, I'd say, Americas is definitely kind of the leader of the pack comparatively. We also thought about that probably having 1 of the easier comps comparatively speaking, on Q3, just given some of the timing of projects in terms of last year. And the middle Europe, Middle East, India, Africa is kind of been in the middle. I'd say India and the Middle East, frankly, places that Vicente and myself were in [indiscernible] have been solid organic growth drivers. Western Europe has been a little bit of, I'd say, mixed in terms of some of the different regions. So to give you the spectrum there, I would say the 2 biggest attractors definitely have been China and to a lesser or power tools, Americas [indiscernible] and Europe is kind of in the middle is probably the best way to think about it. And I wouldn't delineate dramatically between the product technologies tend to follow those regional trends fairly well.

[David Raso, analyst]

I guess asked directly, if China is say, at this point, down about 15% of ITS, maybe even slightly smaller. What were the organic orders ex China year-over-year in ITS ex China con?

[Vikram Kini, executive]

Yes. David, we haven't given that, but what I will say here is, would it -- would you be much more positive in that low single-digit realm, that's probably a fair [indiscernible].

[David Raso, analyst]

Okay. So something like up 3% and China down 15%. So something like that is sort of the math.

[Operator]

Your next question comes from the line of Andrew Buscaglia from BNP Paribas.

[Andrew Buscaglia, analyst]

Something that caught my eye was kind of interesting is your comment on some incremental activity in water treatment. Can you comment more on that, is there more behind that? And I guess what are you seeing in that market? Because it really seemed to accelerate quite a bit.

[Vicente Reynal, executive]

Yes. Andrew, so yes, we do play very well in the word treatment. I mean you saw the example Dosatron example that we give here. But even within the we have good technologies with CapEx, which is basically 1 of the market leaders for progressive cavity pumps in waste treatment facilities as you have Milton Roy, which is basically doing a lot of [indiscernible] as well for wastewater facilities. And even when you go into the ITS segment, we have technologies like lower technology that we're 1 of the market leaders for creating the aeriation in the wastewater facility. So yes, the wastewater facilities and wastewater treatment processing has been an end market that we have put a lot of attention, even including acquisitions, about a couple of years ago, we acquired a company called Everest in India that is a market leader for wastewater lower aeriation if you think about India, only 30% of the water is treated. So great growth in that market. So yes, water and wastewater and water treatment are areas of opportunity for us to grow.

[Andrew Buscaglia, analyst]

Interesting. Another comment I was hoping to get some color on -- I was obviously trying to gauge your 2025. But what -- your free cash flow is a good story for a long time. Do you see incremental tailwinds as some of these projects, especially some that are kind of delayed here, really move forward. And maybe any other comment other than fundamental sort of EBITDA margin expansion. Any other puts and takes you keep in mind as we try to model out next year.

[Vikram Kini, executive]

Andrew, just to be clear, was that on the cash flow side of the equation? Was that the nature of the question or?

[Andrew Buscaglia, analyst]

Yes, cash flow. Yes. It seems like you have incremental certain tailwinds, especially with some of the pent-up projects.

[Vikram Kini, executive]

Yes. I think maybe a couple of things in not necessarily particular order. Sure. I think just frankly, the business growth whether it be the projects or just the base business, absolutely. I think working capital continues to be a huge focal point. I think we continue to make great strides in some of the more transactional pieces, accounts payable country. I think inventory continues to be an opportunity to unlock that especially given the model that we have. I think a big piece that's probably -- we don't probably talk about it as much, but maybe a touch underappreciated is also the M&A side. Generally speaking, the vast majority of M&A that we bring in, it frankly has a much higher working capital profile just because, quite frankly, a lot of them are smaller privately held companies by less focus on working capital comparatively speaking to kind of where we are. And so as we bring them and integrate in across the full spectrum of working capital, that's generally an opportunity. And then listen, we'll continue to optimize, I'd say, what I'll call more of the blocking and tackling, cash interest opportunity as we look forward, cash taxes things of that nature. So I think there continue to be a lot of levers. And that being said, I continue to be really pleased with where the teams have operated. We've been in that 100% free cash flow conversion realm, and we will continue to target those levels with some of the opportunities that I mentioned.

[Operator]

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

[Nathan Jones, analyst]

Just a couple of questions back on the velocity of the MQLs through the funnel. Vicente, you said historically 6 to 8 weeks and that is materially longer now. Is it still getting longer? Or has it stabilized? Are things getting shorter? And if the major reasons are customer site readiness and insufficient EPC engineering capacity, these things will naturally move through that process over time. Is it really just time that we have to wait for these -- the decision-making to accelerate again? Or are there other conditions that need to exist.

[Vicente Reynal, executive]

Yes, Nathan, sure Yes. I would say that the elongation -- no material change in getting much longer, to be honest, but definitely, clearly, it's simply much more above that 6 to 8-week conversion rates. In terms of the additional question, it is just time. I don't think we don't see interest rates to be -- clearly, we never saw as that being the impact for any of this to be kind of the driver. We made a commentary about here how elections really not the dramatic change. Could that maybe accelerate as we kind of finalize and get this order with next week potentially, but not something that we're counting on. But yes, it's just mainly time here in this case.

[Nathan Jones, analyst]

You guys have a little bit more visibility than we're going to have from the outside into those kinds of things. Is there an expectation? Or do you have intelligence into the markets that would suggest kind of when that MQL lead time might start to shrink and these things might start to move forward?

[Vicente Reynal, executive]

I mean I would tell you, Nathan, it varies dramatically country by country depending on situations and depending on customer projects. So I would say -- do we have intelligence on a lot of the projects and a lot of data Yes. Are we going to verbalize that externally? Likely not. But yes, we do know very well.

[Nathan Jones, analyst]

Fair enough. And you made a comment that things are boding well for organic orders. Could you just elaborate on that a little bit?

[Vikram Kini, executive]

Yes. Nathan, I think the comment was, I think it was positioned in the kind of the math around the book-to-bill. And if you kind of run the math out now with 3 quarters behind us and you kind of know all the variables, would it imply kind of something in the maybe low single-digit organic growth realm for orders. That's kind of what the math would imply. And you'll still kind of be around that onetime book-to-bill. I think to Vicente's point and kind of what you're seeing, like I said, you've seen 2 quarters of good sequential -- good year-over-year orders, organic orders growth in PST. You did see ITS return back to positive organic realm in Q3. So again, what we'll say is the leading indicator, the general market continues to remain relatively stable and relatively healthy. So we're encouraged kind of as we kind of move here into the fourth quarter.

[Operator]

There are no further questions at this time. I'd like to hand the call back to Vicente Reynal for closing remarks.

[Vicente Reynal, executive]

Yes. Thank you. I'll say my last remark will be, again, a big thank you to our teams for another great quarter and the fact that our economic engine is working very well to deliver very good results even despite macroeconomic environment, it's very exciting to see. So again, thanks, everyone, for the interest and look forward to speaking with you any time soon. Thank you.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now all disconnect.