Oct 30, 2026 earnings call — Large engineered data center order and stronger guidance
Company raised full-year revenue growth view to 5.5%–7% after Q3 with revenue of $2.1 billion.
Revenue $2.1B (est $2.1B) · EPS $1.07 (est $0.90)
Key quotes
"later in the period, we booked an approximately $195 million order that is an engineered-to-order solution for mission-critical data center infrastructure."
"I am pleased to share that this morning, we closed on the acquisition of IVEK Corporation, a leading provider of small-volume precision liquid metering and dispensing systems."
"The year-over-year margin decline was driven primarily by the known inflationary pressures and pricing dynamic in China."
Analyst Q&A 12
where growth and margins are coming from
Q (Mike Halloran · Baird): The analyst asked where momentum is strongest by end market and region, and about Chinese pricing and when price-cost will be EBITDA neutral.
A: Management said momentum is broad across most regions and in core end markets like food, beverage, biopharma and power. They said price-cost was slightly dollar positive in Q3 and is improving, and China remains a pricing headwind but is stabilizing with the lap expected by first half of next year into 2027.
"I think our view as we continue to move forward is that equation will continue to improve as we move through the balance of the year, but really into 2027." — Vik Kini (CFO)
data center competition and accounting
Q (Nigel Coe · Wolfe): The analyst asked if the data center order competes with traditional chiller makers, how small/medium compressor growth looks excluding big orders, and how the $195 million order is accounted for.
A: Management said they compete with a differentiated engineered-to-order, combined power and thermal solution that is plug-and-play. They said short-to-medium cycle orders showed sequential acceleration and that the $195 million order will be POC with most revenue recognized through 2027.
"yes, to answer your question, this will be, the $195 million order will be POC with the majority expected to be kind of consumed or digested through the course of 2027." — Vik Kini (CFO)
data center funnel and capex risk
Q (Steve Volkmann · Jefferies): The analyst asked whether there is a funnel for more data center orders and if capital allocation is risky if data center spending falls.
A: Management said the funnel is substantial and growing, and they structured a focused go-to-market over the past 12 months. They said incremental CapEx will be low and stay within their 2% of sales target, and they are focused on a few hand-picked customers.
"Basically, fulfilling those critical needs that are today, in some ways, unmet." — Vicente Reynal (CEO·CHAIR)
AI impact and lab automation
Q (Rob Wertheimer · Melius): The analyst asked if the data center order is site-specific and how AI is changing biopharma opportunity.
A: Management confirmed the data center award is for one site. They said they have invested in lab automation (Scinomix and Zinsser Analytic) and supply robotic automation to customers using AI for personalized medicine, which they view as a growth opportunity.
"We are participant of developing this machinery and actually providing this robotic automation to customers that are leveraging AI to actually create recipe for personalization of medicine, particularly in the immunotherapies." — Vicente Reynal (CEO·CHAIR)
PST margins and quote-to-order cycles
Q (Nathan Jones · Stifel): The analyst asked if PST can sustain high incrementals and how quote-to-order times are changing with improving orders.
A: Management said PST is operating with strong pricing and volume, has been above 30% EBITDA and expects similar Q4 margins, with mid-30s EBITDA a reachable target. They added quote-to-order cycles are improving but not back to normal; RFQs are accelerating and cancellations are down.
"We've now solidly been above, well, above 30% EBITDA margins here for several quarters, executing in that now above 32% range here in Q3, with expectations to be in a similar range here in Q4." — Vik Kini (CFO)
adapting tech and Q4 growth outlook
Q (Joe O'Dea · Vertical): The analyst asked how the company adapted existing technologies for data centers and whether Q4 organic growth can match Q3.
A: Management said they combined acquired thermal management technology with their engineered-to-order skids and piloted in Asia Pacific before expanding to the U.S. and India, using their existing supply chain and no special new partnerships. They guided Q4 organic growth expectation around 2%+ for the total company with both segments comparable.
"I think the way to think about Q4 is, right now, expectation is in the 2%+ kind of range for the total company on an organic basis, and actually both segments looking fairly comparable." — Vik Kini (CFO)
margin profile of the order and October trends
Q (Joe Ritchie · Goldman Sachs): The analyst asked how dilutive the data center order is to margins and whether the company can comment on October trends.
A: Management said the initial margin profile is similar to how they bring in M&A assets, coming in the '20s and ramping to fleet average over the medium term. They declined to comment on October specifics but said demand continues to be healthy globally.
"Think about it similar to sometimes when we do an M&A, that typically, as we bring in M&A, it kind of comes in the kind of 20s, and then obviously we ramp it up to fleet average over the course of the medium term." — Vicente Reynal (CEO·CHAIR)
capital priorities and PST order durability
Q (Andy Kaplowitz · Citi): The analyst asked whether capital priorities have changed between repurchases and M&A and about PST order durability.
A: Management said M&A remains the priority and they remain disciplined with a funnel of over 200 companies. They said Life Sciences orders were up low double digits while some Precision Technology long-cycle pump projects timed down mid-single digits, but core short-to-medium precision pumps grew low single digits.
"Life Sciences orders were up low double digits on an organic basis, which I think continues to speak to the strength in just kind of the Life Sciences kind of platform and kind of the trends that Vicente mentioned earlier." — Vik Kini (CFO)
ITS margins outlook and order stability
Q (Nicole DeBlase · Deutsche Bank): The analyst asked whether ITS can expand margins next year given price-cost and the dilutive data center order, and whether the mid-single-digit short/medium cycle orders were stable through the quarter.
A: Management said they expect pricing next year in a normal 1%-2% range and the core business operates with 30%-40% incrementals, with ITS toward the lower end. They also said the mid-single-digit short-to-medium cycle orders were fairly stable through the quarter.
"I think our view moving into next year is that we would expect kind of pricing, again, similar to what we talked about entering this year, to be kind of in that normal 1%-2% range." — Vik Kini (CFO)
utilization and margin drivers
Q (Amit Mehrotra · UBS): The analyst asked for an update on field asset utilization and whether that supports accelerating growth, and what drives the strong sequential profit drop-through.
A: Management said utilization of connected compressors and machines is improving and that momentum aligns with PMI-led industrial recovery, supporting acceleration. They said Q4 margin improvement is driven by slight price-cost improvements, procurement and direct material savings that are second-half weighted, and prior restructuring actions.
"I think the concept of continuing to see sequential slight improvements on the price-cost equation, I think is kind of what's embedded." — Vik Kini (CFO)
China margins versus segment
Q (David Raso · Evercore): The analyst asked how China ITS margins compare to the segment average and whether China margins improved sequentially.
A: Management said China (and Asia Pacific) generally plays in a range comparable to the fleet average, though historically healthier and recently a headwind from pricing dynamics. They added China showed sequential improvement similar to other regions but remains a year-over-year headwind.
"Broad strokes, whether it's the China business or frankly total Asia Pacific, but obviously China is the biggest piece of it plays in a range that's very comparable, I would say, to the fleet average." — Vik Kini (CFO)
future order margins and M&A timing
Q (Brandon Knutson · Morgan Stanley): The analyst asked whether initial orders in other regions will also be margin dilutive and what factors delayed M&A this year.
A: Management said future similar orders may start a bit better than the initial one and should improve over the medium term toward fleet average. They said M&A timing delays were mostly due to early-year geopolitical issues in the Middle East and cautious pricing dynamics, but the deal funnel remains active.
"Yeah, Brandon, I will say, the couple factors have been mostly just, one, at the beginning of the year, kind of with what was happening in the Middle East." — Vicente Reynal (CEO·CHAIR)