Good morning. My name is Jill, and I will be your conference operator today. At this time, I would like to welcome everyone to Ingersoll Rand's 2024 Sustainability Update call. I would now like to hand the call over to Matthew Fort, Vice President of Investor Relations and Corporate FP&A. Please go ahead.
Thank you, and welcome to Ingersoll Rand's 2024 Sustainability Update call. I'm Matthew Fort, Vice President of Investor Relations, and joining me today is Vicente Reynal, Chairman and CEO, along with our team as outlined on the agenda. Today's presentation is available on the Investor Relations section of our website. In addition, a replay of this conference call will be made 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, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide 3 for more details. For this call, we will not be taking questions.
If you have further inquiries, please reach out to our team through the contact details provided on our Investor Relations website after the presentation. At this time, I'll turn the call over to Vicente.
Thanks, Matthew, and good morning to everyone. Each year, we share the progress we made towards our ESG goals as a company. And each year, we have more incredible stories to tell about how our products and our employees are helping us deliver on our commitment to making life better. Today, you will receive an overview of the significant tailwinds we have on sustainability and how we continue to align the business to those opportunities that contribute to our market, our performance. Starting on slide 5, we have some exciting news to share. We have been included in Time magazine's World's Best Companies for Sustainable Growth and also Fortune Sector Leaders of 2024. Ingersoll Rand's sterling reputation as a top performer within ESG continues to be recognized by rating agencies and entities as highlighted on this page.
We continue to demonstrate our commitment to both delivering financial performance and doing good for both the planet and our employees. On slide 6, let me provide a brief overview of who Ingersoll Rand is today. We are a leader in mission-critical flow creation technologies in both life sciences and industrial solutions. We have an incredible history of over 165 years, but with our ownership mindset, it allows us to operate at a high level of entrepreneurship and nimbleness, just like a startup company. The best way to think about our technologies is that they are at the heart of most processes out there. From the moment when you wake up and eat a bowl of cereal for breakfast to brushing your teeth before bed, our technology plays a significant role in the manufacturing of the products you interact with throughout the entire day.
This enables us to play across a broad breadth of end markets and also be geographically diverse. With approximately $7.2 billion in revenue and 28% Adjusted EBITDA margins, we continue to generate over $1 billion of free cash flow every year. This allows us to continue to execute on our capital allocation strategy, driving market outperformance. Turning to slide 7, two major components of why we win are our product and technology leadership and also our premium brands. This slide highlights our broad portfolio of products. We have an amazing portfolio of products and services, which are generally either number one or number two in the markets where we play. And we have continued to build upon that portfolio through acquisitions, which improve the quality of our portfolio by reducing cyclicality, increasing our recurrent revenue, and expanding the ecosystem in which our products operate.
Slide 8 highlights our premium brands, where our multi-brand strategy balances our flagship brands while preserving niche-focused applications and regions. As I mentioned on the previous slide, through our capital allocation strategy, we continue to broaden our portfolio of brands and product technologies, with 59 acquisitions completed to date since 2020. On slide 9, sustainability is a key theme, which is embedded in every aspect of our economic growth engine. So let me take a moment to walk you through some examples within the economic growth engine. Starting at the top, sustainability itself sits first in our economic growth engine, as it is a mega trend which we expect will continue to drive market outperformance over the cycle.
In addition, digitalization is linked directly to our connected asset strategy, enabling growth in our recurrent revenue base, which increases the impact of sustainability through longer asset life and improved efficiency, reducing our customer Scope 1 and Scope 2 emissions. Later in this presentation, you will hear from Mike Weatherred, who will discuss in more detail the direct correlation between sustainability and our recurrent revenue offerings. You will also hear later today how sustainable innovation in new products and services is essential and directly aligns with our organic growth enablers. Today, 66% of our IP portfolio has sustainability attributes that are designed for sustainability processes, clearly linking all new product development to how we improve energy and water conservation. For our inorganic growth enablers, our investments are aligned to high-growth, sustainable end markets, which is a critical path towards reducing cyclicality.
Additionally, we will continue to acquire technology that drives efficiency and productivity for our customers, which reduces their emissions. Finally, for innovative value, or I2V, we deliver products that not only drive margin expansion, but also reduce material usage, eliminate processes and steps, localize production, and move our supply chain to a more sustainable, greener grid. On slide 10, our innovative employee ownership model is truly a competitive differentiator. Both our financial performance and our focus on sustainability are made possible because of our employees. Because of that ownership mindset, we have over 20,000 employees working towards the company's common goals. In the middle of the page, we have a few quotes from our employees on how their ownership mindset has driven sustainability improvements within our own facilities while reducing operating costs.
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 today, we have created approximately $800 million in 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 slide 11, we're proud to present Ingersoll Rand's leadership in sustainability, as well as environmental health and safety. Allow me to walk you through a few of the highlights on the page. Approximately 66% of our product portfolio features sustainable attributes, which include benefits related to water consumption, circularity, and efficiency. These attributes are instrumental in enabling our customers to achieve their sustainability goals.
As we continue to focus on sustainability improvements within our own operations, we have 59 green energy locations and 90 locations internally certified as zero waste to landfill. Finally, we take immense pride in our safety record and the culture of safety excellence we have developed, which has led us to surpass the industry standard by 72% in 2024 for total recordable incident rate, a testament to our commitment to world-class safety performance. Turning to slide 12, I would like to announce our new decarbonization and water goals. We have taken a significant step forward in pledging to assist our customers in either reducing or avoiding 1 billion metric tons of CO2 emissions within their scope 2 emissions by 2040 through the application of our products and services. As outlined last year, we submitted our climate targets for scope 1, 2, and 3 to the SBTi organization for validation.
I'm very pleased to announce that our midterm and net-zero targets have been accepted. Ingersoll Rand's emission tracking and reduction goals have been validated to SBTi's highest level of ambition for Scope 1, 2, and 3. The validation of our targets by SBTi further demonstrates our commitment and leadership in sustainability. Finally, on the right-hand side of the page, we're proud to highlight the fact that we have surpassed our initial water reduction goal seven years ahead of schedule, achieving a 40% decrease in water use since 2020. As a result of our success, we have set more ambitious targets, with a new goal to lower water consumption by an additional 30% at all of our global facilities in water-stressed regions by year 2030. With that, I will turn the call over to Mary Vetsch to talk about how we're leading in sustainability. Mary?
Thank you, Vicente. Starting on slide 15, we describe our core lead sustainability strategy, which is integral to our overarching business approach and consists of two main elements. First, we aim to grow our business by leveraging the momentum provided by sustainability megatrends. Secondly, we are dedicated to managing our own operations with a focus on reducing our environmental footprint, safeguarding workplace safety, maintaining sustainable supply chain practices, and ensuring thorough governance in all dimensions of sustainability. We are convinced that by being at the forefront of sustainability, we not only deliver value to our shareholders, but also position Ingersoll Rand as the top choice for our customers, instill a sense of purpose and motivation in our workforce, and contribute positively to the environment. Our growth-oriented sustainability strategy has a dual focus.
Initially, we innovate products that are in line with our customers' requirements for higher energy efficiency, reduced water consumption, material circularity, extended product life, and enhanced safety. By 2030, we anticipate that products with these sustainable features will generate over 25% of our total revenue. Furthermore, we are expanding our market share by offering products and services in rapidly growing sustainable end markets. We identify these markets as sectors projected to expand faster than the GDP due to sustainability megatrends like decarbonization, water preservation, and improved standards of living. Markets that fulfill these conditions include clean energy, food, life sciences, and water. The second component of our lead sustainability strategy is our commitment to run our company in ways that make life better for our employees, customers, shareholders, and our shared planet.
Our commitment to environmental stewardship drives us to adopt innovative solutions that decrease our carbon footprint and preserve and protect natural resources. We wholeheartedly embrace circular practices in our operations, aiming to minimize waste and optimize material efficiency across their entire life cycle. On the next slide, let's discuss the details of our growth sustainability strategy by first unpacking how we think about product sustainability. As outlined on the slide, we see that sustainability is the cornerstone that guides the development and life cycle of our products and services. It's evident from the fact that 66% of our products and services possess sustainable characteristics, showcasing our dedication to providing significant environmental and safety advantages to our customers. Just last year, in 2023, we introduced 80 new products, each featuring one or more aspects of sustainability, such as efficiency, material circularity, or enhanced safety measures.
On slide 17, we showcase instances of product efficiency. Our efficient offerings are engineered to consume less electricity while maintaining or even improving flow or performance. Our customers have a keen interest in energy efficiency, not only to comply with regulatory mandates, but also to achieve their personal decarbonization targets. A standout example is Elmo Rietschle's latest high-speed radial blower, which boasts an impressive efficiency improvement of 60%. Moving to slide 18, we wanted to take a minute to talk about our strategic acquisition of Ecoplant, which was made in April of last year. This solution offers both new and current customers enhanced opportunities for energy optimization. Ecoplant employs real-time dynamic control technology to operate compressed air systems in the most energy-efficient manner possible. Clients are experiencing substantial energy savings of 15%-20%, with the added benefit of a return on investment in under one year.
The next slide illustrates the second approach to product sustainability, emphasizing the importance of circular design principles that help conserve resources by incorporating them into our manufacturing processes and extending the life of our products. Our design for sustainability framework prioritizes the use of materials that are rich in recycled content. We carefully choose metals for their outstanding recyclability and ensure that a significant portion of product components are derived from such sources. For example, our castings contain approximately 40% recycled material, and our motors are composed of around 33% recycled material. Additionally, we offer a selection of compressors and pumps that are specifically engineered to be remanufactured, thereby enhancing their longevity. Finally, on slide 20, we place strong emphasis on the well-being and protection of our customers' workforce, innovating products that meet the most rigorous safety criteria.
Our Butech high-pressure valves serve as a prime example of our dedication to providing superior safety performance, especially in critical subsea systems where exceptional structural strength, performance, and dependability are vital. Another instance of product safety is the enhancement of our testing methodologies in thermal desorption by phasing out the use of methylene chloride. This change not only boosts our testing precision from an estimated 95% to over 99%, but also widens the spectrum of hydrocarbons we can detect, thereby providing more comprehensive solutions to our existing clientele and creating opportunities to tap into new markets. Furthermore, this improvement has significantly reduced the sample preparation time from five minutes per sample to less than one minute, substantially increasing our capacity for growth. It's not just about developing sustainable products and services, but also about the end markets in which we play.
On slide 22, the second component of our growth sustainability strategy involves expanding our presence in high-growth sustainable end markets, which are poised for above-market growth due to their strong connection with global sustainability megatrends such as decarbonization, food, water conservation, and improved standards of living. These sectors are distinct, fostering environments ripe for innovation, growth, and significant consumer engagement. Our competitive edge is established through our comprehensive portfolio of products and services, alongside our strong industry-specific expertise enhanced over decades of experience. This expertise, combined with established relationships with crucial stakeholders and system or device manufacturers, ensures market leadership. Here on slide 23, you can see that significant shift in end markets. Since the merger, we have transformed the company and have pivoted away from cyclical end markets like automotive and oil and gas into those high-growth sustainable end markets.
The shift into these markets is happening both through organic growth as well as through acquisitions. These high-growth sustainable end market opportunities also exist in more traditional end markets such as metals and mining or pulp and paper. On our last sustainability presentation, we gave the example of our Runtech vacuum blower system that eliminates the use of water in the pulp and paper drying process. Another example of sustainable growth in more traditional end markets is a partnership with our longstanding customer, Midrex, a pioneer in the production of green steel. Last year, we acquired Roots, which collaborated with Midrex to develop a proprietary process using our products for the expanding green steel industry. This initiative marks a significant shift in steel production practices, moving from high carbon emissions of natural gas to the much-reduced carbon footprint of hydrogen as a process gas.
Ingersoll Rand, through collaboration with Midrex, has overcome numerous technical hurdles to craft a solution that is both effective and efficient. By transitioning from natural gas to hydrogen, the Midrex process is projected to cut CO2 emissions by as much as 95% when compared with conventional steel production methods. As a cornerstone of our strategy to harness sustainability-driven market trends, we are proud to highlight how our Roots blower technology is contributing positively to the environment and supporting the green steel sector. Furthermore, the acquisition of Roots stands as a prime example of our capital allocation strategy, which is helping the continued shift into sustainable markets. We remain diligent in our efforts to broaden our products and services portfolio with essential and complementary mission-critical flow creation products and technologies, specifically targeting acquisitions that are well-positioned in high-growth sustainable end markets.
On the next slide, let's now take a deeper look at four of our high-growth sustainable end markets. Here, we showcase a life sciences customer success story with a pharmaceutical company where ILC Dover is delivering a fully automated dispensing system that is circular by design. It minimizes product loss by dispensing and mixing on a carriage system and conserves water using clean-in-place systems. Furthermore, on the bottom right-hand side of the page, we manufacture flexible enclosures that significantly reduce water and eliminate harsh chemicals and associated contaminated water required for cleaning after use. Turning to slide 25, we are entering the sustainable aviation fuel market with our Milton Roy side entry mixers. These mixers have undergone extensive testing by one of our customers and have proven to meet the fuel and product homogeneity requirements with 50% less power using the four-blade impeller.
On the bottom half of the page, we are pleased to support Asia's largest liquid hydrogen facility in South Korea with a capacity of more than 30 tons per day. Ingersoll Rand products are helping South Korea achieve their ambitious targets for fueling hydrogen-powered fuel cell vehicles. On the next slide, Ingersoll Rand has been in the food and beverage sector for many years. As seen on slide 26, our compressors and pumps support the food and beverage industry from agriculture to food mixing and blending to packaging. Our Dosatron non-electric proportional injectors help farmers boost their productivity, save energy, and cut labor costs. Traditional outdoor farming is unable to sustain the current demand for healthy, affordable food due to soil vitality, water scarcity, climate variability, and land scarcity. Vertical farming, however, has the potential to resolve these challenges with consistent, healthy, and affordable food.
Dosatron pumps, which use the pressure and flow of water to provide precise and consistent dosing, help to optimize the delivery of nutrients and water to the plants, and finally, on slide 27, one of the greatest examples of multi-product presence is in wastewater. On this slide, you will see over 15 different Ingersoll Rand products sold into the wastewater sector. A prime example is the city of Houston, where we have an ecosystem of SEEPEX pumps, Roots blowers, Milton Roy dosing pumps, and Hoffman & Lamson pumps supporting and servicing their wastewater infrastructure across Houston. Our multi-product, multi-channel approach allows wastewater customers to purchase all their products and services from a single source, Ingersoll Rand. On the next slide, we believe in leading by example. For sustainability, that starts within our own operations.
On slide 29, you will see we are focused on continuous improvements in pursuit of our ambitious decarbonization, water, and waste targets. We remain on track to deliver our aggressive goals, which are primarily accomplished through strategic initiatives such as fleet and fuel optimization in our service operations and our GreenX teams leading sustainability projects in our manufacturing plants. Our success in water is remarkable as we achieved our water reduction goal seven years ahead of our 2030 target, which represents a total water savings since 2020 of 25 million gallons. As you can see, we are taking meaningful actions to help protect our world for future generations. The next slide reflects our deep commitment to safety, emphasizing the protection of our 20,000 employees, their families, and the communities in which we operate. We are dedicated to listening and proactively responding to safety concerns.
Embracing an ownership mentality, we encourage our team to voice potential risks and address safety issues both in the field and within our manufactured environments, where we successfully resolve around 20,000 risk-related cases every year. This proactive approach and consistent action have established us as a world-class leader in safety. As we turn to slide 31, it's evident that Ingersoll Rand is strategically positioned to further enhance the environmental quality and the well-being of the communities where we operate. Our straightforward greenhouse gas reduction strategy is anchored in three key areas: implementing site-specific energy efficiency projects, transitioning to renewable electricity, and modifying our fleet to support a more sustainable and resilient economy. Illustrating our advancements, consider a Wujiang factory in China, where we have made significant progress.
There, we replaced an electric heating system with a heat pump in the paint room and installed another to divert excess heat from the manufacturing area, thereby reducing the burden on our air conditioning system. These changes have led to an annual reduction of over 335 metric tons of greenhouse gases. Slide 32 sums it all up. Everything we do in sustainability is accomplished using our IRX operating system, which guides our decision-making through weekly IDMs. Sustainability is about making life better for our customers, enhancing the quality of life in the communities where we operate, all while delivering value to our stakeholders. Our responsibility to reduce our consumption of energy, water, and waste is deeply embedded within our company culture as we strive to reach the goals established, where people and the planet prosper.
We believe Ingersoll Rand is creating meaningful, positive change that aligns with long-term economic value. With that, I'll turn the call over to Mike Modesto to talk in further detail about recurring revenue. Mike.
Thanks, Mary. You may remember that just over a year ago, we announced our bold but achievable ambition to reach $1 billion in annual recurring revenue. Today, I wanted to share a few pages that demonstrate that generating recurring revenue and leading sustainably are twin and interconnected objectives. Moving to page 34, we strongly believe that long-term relationships with our customers deliver both higher recurring revenue for us and improved sustainability for our customers' operations. When we sell a new standalone compressor, the user of that machine can be assured that they're getting our latest and most energy-efficient technology.
But when that same customer entrusts us with the care of their entire compressed air system for a decade or two or even three, we are confident that we can deliver services and ancillary systems that have an even more significant impact on reducing their overall energy consumption. One major driver is that machines that we are overseeing within a Care or EcoPlan agreement receive close personal attention from the best network of field service technicians in the industry and real-time 24/7 digital control and optimization, resulting in the most energy-efficient operation possible, with bonus benefits like reducing the waste and emissions associated with unnecessary service calls or avoiding replacement of parts that don't need replacement.
Another example is the installation of an energy recovery unit next to an air compressor to capture and reuse up to 92% of the waste heat generated by the compressor, which can then be used to heat process water, preheat boiler feed water, or even for space heating to keep employees warm, and to cite a third example, by choosing to buy remanufactured rotary screw air ends from Ingersoll Rand, customers can both extend the useful life of their equipment and avoid the use of virgin materials and electricity associated with the production of new spare parts. Moving to page 35, we're already seeing great results by bundling our long-standing care service offering with the Breakthrough EcoPlant platform, two of the three cornerstone elements of our recurring revenue foundation.
The left side of this page is a great story where we worked very closely with a global leader in beverage packaging, who awarded us with a $17.9 million Care recurring revenue order to provide comprehensive Care service to 68 high-pressure air compressors at 28 separate locations, and then a second order for $3.3 million to look after their low-pressure units. When we subsequently introduced them to EcoPlant, they were immediately intrigued and agreed to pilot EcoPlant at a large facility where their annual energy bill for compressed air was $3.5 million. Upon installation and activation of the EcoPlant sensors and software, that site reduced their energy cost by 20%, saving over $700,000 per year and opening the door for installation at other sites.
On the right side of the page, we worked with a global leader in drug packaging systems to extend their long-term care agreement and, in the process, suggested sustainability improvements, including a new high-efficiency compressor and EcoPlant, which was installed in July of 2024 and has already delivered energy savings. Moving to the next page, an important component of our recurring revenue growth strategy is extension of the care service offering to product lines beyond air compressors, as we strongly believe that great equipment demands uncompromised service from the OEM to recognize its full potential. Two great examples of our recent progress are shown here, where we are wrapping service agreements around already sustainable products to ensure that they operate at peak performance. With RunTech, our best-in-class turbo vacuum systems for the pulp and paper industry are saving over 7.5 billion gallons of water per year.
And now RunCare, our new service offering, is ensuring that 89 of these currently installed units are maintained and serviced properly. Similarly, AeroProtect, the new offering from our PST business, which was launched in August, will ensure that our Evo Series of electric positive displacement pumps are delivering on their promise of reliable fluid transfer while saving customers up to 20% of their energy costs when compared to conventional options. Finally, turning to page 37, I'm excited to close this section with Trace Analytics, the Austin, Texas-based firm we acquired in 2023, who is a leader in compressed air quality testing and a key component of both our recurring revenue and leading sustainability strategies.
You'll recall that Trace is a leader in the science of testing compressed air for the presence of water, oil, particulates, and microorganisms, which is critically important for operator and consumer safety and, in many jurisdictions, a regulatory requirement for producers of food and beverages and pharmaceutical products. Since acquiring Trace, we've gone to work promoting the offering to our vast network of compressor customers and especially Care accounts and have had great success. Listed at the bottom of the page are six examples that showcase the breadth and impact of air quality testing on sustainability and human welfare, including the ongoing testing of compressed air samples for a leading disease research institute developing human and animal vaccines. In another case that demonstrates our credibility as a market and thought leader, a prominent U.S.
Government agency created a new air quality training course for rescue divers using resources furnished by Trace. These are just two of the many ways that Ingersoll Rand is leading sustainably and generating highly profitable recurring revenue in the process. With that, I'll turn it back to Vicente for closing remarks.
Thanks, Mike. Thank you, everyone, for your interest in attending the call. As you can see, sustainability continues to be a focus for us as it provides a holistic approach to grow our company while doing good for the planet. So with that, thank you and talk to you soon. Bye-bye.
This concludes today's conference call. We now disconnect.