Core Insights - Allegion plc's third-quarter 2025 adjusted earnings per share (EPS) of $2.30 exceeded the Zacks Consensus Estimate of $2.21, marking a year-over-year increase of 6.5% [1][8] - The company's revenues reached $1.07 billion, reflecting a 10.7% year-over-year growth, driven by strong performance in the non-residential business in the Americas [2][8] Revenue Details - Allegion's organic revenues increased by 5.9%, with acquired assets contributing an additional 3.9% and foreign currency effects adding 0.9% [2] - Revenues from Allegion Americas rose by 7.9% year over year to $844 million, accounting for 78.9% of total revenues, while Allegion International revenues surged by 22.5% to $226.2 million [2][3] Margin Profile - The cost of revenues increased by 8.5% year over year to $580.4 million, while gross profit rose by 13.4% to $489.8 million, resulting in a gross margin improvement of 110 basis points to 45.8% [4] - Adjusted operating income increased by 10.1% year over year to $257.4 million, with an adjusted margin of 24.2%, up 10 basis points [5] Balance Sheet and Cash Flow - At the end of Q3 2025, Allegion had cash and cash equivalents of $302.7 million, down from $503.8 million at the end of 2024, while long-term debt increased to $2.06 billion [6] - The company generated net cash of $543.7 million from operating activities in the first nine months of 2025, a 19.2% increase year over year [7] 2025 Outlook - Allegion raised its 2025 revenue growth guidance to 7-8%, up from the previous estimate of 6.5-7.5%, with organic revenue growth expected in the range of 3.5-4.5% [10] - Adjusted earnings are projected to be between $8.10 and $8.20 per share, an increase from the earlier forecast of $8.00 to $8.15 [10]

Financial Data and Key Metrics Changes - Q3 revenue exceeded $1 billion, marking a 10.7% increase compared to 2024, with organic revenue rising by 5.9% due to favorable pricing and volume [8][9] - Adjusted EPS for Q3 was $2.30, an increase of $0.14 or 6.5% year-over-year [9] - Year-to-date available cash flow reached $485.2 million, up 25.1% from the previous year [12] Business Line Data and Key Metrics Changes - The Americas segment reported revenue of $844 million, up 7.9% on a reported basis and 6.4% organically, driven by non-residential business demand [9][10] - The International segment delivered revenue of $226 million, a 22.5% increase on a reported basis and 3.6% organically, with acquisitions contributing significantly [11] Market Data and Key Metrics Changes - Non-residential business in the Americas showed mid-single-digit organic growth, while residential market demand remained soft [10][14] - International markets are expected to remain largely flat, with some growth driven by recent acquisitions [14][15] Company Strategy and Development Direction - The company is focused on long-term capital allocation for growth, with approximately $600 million allocated to acquisitions year-to-date [4][7] - Recent acquisitions, including UAP and Bressant, are aimed at strengthening the product portfolio and enhancing cost positions [6][11] Management's Comments on Operating Environment and Future Outlook - Management raised the 2025 adjusted EPS outlook to $8.10 to $8.20, reflecting strong execution and recent acquisitions [5][15] - The overall market conditions for 2026 are expected to be similar to 2025, with continued focus on price adjustments to offset inflation [15][16] Other Important Information - The company continues to pay dividends, amounting to $0.51 per share in Q3, totaling approximately $44 million [7] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 1.8 times [13] Q&A Session Summary Question: Update on spec writing and key verticals - Spec activity has accelerated in 2025, supporting organic growth in non-residential markets [20][22] Question: M&A pipeline and potential earnings accretion - The M&A pipeline remains strong across both reporting segments, with ongoing activity in portfolio expansion and complementary software [23][24] Question: Conversations with building owners and architects regarding macro uncertainty - Non-res project activity is healthy, with private finance returning to the market, indicating a positive environment [29][30] Question: International volume growth and momentum - International segment showed volume growth after previous declines, with electronics businesses performing well [32][33] Question: Adjusted operating margins and corporate costs - Margins are expected to expand in Q4, with corporate costs remaining consistent with previous quarters [36][39] Question: Residential outlook for Q4 - Residential market demand is expected to remain soft, aligning with year-to-date growth rates [65] Question: Pricing power and customer reactions to tariffs - The company has not seen pricing fatigue, and the demand environment in non-res remains strong [68] Question: Spec content evolution and new product contributions - There is an increase in electronics adoption in specs, with new product launches contributing positively [75][76]

Financial Data and Key Metrics Changes - Q3 revenue exceeded $1 billion, marking a 10.7% increase compared to 2024, with organic revenue growth of 5.9% driven by favorable pricing and volume [8][9] - Adjusted EPS for Q3 was $2.30, an increase of $0.14 or 6.5% year-over-year [9] - Year-to-date available cash flow reached $485.2 million, up 25.1% from the previous year [12][13] Business Line Data and Key Metrics Changes - Americas segment revenue was $844 million, up 7.9% reported and 6.4% organically, with non-residential business demand remaining healthy [9][10] - International segment revenue was $226 million, up 22.5% reported and 3.6% organically, with acquisitions contributing 13.6% to segment revenue [11] Market Data and Key Metrics Changes - Non-residential markets in the Americas are resilient, while residential markets remain soft, consistent with year-to-date growth rates [14][15] - International markets are expected to show roughly flat organic performance, with some segments at historical troughs [14][33] Company Strategy and Development Direction - The company is focused on capital allocation for long-term shareholder benefits, raising the 2025 adjusted EPS outlook to $8.10-$8.20 [5][15] - Allegion continues to pursue accretive acquisitions, with recent acquisitions including UAP and Bressant enhancing the product portfolio [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that spec activity has accelerated in 2025, supporting organic growth in non-residential markets [22][14] - The input cost environment remains dynamic, with expectations to drive pricing to offset inflation [15][68] Other Important Information - The company remains disciplined in capital deployment, with a strong balance sheet and a net debt to adjusted EBITDA ratio of 1.8x [12][13] - Allegion continues to be a dividend-paying stock, distributing $0.51 per share in Q3 [7] Q&A Session Summary Question: Update on spec writing and key verticals - Spec activity has continued to grow in 2025, with versatile spec writers capable of addressing various market needs [22] Question: M&A pipeline and potential earnings accretion - The M&A pipeline remains strong across both reporting segments, with ongoing activity in portfolio expansion and complementary software [24] Question: Conversations with building owners regarding macro uncertainty - Non-res project activity is healthy, with private finance returning to the market, supported by positive customer backlogs [31] Question: International volume growth and momentum - International segment showed volume growth after previous declines, with electronics businesses performing well [33] Question: Adjusted operating margins and corporate costs - Expectation of margin expansion in Q4, with corporate costs remaining consistent with previous quarters [36] Question: Pricing power and customer weakness - No signs of pricing fatigue observed, with the demand environment in non-res being healthy [68]

Financial Data and Key Metrics Changes - Q3 revenue exceeded $1 billion, marking a 10.7% increase compared to 2024 [9] - Organic revenue grew by 5.9%, driven by favorable pricing and volume, particularly in the Americas nonresidential business [10] - Adjusted earnings per share (EPS) for Q3 was $2.3, an increase of $0.14 or 6.5% year-over-year [10] - Year-to-date available cash flow reached $485.2 million, up 25.1% compared to the previous year [11] Business Line Data and Key Metrics Changes - Americas segment revenue was $844 million, up 7.9% reported and 6.4% organically, with strong performance in nonresidential business [12] - International segment revenue was $226 million, up 22.5% reported and 3.6% organically, led by electronics businesses [15] - Adjusted operating margin for the Americas increased by 40 basis points, while the international segment's adjusted operating margin rose by 70 basis points [14][15] Market Data and Key Metrics Changes - Nonresidential markets in the Americas remain resilient, with solid demand and spec activity growth [19] - Residential markets are considered soft, with growth primarily driven by new electronic product launches [13][19] - International markets are expected to show roughly flat organic performance, with some segments at historical troughs [21] Company Strategy and Development Direction - The company is focused on capital allocation for long-term shareholder benefits, raising the 2025 adjusted EPS outlook to $8.1 to $8.2 [6][20] - Recent acquisitions, including UAP and Bressant, are aimed at strengthening the product portfolio and enhancing cost position [7][20] - The company emphasizes disciplined capital deployment and continues to seek accretive acquisitions in high-performing markets [32][58] Management's Comments on Operating Environment and Future Outlook - Management noted a positive environment for nonresidential project activity, with healthy customer backlogs supporting organic growth [38] - The input cost environment remains dynamic, with expectations to drive pricing to offset inflation [21][76] - Overall, the company remains confident in its ability to navigate the current economic landscape and achieve growth [22] Other Important Information - The company has allocated approximately $600 million to acquisitions year-to-date, consistent with priorities outlined at the Investor Day [5] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 1.8 times [17] Q&A Session Summary Question: Update on spec writing and key verticals - Spec activity has continued to grow in 2025, supporting organic growth in nonresidential markets [28][30] Question: M&A pipeline and potential earnings accretion - The M&A pipeline remains strong across both reporting segments, with ongoing activity in various product categories [32] Question: Conversations with building owners and architects regarding macro uncertainty - Nonresidential project activity is performing well, with private finance returning to the market [38] Question: International volume growth and momentum - International segment showed positive volume growth, with expectations for continued performance despite a largely unchanged market outlook [40] Question: Adjusted operating margins and corporate costs - Expectation of margin expansion in Q4, with corporate costs remaining consistent with previous quarters [46] Question: Residential outlook for Q4 - Residential market demand is expected to remain soft, aligning with year-to-date growth rates [74] Question: Pricing power and customer reactions to tariffs - The company has not observed pricing fatigue, with strong pricing power maintained in the current environment [76]

Financial Data and Key Metrics Changes - Q3 revenue exceeded $1 billion, marking a 10.7% increase compared to 2024, with organic revenue growth of 5.9% driven by favorable price and volume [8][9] - Adjusted EPS for Q3 was $2.30, an increase of $0.14 or 6.5% year-over-year [8][9] - Year-to-date available cash flow reached $485.2 million, up 25.1% from the previous year [12] Business Line Data and Key Metrics Changes - Americas segment revenue was $844 million, up 7.9% reported and 6.4% organically, with mid-single-digit growth in non-residential business [9][10] - International segment revenue was $226 million, up 22.5% reported and 3.6% organically, with acquisitions contributing 13.6% to segment revenue [11] Market Data and Key Metrics Changes - Demand in the Americas non-residential market remains healthy, while residential market demand is considered soft [13][14] - International markets are expected to show roughly flat organic performance, with some segments at historical troughs [14] Company Strategy and Development Direction - The company is focused on capital allocation for long-term shareholder benefits, with approximately $600 million allocated to acquisitions year-to-date [4][6] - Recent acquisitions, including UAP and Bressant, are expected to enhance the product portfolio and cost position [6][11] Management's Comments on Operating Environment and Future Outlook - Management raised the 2025 adjusted EPS outlook to $8.10 to $8.20, reflecting strong execution and recent acquisitions [5][14] - The company anticipates continued organic growth in non-residential business, while residential markets remain soft [13][14] Other Important Information - The company continues to pay dividends, amounting to $0.51 per share in Q3, totaling approximately $44 million [6] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 1.8 times [12] Q&A Session Summary Question: Update on spec writing and key verticals - Spec activity has accelerated in 2025, supporting organic growth in non-residential markets [18][19] Question: M&A pipeline and earnings accretion - The M&A pipeline remains strong across both reporting segments, with disciplined acquisition strategies in place [20][21] Question: Conversations with building owners and architects - Non-res project activity is healthy, with private finance returning to the market [27][28] Question: International volume growth and outlook - International segment showed volume growth after previous declines, with electronics businesses performing well [29][30] Question: Adjusted operating margins and corporate costs - Expectation of margin expansion in Q4, with corporate costs remaining consistent [32][34] Question: Residential outlook for Q4 - Residential market demand is soft, with expectations for Q4 aligning with market demand rather than mid-single-digit growth [49][53] Question: Pricing power and customer reactions - The company has not seen signs of pricing fatigue, with strong pricing power in response to inflationary pressures [54][55] Question: Spec content evolution - Increased adoption of electronics in specifications, with new product launches contributing positively [58][59]

Core Insights - Allegion (ALLE) reported quarterly earnings of $2.3 per share, exceeding the Zacks Consensus Estimate of $2.21 per share, and showing an increase from $2.16 per share a year ago, resulting in an earnings surprise of +4.07% [1] - The company achieved revenues of $1.07 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.33% and up from $967.1 million year-over-year [2] - Allegion's stock has increased by approximately 34.3% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] Earnings Outlook - The future performance of Allegion's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $2.02 on revenues of $1.02 billion, while for the current fiscal year, the estimate is $8.14 on revenues of $4.02 billion [7] Industry Context - The Security and Safety Services industry, to which Allegion belongs, is currently ranked in the top 11% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

October 23, 2025 Cautionary Statements Forward-Looking Statements This presentation contains "forward-looking statements," which are statements that are not historical facts, including, but not limited to, statements related to FY-2025 Outlook, FY-2025 EPS Outlook Details and statements regarding market trends, electronics growth, global software solutions business, the company's financial performance in 2025 and future years, including the 2026 Preview, the company's business plans and strategy, the compan ...

Financial Performance - In Q3 2025, Allegion reported net revenues of $1,070.2 million, a 10.7% increase from $967.1 million in Q3 2024, driven by pricing (4.0%), volume (1.9%), and acquisitions (3.9%) [104][105] - The operating income for Q3 2025 was $233.8 million, up from $215.0 million in Q3 2024, with an operating margin of 21.8%, slightly down from 22.2% [104][107] - For the nine months ended September 30, 2025, net revenues reached $3,034.1 million, a 7.3% increase from $2,826.6 million in the same period of 2024, attributed to pricing (2.6%), volume (1.8%), and acquisitions (2.6%) [114][115] - Allegion's operating income for the nine months ended September 30, 2025, was $649.9 million, an increase from $596.1 million in 2024, with an operating margin of 21.4% [114][116] - Total net revenues for the nine months ended September 30, 2025, increased by 7.1%, or $160.9 million, compared to the same period in 2024, with contributions from pricing (2.9%), volume (2.4%), and acquisitions (2.0%) [130] Acquisitions and Growth - Allegion completed several acquisitions in 2025, including ELATEC for €330.0 million (approximately $389.0 million), enhancing its global electronics portfolio [99] - Allegion Americas net revenues for Q3 2025 increased by 7.9%, or $61.6 million, compared to Q3 2024, driven by pricing (4.6%), volume (1.8%), and acquisitions (1.5%) [126] - Allegion International net revenues for Q3 2025 increased by 22.5%, or $41.5 million, compared to Q3 2024, primarily due to acquisitions/divestitures (13.6%) and favorable currency exchange rates (5.3%) [140] - Allegion Americas net revenues from electronic products increased by a mid-teens percent in Q3 2025 compared to the same period in the prior year, with expectations for continued growth [129] - Allegion International net revenues for the nine months ended September 30, 2025, increased by 8.2%, or $46.6 million, primarily driven by acquisitions/divestitures (5.4%) and favorable currency exchange rates (2.1%) [141] - Segment operating income for Allegion Americas for the nine months ended September 30, 2025, increased by $68.0 million, with an operating margin of 28.5%, up from 27.5% in the same period in 2024 [136] Tax and Interest - The effective income tax rate for Q3 2025 was 9.8%, down from 10.5% in Q3 2024, primarily due to a tax benefit from legislative changes [113] - Allegion's interest expense decreased by $2.2 million in Q3 2025 compared to Q3 2024, reflecting lower outstanding indebtedness [111] Cash Flow and Debt - Net cash provided by operating activities increased by $87.7 million to $543.7 million for the nine months ended September 30, 2025, compared to $456.0 million in 2024 [149] - Net cash used in investing activities rose by $459.1 million to $(649.3) million in 2025, primarily due to higher cash used for acquisitions [150] - Net cash used in financing activities increased by $262.5 million to $(115.2) million in 2025, with net proceeds from debt borrowings down by $306.6 million year over year [151] - Total long-term debt increased to $2,059.5 million as of September 30, 2025, compared to $1,977.6 million at the end of 2024 [153] - The company had $400.0 million of 3.550% Senior Notes due 2027 and $600.0 million of 5.411% Senior Notes due 2032 outstanding as of September 30, 2025 [156] Supply Chain and Market Conditions - The company sourced approximately 20-25% of its cost of goods sold from Mexico and less than 5% from China, indicating a diversified supply chain [94] - Demand for electronic security products remains strong, contributing to long-term growth despite mixed macroeconomic conditions in international markets [93] Risks and Uncertainties - The company acknowledges ongoing macroeconomic challenges and economic instability impacting future performance [169] - Increased prices and inflation are significant risks that could affect the company's projections [169] - Political, economic, and regulatory volatility remains a concern for the company's operations [169] - The strength and stability of the construction and remodeling markets are critical to the company's performance [169] - The company has identified potential risks that may not have been anticipated in previous filings [170] - The company emphasizes the importance of not placing undue reliance on forward-looking statements [169] - The company continues to monitor various uncertainties that could impact its future results [169] Compliance and Liquidity - The company is in compliance with all applicable covenants under its credit agreement as of September 30, 2025 [155] - The Term Facility requires quarterly principal payments totaling $6.3 million for the remainder of 2025 and $190.6 million in 2026 [154] - Allegion's liquidity outlook remains strong, with cash flows from operations expected to meet financing needs for at least the next 12 months [147] - Approximately 86% of Allegion's total outstanding indebtedness incurs fixed-rate interest, reducing exposure to rising variable interest rates [146]

Financial Performance - Allegion reported Q3 2025 net revenues of $1,070.2 million, a 10.7% increase compared to Q3 2024, with organic growth of 5.9%[3][4] - Net earnings for Q3 2025 were $188.4 million, or $2.18 per share, representing a 9.5% increase in EPS compared to $1.99 in Q3 2024[6][24] - Operating income for Q3 2025 was $233.8 million, an 8.7% increase, with an operating margin of 21.8%[5][6] - Total net revenues for the nine months ended September 30, 2025, increased to $3,034.1 million, up from $2,826.6 million in the same period of 2024, representing a growth of 7.4%[28] - Net earnings for the nine months ended September 30, 2025, were $496.3 million, compared to $453.4 million in 2024, reflecting an increase of 9.5%[34] - Operating income for the nine months ended September 30, 2025, was $649.9 million, up from $596.1 million in 2024, indicating a growth of 9.0%[34] - Diluted earnings per share for the nine months ended September 30, 2025, increased to $5.73, up from $5.16 in 2024, a growth of 11.0%[34] - Allegion's net revenues for Q3 2025 reached $1,070.2 million, a 10.7% increase from $967.1 million in Q3 2024[38] Segment Performance - The Americas segment revenues increased by 7.9%, with organic growth of 6.4%, driven by non-residential business[7] - The International segment revenues rose by 22.5%, with organic growth of 3.6%, supported by acquisitions and favorable foreign currency impacts[8] - Allegion Americas segment reported net revenues of $2,423.3 million for the nine months ended September 30, 2025, up from $2,262.4 million in 2024, a growth of 7.1%[28] - Allegion International segment achieved net revenues of $610.8 million for the nine months ended September 30, 2025, compared to $564.2 million in 2024, marking an increase of 8.3%[28] - Allegion Americas reported net revenues of $844.0 million in Q3 2025, up from $782.4 million in Q3 2024, with an adjusted operating income margin of 29.9%[38] - Allegion International's net revenues increased to $226.2 million in Q3 2025 from $184.7 million in Q3 2024, with adjusted operating income rising to $32.3 million[38] Cash Flow and Financial Position - Year-to-date available cash flow for 2025 was $485.2 million, an increase of $97.2 million compared to the prior year[11] - Allegion ended Q3 2025 with cash and cash equivalents of $302.7 million and total debt of $2,087.7 million[11] - Cash and cash equivalents decreased to $302.7 million as of September 30, 2025, down from $503.8 million at the end of 2024, a decline of 40.0%[27] - Total assets increased to $5,225.3 million as of September 30, 2025, compared to $4,487.8 million at the end of 2024, reflecting a growth of 16.5%[26] - Long-term debt rose to $2,059.5 million as of September 30, 2025, compared to $1,977.6 million at the end of 2024, an increase of 4.1%[26] Outlook - The company raised its full-year 2025 revenue growth outlook to 7.0% to 8.0% on a reported basis, maintaining organic growth outlook of 3.5% to 4.5%[13] - Full-year EPS outlook was raised to a range of $7.45 to $7.55, or $8.10 to $8.20 on an adjusted basis[15] - The company expects tariff costs of approximately $40 million in 2025, which will be offset at the operating profit and EPS level primarily through pricing actions[14] Adjusted Metrics - Adjusted operating income for Q3 2025 was $257.4 million, representing a margin of 24.1%, compared to $233.7 million and 24.2% in Q3 2024[38] - Adjusted EBITDA for Q3 2025 was $274.1 million, maintaining a margin of 25.7%, consistent with the margin from Q3 2024[40] - Organic revenue growth for Allegion Americas was 6.4% in Q3 2025, compared to 4.1% in Q3 2024[42] - Allegion International experienced a GAAP revenue growth of 22.5% in Q3 2025, with organic growth at 3.6%[42] Taxation - The effective income tax rate for the nine months ended September 30, 2025, was 15.1%, compared to 15.5% in 2024[34]

Core Insights - Analysts project Allegion (ALLE) will report quarterly earnings of $2.21 per share, reflecting a 2.3% year-over-year increase, with revenues expected to reach $1.04 billion, a 7.1% increase from the same quarter last year [1]. Earnings Estimates - Over the past 30 days, the consensus EPS estimate has been revised downward by 3.2%, indicating a collective reassessment by analysts of their initial forecasts [2]. - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3]. Key Metrics Projections - Analysts project 'Net Revenues- Allegion International' to reach $210.04 million, representing a year-over-year change of +13.7% [5]. - 'Net Revenues- Allegion Americas' is estimated at $825.69 million, indicating a +5.5% change from the previous year [5]. - The consensus for 'Adjusted Operating Income- Allegion Americas' is $246.16 million, up from $231.10 million in the same quarter last year [6]. - 'Adjusted Operating Income- Allegion International' is projected at $28.12 million, compared to $25.20 million a year ago [6]. Stock Performance - Allegion shares have changed by +0.1% over the past month, compared to a +1.2% move of the Zacks S&P 500 composite [6]. - With a Zacks Rank 3 (Hold), Allegion is expected to mirror overall market performance in the near future [6].