Core Viewpoint - Allegion's stock rose by 10.3% following the release of its first-quarter earnings report, indicating strong investor confidence in the company's value despite challenges in the residential housing market [1]. Company Performance - Allegion maintained its full-year guidance for mid-single-digit revenue growth and adjusted earnings per share (EPS) of $7.65-$7.85, which was sufficient to trigger a stock rally [3]. - The company experienced a 4.9% increase in organic sales, driven by a 1.1% price realization and a 3.8% volume growth [6]. Market Conditions - The residential housing market is facing pressure from high interest rates and tariff-related uncertainties, impacting manufacturers' ability to pass on increased supply chain costs [2]. - Despite weak residential sales in the Americas, which declined at a mid-single-digit rate, nonresidential sales increased by a high-single-digit rate, offsetting the losses [4]. Growth Prospects - Allegion is positioned well in the market due to the convergence of electronics and mechanics in lock security, particularly with web-enabled electronic locks that enhance access control and monitoring [4][5]. - The company's electronics sales rose by a low double-digit rate in the quarter, reflecting strong demand for its innovative products [5]. Valuation - Trading at less than 18 times the midpoint of management's 2025 EPS guidance, Allegion is considered an excellent investment opportunity for those who believe in the long-term potential of electronic locks and access doors [6].

Core Viewpoint - Allegion plc reported strong first-quarter 2025 results, with adjusted earnings per share of $1.86, exceeding estimates and showing a 20% year-over-year increase [1] Revenue Details - Total revenues reached $941.9 million, a 5.4% increase year over year, surpassing the Zacks Consensus Estimate of $932 million [1][2] - Organic revenues grew by 4%, primarily driven by robust performance in the non-residential business in the Americas [1] - Acquired assets contributed 1.8% to revenue growth, while foreign exchange negatively impacted revenues by 3% [2] Segment Performance - Allegion Americas revenues increased by 6.8% year over year to $757.8 million, accounting for 80.5% of total revenues, exceeding estimates [2] - Organic revenues in this segment rose by 4.9%, supported by high-single-digit growth in non-residential businesses [2] - Allegion International revenues slightly declined by 0.3% year over year to $184.1 million, but organic revenues grew by 0.9% due to pricing [3] Margin Profile - Cost of revenues increased by 3.4% year over year to $519.4 million, while gross profit rose by 8% to $422.5 million, leading to a gross margin increase of 110 basis points to 44.9% [4] - Adjusted EBITDA grew by 12.2% year over year to $228.0 million, with a margin increase of 140 basis points to 24.2% [4] - Adjusted operating income increased by 14.1% year over year to $196.4 million, with an adjusted margin of 22.7%, up 150 basis points [5] Balance Sheet and Cash Flow - At the end of Q1 2025, Allegion had cash and cash equivalents of $494.5 million, down from $503.8 million at the end of 2024, while long-term debt slightly decreased to $1.97 billion [6] - The company generated net cash of $104.5 million from operating activities, more than doubling year over year, with available cash flow of $83.4 million [7] - Allegion repurchased shares worth $40.0 million and paid dividends totaling $43.6 million, reflecting a 3.6% year-over-year increase [7] 2025 Outlook - Allegion has reaffirmed its 2025 guidance, expecting revenue growth of 1-3% and organic revenue growth of 1.5-3.5% [9] - Adjusted earnings are projected to be between $7.65 and $7.85 per share, with available cash flow estimated at 85-90% of adjusted net income [9]

Allegion (ALLE) Q1 2025 Earnings Call April 24, 2025 08:00 AM ET Company Participants Josh Pokrzywinski - Vice President of Investor RelationsJohn Stone - President & CEOMike Wagnes - Senior Vice President and Chief Financial OfficerJoe Ritchie - Managing DirectorJeffrey Sprague - Founder and Managing PartnerJoseph O'Dea - Managing DirectorBrett Linzey - Executive DirectorChris Snyder - Executive DirectorAndrew Obin - MD - Equity Research Conference Call Participants Timothy Wojs - Senior Research AnalystJu ...

Earnings Performance - Allegion reported quarterly earnings of $1.86 per share, exceeding the Zacks Consensus Estimate of $1.68 per share, and up from $1.55 per share a year ago, representing an earnings surprise of 10.71% [1] - The company posted revenues of $941.9 million for the quarter, surpassing the Zacks Consensus Estimate by 1.11%, and an increase from $893.9 million year-over-year [2] Market Comparison - Allegion shares have declined approximately 3.2% since the beginning of the year, while the S&P 500 has seen a decline of 8.6% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2 on revenues of $990.15 million, and for the current fiscal year, it is $7.69 on revenues of $3.86 billion [7] - The Zacks Industry Rank indicates that the Security and Safety Services sector is in the bottom 28% of over 250 Zacks industries, suggesting potential challenges ahead [8] Estimate Revisions - The estimate revisions trend for Allegion is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6]

Financial Performance - Net revenues for Q1 2025 increased to $941.9 million, up 5.9% from $893.9 million in Q1 2024[10] - Operating income rose to $196.4 million, reflecting a 14.1% increase compared to $172.1 million in the same period last year[10] - Net earnings attributable to Allegion plc reached $148.2 million, a 19.7% increase from $123.8 million in Q1 2024[10] - Basic earnings per share increased to $1.72, up 21.9% from $1.41 in Q1 2024[10] - Total comprehensive income attributable to Allegion plc for Q1 2025 was $184.8 million, significantly higher than $99.8 million in Q1 2024[10] - Net earnings for the three months ended March 31, 2025, were $148.2 million, an increase from $123.8 million for the same period in 2024[47] - The total equity of Allegion plc increased from $1,500.7 million at December 31, 2024, to $1,606.9 million at March 31, 2025[47] Assets and Liabilities - Total assets as of March 31, 2025, were $4,564.1 million, compared to $4,487.8 million at the end of 2024, marking a 1.7% increase[12] - As of March 31, 2025, total long-term debt was $1,972.0 million, a slight decrease from $1,977.6 million as of December 31, 2024[27] - The Company has an outstanding $209.4 million on its $250.0 million Term Facility and no balance on its $750.0 million Revolving Facility as of March 31, 2025[28] - Total current assets as of March 31, 2025, were $12.2 million for Allegion plc and $692.7 million for Allegion US Hold Co[118] - Total current liabilities as of March 31, 2025, were $50.4 million for Allegion plc and $805.8 million for Allegion US Hold Co[118] Cash Flow and Capital Expenditures - Cash and cash equivalents at the end of Q1 2025 were $494.5 million, down from $503.8 million at the beginning of the period[14] - Capital expenditures for Q1 2025 were $21.1 million, a decrease from $27.2 million in Q1 2024[14] - Net cash provided by operating activities increased by $53.4 million to $104.5 million in Q1 2025 compared to Q1 2024, driven by higher net earnings and lower working capital usage[103] - Net cash used in investing activities decreased by $15.4 million to $28.0 million in Q1 2025, primarily due to lower capital expenditures and reduced cash used for acquisitions[104] - Net cash used in financing activities increased by $11.3 million to $91.3 million in Q1 2025, mainly due to higher cash used for other financing activities[104] Segment Performance - Allegion Americas segment reported net revenues of $757.8 million, up from $709.3 million in 2024, while Allegion International segment revenues slightly decreased to $184.1 million from $184.6 million[66] - Segment operating income for Allegion Americas was $211.4 million in Q1 2025, compared to $187.0 million in Q1 2024, while Allegion International's operating income decreased to $11.7 million from $13.0 million[66] - Allegion Americas segment net revenues increased by 6.8%, or $48.5 million, to $757.8 million, driven by higher volumes and acquisitions[90] - Allegion International segment net revenues decreased by 0.3%, or $0.5 million, to $184.1 million, primarily due to unfavorable foreign currency exchange rates[97] Debt and Interest - The interest rate on outstanding borrowings under the Credit Facilities was 5.550% as of March 31, 2025, based on SOFR plus a margin of 1.225%[30] - Interest expense for Q1 2025 increased by $1.8 million to $24.7 million due to higher interest rates on outstanding debt[82] - 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 March 31, 2025[31] Shareholder Activities - The company repurchased $40.0 million of ordinary shares during the three months ended March 31, 2025, with approximately $200.0 million remaining under the share repurchase authorization[47] - The company has authorized the repurchase of up to $500.0 million of its ordinary shares under the existing share repurchase program[133] - A total of 312,000 shares were purchased during the first quarter of 2025 at an average price of $128.29 per share[133] Tax and Compliance - The effective income tax rate decreased to 15.4% in Q1 2025 from 19.0% in Q1 2024, primarily due to favorable changes in uncertain tax positions and income tax credits[54] - The company remains in compliance with all applicable covenants under the credit agreement as of March 31, 2025[107] Acquisitions and Investments - The company completed acquisitions of Next Door and Lemaar for a total consideration of approximately $11.1 million in Q1 2025[19][20] - Allegion completed the acquisition of Trimco Hardware on April 2, 2025, which will be integrated into the Allegion Americas segment[67] - The company had investments in debt and equity securities without readily determinable fair values of $64.9 million as of March 31, 2025[46] Risk Management - The company continues to face risks related to increased competition and technological developments[127] - The company has not identified any new risk factors beyond those disclosed in its Annual Report for the year ended December 31, 2024[132] - The company is committed to managing its global supply chain effectively to mitigate disruptions[127] Operational Efficiency - The company experienced mid-single digit revenue growth in Q1 2025, driven by strong demand in the Americas non-residential business[71] - The company estimates that approximately 20-25% of its cost of goods sold (COGS) is sourced from Mexico, with less than 5% from China[72] Internal Controls and Reporting - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the first quarter of 2025[129] - The management has concluded that the disclosure controls and procedures are effective as of March 31, 2025[126]

Financial Performance - Allegion reported Q1 2025 net revenues of $941.9 million, a 5.4% increase compared to Q1 2024, with organic revenue growth of 4.0%[3][4] - Net earnings for Q1 2025 were $148.2 million, or $1.71 per share, representing a 21.3% increase in EPS compared to $1.41 in Q1 2024[6][24] - Adjusted net earnings were $161.2 million, or $1.86 per share, up 20.0% from $1.55 in the prior year[3][6] - Operating income for Q1 2025 was $196.4 million, a 14.1% increase, with an operating margin of 20.9%, up from 19.3%[5][6] - Total net revenues for Q1 2025 reached $941.9 million, compared to $893.9 million in Q1 2024, reflecting a year-over-year increase of 5.4%[27] - Operating income for the total company improved to $196.4 million in Q1 2025, compared to $172.1 million in Q1 2024, marking a 14.1% increase[27] - Net earnings for Q1 2025 increased to $148.2 million, up from $123.8 million in Q1 2024, representing a growth of 19.6%[30] Segment Performance - The Americas segment revenues increased by 6.8%, with an organic growth of 4.9%, driven by price realization and volume growth[6][7] - Allegion Americas segment reported net revenues of $757.8 million, a 6.8% increase from $709.3 million in the same period last year[33] - The International segment revenues decreased by 0.3%, but showed a 0.9% organic growth, primarily due to price increases[8] - Organic revenue growth for Allegion Americas was 4.9% in Q1 2025, compared to a decline of 4.3% in Q1 2024[36] - Allegion International segment experienced a slight revenue decline of 0.3% in Q1 2025, while organic growth was 0.9%[36] Cash Flow and Financial Position - Year-to-date available cash flow for 2025 was $83.4 million, an increase of $59.5 million compared to the prior-year period[11] - Available cash flow for Q1 2025 was $83.4 million, significantly higher than $23.9 million in Q1 2024[34] - Cash and cash equivalents at the end of Q1 2025 totaled $494.5 million, up from $391.8 million at the end of Q1 2024[34] Future Outlook - Allegion expects full-year 2025 reported EPS to be in the range of $7.05 to $7.25, or $7.65 to $7.85 on an adjusted basis[16] - Allegion estimates tariff costs of approximately $80 million in 2025, expecting to offset these costs through pricing actions[15] Shareholder Actions - The company repurchased $40.0 million in ordinary shares during Q1 2025, consistent with the previous year[34] Tax Efficiency - The effective income tax rate for Q1 2025 was 15.4%, down from 19.0% in Q1 2024, indicating improved tax efficiency[30] Acquisitions - The company has acquired two businesses in Q1 2025, Next Door Company and Lemaar, to expand its core operations[3][6]

Core Viewpoint - Allegion plc (ALLE) is expected to report first-quarter 2025 results on April 24, with revenue estimates of $931.6 million, reflecting a 4.2% year-over-year growth, and earnings per share (EPS) estimated at $1.68, indicating an 8.4% increase from the previous year [1]. Group 1: Financial Performance Expectations - The Zacks Consensus Estimate for ALLE's first-quarter revenues is $931.6 million, indicating a growth of 4.2% from the prior-year quarter [1]. - The consensus mark for earnings is pinned at $1.68 per share, which has remained steady in the past 30 days, reflecting an 8.4% growth from the year-ago quarter [1]. - Allegion has delivered better-than-expected results in each of the trailing four quarters, with an average earnings surprise of 9.9% [2]. Group 2: Segment Performance Insights - The Allegion Americas segment is expected to see a revenue increase of 5.5% year-over-year to $748.5 million, driven by stable demand across various end markets including education, healthcare, government, hospitality, and retail [3]. - The Allegion International segment's performance is anticipated to benefit from the increased adoption of advanced technologies in the electronics security products market, such as wireless locks and mobile-enabled smart locks [4]. Group 3: Strategic Acquisitions - Allegion has focused on expanding its product offerings through acquisitions, including Krieger Specialty Products and Unicel Architectural Corp. in June 2024, which enhanced its door and frame portfolio and expanded its non-residential product offerings [5]. - The acquisition of Dorcas in March 2024 strengthened Allegion's security products portfolio and enhanced its presence in the healthcare and education sectors [6]. Group 4: Cost and Margin Considerations - Rising operating costs due to increased material costs and investments in new products and growth initiatives are expected to impact the company's bottom line, with a projected 4.4% increase in the cost of sales year-over-year [7]. - The adjusted operating margin is anticipated to decline by 10 basis points to 21.1% in the first quarter [7]. Group 5: Foreign Exchange Impact - Allegion's extensive geographic presence subjects it to foreign exchange headwinds, with a stronger U.S. dollar likely to negatively affect its overseas business [8]. Group 6: Earnings Prediction Model - The current model does not predict an earnings beat for ALLE, as the Earnings ESP is 0.00% with both the Most Accurate Estimate and the Zacks Consensus Estimate at $1.68 per share [9][10].

Core Viewpoint - Allegion plc (ALLE) is positioned to benefit from strong business momentum, operational excellence, strategic acquisitions, and shareholder-friendly policies, focusing on growth opportunities and long-term market strength [1] Business Strength - Allegion is experiencing strong momentum across its segments, with stable demand in non-residential markets such as education, healthcare, government, hospitality, and retail driving growth in the Americas segment, which saw a revenue increase of 6.4% year over year in Q4 2024 [2] - The Allegion International segment is benefiting from increased demand for electronic security products, with revenues rising 1.5% year over year in Q4 2024; for 2025, the Americas segment is expected to see low to mid-single-digit revenue growth, while the International segment's revenues are projected to remain flat [3] Accretive Acquisitions - Allegion is enhancing its business and product offerings through acquisitions, including the acquisition of Trimco Hardware in April 2025, which will strengthen its door and frame portfolio [4] - In June 2024, Allegion acquired Krieger Specialty Products and Unicel Architectural Corp, both of which have been integrated into the Americas segment to enhance its non-residential product portfolio [5] - The acquisition of Lemaar Pty Ltd. in February 2025 is expected to enhance Allegion's security and accessibility portfolio in Australia; overall, acquisitions contributed to a 2% increase in sales in Q4 [6] Stock Performance - Over the past three months, ALLE shares have declined by 3.7%, while the industry has seen an 11.7% decline; however, over the past two years, ALLE shares have increased by 23.2%, outperforming the industry growth of 9.1% [7] Rewards to Shareholders - Allegion is committed to enhancing shareholder value through dividends and share repurchases, having paid out $166.9 million in dividends in 2024, a 5.2% increase year over year, and repurchased shares worth $220 million [10] - As of the end of 2024, Allegion had $240 million remaining for share repurchases under its 2023-approved program; in February 2025, the company announced a 6% increase in its quarterly dividend rate to 51 cents per share [11] Estimate Revisions - The Zacks Consensus Estimate for ALLE's 2025 earnings is $7.73 per share, reflecting a 1.6% increase from the previous estimate; the 2026 earnings estimate is $8.15 per share, indicating a 5.1% rise [11]

Group 1: Acquisition Details - Allegion plc has acquired Trimco Hardware, including its brands and assets, through a subsidiary, with financial terms undisclosed [1] - Trimco, based in Los Angeles, specializes in high-performance and custom-designed door hardware for commercial and institutional markets [1] Group 2: Strategic Rationale - The acquisition aligns with Allegion's strategy to expand market share and customer base, enhancing its door and frame portfolio with Trimco's specialty solutions and innovation capabilities [2] - Trimco will be integrated into Allegion's Americas segment, led by senior vice president Dave Ilardi [3] Group 3: Growth Strategy - Acquisitions are a key component of Allegion's growth strategy, focusing on strategic buys and innovation to improve long-term results [4] - Allegion also acquired Krieger Specialty Products and Unicel Architectural Corp in June 2024, further strengthening its door and frame portfolio and non-residential business [5] Group 4: Market Position and Performance - Allegion holds a Zacks Rank 2 (Buy) and is positioned to benefit from stable demand in the Allegion Americas unit across sectors like education, hospitality, and retail [6] - Year-to-date, Allegion's stock has increased by 1.1%, contrasting with a 1.4% decline in the industry [6]

Core Insights - Allegion is showcasing innovative electronic access control technologies and services at ISC West 2025, emphasizing interoperability as a key aspect of their security solutions [1][2] - The company aims to provide seamless and secure access solutions by fostering integration across various technologies and manufacturers, enhancing customer choice and adoption of new technologies [2] Product Highlights - Schlage Mobile Credentials now support NFC credentials in Apple Wallet® and Google Wallet™, making Schlage the first provider to support mobile credentials on Wear OS by Google Smartwatches, enhancing convenience and security for users [3] - New Latch Retraction Mortise Solutions feature ultra-quiet, motor-driven latch retraction, designed for various access control and fire systems, providing a quieter solution for door operations [3] - Von Duprin's Outdoor Defense option protects exit devices from moisture and temperature variations, ensuring functionality in exterior applications [3] - Zentra™ offers a unified access system for multifamily properties, streamlining operations for property owners while enhancing security for residents [3] - The ND Series Keyed Privacy Indication Trim Options expand Schlage's indication offerings, featuring keyed unlocking and improved visibility [4] Collaborative Efforts - Allegion collaborates with the Partner Alliance for Safer Schools (PASS) to enhance school safety and security, providing resources and expert guidance to implement safety guidelines [5] - The Allegion Alliance Network fosters partnerships with other companies to broaden the range of products and services available to customers [2] Digital Solutions - Overtur™ is a cloud-based solution that facilitates collaboration on door security design and management, integrating with industry tools to streamline processes and reduce reliance on manual methods [8] - The Schlage XE360™ Series offers a next-generation wireless electronic lock designed for common area openings, enhancing operational efficiencies for multifamily property owners [8]