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].

Core Insights - Allegion plc (ALLE) is set to release its third-quarter 2025 results on October 23, with expected revenues of $1.04 billion, reflecting a 7.1% year-over-year growth, and earnings estimated at $2.21 per share, indicating a 2.3% increase from the previous year [1][9]. Group 1: Performance Expectations - The Americas segment is anticipated to perform well due to stable demand in sectors such as education, healthcare, government, hospitality, and retail, with organic revenues expected to rise by 3.2% year-over-year [3]. - The International segment's performance may be mixed, benefiting from strong demand for electronic security products but facing challenges from lower demand for mechanical products, leading to flat organic revenues [4]. Group 2: Strategic Acquisitions - Allegion has focused on expanding its product offerings through acquisitions, including the purchase of ELATEC in July 2025, which enhances its global electronics portfolio in non-residential markets [5]. - The acquisition of Trimco Hardware in April 2025 is expected to strengthen Allegion's door and frame portfolio within the Americas segment, contributing positively to its top-line growth [6]. Group 3: Cost and Margin Considerations - Rising operating costs due to high material prices and investments in new products and growth initiatives are likely to impact the company's bottom line, with an expected 3.1% increase in the cost of sales and a decline in the net income margin to 18.4% [7]. - The company's operations are also exposed to foreign exchange risks, particularly from a stronger U.S. dollar affecting overseas business [8]. Group 4: Earnings Predictions - The earnings model suggests a potential earnings beat for ALLE, supported by a positive Earnings ESP of +1.24% and a Zacks Rank of 3, indicating steady performance trends [9][10].

Core Viewpoint - Allegion (ALLE) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1][2]. Earnings Performance - Allegion has a solid track record of surpassing earnings estimates, with an average surprise of 6.36% over the last two quarters [2]. - In the most recent quarter, Allegion reported earnings of $2.04 per share, exceeding the expected $2.00 per share, resulting in a surprise of 2.00% [2]. - For the previous quarter, the consensus estimate was $1.68 per share, while the actual earnings were $1.86 per share, leading to a surprise of 10.71% [2]. Earnings Estimates and Predictions - Recent changes in earnings estimates for Allegion have been favorable, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [5]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time [6]. - Allegion currently has an Earnings ESP of +1.24%, suggesting increased analyst optimism regarding its near-term earnings potential [8]. Upcoming Earnings Report - Allegion's next earnings report is anticipated to be released on October 23, 2025 [8].

Core Insights - Zentra, a brand of Allegion US, is the first to integrate resident key capabilities into Google Wallet, allowing residents to unlock their apartments using their Android devices or Wear OS smartwatches [1][2]. Group 1: Product Innovation - The introduction of the resident key in Google Wallet enhances the access experience for multifamily communities, providing a seamless and secure solution for residents [2][3]. - This innovation simplifies daily life for residents and aids property managers in creating a premium living experience, aligning with modern renter expectations [3]. Group 2: Benefits and Operational Efficiency - Residents can unlock community access points by simply tapping their Android devices, which streamlines movement throughout the multifamily property [4]. - The integration of resident key in Google Wallet contributes to a luxury experience for residents while reducing operational costs associated with physical keys or fobs, leading to increased net operating income (NOI) for properties [5]. Group 3: Future Developments - Allegion aims to redefine access control for multifamily properties with the resident key in Google Wallet, focusing on creating smarter and safer communities that meet modern living demands [6]. - The solution is compatible with various Schlage products, including the Schlage XE360 Series and Schlage Control Smart Lock, enhancing its applicability in the market [6].

Core Viewpoint - Allegion plc is set to release its third-quarter financial results for 2025 on October 23, before the market opens [1] Group 1 - The conference call for analysts and investors will be conducted by John H. Stone, president and CEO, and Mike Wagnes, senior vice president and chief financial officer [1] - The conference call is scheduled to begin at 8 a.m. ET on the same day [1] - A real-time, listen-only webcast of the conference will be available [1]