Financial Data and Key Metrics Changes - Q2 revenue exceeded $1,000,000,000 for the first time, marking a 5.8% increase compared to 2024 [5][15] - Organic revenue grew by 3.2%, driven by favorable pricing and volume, particularly in the Americas non-residential business [16][18] - Adjusted earnings per share (EPS) for Q2 was $2.04, an increase of 4.1% year-over-year [17] - Year-to-date available cash flow reached approximately $275,400,000, up 56.5% compared to the previous year [24][25] Business Line Data and Key Metrics Changes - Americas segment revenue was $821,500,000, up 6.6% reported and 4.5% organically, with high single-digit growth in non-residential business [19][20] - Residential business saw a decline of mid-single digits due to a soft market environment [20] - Electronics revenue in the Americas increased by low double digits, continuing to be a long-term growth driver [21] Market Data and Key Metrics Changes - International segment revenue was $200,500,000, up 2.9% reported but down 2.2% organically, with acquisitions contributing 1.1% to revenue [22] - Currency fluctuations positively impacted reported revenue by 4% in the international segment [23] Company Strategy and Development Direction - The company is focused on capital allocation for growth, including organic investments and strategic acquisitions [7][10] - Recent acquisitions include Trimco, Elletech, Gatewise, and Waitwhile, aimed at enhancing the electronics portfolio and expanding market reach [11][13] - The company aims to leverage its strong cash generation to return value to shareholders while pursuing accretive acquisitions [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year performance, raising the adjusted EPS outlook to $8 to $8.15 based on strong operational execution and demand in non-residential markets [6][29] - The non-residential markets, particularly institutional verticals, remain resilient, while residential markets are soft due to high interest rates [26][30] Other Important Information - The company announced the divestiture of its API business in Australia, expected to close in early August [24] - The balance sheet remains strong with a net debt to adjusted EBITDA ratio of 1.5 times [25] Q&A Session Summary Question: Activity levels in non-residential markets and tariff impacts - Management noted no evidence of pull-forward ordering due to tariffs, with project demand remaining strong [34][35] Question: Margin performance and pricing actions - Management indicated that pricing actions are expected to offset inflationary pressures, with a slight tailwind from transactional FX [37][40] Question: Market conditions and share gain - Management believes Allegion is gaining share, particularly at the expense of smaller competitors, due to better operational performance [52] Question: EPS guidance increase - The increase in EPS guidance is attributed to favorable FX impacts, strong first-half performance, and contributions from acquisitions [56][57] Question: International business outlook - The international segment is expected to remain flat, with the fourth quarter typically being the strongest [78] Question: Pricing and tariff surcharges - Management clarified that the tariff revenue is expected to be neutral at the EPS level, with surcharges adjusted to offset inflation [63][84]

Core Insights - Allegion (ALLE) reported quarterly earnings of $2.04 per share, exceeding the Zacks Consensus Estimate of $2 per share, and up from $1.96 per share a year ago, representing an earnings surprise of +2.00% [1] - The company achieved revenues of $1.02 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.03% and increasing from $965.6 million year-over-year [2] - Allegion has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +10.71%, with actual earnings of $1.86 per share compared to an expected $1.68 [1] - The current consensus EPS estimate for the upcoming quarter is $2.10, with projected revenues of $1 billion, and for the current fiscal year, the EPS estimate is $7.87 on revenues of $3.92 billion [7] Stock Performance - Allegion shares have increased approximately 18.1% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Security and Safety Services industry, to which Allegion belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5]

Financial Performance - Revenue increased by 5.8% to $1,022.0 million in Q2 2025, compared to $965.6 million in Q2 2024[18] - Adjusted EPS increased by 4.1% to $2.04 in Q2 2025, compared to $1.96 in Q2 2024[18] - Available Cash Flow (ACF) increased significantly by 56.5% to $275.4 million YTD Q2 2025, compared to $176.0 million YTD Q2 2024[21, 44] - The company is raising FY-2025 Adjusted EPS outlook to $8.00-$8.15[10, 55] Segment Performance - Allegion Americas revenue increased by 6.6% to $821.5 million in Q2 2025, compared to $770.7 million in Q2 2024[29] - Allegion International revenue increased by 2.9% to $200.5 million in Q2 2025, compared to $194.9 million in Q2 2024[36] - Americas organic revenue growth was 4.5% in Q2 and 4.7% YTD[26] - International organic revenue declined by 2.2% in Q2 and 0.7% YTD[26] Capital Allocation and Acquisitions - The company is accelerating capital deployment[10, 55] - Approximately $44 million was allocated for dividends, equating to $0.51 per ordinary share[12] - The company spent $40 million on share repurchases in Q2 2025[13] - The company announced acquisitions with a combined purchase price of approximately $525 million (€330M purchase price (~$390M) for technology & electronics acquisitions, ~$55M for mechanical portfolio expansion, and ~$80M for complementary software & services)[16] Outlook - The company updated its FY-2025 organic revenue growth outlook to 3.5% to 4.5%[50] - The company expects approximately $40 million of surcharge revenue in the Americas related to tariff mitigation, which is neutral to EPS[49]

Financial Performance - Net revenues for Q2 2025 were $1,022.0 million, a 5.8% increase from $965.6 million in Q2 2024[10] - Operating income for the first half of 2025 reached $416.1 million, up 9.2% from $381.1 million in the same period of 2024[10] - Net earnings for the first six months of 2025 were $307.9 million, compared to $279.2 million in 2024, reflecting a 10.3% increase[14] - The company reported a total comprehensive income of $250.4 million for Q2 2025, compared to $150.3 million in Q2 2024[10] - Allegion's basic net earnings per share for the first half of 2025 were $3.57, compared to $3.19 in the same period of 2024, marking a 11.9% increase[10] - Net earnings for the six months ended June 30, 2025, were $307.9 million, compared to $279.2 million in 2024, reflecting a strong performance[106] - For the six months ended June 30, 2025, net revenues increased by 6.7%, or $99.3 million, compared to the same period in 2024, driven by higher volumes, acquisitions, and improved pricing[121] Assets and Liabilities - Total assets as of June 30, 2025, were $4,914.8 million, an increase from $4,487.8 million at the end of 2024[12] - Allegion's long-term debt stood at $2,042.3 million as of June 30, 2025, up from $1,977.6 million at the end of 2024[12] - The total debt as of June 30, 2025, was $2,086.1 million, reflecting the company's financial obligations[56] - The Company had $2,079.1 million in total borrowings outstanding as of June 30, 2025, compared to $2,012.5 million at December 31, 2024[40] - Total current assets for Allegion US Hold Co decreased from $954.9 million as of December 31, 2024, to $715.4 million as of June 30, 2025[154] - Total noncurrent liabilities for Allegion US Hold Co decreased from $4,145.8 million as of December 31, 2024, to $3,775.6 million as of June 30, 2025[154] Acquisitions and Investments - The company completed acquisitions totaling approximately $65.0 million during the first half of 2025, including Next Door and Lemaar[20][21][24] - The company plans to expand its global electronics portfolio through the acquisition of ELATEC for approximately $389.0 million[27] - The total net assets acquired and liabilities assumed from the 2024 acquisitions amounted to $130.1 million, including $62.5 million in goodwill and $68.4 million in intangible assets[35] - The company completed several acquisitions in 2025, including ELATEC for €330.0 million (approximately $389.0 million), enhancing its global electronics portfolio[91] Cash Flow and Liquidity - Cash and cash equivalents increased to $656.8 million as of June 30, 2025, from $503.8 million at the end of 2024[12] - Net cash provided by operating activities during the six months ended June 30, 2025, increased by $90.1 million compared to the same period in 2024, totaling $314.2 million[138] - The company expects cash flows from operations to be sufficient to maintain a sound financial position and liquidity for at least the next 12 months[136] Shareholder Returns - The company repurchased $80.0 million of ordinary shares during the six months ended June 30, 2025, with approximately $160.0 million remaining under the share repurchase authorization[62] - The company repurchased approximately 0.6 million shares for $80.0 million during the six months ended June 30, 2025[94] - The Board of Directors reauthorized a share repurchase program allowing for the repurchase of up to $500 million of the company's ordinary shares[168] Tax and Compliance - The effective income tax rate for the six months ended June 30, 2025, was 18.0%, a slight decrease from 18.3% in 2024[72] - The effective income tax rate for the three months ended June 30, 2025, was 20.3%, up from 17.8% in 2024, mainly due to legislative changes and income mix[105] - The company has maintained its assertion of permanent reinvestment of earnings in jurisdictions where substantial investments are made, with no material changes required as of June 30, 2025[145] - The company’s management has concluded that disclosure controls and procedures are effective as of June 30, 2025[162] Market and Operational Insights - Demand for electronic security products remains strong, contributing to mid-single digit revenue growth in the second quarter of 2025 compared to the same period in 2024[86] - The company anticipates continued growth in revenues from non-residential products for the remainder of 2025, while residential product revenues are expected to remain soft[118] - The company estimates that approximately 20-25% of its cost of goods sold is sourced from Mexico, with less than 5% from China[87] Other Financial Metrics - The company reported an intangible asset amortization expense of $32.5 million for the six months ended June 30, 2025, compared to $31.8 million for the same period in 2024[39] - The warranty liability balance at the end of June 2025 was $23.5 million, slightly up from $22.5 million at the end of June 2024[81] - The foreign currency exchange gain for the six months ended June 30, 2025, was $1.5 million, compared to a gain of $0.8 million in 2024[70] - Allegion plc's total equity increased from $1,500.7 million at December 31, 2024, to $1,786.5 million at June 30, 2025, reflecting a growth of approximately 18.9%[62] - Allegion plc's accumulated other comprehensive loss decreased from $(331.6) million at December 31, 2024, to $(204.3) million at June 30, 2025, indicating a reduction of approximately 38.3%[64]

Financial Performance - Second-quarter 2025 net revenues reached $1,022.0 million, a 5.8% increase compared to Q2 2024, with organic growth of 3.2%[3] - Net earnings for Q2 2025 were $159.7 million, or $1.85 per share, reflecting a 4.5% increase in EPS compared to $1.77 in Q2 2024[6] - The Americas segment reported a revenue increase of 6.6%, with organic growth of 4.5%, driven by price realization and volume growth[7] - The International segment's revenues increased by 2.9%, but organic revenues decreased by 2.2%, impacted by volume decline[8] - Total net revenues for the six months ended June 30, 2025, increased to $1,963.9 million, up from $1,859.5 million in the same period of 2024, representing a growth of 5.6%[28] - Net earnings for the six months ended June 30, 2025, were $307.9 million, compared to $279.2 million in 2024, reflecting an increase of 10.3%[27] - Operating income for the six months ended June 30, 2025, rose to $416.1 million, up from $381.1 million in 2024, marking a growth of 9.2%[28] - Allegion's net revenues for Q2 2025 reached $1,022.0 million, a 5.8% increase compared to $965.6 million in Q2 2024[40] - Allegion Americas reported net revenues of $821.5 million in Q2 2025, up from $770.7 million in Q2 2024, reflecting a 6.6% GAAP revenue growth[40] - Allegion International's net revenues for Q2 2025 were $200.5 million, compared to $194.9 million in Q2 2024, showing a 2.9% GAAP revenue growth[40] Earnings and Outlook - The company raised its full-year revenue growth outlook to 6.5% to 7.5% on a reported basis and 3.5% to 4.5% organically[13] - Full-year EPS outlook is now projected to be in the range of $7.25 to $7.40, or $8.00 to $8.15 on an adjusted basis[15] - Adjusted operating income for Q2 2025 was $241.9 million, a 5.8% increase from the previous year[5] - The effective tax rate for Q2 2025 was 20.3%, up from 17.8% in Q2 2024[10] - The effective income tax rate for the six months ended June 30, 2025, was 18.0%, compared to 18.3% in 2024, showing a slight improvement[36] - Diluted earnings per share for the six months ended June 30, 2025, were $3.56, an increase from $3.18 in 2024, representing a growth of 11.9%[36] Cash Flow and Capital Management - Year-to-date available cash flow for 2025 was $275.4 million, an increase of $99.4 million compared to the prior-year period[11] - The company repurchased approximately 0.3 million shares for about $40 million in Q2 2025[12] - Cash and cash equivalents at the end of the period increased to $656.8 million from $503.8 million at the beginning of the period, representing a growth of 30.3%[27] - For the first half of 2025, Allegion's net cash provided by operating activities was $314.2 million, an increase from $224.1 million in the same period of 2024[42] - Allegion's available cash flow for the first half of 2025 was $275.4 million, compared to $176.0 million in the first half of 2024[42] Segment Performance - Allegion Americas segment reported net revenues of $1,579.3 million for the six months ended June 30, 2025, an increase of 6.7% from $1,480.0 million in 2024[28] - Allegion International segment net revenues reached $384.6 million for the six months ended June 30, 2025, a slight increase from $379.5 million in 2024, showing a growth of 1.4%[28] - The organic revenue growth for Allegion Americas in Q2 2025 was 4.5%, down from 5.7% in Q2 2024[43] - Allegion International experienced an organic revenue decline of 2.2% in Q2 2025, contrasting with a 3.1% growth in Q2 2024[43] Balance Sheet Highlights - Total assets as of June 30, 2025, amounted to $4,914.8 million, up from $4,487.8 million at the end of 2024, indicating an increase of 9.5%[26] - Long-term debt increased to $2,042.3 million as of June 30, 2025, compared to $1,977.6 million at the end of 2024, reflecting a rise of 3.3%[26] - The total adjusted operating income for the first half of 2025 was $455.3 million, with a margin of 23.2%, compared to $417.9 million and 22.5% in the first half of 2024[41]

Core Viewpoint - Allegion plc (ALLE) is expected to report second-quarter 2025 results on July 24, with projected revenues of $1 billion, reflecting a 3.7% year-over-year growth, and earnings per share (EPS) estimated at $2, indicating a 2% increase from the previous year [1][10]. Group 1: Financial Performance Expectations - The Zacks Consensus Estimate for ALLE's second-quarter revenues is $1 billion, showing a growth of 3.7% from the prior-year quarter [1]. - The consensus estimate for earnings is $2 per share, which has increased by a penny in the past 30 days, indicating a growth of 2% from the year-ago quarter [1]. - ALLE has consistently delivered better-than-expected results in the past four quarters, with an average earnings surprise of 10.1% [2]. Group 2: Segment Performance Insights - The Allegion Americas segment is expected to see a revenue increase of 4.1% year-over-year to $801.9 million, driven by stable demand across various end markets [3]. - The Allegion International segment is anticipated to experience a revenue decline of 4.5% from the year-ago quarter to $186.2 million, impacted by challenges in some European regions despite increased demand for electronic security products [4]. Group 3: Strategic Acquisitions - Allegion has focused on expanding its product offerings through acquisitions, including Lemaar Pty Ltd in March 2025, Next Door Company in February 2025, and Krieger Specialty Products in June 2024, which are expected to enhance its top-line performance [5]. Group 4: Cost and Margin Considerations - Rising operating costs due to increased material costs and investments in new products are likely to impact the bottom line, with cost of sales expected to rise 2.4% year-over-year to $550.2 million [6]. - The adjusted operating margin is projected to decline by 50 basis points to 23.2% in the second quarter [6]. Group 5: Foreign Exchange Impact - Allegion's extensive geographic presence exposes it to foreign exchange headwinds, with a stronger U.S. dollar likely to negatively affect its overseas business [7].

Acquisition Overview - Allegion plc (ALLE) has completed the acquisition of Waitwhile Inc., a privately owned company, through one of its subsidiaries, with financial terms undisclosed [1] - Waitwhile, based in San Francisco, CA, provides cloud-based solutions for appointment scheduling and queue management, enhancing operational efficiency and reducing wait times [2] Strategic Rationale - The acquisition aligns with Allegion's strategy to expand its market share and customer base, particularly in non-residential markets such as education, healthcare, government, commercial, and retail [3] - Waitwhile's solutions will enhance Allegion's software capabilities and digital access solutions portfolio, offering improved crowd management and real-time updates [3][8] Growth Strategy - Acquisitions are a key component of Allegion's growth strategy, focusing on strategic buyouts and innovations to improve long-term results [4] - Recent acquisitions include Gatewise, ELATEC, Novas, Trimco, Lemaar, and Next Door Company, each contributing to various segments of Allegion's portfolio [4][5][6] Market Performance - Allegion is experiencing growth in its Americas segment, driven by increased demand for non-residential products, and the International segment is benefiting from heightened awareness of security and safety [7] - The company's stock has gained 13.6% year-to-date, outperforming the industry growth of 8.7% [7]

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market engagement and confidence [1][2] Zacks Style Scores - Zacks Style Scores are indicators that assist investors in selecting stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [4] - The Growth Score emphasizes a company's financial health and future outlook, analyzing projected and historical earnings and sales [5] - The Momentum Score identifies optimal times to invest based on price trends and earnings estimate changes [6] - The VGM Score combines all three Style Scores, providing a comprehensive assessment of stocks based on value, growth, and momentum [7] Zacks Rank and Style Scores Interaction - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks achieving an average annual return of +23.62% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 top-rated stocks available, making it essential to utilize Style Scores for effective stock selection [9] - To maximize returns, investors should target stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with lower ranks (4 or 5) may still have good Style Scores but are likely to face declining earnings forecasts [11] Company Spotlight: Allegion plc - Allegion plc, based in Dublin, Ireland, specializes in security products and solutions, established as a standalone public company in December 2013 [12] - Allegion holds a Zacks Rank of 2 (Buy) and a VGM Score of B, indicating strong investment potential [12] - The company has a Momentum Style Score of A, with shares increasing by 6.4% over the past four weeks, and upward revisions in earnings estimates for fiscal 2025 [13]

Group 1 - Allegion plc (ALLE) has completed the acquisition of Gatewise Incorporated, a software-as-a-service company that provides modern gate entry systems for multifamily communities [1][7] - The acquisition aligns with ALLE's strategy to expand its market share and customer base, enhancing its electronic locks and the Zentra multifamily access portfolio [2][7] - Gatewise's mobile app and cloud-based management portal will improve user experience for property owners and residents by simplifying access management [2][7] Group 2 - Acquisitions are a key component of Allegion's growth strategy, with recent acquisitions including ELATEC, Novas, Trimco Hardware, Lemaar Pty Ltd, and Next Door Company, all aimed at enhancing various product portfolios [3][4][5] - The Allegion Americas segment is experiencing growth due to increased demand for non-residential products in sectors such as education, hospitality, and retail, while the International segment benefits from heightened security awareness [6] - ALLE currently holds a Zacks Rank of 2 (Buy) and has seen a year-to-date stock gain of 13.3%, outperforming the industry growth of 8.2% [6]

Industry Overview - The U.S. manufacturing sector is showing signs of recovery after a prolonged downturn, with new orders for manufactured goods increasing by 8.2% in May compared to a revised 3.9% decline in April, and a year-over-year increase of 3.2% [3][4] - The rebound in manufacturing activity is supported by easing inflationary pressures and expectations of Federal Reserve rate cuts, which are anticipated to boost demand [1][6][11] Manufacturing Activity - The Institute of Supply Management's manufacturing PMI rose to 49 in June from 48.5 in May, indicating a continued contraction but a rebound from a six-month low [5][6] - Manufacturing activity accounts for 10.2% of the U.S. economy, highlighting its significance [5] Stock Recommendations - Four stocks from the manufacturing sector are recommended for investment: Allegion plc (ALLE), AptarGroup, Inc. (ATR), Broadwind, Inc. (BWEN), and DXP Enterprises, Inc. (DXPE), all of which have strong earnings growth prospects and Zacks Rank of 1 (Strong Buy) or 2 (Buy) [2][11] Allegion plc (ALLE) - Allegion is a global provider of security products and solutions, with an expected earnings growth of 3.9% for the current year and a Zacks Rank 2 [8][9] AptarGroup, Inc. (ATR) - AptarGroup specializes in innovative dispensing and packaging solutions, with an expected earnings growth of 4.1% for the current year and a Zacks Rank 2 [12][13] Broadwind, Inc. (BWEN) - Broadwind is a precision manufacturer focused on clean tech, particularly in the U.S. wind energy sector, with an expected earnings growth of 60% for the current year and a Zacks Rank 2 [14][15] DXP Enterprises, Inc. (DXPE) - DXP Enterprises is a distributor providing innovative solutions to industrial customers, with an expected earnings growth rate of 17.5% for the current year and a Zacks Rank 2 [16][17]