Company Overview - Allegion's 2024 revenue reached $3.8 billion with a 24.4% adjusted EBITDA margin[27] - The company has over 12,000 full-time global employees, operates in 25+ countries, and has 1,000+ global active patents[26] - Americas account for 80% of revenue, while International contributes 20%[28] - Electronics represent 25% of revenue, Mechanical 68%, and Software & Services 7%[28] Growth Strategy - The company aims for 7%+ revenue growth, excluding FX, over the cycle[56] - Allegion targets bolt-on acquisitions to contribute 3+ points of annual acquired growth[60] - The company plans to deploy approximately $2 billion of available cash flow over the next 3 years[60] - From 2021 to 2024, Enterprise Adjusted EBITDA Margins increased by +280 bps[140] Electronics & Innovation - Electronics growth is expected to be ~30% HSD of 2024 revenue[150] - Electronics products have an average annual revenue outgrowth of ~2-2.5x ASP vs mechanical products at a similar margin rate[150] - Platforming efforts have led to over 45% reduction in development time[168]

Allegion (ALLE) 2025 Capital Markets Day Summary Company Overview - Allegion is a high-quality industrial company focused on personal safety and security, with a mission to create a safer and more accessible world [7][10][16]. Core Industry Insights - The increasing need for personal safety and security is a significant secular trend, with threats multiplying from various sources, including natural disasters and violence [7][9]. - Allegion's products, such as tornado and hurricane-proof doors, are designed to withstand extreme conditions, demonstrating the company's commitment to safety [7][8]. - The company has a strong presence in the non-residential construction market, particularly in school safety and electronic solutions [21][22]. Financial Performance and Growth Strategy - Allegion has demonstrated resilience with mid-single-digit total growth from 2020 to 2024, despite challenges like supply chain issues and inflation [28][29]. - The company aims for organic growth in the mid-single-digit range, with an increased focus on electronics and acquisitions contributing to this growth [30][31]. - Allegion has a disciplined approach to capital deployment, focusing on profitable growth and maintaining a balanced investment strategy [31][32]. Mergers and Acquisitions (M&A) - The company is actively pursuing acquisitions that align with its core business, particularly in mechanical and electromechanical portfolios, as well as complementary software and services [34][38]. - Recent acquisitions include Dorkus, a manufacturer of electric strikes, enhancing Allegion's product offerings in the Americas [39]. - Allegion's M&A strategy focuses on high-margin, fast-growing specialty applications, aiming to integrate these companies quickly to accelerate growth [37][38]. Unique Business Model - Allegion's demand creation model is unique, with a significant portion of its team focused on influencing the design phase of building projects, ensuring that their products are specified early in the process [42][46]. - The company leverages technology, such as the Overture platform, to streamline the specification process and enhance collaboration with architects and contractors [57][60]. - Allegion emphasizes long-term relationships with end-users, providing training and support to ensure effective product use and maintenance [64][66]. International Expansion - Allegion is not a container company; it focuses on serving local markets with tailored solutions developed and manufactured locally [75]. - The company is leveraging global best practices while adapting to local market needs, enhancing its competitive edge [76][82]. - Investments in automation across various facilities are aimed at improving efficiency, quality, and safety, ultimately benefiting customer service [83][84]. Key Takeaways - Allegion is well-positioned for accelerated growth, driven by a strong mission, innovative products, and a unique demand creation model [12][25]. - The company's focus on safety, technology integration, and strategic acquisitions will continue to enhance its market position and shareholder value [25][30]. - Allegion's commitment to employee engagement and a strong corporate culture contributes to its competitive advantage in the industry [18][20].

Group 1 - Allegion (NYSE: ALLE) experienced single-digit growth in its topline as it entered 2025, despite facing weakness in the international segment [1] - The demand environment in the Americas segment remains stable, driven by strength in the non-residential end market [1] - Expectations indicate that the Americas segment will continue to perform well [1]

Group 1 - Allegion plc reported quarterly earnings of $1.86 per share, exceeding the analyst consensus estimate of $1.67 per share [1] - The company achieved quarterly sales of $941.90 million, surpassing the analyst consensus estimate of $919.64 million [1] - Allegion affirmed its FY2025 adjusted EPS guidance of $7.65-$7.85 and revenue growth guidance of 1% to 3% [1] Group 2 - Allegion's President and CEO John H. Stone expressed pride in the team's execution and highlighted the strong performance of the Americas non-residential business [2] - Allegion shares experienced a decline of 1.5%, trading at $137.38 [2] Group 3 - Following the earnings announcement, Barclays analyst Julian Mitchell maintained an Underweight rating on Allegion and raised the price target from $126 to $128 [3] - Baird analyst Timothy Wojs maintained a Neutral rating and increased the price target from $144 to $150 [3]

Financial Data and Key Metrics Changes - Q1 2025 revenue was $941.9 million, an increase of 5.4% compared to Q1 2024 [16] - Organic revenue increased by 4%, driven by favorable pricing and volume, particularly in the non-residential business in The Americas [17] - Adjusted earnings per share (EPS) for Q1 was $1.86, up $0.31 or 20% year-over-year [18] - Available cash flow was $83.4 million, up nearly 250% compared to the previous year [20] Business Line Data and Key Metrics Changes - The Americas segment reported revenue of $757.8 million, up 6.8% on a reported basis and 4.9% organically [21] - The non-residential business in The Americas saw high single-digit organic growth, while the residential business declined mid-single digits [23][24] - International segment revenue was $104.1 million, down 0.3% on a reported basis but up 0.9% organically [26] Market Data and Key Metrics Changes - The Americas experienced mid-single-digit growth and solid margin expansion, indicating strong demand and effective channel partnerships [7] - The residential market remains soft due to high mortgage rates and tariff uncertainties, with expectations to continue at low levels until a significant catalyst occurs [104] Company Strategy and Development Direction - The company is focused on capital allocation for growth, including organic investments and accretive acquisitions, having closed three acquisitions in 2025 [12][14] - Allegion is committed to maintaining its dividend policy, having announced its eleventh consecutive increase at the beginning of the year [15] - The company aims to offset tariff costs through pricing actions while remaining agile in response to market conditions [33][34] Management's Comments on Operating Environment and Future Outlook - Management affirmed the 2025 full-year outlook for adjusted EPS of $7.65 to $7.85, citing resilience in non-residential markets [9][31] - The company anticipates some headwinds in Q2 due to a lag in pricing actions relative to tariff impacts [43] - Positive internal indicators in the non-residential business and a strong aftermarket contribute to confidence in the full-year guidance [125] Other Important Information - Allegion's new product launches, including smart locks, are expected to drive growth in the electronics segment [10][11] - The company has a strong balance sheet with a net debt to adjusted EBITDA ratio of 1.6 times, supporting continued capital deployment [30] Q&A Session Summary Question: Inquiry about tariffs and pricing actions - Management acknowledged a potential lag between tariff impacts and pricing actions, expecting to cover tariff costs at the operating profit and EPS level for the full year [42][44] Question: Changes in institutional verticals and CapEx priorities - Management noted that institutional verticals like healthcare and education remain resilient, with a long tail for projects funded by municipal bonds [55][56] Question: Market dynamics and project paralysis - Management indicated that while some projects may be paused due to interest rate concerns, there is optimism for future project progression as rates stabilize [120] Question: Outlook for the residential market - Management expressed that the residential market is expected to remain soft due to high mortgage rates and construction costs, with a focus on aftermarket opportunities [104][106] Question: Pricing and productivity outlook - Management confirmed expectations for price and productivity to remain neutral for the year, despite fluctuations in quarterly performance [110][111]

Financial Data and Key Metrics Changes - Q1 2025 revenue was $941.9 million, an increase of 5.4% compared to Q1 2024 [16] - Organic revenue increased by 4%, driven by favorable pricing and volume, particularly in the non-residential business in The Americas [17] - Adjusted earnings per share (EPS) for Q1 was $1.86, up $0.31 or 20% year-over-year [18] - Available cash flow was $83.4 million, up nearly 250% compared to the previous year [20] Business Line Data and Key Metrics Changes - The Americas segment reported revenue of $757.8 million, up 6.8% on a reported basis and 4.9% organically [21] - The non-residential business in The Americas saw high single-digit organic growth, while the residential business declined mid-single digits [23][24] - International segment revenue was $104.1 million, down 0.3% on a reported basis but up 0.9% organically [26] Market Data and Key Metrics Changes - The Americas experienced mid-single-digit growth in the non-residential sector, indicating strong demand [7] - The residential market is expected to remain soft due to high mortgage rates and construction costs [104] - The company anticipates tariff costs of approximately $80 million in 2025, which they expect to offset through pricing actions [33] Company Strategy and Development Direction - The company is focused on capital allocation for organic growth and has made three bolt-on acquisitions in 2025 to enhance its portfolio [12][13] - Allegion is committed to returning capital to shareholders while investing in growth opportunities [8] - The company is maintaining its full-year outlook for adjusted EPS of $7.65 to $7.85 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the non-residential markets, particularly in institutional verticals [31] - The company remains agile in response to changing market conditions and is closely monitoring tariff impacts [46][47] - Positive internal indicators in the non-residential business provide confidence for the full-year guidance [125] Other Important Information - Allegion announced its eleventh consecutive dividend increase, amounting to approximately $44 million in Q1 [15] - The company is set to release innovative products in the smart lock segment later in the year [10][11] Q&A Session Summary Question: Inquiry about tariff impacts and pricing actions - Management acknowledged a potential lag in pricing actions relative to tariff impacts, expecting to cover tariff costs at the operating profit and EPS level for the full year [42][43] Question: Changes in institutional verticals and CapEx priorities - Management noted that institutional verticals like healthcare and education remain resilient, with ongoing projects supported by strong municipal bond issuances [55][56] Question: Market share and competition in the residential market - Management indicated that the residential market is expected to remain soft, but they are focusing on innovation in electronic products to drive growth [104][106] Question: Revenue guidance and pricing actions - Management clarified that the revenue guidance does not assume any uplift from pricing actions related to tariffs, but the operating profit guidance does reflect those actions [114][115] Question: Momentum in the channel and recession concerns - Management reported positive momentum in the non-residential sector and expressed confidence in the outlook despite broader economic concerns [124][125] Question: European market outlook - Management noted optimism in the German market and highlighted strong performance in Italy, but reiterated the need to maintain the current guidance [127][129]

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]

Financial Data and Key Metrics Changes - Revenue for Q1 was $941.9 million, an increase of 5.4% compared to 2024 [13] - Organic revenue increased by 4% due to favorable price and volume, primarily from the non-residential business in The Americas [14] - Adjusted earnings per share (EPS) of $1.86 increased by $0.31 or 20% versus the prior year [14] - Year-to-date available cash flow was $83.4 million, up nearly 250% compared to last year [15] Business Line Data and Key Metrics Changes - The Americas segment reported revenue of $757.8 million, up 6.8% on a reported basis and 4.9% organically [17] - The non-residential business in The Americas increased high single digits organically, while the residential business declined mid-single digits [19] - International segment revenues were $184.1 million, down 0.3% on a reported basis but up 0.9% organically [21] Market Data and Key Metrics Changes - The Americas team achieved mid-single digit growth and solid margin expansion over the past year [7] - The institutional verticals in non-residential markets remain resilient, supported by backlog and specification activity [25] - The residential market is expected to remain soft due to high mortgage rates and tariff uncertainties [88] Company Strategy and Development Direction - The company is focused on organic growth through innovative product offerings, such as the Schlage Sense Pro smart deadbolt [8][9] - Allegion has closed three bolt-on acquisitions in 2025 to enhance its product portfolio and market reach [10] - The company is committed to balanced capital allocation, including dividends and share repurchases, while investing for growth [12] Management's Comments on Operating Environment and Future Outlook - Management affirmed the 2025 full-year outlook for adjusted EPS of $7.65 to $7.85, citing strong cash generation and a robust pipeline of opportunities [7][25] - The company anticipates potential upside to revenue if current tariff-related pricing actions and foreign exchange rates persist [27] - Management remains agile in response to market dynamics and is focused on maintaining operational efficiency [28] Other Important Information - Allegion announced its eleventh consecutive increase to its dividend at the beginning of the year, amounting to approximately $44 million in Q1 [12] - The company has an upcoming Investor and Analyst Day in New York to share more on its growth strategy [29] Q&A Session Summary Question: Tariff impact and pricing actions - Management acknowledged a potential lag between tariff impacts and pricing actions, expecting to cover tariff costs at the operating profit and EPS level for the full year [36][40] Question: Non-residential growth and pull ahead orders - Management indicated that while there is typically some pull ahead before price increases, they do not see significant evidence of large pull ahead orders in the non-residential sector [43] Question: Institutional market changes - Management noted that institutional verticals like healthcare and education remain resilient, with strong growth supported by municipal bond issuances [48] Question: Supply chain and competitor comparison - Management stated that Allegion has reduced its exposure to China and is focused on sourcing from compliant regions, positioning itself competitively against peers [52] Question: Revenue and margin outlook - Management confirmed that the revenue guide does not assume uplift from incremental pricing actions related to tariffs, while the operating profit guide does reflect those price actions [97] Question: Market momentum and recession concerns - Management expressed confidence in the outlook, citing positive volume growth and resilient institutional verticals, despite broader economic concerns [106] Question: European market performance - Management reported optimism in Italy and a cautious outlook in Germany, reiterating their full-year guidance [109]

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]