Allegion(US:ALLE)2025-04-24 13:02Financial 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]