ALLE

This article first appeared on GuruFocus. - Revenue: Approximately $1.2 billion, up 9.6% year over year. - Organic Revenue Growth: Up 7.2%, driven by price realization and volume growth in the Americas. - Adjusted Operating Margin: 24.7%, up 60 basis points year over year. - Adjusted EPS: $2.60, up $0.30 or 13% versus prior year. - Price and Productivity Net of Inflation and Investment: Favorable by $15.6 million, a 50 basis point margin tailwind. - Acquisition Impact on Margin: 20 basis point headwind. - Americas Revenue: $942.4 million, up 11.7% reported and 9.1% organic. - Americas Non-Residential: Low double-digit organic growth on price and volume. - Americas Residential: Mid-single-digit growth driven by price. - Americas Electronics Revenue: Up low double digits. - Americas Adjusted Operating Income: $283.8 million, up 12.6%; adjusted operating margin up 20 basis points. - International Revenue: $230.2 million, up 1.8% reported, down slightly organically. - International Adjusted Operating Income: $31.9 million, down 1.2%; adjusted operating margin down 40 basis points. - Year-to-Date Available Cash Flow: $539.4 million, up 11.2% year over year. - ACF Conversion Outlook: 85% to 95% of adjusted net income for 2026. - Working Capital: 7.9% of revenue, consistent with prior year. - Net Debt to Adjusted EBITDA: 1.5 times. - Capital Returns: $46 million in dividends paid and $120 million of shares repurchased in the quarter. - Full-Year 2026 Reported Revenue Outlook: Raised to 9.5% to 10.5% growth. - Full-Year 2026 Organic Revenue Growth Outlook: Raised to 5% to 6%. - Full-Year 2026 Adjusted EPS Outlook: Raised to $9.05 to $9.10. - Warning! GuruFocus has detected 1 Warning Sign with ALLE. - Is ALLE fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Allegion PLC (NYSE:ALLE) raised its full-year 2026 organic revenue growth outlook to 5%-6% and adjusted EPS outlook to $9.05-$9.10, driven by stronger demand and favorable pricing in the Americas. - The Americas segment delivered 9.1% organic growth, with non-residential business up low double digits on healthy demand and strong specification activity, supporting optimism for continued strength into 2027. - Adjusted operating margin expanded 60 basis points to 24.7%, with price and productivity net of inflation and investment contributing a 50 basis point tailwind. - Allegion PLC (NYSE:ALLE) completed the acquisition of Overly Door Company for ~$90 million, expected to add ~1 point to Americas revenues at enterprise-consistent margins, and made a $40 million follow-on investment in Ambient.ai. - The company launched the Allegion Optimize app, a first-in-industry single tool for managing connected products, and continues to see electronics as a high-single-digit long-term growth driver. - International segment organic revenue declined slightly, with continued weakness in Western Europe, particularly Germany, and adjusted operating margin contracted 40 basis points due to lower volume and unfavorable mix. - Residential growth was primarily price-driven with flattish end-market volume, and high inflation and interest rates make a strong recovery difficult to forecast in the medium term. - Allegion PLC (NYSE:ALLE) expects a highly inflationary environment to persist into 2027, requiring continued pricing actions to protect operating profit dollars. - The company anticipates soft international markets in 2027 due to weak economic activity and persistent inflation, with organic growth outlook unchanged at down low single digits. - M&A pace in 2026 has been slower than 2025, and future acquisitions will be disciplined on strategy and valuation, potentially limiting growth from acquisitions. Q: Can you unpack the strength in Americas non-residential, including the volume and price mix, end market drivers, and whether share gains are contributing? A: CEO John Stone said Americas non-residential, the company's largest and most important segment, is growing high single digits this year on a combination of volume and price. Specification activity remains strong and broad-based, with data centers forming a good base for 2027 volume growth and other verticals expected to contribute as well. He noted that skilled trade labor availability could act as a governor on year-on-year market growth, but the high-single-digit environment is well supported by specification activity. On share, he said Allegion wins with its brands, field sales force, and distribution partners, though share is hard to pin down because the company sells through distribution. Q: What is the impact of new smart home entrants into the lock hardware space, and how is Allegion's technology integration positioned? A: CEO John Stone said Schlage has been an innovation leader in residential electronic and connected locking for seven years and is integrated with all major smart home providers and Airbnb. He noted the product category new entrants may target represents a low-single-digit percentage of Americas revenue and an even smaller portion of Americas operating profit. He expressed confidence in the Schlage brand and portfolio, saying performance this year in a soft demand environment speaks for itself. Q: How should investors think about pricing in Americas given tougher comps, and what is the outlook for inflation and price into 2027? A: CFO Mike Wagnes said pricing stepped up in the back half of 2025 due to new tariffs, making the Q3 2026 comparison tougher. He said Allegion no longer sets pricing just once in early February but takes multiple increases across select parts of the business as needed to combat inflation, targeting positive price/productivity net of inflation and investment (PPII) dollars and neutral margin rate for the full year. For 2027, he said the company is planning for a highly inflationary environment and will take necessary pricing actions, with details to come in February. Q: What is driving the implied Q4 slowdown in the guide, and how much pricing carryover is expected into the first half of 2027? A: CEO John Stone attributed quarter-to-quarter variability to the construction-facing nature of Americas non-residential, noting growing project sizes create lumpiness and that the middle two quarters typically see more construction activity than the tails. He said year-to-date or full-year high-single-digit organic growth is the better measure than extrapolating one quarter. CFO Mike Wagnes said there will be pricing carryover into 2027, but carryover alone won't be sufficient for the back half, and Allegion anticipates announcing a pricing increase in early February as customary. Q: Does the shift toward more selective pricing change Allegion's ability to align price with inflation versus historical lags? A: CFO Mike Wagnes said Allegion has gotten better over the last year and a half at reacting to inflationary pressure and does not expect the significant lags seen in 2021. He said the company is committed to driving PPII positive on a dollar basis and neutral on a margin rate basis over the course of the year. Q: How is AI impacting the specification writing business, and is it an opportunity for productivity and volume? A: CEO John Stone said Allegion is making well thought-out investments in AI tools across every function. He said AI models need large, robust data sets, and Allegion specifies 2.5 million openings annually, giving it an exceptionally large data set to train models for efficiency. He said this is happening now in conjunction with channel partners, improving responsiveness on initial specifications and change orders, and that Allegion is in the pole position to use AI for accuracy and speed in spec writing. Q: What are you seeing in residential volume, and when could positive volume growth return absent pricing? A: CEO John Stone said residential growth has been driven primarily by price while end market volume has been roughly flat. He said high inflation and high interest rates make a strong recovery difficult to forecast, but the company does not see conditions getting much worse, informing the view that 2027 residential growth will be primarily price-driven. Q: Where does Allegion participate in the data center opportunity, how large is it, and what portion of non-residential growth is data center linked? A: CEO John Stone said Allegion is active in data centers, with specification writers and end user consultants securing a leading position in doors and door hardware with large data center builders. He said data centers were approaching 5% of the non-residential business in Q2 and are there now, growing rapidly and contributing to volume growth this year. He noted doors and hardware go in late in construction projects, making Allegion late cycle on each project. Q: How is Allegion thinking about M&A pace in 2027 after a slower 2026? A: CEO John Stone said 2025 was very high from a deal count perspective and M&A is episodic, so 2025 should not be a benchmark. He said the strategy is to complement the mechanical portfolio, as with the Overly Door acquisition, and add electronics, electromechanical, and complementary software for faster-growth verticals. He said Allegion will remain disciplined on strategy and valuation, which will throttle deal pace more than anything else. Q: How do higher freight and logistics costs influence inventory levels and cash flow expectations? A: CFO Mike Wagnes said the 85% to 95% available cash flow conversion range should not change based on freight. He said inflation raises inventory costs on the balance sheet, but the key is driving necessary pricing, and inventory levels should not move enough to affect the cash conversion framework. Q: Is electronics adoption accelerating, and what actions are driving growth? A: CEO John Stone said Allegion is always driving electronics growth through its demand generation engine, new products including a new family of connected commercial locks, and end user consulting. He said electronics remains a high-single-digit growth driver over the cycle, with quarter-to-quarter lumpiness from comps, and cited new adoption, mechanical-to-electronic conversion, and upgrades of older electronic locks as ongoing drivers. Q: Is it getting harder to raise residential prices amid macro headwinds, and are customers pushing back? A: CEO John Stone said some pushback and negotiation For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Allegion (ALLE) came out with quarterly earnings of $2.6 per share, beating the Zacks Consensus Estimate of $2.49 per share. This compares to earnings of $2.3 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.42%. A quarter ago, it was expected that this security device maker would post earnings of $2.23 per share when it actually produced earnings of $2.4, delivering a surprise of +7.62%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Allegion, which belongs to the Zacks Security and Safety Services industry, posted revenues of $1.17 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 3.44%. This compares to year-ago revenues of $1.07 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Allegion shares have lost about 0.1% since the beginning of the year versus the S&P 500's gain of 13.3%. While Allegion has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Allegion was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.27 on $1.09 billion in revenues for the coming quarter and $8.94 on $4.4 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Security and Safety Services is currently in the bottom 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. SoundThinking (SSTI), another stock in the same industry, has yet to report results for the quarter ended September 2026. This maker of gunfire detection systems is expected to post quarterly loss of $0.17 per share in its upcoming report, which represents a year-over-year change of -6.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. SoundThinking's revenues are expected to be $25.13 million, up 0.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allegion PLC (ALLE) : Free Stock Analysis Report SoundThinking, Inc. (SSTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Allegion plc ALLE reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion. Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization. Allegion's organic revenue growth of 7.2% reflected a 3.8% contribution from price realization and 3.4% from volume growth. Acquisitions and divestitures boosted revenues by 2.6%, while foreign currency had an adverse impact of 0.2%. The company reports revenues under two segments, Allegion Americas and Allegion International. A brief discussion of quarterly results is provided below. Allegion price-consensus-eps-surprise-chart | Allegion Quote Revenues from Allegion Americas increased 11.7% year over year to $942.4 million. The figure accounted for 80.4% of the quarter's revenues. Organic revenues increased 9.1%, supported by low-double-digit growth in the non-residential business and mid-single-digit growth in the residential business. The non-residential business benefited from volume growth and price realization, while residential growth was supported by pricing. The electronics business registered low-double-digit organic growth. Price realization contributed 4.5% to growth, while volumes increased 4.6%. Acquisitions added 2.6% to revenues. Adjusted operating income for the segment increased 12.6% year over year to $283.8 million. The adjusted operating margin expanded 20 basis points (bps) to 30.1%, benefiting from favorable volume leverage and productivity gains, partially offset by acquisition-related headwinds. Revenues from Allegion International increased 1.8% year over year to $230.2 million, accounting for 19.6% of total quarterly revenues. Organic revenues declined 0.2%, reflecting softness in European markets. Price realization contributed 1.3%, while volumes declined 1.5%. Acquisitions and divestitures contributed 2.5% to reported revenues, while currency movements created a 0.5% headwind. Adjusted operating income decreased 1.2% year over year to $31.9 million. The adjusted operating margin contracted 40 bps to 13.9%, primarily due to unfavorable volume and mix, partially offset by pricing and productivity benefits. In the quarter, Allegion's cost of revenues increased 7.6% year over year to $624.4 million. Gross profit increased 11.9% to $548.2 million. Selling and administrative expenses rose 3% to $263.6 million. Adjusted EBITDA increased 12.4% year over year to $308 million. The adjusted EBITDA margin expanded 60 bps to 26.3%, driven by volume leverage and favorable pricing and productivity, net of inflation and investment. Adjusted operating income increased 12.5% year over year to $289.7 million. The adjusted operating margin expanded 60 bps to 24.7%. Interest expense declined 9% to $24.2 million. The adjusted effective tax rate increased to 17.5% from 14.9% in the year-ago quarter. Allegion exited the third quarter of 2026 with cash and cash equivalents of $388.1 million compared with $356.2 million at the end of 2025. Long-term debt stood at $2.03 billion, higher than $1.98 billion at 2025-end. In the first nine months of 2026, net cash generated from operating activities was $604 million, up 11.1% year over year. Capital expenditures totaled $64.6 million compared with $58.5 million in the year-ago period. Available cash flow increased 11.2% to $539.4 million. During the first nine months, the company repurchased shares worth $280.3 million and paid dividends totaling $140.2 million. In the third quarter alone, share repurchases totaled approximately $120 million, while dividends paid were approximately $46 million. Allegion has raised its 2026 revenue guidance. The company now expects reported revenues to increase 9.5-10.5% year over year, higher than the previous projection of 7.5-8.5%. Organic revenue growth is anticipated to be 5-6%, up from the earlier estimate of 3.5-4.5%. Adjusted earnings are now projected to be $9.05-$9.10 per share, higher than the previous guidance of $8.85-$9.00. The company expects reported earnings of $8.35-$8.40 per share compared with $7.95-$8.10 projected earlier. Allegion continues to expect available cash flow to be 85-95% of adjusted net income. The adjusted effective tax rate is projected to be approximately 18-19%, while average diluted shares outstanding are estimated at 85.6 million. The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below. Emerson Electric Co. EMR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. EMR delivered a trailing four-quarter average earnings surprise of 1.3%. In the past 60 days, the Zacks Consensus Estimate for Emerson's fiscal 2026 (ended September 2026) earnings has increased 0.3%. Applied Industrial Technologies AIT presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 4.3%. The Zacks Consensus Estimate for AIT's fiscal 2027 (ending June 2027) earnings has improved 0.2% in the past 60 days. Nordson Corporation NDSN presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 2.6%. In the past 60 days, the consensus estimate for NDSN's fiscal 2026 (ending October 2026) earnings has increased 0.7%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allegion PLC (ALLE) : Free Stock Analysis Report Emerson Electric Co. (EMR) : Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report Nordson Corporation (NDSN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

High-Single Digit Revenue Growth, Strength in Americas Non-Residential; Raising Full-Year 2026 Outlook Quarterly Financial Highlights (All comparisons are year-over-year, unless otherwise noted) - Net earnings per share (EPS) of $2.59, up 18.8% compared with $2.18; Adjusted EPS of $2.60, up 13.0% compared with $2.30 - Revenues of $1,172.6 million, up 9.6% on a reported basis and up 7.2% on an organic basis - Operating margin of 24.3%, compared with 21.8%; Adjusted operating margin of 24.7%, compared with 24.1% DUBLIN, October 22, 2026--(BUSINESS WIRE)--Allegion plc (NYSE: ALLE), a leading global security products and solutions provider, today reported financial results for its third quarter (ended Sept. 30, 2026). "I am pleased with our Q3 performance as we delivered high-single digit organic revenue growth and low teens adjusted EPS growth led by our Americas non-residential business," Allegion President and CEO John H. Stone said. "With steady momentum in our demand generation engine and a proven, resilient business model, we are raising our full-year 2026 revenue and adjusted EPS outlook." Q3 2026 Company Results (All comparisons are year-over-year, unless otherwise noted) Allegion reported third-quarter 2026 net revenues of $1,172.6 million and net earnings of $220.9 million, or $2.59 per share. Adjusted net earnings were $221.0 million, or $2.60 per share, up 13.0%. (Details of the adjustments are included in the footnotes of the tables in this press release.) Third-quarter 2026 net revenues increased 9.6%. On an organic basis, which excludes impacts of acquisitions, divestitures and foreign currency movements, net revenues increased 7.2%, led by the Americas region. The organic revenue increase was driven by volume growth and price realization. Reported revenue reflects a 2.6% net positive impact from acquisitions and divestitures, as well as a 0.2% headwind from foreign currency. Third-quarter 2026 operating income was $284.6 million, an increase of $50.8 million or 21.7%. Adjusted operating income in third-quarter 2026 was $289.7 million, an increase of $32.3 million or 12.5%. Third-quarter 2026 operating margin was 24.3%, compared with 21.8%. The adjusted operating margin in third-quarter 2026 was 24.7%, compared with 24.1%. The adjusted operating margin increase is attributable to favorable volume leverage as well as price and productivity net of inflation and investment (PPII), inclusive of transactional foreign currency, which was positive on a dollar basis and a tailwind to margin rate. Q3 2026 Segment Results (All comparisons are year-over-year, unless otherwise noted) The Americas segment revenues were up 11.7% (up 9.1% on an organic basis). The non-residential business was up low-double digits organically, driven by volume growth and price realization. The residential business was up mid-single digits organically, driven by price realization. The reported revenue reflects a 2.6% positive impact from acquisitions. Adjusted operating margin in the region increased 20 basis points to 30.1%. The adjusted operating margin increase is attributable to favorable volume leverage as well as PPII, inclusive of transactional foreign currency headwinds, which was positive on a dollar basis and a 20-basis point tailwind to margin rate. Acquisitions were a 40-basis point headwind to margin rate. The International segment revenues were up 1.8% (down 0.2% on an organic basis). The slight organic revenue decrease was driven by volume declines, which more than offset favorable pricing. Reported revenue reflects a 2.5% net positive impact from acquisitions and divestitures and a 0.5% headwind from foreign currency. Adjusted operating margin in the region decreased 40 basis points to 13.9%, driven by volume declines and unfavorable mix offset partially by a PPII tailwind and favorable impacts from acquisitions. IEEPA Tariff Refunds Third-quarter 2026 reported results include the impact of IEEPA tariff refunds (tariff refunds), which benefited operating income by $19.9 million and interest income by $0.9 million. These benefits are excluded from adjusted operating income and adjusted EPS and reflect the impact from refunds received and expected to be received from the U.S. government. Additional Items (All comparisons are year-over-year, unless otherwise noted) Interest expense for third-quarter 2026 was $24.2 million, a decrease of $2.4 million. Other income, net for third-quarter 2026 was $7.4 million, compared to other income, net of $1.7 million. Other income, net for third-quarter 2026 includes a $4.1 million gain on non-operating investments and $0.9 million of interest income related to tariff refunds. The company's effective tax rate for third-quarter 2026 was 17.5%, compared with 9.8%. The company's adjusted effective tax rate for third-quarter 2026 was 17.5%, compared with 14.9%. Cash Flow and Liquidity Year-to-date available cash flow for 2026 was $539.4 million, an increase of $54.2 million versus the prior-year period. The company ended third-quarter 2026 with cash and cash equivalents of $388.1 million and total debt of $2,032.0 million. Share Repurchase and Dividends In the third quarter of 2026, the company repurchased approximately 0.8 million shares for approximately $120 million and paid quarterly dividends of $0.55 per ordinary share or approximately $46 million. 2026 Full-Year Outlook (All comparisons are year-over-year, unless otherwise noted) The company is raising its full-year 2026 reported revenue growth outlook to a range of 9.5% to 10.5% and is raising its organic growth outlook to a range of 5.0% to 6.0%, after excluding the expected impacts of acquisitions, divestitures and foreign currency movements. The company is raising the outlook for full-year 2026 adjusted EPS to be in the range of $9.05 to $9.10. The company is updating the outlook for full-year 2026 reported EPS and expects it to be in the range of $8.35 to $8.40. Adjustments to 2026 EPS include estimated impacts of approximately $0.60 per share for acquisition-related amortization, $0.28 per share for restructuring, M&A and other adjustments as well as $0.18 per share benefit for tariff refunds. The outlook continues to assume a full-year adjusted effective tax rate of approximately 18% to 19%. The outlook assumes an average diluted share count for the full year of approximately 85.6 million shares. The company continues to expect full-year available cash flow to be 85% to 95% of adjusted net income. Conference Call Information On Thursday, Oct. 22, 2026, President and CEO John H. Stone and Senior Vice President and Chief Financial Officer Mike Wagnes will conduct a conference call for analysts and investors, beginning at 8 a.m. ET, to review the company's results. A real-time, listen-only webcast of the conference call will be broadcast live online. Individuals wishing to listen may access the call through https://investor.allegion.com. About Allegion At Allegion (NYSE: ALLE), we design and manufacture innovative security and access solutions that help keep people safe where they live, learn, work and connect. We're pioneering safety with our strong legacy of leading brands like CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®. Our comprehensive portfolio of hardware, software and electronic solutions is sold around the world and spans residential and commercial locks, door closer and exit devices, steel doors and frames, access control and workforce productivity systems. Allegion had $4.1 billion in revenue in 2025. For more, visit www.allegion.com. Non-GAAP Measures This news release and accompanying earnings release materials include adjusted non-GAAP financial information which should be considered supplemental to, not a substitute for or superior to, the financial measure calculated in accordance with GAAP. The company presents operating income, operating margin, earnings before income taxes, effective tax rate, net earnings and diluted earnings per ordinary share (EPS) on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis, revenue growth on a U.S. GAAP basis and organic revenue growth on a non-GAAP basis, EBITDA, adjusted EBITDA and adjusted EBITDA margin (all non-GAAP measures) and Available Cash Flow ("ACF," a non-GAAP measure), including in certain cases, on a segment basis. The company presents these non-GAAP measures because management believes these non-GAAP measures provide management and investors useful perspective of the company's underlying business results and trends and a more comparable measure of period-over-period results. These measures are also used to evaluate senior management and are a factor in determining at-risk compensation. Investors should not consider non-GAAP measures as alternatives to the related U.S. GAAP measures. Further information about the adjusted non-GAAP financial tables is attached to this news release. The Quarterly Financial Highlights, Full-Year Financial Highlights and 2026 Full-Year Outlook Highlights contain non-GAAP financial measures that exclude or otherwise have been adjusted for non-GAAP adjustment items from our U.S. GAAP financial statements. When we provide forward-looking outlooks for any of the various non-GAAP metrics described above, we do not provide reconciliations of the U.S. GAAP measures as we are unable to predict with a reasonable degree of certainty the actual impact of the non-GAAP adjustment items. By their very nature, non-GAAP adjustment items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results. Therefore, we are unable to provide a reconciliation of these measures without unreasonable efforts. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, statements under the heading "2026 Full-Year Outlook" and statements regarding the company's 2026 and future financial performance, the company's business plans and strategy, the company's growth strategy, the company's capital allocation strategy, the company's ability to successfully complete and integrate acquisitions and achieve anticipated strategic and financial benefits and the performance of the markets in which the company operates. These forward-looking statements generally are identified by the words "believe," "aim," "projected," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "scheduled," "targets," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result" or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax rate and provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Undue reliance should not be placed on any forward-looking statements, as these statements are based on the company's currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties - many of which are beyond the company's control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Important factors and other risks that may affect the company's business or that could cause actual results to differ materially are included in filings the company makes with the Securities and Exchange Commission (SEC) from time to time, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q and in its other SEC filings. All forward-looking statements in this press release are made only as of the date hereof and are expressly qualified by such cautionary statements and by reference to the underlying assumptions. The company undertakes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. ALLEGION PLC Condensed and Consolidated Income Statements (In millions, except per share data) UNAUDITED | | | | Three months ended September 30, | | Nine months ended September 30, | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | | | | | | | | Net revenues | $ | 1,172.6 | | | $ | 1,070.2 | | | $ | 3,357.7 | | | $ | 3,034.1 | Cost of goods sold | | 624.4 | | | | 580.4 | | | | 1,837.5 | | | | 1,655.3 | Gross profit | | 548.2 | | | | 489.8 | | | | 1,520.2 | | | | 1,378.8 | | | | | | | | Selling and administrative expenses | | 263.6 | | | | 256.0 | | | | 785.6 | | | | 728.9 | Operating income | | 284.6 | | | | 233.8 | | | | 734.6 | | | | 649.9 | | | | | | | | Interest expense | | 24.2 | | | | 26.6 | | | | 73.2 | | | | 75.9 | Other income, net | | (7.4 | ) | | | (1.7 | ) | | | (5.8 | ) | | | (10.5 | ) Earnings before income taxes | | 267.8 | | | | 208.9 | | | | 667.2 | | | | 584.5 | | | | | | | | Provision for income taxes | | 46.9 | | | | 20.5 | | | | 123.6 | | | | 88.2 | Net earnings | $ | 220.9 | | | $ | 188.4 | | | $ | 543.6 | | | $ | 496.3 | | | | | | | | Basic earnings per ordinary share | $ | 2.60 | | | $ | 2.19 | | | $ | 6.36 | | | $ | 5.76 | | | | | | | | Diluted earnings per ordinary share | $ | 2.59 | | | $ | 2.18 | | | $ | 6.33 | | | $ | 5.73 | | | | | | | | Shares outstanding - basic | | 84.8 | | | | 85.9 | | | | 85.5 | | | | 86.1 | Shares outstanding - diluted | | 85.2 | | | | 86.5 | | | | 85.9 | | | | 86.6 | ALLEGION PLC Condensed and Consolidated Balance Sheets (In millions) UNAUDITED | | | | September 30, 2026 | | December 31, 2025 ASSETS | | | Cash and cash equivalents | $ | 388.1 | | $ | 356.2 Accounts and notes receivables, net | | 551.6 | | | 437.7 Inventories | | 539.4 | | | 519.0 Other current assets | | 83.9 | | | 78.9 Total current assets | | 1,563.0 | | | 1,391.8 Property, plant and equipment, net | | 457.2 | | | 444.6 Goodwill | | 1,926.1 | | | 1,912.4 Intangible assets, net | | 798.5 | | | 826.0 Other noncurrent assets | | 722.1 | | | 648.9 Total assets | $ | 5,466.9 | | $ | 5,223.7 | | | LIABILITIES AND EQUITY | | | Accounts payable | $ | 283.2 | | $ | 244.8 Accrued expenses and other current liabilities | | 539.5 | | | 510.4 Short-term borrowings and current maturities of long-term debt | | 0.3 | | | 0.2 Total current liabilities | | 823.0 | | | 755.4 Long-term debt | | 2,031.7 | | | 1,979.9 Other noncurrent liabilities | | 439.8 | | | 420.8 Equity | | 2,172.4 | | | 2,067.6 Total liabilities and equity | $ | 5,466.9 | | $ | 5,223.7 ALLEGION PLC Condensed and Consolidated Statements of Cash Flows (In millions) UNAUDITED | | Nine months ended September 30, | | 2026 | | | | 2025 | Operating Activities | | | Net earnings | $ | 543.6 | | | $ | 496.3 | Depreciation and amortization | | 107.4 | | | | 98.6 | Changes in assets and liabilities and other non-cash items | | (47.0 | ) | | | (51.2 | ) Net cash provided by operating activities | | 604.0 | | | | 543.7 | | | | Investing Activities | | | Capital expenditures | | (64.6 | ) | | | (58.5 | ) Acquisition of businesses, net of cash acquired | | (74.7 | ) | | | (594.0 | ) Other investing activities, net | | (38.9 | ) | | | 3.2 | Net cash used in investing activities | | (178.2 | ) | | | (649.3 | ) | | | Financing Activities | | | Net debt proceeds | | 50.4 | | | | 83.3 | Dividends paid to ordinary shareholders | | (140.2 | ) | | | (131.4 | ) Repurchase of ordinary shares | | (280.3 | ) | | | (80.0 | ) Other financing activities, net | | (17.9 | ) | | | 12.9 | Net cash used in financing activities | | (388.0 | ) | | | (115.2 | ) | | | Effect of exchange rate changes on cash and cash equivalents | | (5.9 | ) | | | 19.7 | Net increase (decrease) in cash and cash equivalents | | 31.9 | | | | (201.1 | ) Cash and cash equivalents - beginning of period | | 356.2 | | | | 503.8 | Cash and cash equivalents - end of period | $ | 388.1 | | | $ | 302.7 | SUPPLEMENTAL SCHEDULES ALLEGION PLC | | | | | | | SCHEDULE 1 SELECTED OPERATING SEGMENT INFORMATION (In millions) | | | | Three months ended September 30, | | Nine months ended September 30, | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Net revenues | | | | | | | Allegion Americas | $ | 942.4 | | | $ | 844.0 | | | $ | 2,670.9 | | | $ | 2,423.3 | Allegion International | | 230.2 | | | | 226.2 | | | | 686.8 | | | | 610.8 | Total net revenues | $ | 1,172.6 | | | $ | 1,070.2 | | | $ | 3,357.7 | | | $ | 3,034.1 | | | | | | | | Operating income (loss) | | | | | | | Allegion Americas | $ | 294.6 | | | $ | 242.4 | | | $ | 776.5 | | | $ | 690.4 | Allegion International | | 17.2 | | | | 19.7 | | | | 40.3 | | | | 47.1 | Corporate unallocated | | (27.2 | ) | | | (28.3 | ) | | | (82.2 | ) | | | (87.6 | ) Total operating income | $ | 284.6 | | | $ | 233.8 | | | $ | 734.6 | | | $ | 649.9 | ALLEGION PLC | | | SCHEDULE 2 | | | The Company presents operating income, operating margin, earnings before income taxes, effective income tax rate, net earnings and diluted earnings per ordinary share (EPS) on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis, revenue growth on a U.S. GAAP basis and organic revenue growth on a non-GAAP basis, EBITDA, adjusted EBITDA and adjusted EBITDA margin (all non-GAAP measures), and available cash flow ("ACF", a non-GAAP measure). The Company presents these non-GAAP measures because management believes they provide useful perspective of the Company's underlying business results and trends and a more comparable measure of period-over-period results. These measures are also used to evaluate senior management and are a factor in determining at-risk compensation. Investors should not consider non-GAAP measures as alternatives to the related U.S. GAAP measures. | | | The Company defines the presented non-GAAP measures as follows: | | | Adjustments to operating income, operating margin, earnings before income taxes, effective tax rate, net earnings, EPS and EBITDA include items such as goodwill, indefinite-lived trade name and other asset impairment charges, restructuring charges, acquisition and integration costs, amortization of acquired intangible assets, debt financing costs, gains or losses related to the divestiture of businesses or equity method investments, non-operating investment gains or losses, non-cash pension settlement charges, and tariff refunds;Organic revenue growth is defined as U.S. GAAP revenue growth excluding the impact of acquisitions, divestitures and currency effects; andACF is defined as U.S. GAAP net cash from operating activities less capital expenditures. | | | These non-GAAP measures may not be defined and calculated the same as similar measures used by other companies. | | | RECONCILIATION OF GAAP TO NON-GAAP NET EARNINGS (In millions, except per share data) | | | | Three months ended September 30, 2026 | | Three months ended September 30, 2025 | Reported | | Adjustments | | Adjusted (non-GAAP) | | Reported | | Adjustments | | Adjusted (non-GAAP) Net revenues | $ | 1,172.6 | | | $ | — | | $ | 1,172.6 | | | $ | 1,070.2 | | | $ | — | | $ | 1,070.2 | | | | | | | | | | | | Operating income | | 284.6 | | | | 5.1 | (1) | | 289.7 | | | | 233.8 | | | | 23.6 | (1) | | 257.4 | Operating margin | | 24.3 | % | | | | | 24.7 | % | | | 21.8 | % | | | | | 24.1 | % | | | | | | | | | | | Earnings before income taxes | | 267.8 | | | | 0.1 | (2) | | 267.9 | | | | 208.9 | | | | 24.6 | (2) | | 233.5 | Provision for income taxes | | 46.9 | | | | — | | | 46.9 | | | | 20.5 | | | | 14.3 | (3) | | 34.8 | Effective income tax rate | | 17.5 | % | | | | | 17.5 | % | | | 9.8 | % | | | | | 14.9 | % Net earnings | $ | 220.9 | | | $ | 0.1 | | $ | 221.0 | | | $ | 188.4 | | | $ | 10.3 | | $ | 198.7 | | | | | | | | | | | | Diluted earnings per ordinary share: | $ | 2.59 | | | $ | 0.01 | | $ | 2.60 | | | $ | 2.18 | | | $ | 0.12 | | $ | 2.30 | (1) | | Adjustments to operating income for the three months ended September 30, 2026, consist of $8.0 million of restructuring charges and acquisition and integration expenses and $17.0 million of amortization expense related to acquired intangible assets, partially offset by $19.9 million for tariff refunds. Adjustments to operating income for the three months ended September 30, 2025, consist of $4.6 million of restructuring charges and acquisition and integration expenses and $19.0 million of amortization expense related to acquired intangible assets. (2) | | Adjustments to earnings before income taxes for the three months ended September 30, 2026, consist of the adjustments to operating income discussed above, a $4.1 million net gain on non-operating investments and $0.9 million of interest income related to tariff refunds. Adjustments to earnings before income taxes for the three months ended September 30, 2025, consist of the adjustments to operating income discussed above as well as a $1.1 million loss on divestiture. (3) | | Adjustments to the provision for income taxes for the three months ended September 30, 2025, consist of $14.3 million of tax expense related to the excluded items discussed above. | Nine months ended September 30, 2026 | | Nine months ended September 30, 2025 | Reported | | Adjustments | | Adjusted (non-GAAP) | | Reported | | Adjustments | | Adjusted (non-GAAP) Net revenues | $ | 3,357.7 | | | $ | — | | $ | 3,357.7 | | | $ | 3,034.1 | | | $ | — | | $ | 3,034.1 | | | | | | | | | | | | Operating income | | 734.6 | | | | 52.8 | (1) | | 787.4 | | | | 649.9 | | | | 62.8 | (1) | | 712.7 | Operating margin | | 21.9 | % | | | | | 23.5 | % | | | 21.4 | % | | | | | 23.5 | % | | | | | | | | | | | Earnings before income taxes | | 667.2 | | | | 52.4 | (2) | | 719.6 | | | | 584.5 | | | | 63.9 | (2) | | 648.4 | Provision for income taxes | | 123.6 | | | | 13.0 | (3) | | 136.6 | | | | 88.2 | | | | 23.6 | (3) | | 111.8 | Effective income tax rate | | 18.5 | % | | | | | 19.0 | % | | | 15.1 | % | | | | | 17.2 | % Net earnings | | 543.6 | | | | 39.4 | | | 583.0 | | | | 496.3 | | | | 40.3 | | | 536.6 | | | | | | | | | | | | Diluted earnings per ordinary share: | $ | 6.33 | | | $ | 0.46 | | $ | 6.79 | | | $ | 5.73 | | | $ | 0.47 | | $ | 6.20 | (1) | | Adjustments to operating income for the nine months ended September 30, 2026, consist of $21.4 million of restructuring charges and acquisition and integration expenses and $51.3 million of amortization expense related to acquired intangible assets, partially offset by $19.9 million for tariff refunds. Adjustments to operating income for the nine months ended September 30, 2025, consist of $14.2 million of restructuring charges and acquisition and integration expenses and $48.6 million of amortization expense related to acquired intangible assets. (2) | | Adjustments to earnings before income taxes for the nine months ended September 30, 2026, consist of the adjustments to operating income discussed above, a $3.7 million non-cash pension settlement charge, a $0.1 million adjustment to a previously recorded loss on divestiture, a $3.3 million net gain on non-operating investments and $0.9 million of interest income related to tariff refunds. Adjustments to operating income for the nine months ended September 30, 2025, consist of the adjustments to operating income discussed above as well as a $1.1 million loss on divestiture. (3) | | Adjustments to the provision for income taxes for the nine months ended September 30, 2026, consist of $13.0 million of tax expense related to the excluded items discussed above. Adjustments to the provision for income taxes for the nine months ended September 30, 2025, consist of $15.1 million of tax expense related to the excluded items discussed above, as well as an $8.5 million tax benefit related to a legislative change. ALLEGION PLC | | | | | | | SCHEDULE 3 RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING INCOME BY REGION (In millions) | | | | Three months ended September 30, 2026 | | Three months ended September 30, 2025 | As Reported | | Margin | | As Reported | | Margin Allegion Americas | | | | | | | Net revenues (GAAP) | $ | 942.4 | | | | | $ | 844.0 | | | | | | | | | | Operating income (GAAP) | $ | 294.6 | | | 31.3 | % | | $ | 242.4 | | | 28.7 | % Restructuring charges | | 0.3 | | | — | % | | | — | | | — | % Acquisition and integration costs | | 0.4 | | | — | % | | | 0.3 | | | — | % Amortization of acquired intangible assets | | 8.4 | | | 0.9 | % | | | 9.3 | | | 1.2 | % Tariff refunds | | (19.9 | ) | | (2.1 | )% | | | — | | | — | % Adjusted operating income | | 283.8 | | | 30.1 | % | | | 252.0 | | | 29.9 | % Depreciation and amortization of nonacquired intangible assets | | 12.4 | | | 1.3 | % | | | 11.1 | | | 1.3 | % Adjusted EBITDA | $ | 296.2 | | | 31.4 | % | | $ | 263.1 | | | 31.2 | % | | | | | | | Allegion International | | | | | | | Net revenues (GAAP) | $ | 230.2 | | | | | $ | 226.2 | | | | | | | | | | Operating income (GAAP) | $ | 17.2 | | | 7.5 | % | | $ | 19.7 | | | 8.7 | % Restructuring charges | | 5.3 | | | 2.3 | % | | | 0.9 | | | 0.4 | % Acquisition and integration costs | | 0.8 | | | 0.3 | % | | | 2.0 | | | 0.9 | % Amortization of acquired intangible assets | | 8.6 | | | 3.8 | % | | | 9.7 | | | 4.3 | % Adjusted operating income | | 31.9 | | | 13.9 | % | | | 32.3 | | | 14.3 | % | | | | | | | Depreciation and amortization of nonacquired intangible assets | | 5.7 | | | 2.5 | % | | | 5.3 | | | 2.3 | % Adjusted EBITDA | $ | 37.6 | | | 16.4 | % | | $ | 37.6 | | | 16.6 | % | | | | | | | Corporate | | | | | | | Operating loss (GAAP) | $ | (27.2 | ) | | | | $ | (28.3 | ) | | Acquisition and integration costs | | 1.2 | | | | | | 1.4 | | | Adjusted operating loss | | (26.0 | ) | | | | | (26.9 | ) | | Depreciation and amortization of nonacquired intangible assets | | 0.2 | | | | | | 0.3 | | | Adjusted EBITDA | $ | (25.8 | ) | | | | $ | (26.6 | ) | | | | | | | | | Total | | | | | | | Net revenues | $ | 1,172.6 | | | | | $ | 1,070.2 | | | | | | | | | | Adjusted operating income | $ | 289.7 | | | 24.7 | % | | $ | 257.4 | | | 24.1 | % Depreciation and amortization of nonacquired intangible assets | | 18.3 | | | 1.6 | % | | | 16.7 | | | 1.6 | % Adjusted EBITDA | $ | 308.0 | | | 26.3 | % | | $ | 274.1 | | | 25.7 | % | Nine months ended September 30, 2026 | | Nine months ended September 30, 2025 | As Reported | | Margin | | As Reported | | Margin Allegion Americas | | | | | | | Net revenues (GAAP) | $ | 2,670.9 | | | | | $ | 2,423.3 | | | | | | | | | | Operating income (GAAP) | $ | 776.5 | | | 29.1 | % | | $ | 690.4 | | | 28.5 | % Restructuring charges | | 4.5 | | | 0.2 | % | | | 0.1 | | | — | % Acquisition and integration costs | | 1.3 | | | — | % | | | 1.4 | | | 0.1 | % Amortization of acquired intangible assets | | 25.1 | | | 0.9 | % | | | 26.6 | | | 1.0 | % Tariff refunds | | (19.9 | ) | | (0.7 | )% | | | — | | | — | % Adjusted operating income | | 787.5 | | | 29.5 | % | | | 718.5 | | | 29.6 | % Depreciation and amortization of nonacquired intangible assets | | 36.5 | | | 1.4 | % | | | 32.6 | | | 1.4 | % Adjusted EBITDA | $ | 824.0 | | | 30.9 | % | | $ | 751.1 | | | 31.0 | % | | | | | | | Allegion International | | | | | | | Net revenues (GAAP) | $ | 686.8 | | | | | $ | 610.8 | | | | | | | | | | Operating income (GAAP) | $ | 40.3 | | | 5.8 | % | | $ | 47.1 | | | 7.7 | % Restructuring charges | | 10.9 | | | 1.6 | % | | | 1.9 | | | 0.3 | % Acquisition and integration costs | | 1.2 | | | 0.2 | % | | | 6.3 | | | 1.1 | % Amortization of acquired intangible assets | | 26.2 | | | 3.8 | % | | | 22.0 | | | 3.6 | % Adjusted operating income | | 78.6 | | | 11.4 | % | | | 77.3 | | | 12.7 | % Depreciation and amortization of nonacquired intangible assets | | 16.9 | | | 2.5 | % | | | 14.2 | | | 2.3 | % Adjusted EBITDA | $ | 95.5 | | | 13.9 | % | | $ | 91.5 | | | 15.0 | % | | | | | | | Corporate | | | | | | | Operating loss (GAAP) | $ | (82.2 | ) | | | | $ | (87.6 | ) | | Acquisition and integration costs | | 3.5 | | | | | | 4.5 | | | Adjusted operating loss | | (78.7 | ) | | | | | (83.1 | ) | | Depreciation and amortization of nonacquired intangible assets | | 0.6 | | | | | | 0.7 | | | Adjusted EBITDA | $ | (78.1 | ) | | | | $ | (82.4 | ) | | | | | | | | | Total | | | | | | | Net revenues | $ | 3,357.7 | | | | | $ | 3,034.1 | | | | | | | | | | Adjusted operating income | $ | 787.4 | | | 23.5 | % | | $ | 712.7 | | | 23.5 | % Depreciation and amortization of nonacquired intangible assets | | 54.0 | | | 1.6 | % | | | 47.5 | | | 1.6 | % Adjusted EBITDA | $ | 841.4 | | | 25.1 | % | | $ | 760.2 | | | 25.1 | % ALLEGION PLC | | | SCHEDULE 4 RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO AVAILABLE CASH FLOW AND NET EARNINGS TO ADJUSTED EBITDA (In millions) | | Nine months ended September 30, | | 2026 | | | | 2025 | Net cash provided by operating activities | $ | 604.0 | | | $ | 543.7 | Capital expenditures | | (64.6 | ) | | | (58.5 | ) Available cash flow | $ | 539.4 | | | $ | 485.2 | | Three months ended September 30, | | Nine months ended September 30, | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Net earnings (GAAP) | $ | 220.9 | | | $ | 188.4 | | | $ | 543.6 | | | $ | 496.3 | Provision for income taxes | | 46.9 | | | | 20.5 | | | | 123.6 | | | | 88.2 | Interest expense | | 24.2 | | | | 26.6 | | | | 73.2 | | | | 75.9 | Amortization of acquired intangible assets | | 17.0 | | | | 19.0 | | | | 51.3 | | | | 48.6 | Depreciation and amortization of nonacquired intangible assets | | 18.3 | | | | 16.7 | | | | 54.0 | | | | 47.5 | EBITDA | | 327.3 | | | | 271.2 | | | | 845.7 | | | | 756.5 | Tariff refunds | | (19.9 | ) | | | — | | | | (19.9 | ) | | | — | Other income, net | | (7.4 | ) | | | (1.7 | ) | | | (5.8 | ) | | | (10.5 | ) Acquisition and integration costs and restructuring charges | | 8.0 | | | | 4.6 | | | | 21.4 | | | | 14.2 | Adjusted EBITDA | $ | 308.0 | | | $ | 274.1 | | | $ | 841.4 | | | $ | 760.2 | ALLEGION PLC | | | | | | | SCHEDULE 5 RECONCILIATION OF GAAP REVENUE GROWTH TO NON-GAAP ORGANIC REVENUE GROWTH BY REGION | | | | Three months ended September 30, | | Nine months ended September 30, | 2026 | | 2025 | | 2026 | | 2025 Allegion Americas | | | | | | | Revenue growth (GAAP) | 11.7 | % | | 7.9 | % | | 10.2 | % | | 7.1 | % Acquisitions | (2.6 | )% | | (1.5 | )% | | (2.6 | )% | | (2.0 | )% Currency translation effects | — | % | | — | % | | — | % | | 0.2 | % Organic growth (non-GAAP) | 9.1 | % | | 6.4 | % | | 7.6 | % | | 5.3 | % | | | | | | | Allegion International | | | | | | | Revenue growth (GAAP) | 1.8 | % | | 22.5 | % | | 12.4 | % | | 8.2 | % Acquisitions / divestitures | (2.5 | )% | | (13.6 | )% | | (10.5 | )% | | (5.4 | )% Currency translation effects | 0.5 | % | | (5.3 | )% | | (4.0 | )% | | (2.1 | )% Organic growth (non-GAAP) | (0.2 | )% | | 3.6 | % | | (2.1 | )% | | 0.7 | % | | | | | | | Total | | | | | | | Revenue growth (GAAP) | 9.6 | % | | 10.7 | % | | 10.7 | % | | 7.3 | % Acquisitions / divestitures | (2.6 | )% | | (3.9 | )% | | (4.2 | )% | | (2.6 | )% Currency translation effects | 0.2 | % | | (0.9 | )% | | (0.8 | )% | | (0.3 | )% Organic growth (non-GAAP) | 7.2 | % | | 5.9 | % | | 5.7 | % | | 4.4 | % View source version on businesswire.com: https://www.businesswire.com/news/home/20261022131751/en/ Contacts Media Contact: Whitney Moorman – Director, Global Communications 317-810-3241 [email protected] Analyst Contacts: Jobi Coyle – Director, Investor Relations [email protected] Josh Pokrzywinski – Vice President, Investor Relations [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Americas Non-Residential performance was the primary growth engine, achieving double-digit organic growth through a combination of volume gains and agile pricing actions. - Management attributes sustained demand to a robust 'demand generation engine' and strong spec writing trends, particularly in high-growth verticals like data centers. - The business model is increasingly shifting toward electrification and digitization, with electronics revenue growing at a low double-digit rate as customers transition from mechanical to connected solutions. - International operations have stabilized following the resolution of Q1 ERP challenges, though the segment remains pressured by macroeconomic weakness in Western Europe, specifically Germany. - The acquisition of Overly Door Company and a follow-on investment in Ambient.ai underscore a strategy of complementing the core mechanical portfolio with high-security specialty products and AI-driven proactive security technology. - Pricing strategies have evolved from annual adjustments to a more continuous, adaptable approach to neutralize persistent inflationary pressures on a dollar basis. - Management expects 2027 demand to mirror current levels, with growth led by the Americas and supported by a multi-year tailwind in non-residential spec activity. - Residential markets are projected to remain stable but face continued headwinds from high interest rates and inflation, with growth likely restricted to price realization rather than volume. - The company anticipates a high inflationary environment will persist into 2027, necessitating a broad-based price increase planned for early February. - Data centers are expected to remain a significant volume contributor, currently representing approximately 5% of Non-Residential business with a long tail due to Allegion's late-cycle positioning. - International markets are forecasted to remain soft, with management focusing on 'self-help' initiatives and carryover cost savings to protect margins. - The Allegion Optimize app was launched to consolidate the commissioning and management of connected products into a single tool, aiming to reduce customer friction. - Skilled trade labor availability is identified as a potential 'governor' or limiting factor on the overall pace of year-over-year market growth. - The Overly Door Company acquisition is expected to add approximately 1 point to Americas revenue on an annualized basis at enterprise-consistent margins. - Reported results exclude the favorable impact of IEEPA tariff refunds to provide a clearer view of underlying operational performance. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management noted that the specific product categories targeted by new tech entrants represent only a low single-digit percentage of Americas revenue. - They emphasized the Schlage brand's 7-year tenure as 'America's most trusted lock brand' and its existing deep integration with major ecosystems like Apple HomeKit and Airbnb. - Allegion is training AI models on its massive data set of 2.5 million annual opening specifications to improve responsiveness and accuracy for channel partners. - Management believes their proprietary data set provides a 'pole position' advantage in utilizing AI for productivity and efficiency in the spec writing environment. - The company has moved away from a single annual price increase to a more reactive model to avoid the margin lags experienced in 2021. - Management committed to maintaining 'PPII neutrality' on a margin rate basis, ensuring price and productivity at least offset inflation and investments in dollar terms. - The slower pace of M&A in 2026 compared to 2025 is attributed to the episodic nature of deals and a strict adherence to strategic fit and valuation discipline. - Future acquisitions will prioritize electromechanical solutions and software for fast-growing verticals rather than pursuing growth for growth's sake.

- Interested in Allegion PLC? Here are five stocks we like better. - Strong Q3 performance: Revenue rose 9.6% to approximately $1.2 billion, while organic growth reached 7.2%, adjusted operating margin improved to 24.7%, and adjusted EPS increased 13% to $2.60. Growth was led by the Americas, particularly double-digit expansion in non-residential markets. - Outlook raised: Allegion now expects 2026 reported revenue growth of 9.5%–10.5%, organic growth of 5%–6%, and adjusted EPS of $9.05–$9.10. Management expects non-residential demand to remain strong, while international markets and residential volumes remain challenged. - Capital deployment continues: The company acquired Overly Door Company for about $90 million, invested an additional $40 million in Ambient.ai, repurchased $120 million of stock, and paid $46 million in dividends during the quarter. - The 5 Hottest CEO Stock Purchases So Far This Year Allegion (NYSE:ALLE) reported third-quarter results marked by strong growth in its Americas business, led by double-digit organic growth in non-residential markets, while raising its full-year revenue and adjusted earnings outlook. Third-quarter revenue was approximately $1.2 billion, up 9.6% from the prior year. Organic revenue increased 7.2%, supported by both pricing and volume growth, Chief Financial Officer Mike Wagnes said. Adjusted operating margin rose 60 basis points year over year to 24.7%, while adjusted earnings per share increased 13% to $2.60. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over "Third quarter results were driven by strong organic growth in the Americas, led by double-digit organic growth in our non-residential business," President and Chief Executive Officer John Stone said. He said the company expects strength in non-residential markets to continue into 2027, supported by demand-generation activity and specification-writing trends. Americas revenue totaled $942.4 million, up 11.7% on a reported basis and 9.1% organically. The company's non-residential business grew by low double digits organically, with contributions from price and volume. Residential revenue rose by the mid-single digits, primarily due to pricing, while electronics revenue increased by the low double digits. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Americas adjusted operating income increased 12.6% to $283.8 million. Segment adjusted operating margin rose 20 basis points, as favorable price and productivity more than offset inflation and investments. Acquisitions reduced the segment's margin rate by 40 basis points. Stone said the company's specification activity remains broad-based across end markets. Data centers have become an increasingly important source of demand, accounting for about 5% of non-residential business as of the second quarter and continuing to grow, he said. Allegion supplies doors and door hardware, which Stone described as late-cycle components of data-center construction projects. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Stone also said commercial office demand has shown signs of improvement, citing growth in major metro markets, while institutional and commercial specification activity remains broad-based. However, he noted that skilled trade labor could limit year-over-year market growth. On residential markets, management said inflation and elevated interest rates continue to restrain demand. Stone said residential volume has been "kind of flattish," with recent growth largely driven by price realization. The company does not expect a significant medium-term residential recovery, although it also does not anticipate materially worsening conditions. International revenue rose 1.8% to $230.2 million on a reported basis but declined slightly organically, as pricing was more than offset by lower volumes. Acquisitions contributed 2.5% to segment revenue, while currency was a headwind. International adjusted operating income declined 1.2% to $31.9 million, and adjusted operating margin decreased 40 basis points. Price and productivity, net of inflation and investment, benefited margins by 30 basis points, while acquisitions added 20 basis points. Those gains were offset by lower volume and unfavorable mix. Stone said the company resolved an enterprise resource planning issue previously identified in the first quarter, restoring normal operations and lead times. Still, demand conditions in Western Europe remain difficult, particularly in Germany, Allegion's largest international market. The company is focusing on execution and cost management in the segment. Allegion raised its full-year 2026 outlook, now forecasting reported revenue growth of 9.5% to 10.5% and organic revenue growth of 5% to 6%. The prior increase reflects stronger demand and favorable pricing in the Americas, Stone said. - Americas organic growth is now projected at 7% to 8%. - International organic growth is still expected to decline by the low single digits. - Adjusted earnings per share is forecast at $9.05 to $9.10. - The outlook assumes a share count of 85.6 million and excludes benefits from future capital deployment. Management expects to provide its full 2027 outlook in February. For now, the company anticipates demand trends broadly similar to 2026, with Americas growth led by non-residential markets and pricing continuing to support residential performance. It also expects persistent inflation and said it will continue using pricing actions to protect operating profit dollars. Wagnes said Allegion has shifted from relying mainly on a single annual price increase to taking more targeted and responsive actions as inflation develops. The company expects to announce another broad pricing action early in February 2027, while continuing selective increases where needed. Allegion completed the acquisition of Overly Door Company in early October for approximately $90 million. Overly manufactures specialty doors for acoustic, blast, bullet-resistant and vault-security applications. Stone said the acquisition complements Allegion's hollow-metal portfolio and is expected to add about one percentage point to Americas revenue on an annualized basis, with margins consistent with the overall company. The company also made a $40 million follow-on investment in Ambient.ai through Allegion Ventures. Stone said Ambient's technology helps security customers shift operations from reactive to proactive approaches through purpose-built artificial intelligence. During the quarter, Allegion paid $46 million in dividends and repurchased $120 million of stock. Stone said the company sees its shares as attractively valued and expects to remain active in repurchases, alongside bolt-on acquisitions. Year-to-date available cash flow increased 11.2% to $539.4 million, primarily due to higher earnings. Net debt to adjusted EBITDA stood at 1.5 times, and Allegion continues to expect available cash flow conversion of 85% to 95% of adjusted net income for 2026. Allegion plc (NYSE:ALLE) is a global security products and solutions company focused on protecting people and property. Its portfolio includes mechanical and electronic locks, access control systems, door closers, exit devices, door controls, and commercial doors and frames. The company serves commercial, institutional, industrial, and residential customers through well-known brands including Schlage, Von Duprin, LCN, Steelcraft, Briton, and aptiQ. Its offerings range from traditional hardware to connected and electronic access solutions designed for offices, schools, healthcare facilities, multifamily properties, and homes. Allegion was established as an independent public company in 2013 following its separation from Ingersoll Rand. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Allegion (ALLE) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Image source: The Motley Fool. Thursday, Oct. 22, 2026 - Vice President, Investor Relations - Joshua Pokrzywinski - President and Chief Executive Officer - John Stone - Senior Vice President and Chief Financial Officer - Mike Wagnes Operator: Good day, everyone. My name is Shell and I will be your conference operator today. At this time, I would like to welcome you to the Allegion Third Quarter Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Joshua Pokrzywinski, Vice President, Investor Relations. Joshua Pokrzywinski: Thank you, Shell. Good morning, everyone. Thank you for joining us for Allegion's Third Quarter 2026 Earnings Call. With me today are John Stone, President and Chief Executive Officer; and Mike Wagnes, Senior Vice President and Chief Financial Officer of Allegion. Our earnings release, which was issued earlier this morning, and the presentation, which we will refer to in today's call are available on our website at investor.allegion.com. This call will be recorded and archived on our website. Please go to Slide 2. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our most recent SEC filings for a description of some of the factors that may cause actual results to differ materially from our projections. The company assumes no obligation to update these forward-looking statements. Today's presentation and commentary include non-GAAP financial measures. Please refer to the reconciliation in the financial tables of our press release for further details. Please go to Slide 3, and I'll turn the call over to John. John Stone: Thanks, Josh. Good morning, everyone, and thanks for joining us. Third quarter results were driven by strong organic growth in the Americas, led by double-digit organic growth in our Non-Residential business. The team's performance reinforces what I hope you've come to believe about Allegion. We're a leader in security and access with premium brands and the highest margins in a great industry. Our resilient business model has the proven ability to navigate inflation and withstand cyclical forces based on the value we provide to our customers and the large installed base we serve. This model continues to evolve with technology as security and access become electrified and digitized, a trend we expect to benefit market leaders like Allegion for many years to come. All of this allows us to deliver double-digit EPS growth through the cycle as we outlined at our Investor Day in May of last year. Digging into the quarter, our Americas business is performing very well. With continued momentum in spec writing trends through our demand generation engine, we expect Non-Residential strength to continue into 2027, which we'll comment on later in the presentation. Residential has performed well in 2026 despite consumer headwinds from inflation and interest rates. However, these dynamics also make it difficult to forecast a strong recovery in the medium term. I'm also pleased with another quarter of margin expansion in the Americas. We have managed inflation well thus far in 2026, primarily through agile pricing actions that continued in the third quarter. In International, we have resolved the ERP challenge we highlighted in Q1 and that business is back to normal operations and lead times. However, as discussed last quarter, macro conditions are difficult across Western Europe, particularly in our largest market, Germany, and we continue to be focused on execution and cost management in our International segment. With respect to our full year, we're raising our reported revenue outlook to 9.5% to 10.5%, and our outlook for organic revenue growth to 5% to 6% based on stronger demand and favorable price in the Americas. We are raising our adjusted earnings per share outlook to $9.05 to $9.10. I'll provide additional details on this later in the call. Please go to Slide 4, and let's take a look at capital allocation, starting with our organic investments. In September, we launched the Allegion Optimize app in the Americas. Optimize gives installers, end users and our channel partners, one tool to commission, configure, manage and troubleshoot our connected products throughout their life cycle. We're rolling Optimize out initially across electronic door controls and locks, and we expect this app will ultimately manage our full nonresidential connected portfolio globally. Offering a single app to cover management of multiple product categories is a first in our industry. Customers will benefit from faster, easier experiences with our intuitive interface that eliminates the friction of switching between multiple stand-alone apps for connected devices. Turning to M&A. We completed the acquisition of the Overly Door Company in early October for approximately $90 million. Overly manufactures specialty doors for acoustics, blast, bullet resistance and vault security. Overly's high security solutions serve commercial and institutional customers with strength across U.S. government, education and health care markets. Similar to our 2024 acquisition of Krieger Specialty Products, this complements our hollow metal portfolio with additional specialty products and regional capability. We expect Overly to add approximately 1 point to Americas revenues on an annualized basis at margins consistent with the overall enterprise. Recently, we also made a $40 million follow-on investment in Ambient.ai through Allegion Ventures. Ambient continues to prove the transformative potential of purpose-built AI and physical security, helping customers shift their security operations from reactive to proactive. This investment underscores our confidence in their technology, their leadership and our increased collaboration. Allegion paid $46 million in dividends and repurchased $120 million of shares in the quarter. We see attractive valuation in Allegion shares and expect to remain active in share repurchase. As we've said in the past, you can expect Allegion to be balanced, disciplined and consistent with capital deployment oriented to profitable growth and driving long-term returns for shareholders. Mike will now walk you through the third quarter financial results. Michael Wagnes: Thanks, John, and good morning, everyone. Thanks for joining today's call. Please go to Slide #5. Revenue for the third quarter was approximately $1.2 billion, an increase of 9.6% compared to last year. Organic revenue increased 7.2% in the quarter driven by strength in our Americas segment. The enterprise organic revenue increase was driven by both price realization and volume growth. Q3 adjusted operating margin was 24.7%, up 60 basis points compared to last year. Price and productivity net of inflation and investment was favorable by $15.6 million and was a 50 basis point tailwind to margin rate. Volume leverage was also a tailwind to margin rate in the quarter. This favorability was partially offset by acquisitions, which were a 20 basis point headwind to margins. I'll provide more details on revenue and margins within each of the regions. Adjusted earnings per share of $2.60 increased $0.30 or 13% versus the prior year. Operating income, inclusive of acquisitions, drove the majority of the year-over-year EPS growth. Additionally, benefits from interest and other and share count were offset by a headwind from tax. Please note, third quarter 2026 adjusted operating income and adjusted earnings per share exclude the favorable impact from IEEPA tariff refunds. You can find additional information regarding this in our press release and 10-Q, which were filed this morning. Finally, year-to-date available cash flow was $539.4 million, up 11.2% from the prior year. I'll provide more details on cash flow and the balance sheet, a little later in the presentation. Please go to Slide #6. Our Americas segment delivered revenue of $942.4 million, which was up 11.7% on a reported basis and up 9.1% on an organic basis. Our Non-Residential business increased low double digits organically driven by price and volume growth. Demand for our non-res products remains healthy. And as John mentioned earlier, spec activity continues to be strong. Our Residential business grew mid-single digits in the quarter, driven by price, consistent with year-to-date trends. Electronics revenue for the segment was up low double digits for the quarter and continues to be a long-term growth driver for the business. In addition, acquisitions contributed 2.6% of growth in the quarter. Americas adjusted operating income of $283.8 million increased 12.6% versus the prior year. Adjusted operating margins were up 20 basis points in the quarter. Price and productivity, net of inflation and investment, was favorable by $13.5 million and was a 20 basis point tailwind to margins. Volume leverage was also a tailwind to margin rates. However, acquisitions were a 40 basis point headwind as we expected. Please go to Slide #7. Our International segment delivered revenue of $230.2 million, which was up 1.8% on a reported basis and down slightly organically as favorable pricing was offset by lower volumes. The volume decline was the result of continued weakness in Western Europe, as John discussed earlier. Acquisitions contributed 2.5% to segment revenue and currency was a headwind in the quarter. International adjusted operating income of $31.9 million decreased 1.2% versus the prior year. Adjusted operating margin for the quarter decreased 40 basis points. Price and productivity, net of inflation and investment, was a 30 basis point tailwind to margin rate in the quarter. Net acquisitions drove a benefit to margin rates of 20 basis points. These benefits were more than offset by headwinds related to lower volume and unfavorable mix. Please go to Slide 8, and I'll provide an overview of our cash flow and balance sheet. Year-to-date available cash flow was $539.4 million, an increase of 11.2% versus the prior year. The cash flow increase was primarily driven by higher earnings. For 2026, we still anticipate our ACF conversion will be in the range of 85% to 95% of adjusted net income. Next, working capital as a percent of revenue was 7.9%, consistent with the prior year. Finally, our balance sheet remains healthy with a net debt to adjusted EBITDA at 1.5x. I will now hand the call back over to John. John Stone: Thanks, Mike. Please go to Slide 9. With one quarter remaining in the year, we're raising our organic revenue growth outlook to 5% to 6% and adjusted EPS outlook to $9.05 to $9.10. We are raising our reported revenue outlook to 9.5% to 10.5% based on changes to the organic growth range and acquisitions. You can find more details on our outlook in the appendix. In the Americas, we're raising our organic growth assumption to 7% to 8%, consistent with year-to-date organic growth in the segment. This is a result of a healthier non-res demand environment and higher price realization. For International, our organic growth outlook remains unchanged at down low single digits as market demand in Europe, particularly Germany, remains weak. For full year 2026, we expect to deliver low double-digit EPS growth, consistent with our long-term earnings framework. As in prior periods, this outlook excludes the benefit of future capital deployment and therefore, assumes a share count of 85.6 million. Please go to Slide 10. We'll provide our full 2027 outlook in February. But in the meantime, consistent with our usual practice, we'll share some high-level perspectives on the year ahead. We expect demand in our major end markets to be similar to current year with growth led by strength in the Americas. Spec writing trends support optimism on nonresidential markets over the next several years, particularly in the context of our late cycle business model. Residential markets continue to face headwinds from inflation and high interest rates but multiple years of low activity supports a stable demand outlook in 2027 with growth driven primarily by price. International markets are expected to remain soft, driven by weak economic activity and persistent inflation. We expect to remain in an inflationary environment and will continue to drive pricing to protect operating profit dollars. Operating leverage in the Americas segment should be consistent with our long-term framework for incremental margins. Internationally, we remain focused on self-help and have some benefit of carryover cost savings from 2026 actions. We plan to stay active in deploying capital pairing bolt-on acquisitions with share repurchase. Please go to Slide 11. In summary, Allegion delivered high single-digit organic revenue growth this quarter, fueled by the strength of our Americas Non-Residential business. For the full year 2026, we're raising our reported revenue outlook and our adjusted EPS outlook. We remain agile and focused on strong execution. The Allegion team expects to continue delivering on our commitments and driving value for shareholders. With that, we'll take your questions. Operator: [Operator Instructions] Our first question comes from Joseph O'Dea from Vertical Research. Joseph O'Dea: John, can you just talk a little bit more and unpack some of the strength that you're seeing in Americas Non-Res, the organic this quarter kind of equal parts volume, enterprise and so in particular, volume that's in that mid-single-digit type of territory. If you could talk a little bit about the end market strength there, where the spec writing activity is seeing signs of strength? And any degree to which you think you're winning in the market and some of this is share related? John Stone: Yes, Joe, I appreciate the question. And certainly, as you know, Americas Non-Res is the largest business segment of the company and really our most important and up high single digits this year, a combination of volume and price. Our spec activity continues to be strong, as we've said the past few quarters, and that strength continues to be broad-based. Certainly, growth in data center forms a good base for 2027 volume growth as we look forward, but we do expect other verticals to contribute there as well. And as we mentioned in the prepared remarks, we see an inflationary environment continuing, and you should expect price to remain elevated as a result. We do feel that I think trade labor -- skilled trade labor can be a bit of a governor on year-on-year market growth. But again, as we said in kind of looking forward into 2027, that kind of high single-digit environment with a combination of price and volume, what we feel is quite well supported by our spec activity. With respect to where are we winning, I think our team wins every time we step on the field. We've got great brands. We've got a great field marketing and sales force. We've got great distribution partners. And I think, tough to say with share, as we've answered many times in the past, we sell through distribution. So pinning down market share numbers in this space is kind of hard. Joseph O'Dea: I appreciate that color. And then just given some of the headlines earlier this month, I wanted to ask about your technology integration with smart home providers. If you could give a little bit of color on developments around the technology integration, how broadly penetrated you are with that across different providers. And your perception of any risks attached to new entrants into the hardware space? John Stone: It's a timely question. And yes, we saw the news media headlines as well as you did. So I would say, first off, Allegion through our Schlage brand has been an innovation leader there and electronic and connected locking in the residential space. For the past 7 years, Schlage is America's most trusted lock brand. We've got a great brand reputation, great product portfolio. We're integrated with all the major smart home devices and providers. We're integrated with Airbnb as we've talked about on previous calls as well. But if you wind the clock back, it'd be, maybe 8 or 9 years ago, we were the first WiFi connected deadbolt that integrated with Apple HomeKit. That innovation has not slowed down. And I'd say with regards to new entrants into the space, that happens from time to time. I would say the product category that these companies have indicated, they might be introducing a lock into, represents a low single-digit percentage of Americas revenue and an even smaller portion of Americas operating profit just to size it for you. But we feel confident in the Schlage brand and Schlage portfolio. And I think our performance this year and a rather soft demand environment speaks for itself. Operator: Our next question comes from Rafe Jadrosich from Bank of America. Rafe Jadrosich: Just starting on the pricing in Americas, on a year-over-year basis, it did not sort of maintain a similar level in 3Q versus 2Q, but you are lapping a lot tougher of a comp. Was there incremental pricing that was announced in 3Q? And then how do we think about that going forward? Michael Wagnes: Yes. Thanks for the question. If you remember, last year, our pricing started to step up in the back half of 2025 as we dealt with the new tariff impacts that were implemented by the administration. So the comp got tougher starting really in Q3. So you saw that this year, we have a tougher comp. The thing to remember about our business is we've been facing consistent inflationary pressure. So the days of just setting pricing once across the portfolio in early February, has kind of changed over the last couple of years. So we take pricing as needed to combat inflationary pressures. So we put in multiple price increases across select parts of our business. I think the key thing to think about our business is we're always going to drive that pricing and productivity to try to cover that inflation and investment. And we -- as you've seen over the last couple of years, we've been able to do that driving positive dollars. And then as you think of the current year, think of it as that PPII neutral on a margin rate for the full year and some positive dollars. So there's going to be pricing actions, but it's not going to be the one time in the beginning of the year that you might have known Allegion to do in, let's say, 2014 through 2019. It's been a more consistent adaptable environment to the changing inflationary pressures we face. Rafe Jadrosich: Okay. That's helpful. So it does sound like there's been some incremental pricing which is why you're not slowing kind of on the 2-year. Can you just talk about your visibility on the level of inflation you're expecting into next year, maybe compared to this year? What are you expecting in terms of input costs? And then like how much price you would need to offset that? Michael Wagnes: I would say, honestly, the details of the magnitude of exact pricing and inflation, we'll give that when we give the outlook in February when we announce earnings. In general, though, think of it as we're planning for a high inflationary environment. And so we're going to make sure that we take the necessary actions to price our products to combat that environment that we're in today and we expect to continue into next year. The magnitude of it, we'll come back to you in Feb. But just remember, we're focused on driving that pricing and productivity to offset that inflation and investments and expect us to do that into next year as well. But the details of the actual percentages, let us finish out the year and get back to you in February. Operator: Our next question comes from Alexander Virgo from Evercore ISI. Alexander Virgo: I wondered if you could just talk a little bit to the sort of implied slowdown in the guide in Q4. Just sort of thinking about, is that something that's just a reflection of prudence given the comps get easier? And then just to clarify on the pricing and the carryover into the first half, I suppose, of next year. Any chance you can give us a sense of how much that might end up being? John Stone: Alex, this is John. I would say a couple of things. Largest business segment being our Americas Non-Residential business, and that's a construction-facing business. Project size has been growing, and that's going to put a little lumpiness when you look quarter-to-quarter. And what we think is the better thing to look at is just the year-to-date or the full year high single-digit organic growth that, that business is driving. Taking one quarter and extrapolating that forward is not the best idea. There's going to be some lumpiness because of project size. There's going to be some lumpiness because we're construction facing. And in the Americas, the middle 2 quarters are always going to have a little bit more construction activity than the 2 tails. I'm going to ask Mike to step in and speak to the pricing part of the question. Michael Wagnes: Yes, there will be carryover pricing into next year. I think it's more important for you as you think about next year, carryover wouldn't be sufficient, obviously, as you think about the back half of the year. We do anticipate putting that pricing increase in early February next year. We'll announce that, obviously, to channel partners first. But as you think about pricing next year, think of an elevated inflationary environment and expect Allegion to put that pricing announcement in early February, like we customarily do to drive that pricing also for the back half of the year. Operator: Our next question comes from Tim Wojs from Baird. Timothy Wojs: Maybe just on the pricing cadence, Mike. I mean, just kind of transitioning, it sounds like a little bit to maybe more, I'd say, kind of selective pricing as well as kind of broad-based pricing. Does that change your ability to kind of line up price with inflation versus historically? I think there's been a little bit of a lag? Or does it really kind of change that timing dynamic at all? Michael Wagnes: Yes. Tim, if you think about our business over the last, I'd say, 1.5 years, we've gotten better at reacting to inflationary pressures. So you don't see that significant lag that you might have seen in 2021. Some of the challenges we encountered in '21, we've learned from. And as you've seen over the last 1.5 years, we are quicker. I don't expect to see periods of time where there's big headwinds because we're late in taking those pricing actions. Look for us to take pricing to combat inflationary pressures and driving that PPII. We talk about neutral on a dollar basis. If you think about quarters, then over the course of the year, it tends to be neutral on a rate as you saw this year, but we're committing to at least driving that neutrality on a dollar basis. Joshua Pokrzywinski: Positive. Michael Wagnes: Positive on a dollar basis, neutral on a margin rate basis. Thank you, Josh. Timothy Wojs: On a rate basis, yes. Okay. And then I guess just a bigger picture question. Just -- John, could you kind of talk about the AI impact on your spec writing business. What you guys are working on implementing and if that's an opportunity for productivity, but also for, I guess, greater volume if you can be more efficient with the spec writing network? John Stone: Yes, it's a good question, Tim. And I think we're making some really well thought out and exciting investments internally on leverage of AI tools, and that's across every function in the business. And when you think about what does an AI model of any flavor, LLM or otherwise, need to really do a good job for you, it needs a very large and robust data set. And when we're specifying 2.5 million openings in any given year, we've got an exceptionally large data set to train models on and use those models for efficiency, just like you're saying. That's happening right now. It's happening in conjunction with channel partners. So our responsiveness in terms of initial spec or change orders is definitely increasing for the benefit of the customer. So I think we're in the pole position really to make the best use of AI in a spec writing environment from an accuracy and a speed standpoint. And it's really built upon this enormous data set that we've built up over time, and we'll continue to build. Operator: Our next question comes from Aanvi Patodia from Goldman Sachs. Aanvi Patodia: Yes, congrats on the quarter and good growth there on the Non-Res side. I did want to touch upon the Residential growth. We saw mid-single-digit growth organically, but I believe it's largely attributed to price realization with the ABI coming in yesterday and the September read was weaker than expected, August and July was also below the 50% number. So I just wanted to understand what you've seen from a volume standpoint on the Resi side? What has happened to like underlying demand there? And when would you expect to return to positive volume growth, absent of pricing? John Stone: Yes, I appreciate the question. And I'd say consistent with our prepared remarks, you're right in that growth in our Residential business recently has been driven primarily by price. The end market volume has been kind of flattish. Price realization has driven that. And as we said, looking forward, it's tough given high inflation and high interest rates to expect any kind of strong recovery in the residential sector, but we also don't see it getting a lot worse. And so I think that informs our look into 2027 that growth in the residential space will primarily be driven by price. Aanvi Patodia: Okay. Got it. That makes sense. And I guess switching gears more holistically, I wanted to touch upon your data center opportunity. Where does Allegion participate today? Is it more like the door hardware, perimeter security? Is it other solutions? And how large is this opportunity for you? What portion of your Non-Res growth is more data center linked? John Stone: Yes, it's a good question. And I'd say we are active in the data center space. I think our specification writers, our end-user consultants have done a great job in terms of getting Allegion a leading position in terms of doors and door hardware with the large data center builders. As we mentioned in second quarter, data centers were approaching 5% of our Non-Res business. I'd say it's there now, growing rapidly and has been a source of volume growth this year, and we look for that to continue. I would -- just keep in mind, whatever you believe about data center construction and build-out, doors and door hardware are some of the last things to go into the building on the construction project. We are late cycle on each project. So we do feel good about the trends there and about our market position with respect to our core products. Operator: [Operator Instructions] Our next question is from David MacGregor from Longbow Research. David S. MacGregor: Congratulations on a great quarter, John. I wanted to -- and I appreciate the early sort of preliminary thoughts on 2027. I guess I wanted to ask about your acquisition program. 2025 was obviously a more M&A active year than 2026. And I'm just wondering how much of that slower pace in '26 related to the need to make progress on integrating the 25 transactions versus maybe valuations or funnel development issues. But how are you thinking about 2027? Could it be a more active year? And what would need to change to make it a more active year? John Stone: That's a really good question, David. And I would say, first off, if you look at 2025, just from a deal count perspective, we would say that was, let's just say, very high. And M&A of any sort is rather episodic in its timing. It's not something that I think anyone can do on this perfectly linear basis. So I don't think '25 as a deal count is any kind of benchmark or goal or any of that. What we're after on acquisitions, is what we talked about at our 2025 Investor Day. Looking to complement and continue to build out our mechanical portfolio like we just did with the acquisition of Overly Door Company. Very excited about that one. Add electronics, add electromechanical acquisitions and complementary software for those faster growth verticals in our segment. And I think the point on the pace is really while we are oriented towards profitable growth, we do see acquisitions continuing to be a part of our growth story for the future. We're going to be very disciplined on what we buy strategically and what we buy from a valuation perspective. So those acquisitions that come in, they're going to drive good value for our shareholders and not just growth for growth's sake. So I think that's going to throttle the pace of deal flow more so than anything else, just being disciplined around our strategy and around what we pay. David S. MacGregor: Just secondly, and for the cash flow model here, I'm just wondering how higher freight and logistics costs influence how you think about your inventory levels going forward? Michael Wagnes: Yes, David, obviously, if you think about cash conversion, we've thrown out that 85% to 95% cash conversion. I wouldn't expect to see any change to that percentage based on something like freight. That's a pretty big range for us. With inventory, we'll always be smart to make sure that we have the necessary parts to ship product. So -- but if there's inflationary pressure, which there is, it will impact inventory on the balance sheet, right, because inventory costs more. The key thing for us, and as I think about it, are we driving the necessary pricing, which I talked about earlier in the call? So I would say if you think about the framework, 85% to 95% ACF conversion, I think that's a decent framework to think of us long term at. And then inventory levels, I think they won't move enough to where it impacts that framework we provided. Operator: Our next question is from Brandon Knutson from Morgan Stanley. Brandon Knutson: I wanted to start out on electronics. So you've seen strong growth there after the year started mid-single digits, accelerating on a 2-year stack essentially as you go throughout the year. Are you seeing an acceleration in electronics adoption? And are there any actions that you're taking currently to drive that acceleration that we're seeing this year? John Stone: Yes. I think we're always striving for growth in electronics, and that comes from everything you can think of from demand generation engine with our specs, introducing new products. We have introduced a new family of connected locks in the commercial space. I'm very proud of that. Very excited about the launch. It's going well. So steady stream of new products driving organic growth, excellence in our demand generation engine and our end-user consulting. And I'd say the way we continue to think about it is high single-digit growth driver for the business over the cycle. Quarter-to-quarter, is there some lumpiness here and there? Does the comp make things look a little lumpy from time to time? Always. But over the cycle, high single-digit growth driver for the business. And we see continued trends of both new adoption of electronics and conversion from mechanical to electronics and now even upgrades of old e-locks to new electronic locks. All those factors are coming into play, and I think we're well positioned to take advantage. Brandon Knutson: Great. And then on the Residential side, you highlighted that the growth there is primarily going to be driven by price. As you see continued sort of macro headwinds from higher interest rates [Technical Difficulty], is it getting harder to get price? Are you seeing any pushback from your customers on the pricing front? Any color there? John Stone: Yes. I think that's fair to always expect some pushback and some negotiation. That's how those things go. But inflation is real. Inflation is high. We are pushing price to cover for that, as Mike has said a couple of times on the call and in the Q&A, and we'll continue to do that. We just feel that given the current environment, we don't see reason to expect a strong recovery in the residential space in the medium term. Operator: Our next question is from Julian Mitchell from JPMorgan. Julian Mitchell: Just wanted to start off with a question around the sort of end markets into next year. And when you look back historically at Allegion and the relationship of nonresidential orders and sales to changes in the interest rate environment, I suppose anything you could share with us on how recent rate moves have affected your commentary. So I think you talked about high single-digit organic growth again in Americas Non-Res into 2027. Are you assuming anything changes in terms of the composition of end markets driving that because of what's happened recently in rates? And when would you think rates would show up in terms of slowing any commercial new construction activity? John Stone: Yes. I appreciate the question, Julian, and I'd say a couple of things. One would be the growth in data centers. This is all new build. This is the next add to our large installed base. So that new build kind of has its own dynamics. And again, it's whatever you believe about that build-out and that continued strength we are participating, we're participating well, and we're late cycle in each of those projects. So I do feel good about our position there and the rather long tail that we would expect to see. Elsewhere, as we've mentioned, past couple of quarters, and you can see it in the news as well, recent JLL reports have even said commercial office demand has 5 straight quarters of growth, kind of coming back from the dead after the pandemic and the work-from-home dynamics. You see that in major metro areas, New York and San Fran, really leading the way. So some tower work has come back that hasn't been there in a while. Multifamily is some places contracting, other places growing. So I think when you look at Allegion, never forget that our portfolio, our sales force, our demand generation engine is broad-based. That's also where we feel justified in our optimism that our spec writing shows strength broad-based. So it's across all the institutional verticals and the commercial verticals have started to show some signs of life. And again, data centers just being its own dynamic right now that's very strong. Julian Mitchell: That's helpful. And then just on the margins and the aspects around that 50 bps tailwind from PPII that you've seen. Is that a good kind of placeholder, assuming no major changes in the cost inputs from here? Just wanted to check on that. And it looks like your guidance embeds a step-up in margin improvement year-on-year in Q4 from what we've seen in the last few quarters. Anything specific to call out there? Michael Wagnes: Yes, Julian, if you think about for this year, 2026, we would expect to see flat to slightly up margins for the full year. Obviously, that means Q4 has that step-up, as you just mentioned. Part of that is comp related. If you think about, especially in the Americas last year, that rate was a little lower. So we have some favorability. As you think about next year, we expect to see margin expansion. The magnitude of that is similar to my comments earlier. When we get to February, we'll give an outlook. A couple of things we did put on the slide though, as you think about next year. Expect us to drive that PPII, right, to combat the inflationary pressure. And then in the Americas, that core incrementals that we highlighted at our Investor Day, think of next year within the parameters of that framework we laid out. So you have an idea. As to the amount of margin expansion next year, we'll come back in February, and we'll give you that when we give you EPS. But at least we wanted to provide you some framework for you to think about next year as part of this earnings call. Operator: At this time, I see no more callers in the queue. So I will hand the call back to John Stone for closing remarks. John Stone: Well, thank you all for joining the call, and thanks for a great Q&A. We look forward to connecting with you on our full year earnings call in February. Be safe, be healthy. Operator: Thank you for joining the call. You may now disconnect. Before you buy stock in Allegion, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Allegion wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Allegion (ALLE) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Wall Street analysts forecast that Allegion (ALLE) will report quarterly earnings of $2.49 per share in its upcoming release, pointing to a year-over-year increase of 8.3%. It is anticipated that revenues will amount to $1.13 billion, exhibiting an increase of 6% compared to the year-ago quarter. The consensus EPS estimate for the quarter has undergone an upward revision of 1% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe. Ahead of a company's earnings disclosure, it is crucial to give due consideration to changes in earnings estimates. These revisions serve as a noteworthy factor in predicting potential investor reactions to the stock. Numerous empirical studies consistently demonstrate a strong relationship between trends in earnings estimate revision and the short-term price performance of a stock. While investors typically rely on consensus earnings and revenue estimates to gauge how the business may have fared during the quarter, examining analysts' projections for some of the company's key metrics often helps gain a deeper insight. Given this perspective, it's time to examine the average forecasts of specific Allegion metrics that are routinely monitored and predicted by Wall Street analysts. The collective assessment of analysts points to an estimated 'Net Revenues- Allegion International' of $226.31 million. The estimate suggests a change of +0.1% year over year. Analysts' assessment points toward 'Net Revenues- Allegion Americas' reaching $907.69 million. The estimate suggests a change of +7.6% year over year. The consensus among analysts is that 'Adjusted Operating Income- Allegion Americas' will reach $273.73 million. Compared to the present estimate, the company reported $252.00 million in the same quarter last year. According to the collective judgment of analysts, 'Adjusted Operating Income- Allegion International' should come in at $33.22 million. The estimate is in contrast to the year-ago figure of $32.30 million. View all Key Company Metrics for Allegion here>>> Shares of Allegion have demonstrated returns of +2.7% over the past month compared to the Zacks S&P 500 composite's +0.7% change. With a Zacks Rank #3 (Hold), ALLE is expected to mirror the overall market performance in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allegion PLC (ALLE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research