Allegion plc Q3 FY2025 earnings call

• Capital allocation: In September, Allegion launched a new mid-tier commercial product line for Schlage. Since Q2 earnings, Allegion announced 2 more acquisitions, UAP and Brisant, and previously announced acquisitions of ELATEC, Gatewise, and Waitwhile closed. Dividend of $0.51 per share was paid in Q3. - Financial results: Q3 revenue over $1 billion, up 10.7% compared to 2024. Organic revenue increased 5.9% due to favorable price and volume. Adjusted operating margin was 24.1%, down 10 basis points compared to last year. Adjusted earnings per share of $2.30 increased $0.14 or 6.5% versus the prior year. Year-to-date available cash flow was $485.2 million, up 25.1%.

Americas Segment: Q3 revenue was $844 million, up 7.9% on a reported basis and 6.4% organically. Adjusted operating income was $252 million, up 9% versus the prior year, with an adjusted operating margin up 40 basis points. Pricing in the Americas segment was 4.6% in the quarter. International Segment: Q3 revenue was $226 million, up 22.5% on a reported basis and 3.6% organically. Adjusted operating income was $32.3 million, up 28.2% versus the prior year period, with an adjusted operating margin for the quarter increasing 70 basis points.

• Raised 2025 full year adjusted earnings per share outlook to $8.10 to $8.20. - Markets: Americas nonresidential markets remain resilient, residential markets soft. International markets have been largely unchanged year-to-date, expecting roughly flat organic performance. Anticipate approximately $40 million of surcharge revenue in the Americas related to tariff recovery.

Q: Joe Ritchie with Goldman Sachs asked about spec writing continuing and key verticals.

A: John Stone said spec activity accelerated in 2024 and continued in 2025, with spec writers versatile across various verticals.

Q: Joe Ritchie also asked about M&A pipeline.

A: John Stone said the pipeline is strong in both segments, with activity in product categories like mechanical, electronics, and complementary software.

Q: Joseph O'Dea with Wells Fargo asked about conversations with building owners, etc.

A: John Stone said nonres project activity is humming along, private finance came off the sidelines, and a favorable interest rate environment would help.

Q: Joseph O'Dea asked about International segment.

A: John Stone said International team executed well, electronics businesses performing well, and ELATEC acquisition adding momentum.

Q: Julian Mitchell with Barclays asked about adjusted operating margins and Americas segment.

A: Michael Wagnes said segment margin expanded, corporate costs were a factor, and expected margin expansion with pricing and productivity.

Q: Jeffrey Sprague with Vertical Research asked about M&A integration.

A: John Stone said acquisitions are being integrated rapidly with synergies across revenue, cost, and faster-growing segments.

Q: Tomohiko Sano with JPMorgan asked about residential outlook and tariffs.

A: Michael Wagnes said residential market demand is soft, and John Stone said no pricing fatigue seen with tariffs.

Q: Timothy Wojs with Baird asked about spec content and International PPII.

A: John Stone said electronics adoption accelerating, new product launches paying dividends, and Michael Wagnes said International PPII was a timing consideration.