Company Overview - Allegion (ALLE) currently holds a Momentum Style Score of A, indicating strong potential for momentum investing [3] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for outperformance in the market [4] Price Performance - Over the past week, Allegion's shares have increased by 8.23%, significantly outperforming the Zacks Security and Safety Services industry, which rose by only 0.19% [6] - In a longer time frame, Allegion's shares have risen by 13.56% over the past month, compared to the industry's 2.01% [6] - Over the last three months, Allegion's shares have increased by 16.17%, and over the past year, they are up 18.89%, while the S&P 500 has moved 15.97% and 18.37%, respectively [7] Trading Volume - Allegion's average 20-day trading volume is 974,880 shares, which serves as a useful baseline for assessing price movements [8] Earnings Outlook - In the past two months, three earnings estimates for Allegion have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from $7.77 to $8.02 [10] - For the next fiscal year, two estimates have also moved upwards with no downward revisions [10] Conclusion - Given the strong price performance, positive earnings outlook, and high Momentum Style Score, Allegion is recommended as a solid momentum pick for investors [12]

Core Insights - Allegion US has launched the Schlage® L Series Motorized Latch Retraction mortise locks, enhancing security and accessibility while providing quiet operation for environments like healthcare and education [1][2]. Product Features - The L Series locks feature quiet control, utilizing an ultra-quiet stepper motor with 24V DC to deliver high torque at low speeds, available in six functions including keyed, non-keyed, and lever control options [3]. - The locks offer both request-to-exit (RX) and latchbolt (LX) monitoring, with a patent-pending feature that detects binding conditions and adjusts the motor accordingly [3]. Application Versatility - These locks can be retrofitted into existing L Series mortise pockets, allowing for hands-free operation in various settings such as accessible restrooms, clean rooms, and high-security data centers [4]. - The locks are suitable for K-12 schools, providing controlled access for visitor entrances, administration offices, and classroom doors, while maintaining the strength and reliability of Schlage's electrified mortise line [4].

Core Insights - The article discusses the journey to financial independence through disciplined living and strategic investing, highlighting the transition from financial struggle to freedom within a six-year period [2]. Group 1: Financial Independence Journey - The individual began blogging in 2011 about achieving financial independence by living below means and investing wisely [2]. - Achieved financial freedom at the age of 33 after starting from a position of being "below broke" at age 27 [2]. Group 2: Investment Focus - The content created focuses on dividend growth investing, emphasizing the importance of living off dividends and identifying undervalued high-quality dividend growth stocks [2]. - The strategy includes exploring high-yield investment opportunities and other long-term investment prospects [2].

Core Insights - Allegion plc's second-quarter 2025 adjusted earnings per share (EPS) were $2.04, exceeding the Zacks Consensus Estimate of $2, marking a 4.1% year-over-year increase [1][8] - The company's revenues reached $1.02 billion, reflecting a 5.8% year-over-year growth, driven by strong performance in the non-residential business in the Americas [2][8] Revenue Details - Allegion's organic revenues increased by 3.2%, with acquired assets contributing 1.9% and foreign currency effects adding 0.7% [2] - Revenues from Allegion Americas rose 6.6% year over year to $821.5 million, accounting for 80.4% of total revenues, surpassing estimates [2] - Allegion International revenues were $200.5 million, up 2.9% year over year, but organic revenues declined by 2.2% [3] Margin Profile - Cost of revenues increased by 3.4% year over year to $555.5 million, while gross profit rose 8.9% to $466.5 million, resulting in a gross margin increase of 120 basis points to 45.6% [4] - Selling and administrative expenses increased by 12.5% to $246.8 million, with adjusted EBITDA at $258.1 million, reflecting a 5.9% year-over-year increase [4][5] Balance Sheet and Cash Flow - At the end of Q2 2025, Allegion had cash and cash equivalents of $656.8 million, up from $503.8 million at the end of 2024, while long-term debt increased to $2.04 billion [6] - In the first half of 2025, net cash generated from operating activities was $314.2 million, a 40.2% increase year over year, with available cash flow at $275.4 million [7] 2025 Outlook - Allegion raised its 2025 revenue growth forecast to 6.5-7.5%, up from the previous 1-3% estimate, and adjusted EPS outlook to $8.00-$8.15 from $7.65-$7.85 [10] - The company expects organic revenue growth to be in the range of 3.5-4.5%, compared to the earlier expectation of 1.5-3.5% [10][11] Shareholder Returns - Allegion repurchased shares worth $80.0 million and paid dividends totaling $87.8 million, reflecting a 4.8% year-over-year increase [9]

Financial Data and Key Metrics Changes - Q2 revenue exceeded $1,000,000,000, marking a 5.8% increase compared to 2024 [15] - Organic revenue increased by 3.2%, driven by favorable pricing and volume in the Americas non-residential business [16] - Adjusted earnings per share (EPS) for Q2 was $2.04, up 4.1% year-over-year [18] - Year-to-date available cash flow reached $275,400,000, a 56.5% increase [18][25] Business Line Data and Key Metrics Changes - Americas segment revenue was $821,500,000, up 6.6% reported and 4.5% organically [20] - Non-residential business in the Americas saw high single-digit organic growth, while residential business declined mid-single digits [21] - International segment revenue was $200,500,000, up 2.9% reported but down 2.2% organically [23] Market Data and Key Metrics Changes - The Americas non-residential markets remain resilient, with strong demand and project activity [27] - International markets are expected to remain roughly flat in organic performance [29] Company Strategy and Development Direction - Allegion is focused on capital allocation strategies that include organic growth investments and accretive acquisitions [6][10] - Recent acquisitions include companies that enhance Allegion's electronics and software offerings, supporting long-term growth [12][13] - The company aims to leverage its strong cash generation to return value to shareholders while pursuing growth opportunities [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year performance, raising the 2025 adjusted EPS outlook to $8 to $8.15 [30] - The company noted that project activity in non-residential markets is strong, with no evidence of pull-ahead ordering due to tariffs [35][36] - Management highlighted that while some markets are soft, institutional sectors like healthcare and education remain robust [50][51] Other Important Information - Allegion announced four additional acquisitions, including NovaS, Elletek, Gatewise, and Waitwhile, enhancing its portfolio [9][11] - The company plans to divest its API business in Australia, which had approximately $6,000,000 in revenue for the first half of 2025 [25] Q&A Session Summary Question: Activity levels in non-residential markets and tariff impacts - Management indicated no signs of pull-ahead ordering due to tariffs, with project demand remaining strong [35][36] Question: Margin performance and pricing actions - Management discussed the timing of price-cost dynamics related to tariffs, noting that the company expects to recover tariff-related revenue throughout the year [38][39] Question: Market conditions and share gain - Management suggested that Allegion is likely gaining market share, particularly at the expense of smaller competitors, due to better operational performance [51] Question: EPS guidance increase - The increase in EPS guidance was attributed to strong first-half performance, favorable currency impacts, and contributions from acquisitions [56] Question: International business outlook - Management expects the international segment to remain flat, with the fourth quarter typically being the strongest [76][78]

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

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

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

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

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