Executive Summary

Allegion delivered a clean beat and strong start to 2025: revenue $941.9M (+5.4% YoY; +4.0% organic) and adjusted EPS $1.86 (+20% YoY), with 150 bps of adjusted operating margin expansion to 22.7% on mix, volume leverage and acquisitions . Versus S&P Global consensus, both revenue ($920.8M*) and EPS ($1.67*) were exceeded, implying a broad-based beat driven by Americas non-residential strength and electronics growth .*
Guidance reaffirmed: FY25 reported revenue growth +1% to +3% (organic +1.5% to +3.5%), adjusted EPS $7.65–$7.85, ACF 85–90% of adjusted net income; outlook explicitly includes ~$80M of estimated tariffs to be offset at operating income and EPS levels, while revenue guidance excludes potential uplift from tariff-related surcharges (upside if current tariff/FX conditions persist) .
Management highlighted near-term dynamics: residential softness (mid-single-digit decline), International margin pressure (–20 bps YoY), and a “month‑ish” Q2 price–cost timing lag from immediate tariff costs vs surcharge implementation; full-year neutrality expected on tariffs .
Cash generation and capital deployment remained supportive: YTD ACF $83.4M (+$59.5M YoY), $40M buybacks (~0.3M shares), and a 6% dividend increase to $0.51 per share; balance sheet remains healthy with net debt/adj EBITDA ~1.6x .

What Went Well and What Went Wrong

What Went Well
- Broad beat and margin expansion: Adj EPS $1.86 (+20% YoY) and adj operating margin up 150 bps to 22.7% on favorable mix, volume leverage and acquisitions . “Q1 was a strong start… we expanded our industry-leading margins” — CEO John Stone .
- Americas non-res strength and electronics growth: Americas revenue +6.8% (+4.9% organic), non-res up high-single digits; electronics up low double digits — key structural growth vector .
- Strong cash flow and disciplined capital return: YTD ACF $83.4M (+~250% YoY), ~$40M buybacks, and dividend raised to $0.51 per share; M&A pipeline active (Next Door, Lemaar closed in Q1; Trimco on Apr 1) .
What Went Wrong
- Residential softness: Americas residential declined mid-single digits; management sees market “bouncing along the bottom” absent a clear catalyst (rates/tariffs) .
- International profitability: International adjusted operating margin slipped 20 bps to 10.2% on slight price/productivity headwinds net of inflation/investments .
- Tariff implementation lag into Q2: Largest tariffs effective early April with a “month‑ish” price–cost lag; management still expects full-year neutrality but flagged a possible Q2 headwind from timing .

Financial Results

Headline metrics – sequential and YoY progression

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$967.1	$945.6	$941.9
GAAP Diluted EPS ($)	$1.99	$1.65	$1.71
Adjusted EPS ($)	$2.16	$1.86	$1.86
Operating Margin (%)	22.2%	19.5%	20.9%
Adjusted Operating Margin (%)	24.2%	22.1%	22.7%

Q1 2025 vs S&P Global Consensus

Metric	Actual	S&P Global Consensus*
Revenue ($USD Millions)	$941.9	$920.8*
Adjusted EPS ($)	$1.86	$1.67*

Values retrieved from S&P Global.*

Segment performance (Q1 YoY)

Metric	Q1 2024	Q1 2025
Americas Revenue ($M)	$709.3	$757.8
Americas Adjusted Operating Margin (%)	27.9%	29.2%
International Revenue ($M)	$184.6	$184.1
International Adjusted Operating Margin (%)	10.4%	10.2%

KPIs and cash/returns

KPI	Q1 2024	Q1 2025
Net Cash from Operating Activities ($M)	$51.1	$104.5
Available Cash Flow ($M)	$23.9	$83.4
Capital Expenditures ($M)	$27.2	$21.1
Effective Tax Rate (%)	19.0%	15.4%
Adjusted Effective Tax Rate (%)	19.5%	16.1%
Cash & Equivalents ($M)	$391.8	$494.5
Share Repurchases ($M)	$40.0	$40.0
Dividends Paid ($M)	$42.1	$43.6
Net Debt / Adjusted EBITDA (x)	—	~1.6x

Notes:

Q1 revenue growth drivers: +2.2 pts from acquisitions; –0.8 pt FX; +4.0% organic on price and volume .
Price/productivity net of inflation/investments was neutral-to-slight tailwind in Q1; MX transactional FX tailwind cited .

Guidance Changes

Metric	Period	Previous Guidance (Feb 18, 2025)	Current Guidance (Apr 24, 2025)	Change
Reported Revenue Growth	FY 2025	+1% to +3%	+1% to +3%	Maintained
Organic Revenue Growth	FY 2025	+1.5% to +3.5%	+1.5% to +3.5%	Maintained
Adjusted EPS ($)	FY 2025	$7.65 – $7.85	$7.65 – $7.85	Maintained
Adjusted Effective Tax Rate	FY 2025	~17% – 18%	~17% – 18%	Maintained
Avg Diluted Shares (M)	FY 2025	~86.7	~86.7	Maintained
Available Cash Flow	FY 2025	85% – 90% of adj NI	85% – 90% of adj NI	Maintained
Tariff Cost Assumption	FY 2025	—	~$80M, offset at OI/EPS level	New detail
Revenue Guide Tariff/Surcharge Assumption	FY 2025	—	Revenue outlook excludes surcharge uplift; potential upside if current tariff/FX persist	Clarified
Dividend/Shareholder Returns	Run-rate	Q4’24 DPS $0.48	Q1’25 DPS $0.51 (6% increase)	Raised

Additional EPS adjustments: ~$0.46/sh amortization of acquired intangibles and ~$0.14/sh restructuring/M&A included in FY25 outlook .

Earnings Call Themes & Trends

Topic	Q3 2024 (Q-2)	Q4 2024 (Q-1)	Q1 2025 (Current)	Trend
Pricing and Tariffs	Not a major driver highlighted	Outlook set pre-new tariffs; adjusted EPS guide raised	~$80M tariff cost; surcharges implemented; “month‑ish” lag in Q2; offset at OI/EPS; revenue guide excludes surcharge uplift	Tariff risk managed via pricing; near-term Q2 lag; potential revenue upside
Americas Non-Res Demand	Mid-single-digit growth; resilient margins	Mid-single-digit non-res growth	High-single-digit non-res growth; sell-through healthy	Improving and resilient
Residential	Low-single-digit growth	High-single-digit growth	Mid-single-digit decline; softness expected to persist near term	Soft near-term
Electronics	—	—	Low double-digit growth; structural driver	Positive structural mix
Supply Chain/Source	—	—	USMCA-compliant sourcing; China <5% of COGS; Mexico plant reduces China exposure	Reduced China exposure
FX/Acquisitions	Modest FX tailwind; acquisitions contributed	Slight FX headwind; acquisitions +2.0 pts	FX –0.8 pt headwind; acquisitions +2.2 pts	Mixed FX; continued M&A accretion
Tax Rate	Adjusted ETR ~12% in Q3	Q4 adjusted ETR 13.1%	Q1 ETR 15.4% (discrete timing); full-year adj 17–18%	Normalizing higher full-year

Management Commentary

Strategy and positioning: “Q1 was a strong start… another demonstration of the resilience of our business model as we expanded our industry‑leading margins” — John Stone, CEO . “We are affirming our 2025 full year outlook for adjusted EPS of $7.65 to $7.85” .
Product innovation: Schlage Sense Pro (ultra-wideband) and Arrive Smart WiFi Deadbolt expand connected home offerings, with launches planned later this year .
Tariffs and pricing: “Our company estimates tariff costs of approximately $80 million in 2025, and we expect to offset tariffs at the operating profit and EPS level on a full-year basis, primarily through pricing actions” . CFO: “You could see a month‑ish… lag” in Q2; full-year neutral on tariffs .
Mix and margin: “Americas adjusted operating margin… up 130 bps” with neutral price/productivity net of inflation and investments; Mexico transactional FX tailwind cited .
Capital allocation: “Consistent cash flow and pipeline… positions us well for additional capital deployment” with Q1 buybacks ~$40M and 11th consecutive dividend increase .

Q&A Highlights

Tariff timing and mechanics: Pricing actions (surcharges) implemented in April; expect a “month‑ish” lag in Q2 but full-year OI/EPS neutrality; revenue guide intentionally excludes surcharge uplift .
Margin math: Offsetting tariffs in dollars (not margin rate) may pressure margin rates if tariffs are sizable; focus remains on dollar OI/EPS protection .
Non-res pipeline: Institutional verticals (healthcare/education) remain resilient; specification activity is a useful internal indicator but not linear QoQ; aftermarket strong with share gains .
Channel inventories: Book-and-ship model with short lead times; management monitoring closely and not seeing large inventory builds; healthy sell-through .
Residential outlook: Persistent softness on affordability (rates), tariffs and construction costs; ~70% aftermarket, ~30% new build mix .

Estimates Context

Q1 2025 vs S&P Global consensus: Adjusted EPS $1.86 vs $1.67* and revenue $941.9M vs $920.8M* — a broad beat on both metrics, aided by Americas non-res demand, favorable mix and M&A accretion .*
Forward implications: With revenue guidance excluding surcharge uplift and management seeing potential upside if current tariff/FX conditions persist, sell-side revenue estimates may drift higher, while margin rates could see mathematical pressure even as OI/EPS dollars are protected (tariffs offset at OI/EPS level) .