Allegion plc (ALLE)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered solid execution: revenue grew 5.4% to $945.6M and adjusted EPS rose 10.7% to $1.86; GAAP EPS was $1.65, up 23.1% year over year .
• Americas led growth (+6.4% reported, +4.6% organic) with adjusted operating margin up 70 bps to 27.4%; International was softer (+1.5% reported, -0.7% organic) with adjusted margin down 100 bps to 15.8% on lower volumes .
• Management introduced FY 2025 outlook: reported revenue growth 1%–3%, adjusted EPS $7.65–$7.85, and adjusted effective tax rate ~17%–18%; ACF targeted at 85%–90% of adjusted net income .
• Dividend raised 6% to $0.51 per share (11th consecutive increase), reinforcing balanced capital deployment; share repurchases totaled ~$100M in Q4 .

What Went Well and What Went Wrong

What Went Well

• Adjusted EPS grew 10.7% YoY to $1.86 on volume leverage and favorable regional mix; adjusted operating margin expanded 10 bps to 22.1% .
• Americas nonresidential grew mid-single digits and residential high-single digits; adjusted regional margin increased 70 bps to 27.4% .
• Strategic product and technology launches underpin growth: “Allegion became the first security solutions provider to support mobile credentials on Wear OS by Google Smart Watches” and highlighted Schlage XE360, Airbnb integration, Indication Solutions, and Von Duprin 70 Series .

What Went Wrong

• International organic revenue declined 0.7% with adjusted margin down 100 bps to 15.8% due to reduced volumes, with Germany and China cited as headwinds (China exit creates slight 2025 organic headwind) .
• Price realization stepped down ~1 point vs Q3 due to timing of rebate accruals in Americas, modestly pressuring Q4 price/mix vs prior quarter .
• Electronics grew only low single digits YoY in Americas as comparisons remain affected by timing of prior supply chain disruptions; management expects normalization in 2025 .

Financial Results

Revenue, EPS, and Margins (GAAP and Adjusted)

Notes: Adjusted EPS and margins exclude restructuring, acquisition/integration costs, and amortization of acquired intangibles per company definitions .

Segment Breakdown (Q4)

Adjusted EBITDA and Margin

Cash and Capital Deployment (Quarterly/Year-end)

• Available Cash Flow (FY 2024): $582.9M, +12.9% YoY .
• Q4 share repurchases: ~0.7M shares for ~$100M; Q4 dividends: $0.48 per share totaling $41.4M .
• Year-end cash: $503.8M; total debt: $1,999.5M .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Allegion delivered a record year in 2024 – a year marked by consistent, strong execution, solid margin expansion and balanced capital deployment.” — John H. Stone .
• “Allegion became the first security solutions provider to support mobile credentials on Wear OS by Google Smart Watches.” — Prepared remarks highlighting tech leadership .
• “We expect total Allegion revenue growth to be 1% to 3% and organic revenue growth to be 1.5% to 3.5%… adjusted EPS outlook in the range of $7.65 to $7.85.” — FY 2025 outlook .
• “At the enterprise level, we import less than 5% of our cost of goods sold from China… for Mexico, we source approximately 20% to 25% of cost of goods sold… we anticipate taking pricing actions to cover the higher costs.” — Tariff exposure and mitigation .

Q&A Highlights

• Tariffs and metals: Minimal impact expected from steel/aluminum derivative tariffs; nonres business largely U.S.-sourced .
• 2025 margin expansion: Management implies ~50 bps expansion within prior 50–100 bps framework; normal seasonality expected .
• Segment outlook: Nonres expected to lead Americas; electronics growth to outpace mechanical in 2025 .
• International/China: China exit small headwind (~$5M FY24 revenue); International margins still set to expand in 2025 despite macro .
• Residential prebuy: Q4 resi benefited by mid-single-digit millions as customers pulled ahead on tariff concerns; expected to be a headwind in Q1, with no further pull-forward .

Estimates Context

• S&P Global Wall Street consensus (EPS and revenue) for Q4 2024 was unavailable at the time of this analysis due to data access limits, so beat/miss vs consensus cannot be determined.
• Absent consensus, investors should note underlying performance drivers: adjusted EPS +10.7% YoY, Americas strength, and modest adjusted margin expansion despite price timing dynamics .

Key Takeaways for Investors

• Q4 2024 was solid: adjusted EPS $1.86 (+10.7% YoY) with adjusted operating margin up 10 bps, supported by volume leverage and regional mix .
• Americas is the engine: revenue +6.4% reported (+4.6% organic) and adjusted margin up 70 bps to 27.4%, with stable institutional demand into 2025 .
• International remains cautious: adjusted margin down 100 bps; Germany weak and China exit a small headwind to 2025 organic growth .
• 2025 guide prudent: reported revenue +1%–3%, adjusted EPS $7.65–$7.85, adjusted tax rate 17%–18%, and ACF at 85%–90% of adjusted NI — supportive of continued capital returns .
• Tariff risk manageable: China exposure <5% of COGS; Mexico 20%–25% mainly in resi; management plans pricing actions to offset operating income/EPS impact if needed .
• Near-term watch: Q1 resi headwind from Q4 tariff prebuy; electronics growth expected to reaccelerate and outpace mechanical in 2025 .
• Capital allocation: Dividend increased 6% to $0.51 and ongoing buybacks underscore cash generation and shareholder returns; M&A pipeline active (Next Door closed; Lemaar intent) .

Citations:
Q4 2024 8-K press release and schedules .
Q4 2024 earnings call transcript .
Q3 2024 8-K press release .
Q2 2024 8-K press release .
Q4 2024 press release (Business Wire) .
Dividend increase press release .
M&A press releases: Lemaar intent , Next Door acquisition .