Allegion raises 2026 adjusted EPS outlook to $9.05 to $9.10 as third-quarter profit rises

Allegion plc (ALLE) said Thursday in a press release filed with the Securities and Exchange Commission that third-quarter 2026 net revenues rose 9.6% to $1,172.6 million from $1,070.2 million a year earlier.

Net earnings were $220.9 million, or $2.59 per diluted share, compared with $188.4 million, or $2.18 per share, a year earlier.

Here's how the company did:

• Diluted EPS: $2.59 vs. $2.18 a year earlier
• Adjusted EPS: $2.60 vs. $2.30 a year earlier
• Revenue: $1,172.6 million vs. $1,070.2 million a year earlier

On an adjusted basis, earnings were $2.60 per share, up 13.0% from $2.30. Adjusted net earnings were $221.0 million.

Organic revenue, which excludes acquisitions, divestitures and currency effects, rose 7.2%. Volume growth and price realization drove the increase, led by the Americas region.

Acquisitions and divestitures added 2.6% to reported revenue growth, while currency subtracted 0.2%.

Operating income rose $50.8 million, or 21.7%, to $284.6 million from $233.8 million a year earlier.

Adjusted operating income was $289.7 million, an increase of $32.3 million, or 12.5%, from $257.4 million.

Operating margin was 24.3%, compared with 21.8%. The adjusted operating margin was 24.7%, compared with 24.1%.

The company attributed the adjusted margin gain to favorable volume leverage and price and productivity net of inflation and investment, known as PPII.

Tariff refunds from the U.S. government added $19.9 million to operating income and $0.9 million to interest income in the quarter. The company excluded both from its adjusted results.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization after the company's adjustments, was $308.0 million, compared with $274.1 million a year earlier.

Here's how Allegion's segments did during the quarter:

• Americas: revenue of $942.4 million, up 11.7% from $844.0 million, or 9.1% organically; adjusted operating margin of 30.1%, up 20 basis points
• International: revenue of $230.2 million, up 1.8% from $226.2 million, or down 0.2% organically; adjusted operating margin of 13.9%, down 40 basis points

In the Americas, non-residential sales rose low-double digits organically, driven by volume growth and price realization. The residential business rose mid-single digits organically, driven by price. Acquisitions added 2.6% to the region's reported revenue.

In International, the organic revenue decline came from volume declines, which more than offset favorable pricing. Adjusted margin fell on volume declines and unfavorable mix, partly offset by a price and productivity tailwind and acquisitions.

Interest expense was $24.2 million, a decrease of $2.4 million. The effective tax rate was 17.5%, compared with 9.8%. On an adjusted basis, the rate was 17.5%, compared with 14.9%.

Year-to-date available cash flow was $539.4 million, an increase of $54.2 million from the prior-year period. Available cash flow, a non-GAAP measure, is operating cash flow less capital expenditures. The company ended the quarter with $388.1 million in cash and cash equivalents and $2,032.0 million in total debt.

In the third quarter, the company repurchased about 0.8 million shares for about $120 million. It also paid quarterly dividends of $0.55 per ordinary share, or about $46 million.

For the first nine months, net revenues were $3,357.7 million, compared with $3,034.1 million, and diluted EPS was $6.33, compared with $5.73.

The company raised its full-year 2026 reported revenue growth outlook to 9.5% to 10.5%. It raised its organic growth outlook to 5.0% to 6.0%, excluding acquisitions, divestitures and currency movements.

The company raised its adjusted EPS outlook to $9.05 to $9.10 and updated its reported EPS outlook to $8.35 to $8.40.

Adjustments to 2026 EPS include about $0.60 per share for acquisition-related amortization, $0.28 per share for restructuring, M&A and other items, and a $0.18 per share benefit from tariff refunds.

The outlook assumes an adjusted effective tax rate of about 18% to 19% and an average diluted share count of about 85.6 million for the full year. The company continues to expect available cash flow of 85% to 95% of adjusted net income.

President and CEO John H. Stone said: “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.”

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.”

In the quarter, restructuring charges and acquisition and integration expenses totaled $8.0 million, and amortization of acquired intangible assets was $17.0 million.

The company said it would hold a conference call at 8 a.m. ET on Thursday, led by President and CEO John H. Stone and Senior Vice President and Chief Financial Officer Mike Wagnes.