Allegion (ALLE 1.05%), a global provider of security products and solutions, reported its second-quarter 2025 results on July 24, 2025. The standout news was the company’s GAAP revenue surpassing $1 billion for the first time in a single quarter. This milestone beat analyst expectations, with actual revenue (GAAP) at $1,022.0 million versus the $1,001.92 million consensus. Adjusted earnings per share (EPS) reached $2.04, coming in $0.05 above estimates (non-GAAP). Allegion also raised its full-year outlook after seeing robust growth in the Americas non-residential business, though the residential segment again declined and international markets saw lower organic volumes. Overall, the quarter was marked by historic top-line growth and stable margins.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.04 | $1.99 | $1.96 | 4.1% |
| Revenue (GAAP) | $1,022.0 million | $1,001.92 million | $965.6 million | 5.8 % |
| Operating Margin (GAAP) | 21.5 % | 21.6 % | (0.1) pp | |
| Adjusted Operating Margin (Non-GAAP) | 23.7 % | 23.7 % | 0.0 pp | |
| Available Cash Flow (Non-GAAP)First Six Months | $275.4 million | $176.0 million | 56.5 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Allegion’s Business and Key Success Factors
The company specializes in security and access solutions for commercial, institutional, and residential customers, offering mechanical and electronic locks, door closers, exit devices, and connected access products. Within its portfolio, brands such as Schlage and LCN have established a strong market reputation, supporting Allegion’s wide-ranging customer base.
Recent years have seen Allegion focus on custom-configurable solutions, broadening its product range from traditional mechanical hardware to digital and electronic security systems. Key success factors include a diverse and technology-driven product portfolio, integration with digital platforms, robust manufacturing and supply chain processes, and strong brand recognition that underpins customer loyalty and market reach.
Noteworthy Second Quarter Developments
Allegion achieved its first-ever billion-dollar revenue quarter, Revenue was up 5.8% over the same period last year in the second quarter of 2025. The core Americas segment was again the main growth driver, with segment revenue up 6.6%. Within this region, the non-residential business grew at a high-single-digit rate, helped by pricing actions and modest volume increases. Recently completed acquisitions added 2.1% to Americas revenue. In contrast, the Americas residential business declined by a mid-single-digit rate, reflecting ongoing challenges tied to high mortgage rates and soft housing starts. Management stated, “expect to just kind of continue to remain soft. I'd say maybe bouncing along the bottom until there is a notable catalyst to change that.”
The international segment produced a reported revenue increase of 2.9%, but organic sales fell 2.2%. While acquisitions and favorable foreign currency shifts led to positive reported growth, the underlying sales environment—especially in core European markets—remains difficult. Nonetheless, Allegion expanded adjusted operating margin in this segment, reaching 13.1%. In both Americas and International, adjusted operating margins rose by 50 and 100 basis points, respectively.
Product innovation featured prominently in the quarter. Allegion launched the Schlage Sense Pro ultra-wideband smart lock and the Arrive Smart WiFi Deadbolt, both aimed at meeting growing demand for smart home security and connected access. These new products reflect Allegion’s ongoing push to integrate advanced electronics and connectivity into its offering, allowing for greater customization and alignment with emerging technology trends. Electronics and smart lock categories remain a key focus, with electronic product lines posting double-digit growth in recent quarters, including the first quarter of 2025.
The company also continued to invest in its supply chain, advancing the regionalization of manufacturing. For example, Allegion expanded capacity at its Mexico facilities to limit reliance on China, mitigating the impact of trade tariffs. These moves, together with an agile sourcing strategy, are intended to keep cost pressures under control while maintaining production flexibility.
Allegion sustained strong cash flow and remained active in capital allocation. Available cash flow (non-GAAP) climbed 56.5% to $275.4 million for the first six months of FY2025 compared to the same period in FY2024. The company ended Q2 2025 with $656.8 million in cash and equivalents and total debt at $2,067.2 million. Dividend payments totaled $44 million for Q1 2025, with management declaring a $0.51 per share quarterly dividend—an eleventh consecutive annual increase. Allegion repurchased approximately 0.3 million shares for around $40 million in the second quarter of 2025, highlighting its balanced approach to returning capital to shareholders while investing for growth.
Looking Ahead: Guidance and Investor Considerations
Management raised its full-year 2025 revenue guidance to 6.5%–7.5% growth reported (GAAP) and 3.5%–4.5% organic (non-GAAP). Non-GAAP adjusted EPS is now projected to range from $8.00 to $8.15, up from a previous $7.65–$7.85 target. Operating assumptions include about $40 million in tariff costs, which Allegion expects to neutralize through price actions. The company also reaffirmed a 17%–18% adjusted effective tax rate and expects full-year available cash flow conversion of 85%–90% of adjusted net income. “Raising the outlook for FY2025 EPS and expecting it to be in the range of $7.25 to $7.40, or $8.00 to $8.15 on an adjusted basis.” management noted.
For upcoming quarters, investors will want to monitor the trajectory of the Americas residential business, which continues to see declining sales in the first half of 2025. The international business also faces risks from weak organic demand, despite recent margin improvements. Other watch areas include the company’s ability to sustain margin rates in the face of cost inflation, ongoing trade/tariff dynamics, and geopolitical or macroeconomic volatility—especially in European markets. With new technological products rolling out and a focus on improving supply chain efficiency, Allegion’s forward momentum depends on maintaining demand in key segments while successfully navigating these external pressures.
The quarterly dividend was unchanged from the previous period at $0.51 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
