Allegion plc

Second-quarter revenue was approximately $1.2 billion, up 12.7% year over year, with organic revenue up 6.9%. Adjusted operating margin was 24.2%, up 50 basis points, and adjusted EPS was $2.40, up $0.36 or 17.6% from last year. Americas revenue was $918.6 million, up 11.8% reported and 8.9% organic, while International revenue was $232.9 million, up 16.2% reported but down 1.2% organic. Year-to-date available cash flow was $260.8 million, down 5.3%, and net debt to adjusted EBITDA was 1.6x. For 2026, management raised reported revenue growth to 7.5% to 8.5%, organic revenue growth to 3.5% to 4.5%, and adjusted EPS to $8.85 to $9.00. They said Americas margin expansion should continue in the second half, International margins should improve as ERP issues are worked through, and full-year ACF conversion should be about 85% to 95% of adjusted net income.

John Stone said the quarter was driven by strong organic growth in the Americas and continued momentum in nonresidential indicators, with spec activity described as the strongest he has seen since joining the company. He highlighted broad-based strength across institutional markets, improving commercial verticals like office and multifamily, and growing relevance in data centers. His tone was constructive but measured: upbeat on the Americas and long-term nonres growth, while acknowledging weaker European demand and additional restructuring actions there.

Mike Wagnes emphasized the hard numbers behind the quarter: revenue of approximately $1.2 billion, adjusted operating margin of 24.2%, adjusted EPS of $2.40, and year-to-date available cash flow of $260.8 million. He said pricing and productivity, net of inflation and investment, were favorable by $11.8 million and added 30 basis points to margin, while acquisitions were a 30 basis point margin headwind. In the Americas, adjusted operating margin improved 20 basis points, and in International margins fell 70 basis points but improved 440 basis points sequentially as production recovered from Q1 ERP disruption. He also noted the balance sheet remains healthy at 1.6x net debt to adjusted EBITDA and reiterated full-year ACF conversion guidance of about 85% to 95% of adjusted net income.

Analysts focused on why Americas volumes were stronger than expected, especially residential, and management said demand was genuinely solid rather than inventory-driven, though some prebuying likely occurred ahead of a late-May price increase. On nonresidential, management said strong spec activity has persisted for three to four quarters and should support project work and revenue over the next 12 to 18 months, but they declined to provide exact spec numbers. Questions on Europe centered on the divergence versus peers; management pointed to Germany’s weakening macro backdrop and its outsized impact on Allegion’s exposure, while noting Southern Europe was more in line with expectations. They also quantified restructuring actions in Europe as roughly $10 million annually of cost benefit, with the full run rate expected in Q4.