ALLE earnings analysis
What we found in ALLE's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Allegion posted a strong Q2, with revenue up 12.7% to $1.15 billion, diluted EPS up 16.2% to $2.15, and operating margin expanding to 22.1%. Americas drove the improvement, whereas International grew revenue but suffered a 140-bp segment-margin decline to 6.4%. First-half free cash flow was a solid $260.8 million, although working-capital investment, lower cash and higher revolver borrowings warrant monitoring; the filing provided no numerical earnings guidance.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Double-digit Q2 revenue growth
- Q2 revenue increased 12.7% year over year to $1,151.5 million, driven by 3.6% volume growth, 3.3% pricing, 5.1% acquisitions/divestitures and 0.7% favorable currency. Revenue also rose from $1.03 billion in Q1 2026.
- EPS and net income accelerated
- Diluted EPS rose 16.2% year over year to $2.15 from $1.85 and improved from $1.59 in Q1 2026. Net earnings increased to $184.6 million from $159.7 million.
- Operating margin expanded year over year
- Q2 gross margin was 44.9%, up about 90 bps sequentially from 44.0%, while operating margin expanded 60 bps year over year to 22.1% from 21.5%. Operating income increased $35.0 million to $254.7 million.
- Americas remained the earnings engine
- Americas delivered $918.6 million of Q2 revenue, up $97.1 million year over year, and segment operating income increased $30.2 million to $266.8 million. Its operating margin improved to 29.0% from 28.8%.
- Cash conversion remains capital-light
- Six-month operating cash flow was $299.7 million and capital expenditures were only $38.9 million, producing calculated free cash flow of $260.8 million. Capex represented approximately 1.8% of $2,185.1 million in first-half revenue.
- Material shareholder return capacity
- The board replenished the buyback authorization to $500.0 million in April; the company repurchased $160.6 million of shares in the first half and had $379.993 million remaining at June 30.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- International margin and profit deteriorated
- International revenue rose 16.2% to $232.9 million, but segment operating income fell $0.9 million to $14.8 million and margin declined 140 bps to 6.4%. Management attributed the pressure to inflation and investment spending exceeding pricing/productivity, unfavorable volume/mix, and $3.6 million of acquisition, integration and restructuring expense.
- Working capital consumed cash
- First-half operating cash flow declined $14.5 million year over year to $299.7 million as working-capital needs increased. Accounts receivable increased $122.0 million to $559.7 million and inventory rose $22.9 million to $541.9 million since December 31, 2025.
- Cash fell as revolver debt increased
- Cash declined $35.6 million in the first half to $320.6 million, while total debt increased $51.0 million to $2,031.1 million, including revolving-facility borrowings of $240.6 million. The revolving balance carried a 4.753% rate at June 30, 2026.
- Tariff exposure remains a demand risk
- Management estimates that approximately 20-25% of cost of goods sold is sourced from Mexico, less than 5% from China and 5-10% from other non-U.S. countries. Although pricing offset tariff inflation through June 30, the company says new or existing tariffs could affect future demand and the timing and amount of tariff refunds remain uncertain.
- No material risk-factor updates filed
- Item 1A states there were no material changes to risk factors from the 2025 Form 10-K. Current filing-specific exposure nevertheless includes $2,040.8 million of borrowings outstanding and $63.4 million of minimum software and IT-service purchase commitments through 2030.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $2.15
- Gross margin
- 44.9%
- Operating margin
- 22.1%
- Segment
- Allegion Americas revenue: $918.6 million, up 11.8% year over year; segment operating income: $266.8 million, up from $236.6 million.
- Segment
- Allegion International revenue: $232.9 million, up 16.2% year over year; segment operating income: $14.8 million, down from $15.7 million.
What they said about what is next.
The 10-Q provides no explicit numerical revenue or EPS outlook. Management said it expects continued growth in electronic products during 2026 and expects operating cash flow, cash balances and revolving-credit capacity to meet financing needs for at least the next 12 months.
The filing reads better than the one before it.
What came before.
- 10-Q · April 28, 2026
- Allegion reported Q1 net revenues of $1,033.6 million, up $91.7 million (+9.7%) versus Q1 2025, while operating income was $195.3 million (operating margin ~18.9%), essentially flat versus $196.4 million a year ago but…
- 10-K · February 17, 2026
- Allegion reported fiscal 2025 Net revenues of $4,067.3 million and Operating income of $859.5 million (implying ~21.1% operating margin), reflecting scale and durable profitability. The company emphasises a broad…
- 10-Q · October 24, 2024
- Allegion reported Q3 net revenues of $967.1 million, up $49.2 million (+5.4%) versus the prior-year quarter, with cost of goods sold of $535.0 million resulting in gross margin of ~44.7% and operating income of $215.0…
- 10-Q · July 24, 2024
- Allegion reported Q2 net revenues of $965.6M (up $53.1M, +5.8% YoY) with operating income of $209.0M and diluted EPS of $1.77. Gross margin expanded to ~44.4% and operating margin to ~21.6%; cash increased to $747.5M…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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