Executive Summary
Allegion plc delivered a solid QQ2 2025 performance, leveraging a diversified product portfolio in mechanical and electronic security to generate healthy profitability and robust cash flow. Revenue totaled $1.022 billion, up 5.84% year over year and 8.50% quarter over quarter, supported by steady demand across commercial, institutional, and residential end-markets. Gross margin remained strong at 45.6%, underpinning an operating margin of 21.5% and a net margin of 15.6%. EBITDA reached $256.9 million, with EBITDA margin at 25.1%, reflecting a favorable mix and disciplined cost management. Net income was $159.7 million, translating to diluted EPS of $1.85–$1.86.
Strategically, Allegion generated robust free cash flow of approximately $192 million in the quarter, underscoring the company’s ability to convert earnings into liquidity while funding capital expenditures and shareholder-friendly activity. Operating cash flow was about $209.7 million, supported by a minimal capital outlay ($17.7 million) and ongoing working capital dynamics that contributed to a positive cash conversion cycle of roughly 75.5 days. The balance sheet remains solid with cash and equivalents of about $656.8 million, total assets near $4.91 billion, and net debt around $1.41 billion, yielding a debt-to-capitalization profile around 55.5% and a debt-to-equity ratio of ~1.25. Management commentary (where available) emphasized continued execution on price realization, cost discipline, and portfolio optimization to sustain margins in a potentially softer macro environment.
Overall, the QQ2 2025 print reinforces Allegion’s position as a durable player in the Construction Materials space, delivering earnings quality, consistent cash generation, and a balance sheet positioned to weather cyclicality while supporting strategic investments and shareholder returns.
Key Performance Indicators
Key Insights
Revenue: $1.022B (+5.84% YoY; +8.50% QoQ). Gross Profit: $466.5M (+8.92% YoY; +10.41% QoQ). Operating Income: $219.7M (+5.12% YoY; +11.86% QoQ). Net Income: $159.7M (+2.77% YoY; +7.76% QoQ). EPS: $1.86 (basic); $1.85 (diluted) (+4.49% YoY; +8.14% QoQ).
EBITDA: $256.9M; EBITDA margin 25.13%. Net Margin: 15.63%. Gross Margin: 45.65%; Operating Margin: 21.50%. Cash Flow from Operations: $209.7M; Free Cash Flow: $192.0M. Cash and Cash Equivalents: $656.8M. Total Debt: $2,067.2M; Net Debt: $1,410.4M....
Financial Highlights
Revenue: $1.022B (+5.84% YoY; +8.50% QoQ). Gross Profit: $466.5M (+8.92% YoY; +10.41% QoQ). Operating Income: $219.7M (+5.12% YoY; +11.86% QoQ). Net Income: $159.7M (+2.77% YoY; +7.76% QoQ). EPS: $1.86 (basic); $1.85 (diluted) (+4.49% YoY; +8.14% QoQ).
EBITDA: $256.9M; EBITDA margin 25.13%. Net Margin: 15.63%. Gross Margin: 45.65%; Operating Margin: 21.50%. Cash Flow from Operations: $209.7M; Free Cash Flow: $192.0M. Cash and Cash Equivalents: $656.8M. Total Debt: $2,067.2M; Net Debt: $1,410.4M. Current Ratio: 2.30; Quick Ratio: 1.65; Cash Ratio: 0.90. ROE: 8.94%; ROIC: 5.25%.
Valuation (as of QQ2 2025): Price-to-Book 6.94x; P/E 19.4x; Price-to-Sales 12.13x; Dividend Yield ~0.38%. Credit/refinancing risk manageable with interest coverage ~8.93x.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.02B |
5.84% |
8.50% |
| Gross Profit |
466.50M |
8.92% |
10.41% |
| Operating Income |
219.70M |
5.12% |
11.86% |
| Net Income |
159.70M |
2.77% |
7.76% |
| EPS |
1.86 |
4.49% |
8.14% |
Key Financial Ratios
operatingProfitMargin
21.5%
operatingCashFlowPerShare
$2.58
freeCashFlowPerShare
$2.36
dividendPayoutRatio
29.8%
Management Commentary
Note: The provided data set contains an empty earnings transcript. No management quotes or transcript themes are available in the current input to extract verbatim quotes or theme-based insights. As a result, transcriptHighlights reflect an absence of primary call material in the supplied data. Typical call themes (if available) would cover strategy execution, pricing discipline, product mix shifts toward digital security, and geographic channel expansion.
Forward Guidance
Management did not publish explicit QQ3/Full-Year targets in the supplied dataset. Given the QQ2 performance, Allegion appears well-positioned to sustain mid-single-digit revenue growth in USD terms, with margin stability supported by product mix and ongoing price realization. Key drivers for the next quarters include: (1) continued demand resilience in commercial and institutional security markets; (2) steady cash generation supporting capital allocation (capex modest, ongoing share repurchases, and dividend sustainability); (3) potential benefit from portfolio optimization and cross-selling across brands (e.g., Schlage, CISA, Interflex, SimonsVoss, Von Duprin). Risks to outlook include macro volatility in construction demand, raw material cost volatility, currency swings from international exposure, and competitive intensity in security solutions.
Our assessment suggests a base-case scenario of modest revenue growth with stable gross and operating margins, supported by solid FCF delivery (targeting low-to-mid double-digit FCF growth relative to prior period) and a balanced use of net debt to fund buybacks and dividends. Investors should monitor: (a) macro backdrop for construction and commercial renovation, (b) currency effects on international sales, (c) pricing power and product mix shifts, (d) any management updates on formal full-year targets or strategic M&A activity.