• Revenue: $945.6 million for Q4, a 5.4% increase compared to 2023.
• Organic Revenue Growth: 3.5% in Q4, driven by favorable price and volume.
• Adjusted Operating Margin: Increased by 10 basis points in Q4.
• Adjusted Earnings Per Share (EPS): $1.86, a 10.7% increase versus the prior year.
• Available Cash Flow: $582.9 million for the full year, a 12.9% increase versus last year.
• America Segment Revenue: $750 million in Q4, up 6.4% on a reported basis and 4.6% organically.
• International Segment Revenue: $195.6 million in Q4, up 1.5% on a reported basis but down 7.1% organically.
• Net Debt to Adjusted EBITDA Ratio: 1.6 times.
• Share Repurchases: Approximately $220 million for the year.
• M&A Activity: $137 million in 2024, including five bolt-on acquisitions.

• Warning! GuruFocus has detected 3 Warning Sign with ALLE.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Allegion PLC (NYSE:ALLE) reported a 5.4% increase in revenue for Q4 2024, with organic revenue growth of 3.5%, driven by favorable price and volume.
• The company achieved a 70 basis points expansion in operating margin for the full year 2024, reflecting strong operational performance.
• Allegion PLC (NYSE:ALLE) executed $137 million in M&A during 2024, including five bolt-on acquisitions, enhancing its core markets and product portfolio.
• The company announced its 11th consecutive dividend increase, demonstrating a commitment to returning cash to shareholders.
• Allegion PLC (NYSE:ALLE) has a strong balance sheet with a net debt to adjusted EBITDA ratio of 1.6 times, supporting continued capital deployment.

Negative Points

• The international segment faced challenges in Q4 2024, with a 7.1% decline in organic revenue, particularly impacted by a weak macroeconomic environment in Germany.
• Price and productivity, net of inflation and investment, were a slight headwind in Q4, although strong for the full year.
• The company's guidance for 2025 includes a significant headwind from foreign currency, primarily affecting Allegion International.
• Allegion PLC (NYSE:ALLE) anticipates potential impacts from tariffs on imports from China and Mexico, which could affect cost structures.
• The residential business experienced a pull-forward in purchases due to inflation and tariff uncertainty, which may lead to a headwind in Q1 2025.

Q & A Highlights

Q: Can you explain the price/cost productivity investment equation and why it flipped negative this quarter? A: Michael Wagnes, CFO: The change was due to the timing of rebate accruals, not core pricing. Core pricing remained strong, especially in the Americas. For 2025, we expect pricing and productivity to exceed inflation and investment on a dollar basis.

Q: How are tariffs on steel and aluminum affecting your sourcing for US plants? A: John Stone, CEO: The impact of steel and aluminum tariffs is minimal. Our non-residential business is largely sourced and produced in the US, so we don't anticipate significant effects from these tariffs.

Q: What is the outlook for adjusted operating margin in 2025? A: Michael Wagnes, CFO: We expect margin expansion in 2025, though at the lower end of our previous framework of 50 to 100 basis points. The year will follow a normal seasonal pattern similar to 2024.

Q: Can you discuss the growth expectations for the Americas segment in 2025? A: Michael Wagnes, CFO: Non-residential is expected to be stronger than residential. Electronics growth should outpace mechanical, returning to normal comparisons and contributing positively to overall growth.

Q: How is the M&A pipeline looking for 2025, and will it be accretive to margins? A: John Stone, CEO: The M&A environment is healthy with high-quality targets. While not every acquisition will be accretive to our industry-leading margins, we remain disciplined and optimistic about our M&A prospects for 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.