Allegion (NYSE: ALLE) reported Q3 2026 revenue of $1.173 billion, up 9.6% from $1.070 billion a year earlier, while diluted EPS rose 18.8% to $2.59 from $2.18. Organic revenue increased 7.2%, led by Americas non-residential demand, and adjusted operating margin expanded 60 basis points to 24.7%. The quarter ended September 30, 2026, and the results were released October 22, 2026.
Core Financial Results
Volume growth and price realization drove the organic revenue increase. Acquisitions and divestitures added 2.6 percentage points to reported growth, while foreign currency reduced growth by 0.2 percentage points.
Profit increased faster than revenue. GAAP operating income rose 21.7%, while adjusted operating income increased 12.5% to $289.7 million as volume leverage and positive price and productivity net of inflation and investment supported margins.
| Metric | Q3 2026 | Q3 2025 | Year-over-Year Change |
|---|---|---|---|
| Revenue | $1,172.6 million | $1,070.2 million | +9.6% |
| Gross profit | $548.2 million | $489.8 million | About +11.9% |
| Operating income | $284.6 million | $233.8 million | +21.7% |
| Operating margin | 24.3% | 21.8% | +250 bps |
| Adjusted operating margin | 24.7% | 24.1% | +60 bps |
| Net earnings | $220.9 million | $188.4 million | About +17.3% |
| Diluted EPS | $2.59 | $2.18 | +18.8% |
| Adjusted EPS | $2.60 | $2.30 | +13.0% |
| Adjusted EBITDA | $308.0 million | $274.1 million | About +12.4% |
Business and Segment Performance
The Americas remained the primary growth engine. Revenue increased 11.7% on a reported basis and 9.1% organically, with non-residential organic revenue rising at a low-double-digit rate on higher volume and pricing. Residential organic revenue increased at a mid-single-digit rate, primarily because of pricing.
International revenue increased only 1.8% on a reported basis and declined 0.2% organically. Lower volume more than offset favorable pricing, while unfavorable mix and volume pressure reduced adjusted profitability.
| Segment Metric | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
| Americas revenue | $942.4 million | $844.0 million | +11.7% |
| Americas adjusted operating margin | 30.1% | 29.9% | +20 bps |
| International revenue | $230.2 million | $226.2 million | +1.8% |
| International adjusted operating margin | 13.9% | 14.3% | -40 bps |
Acquisitions reduced the Americas adjusted operating margin by 40 basis points, partially offsetting volume leverage and operating improvements. In International, positive price and productivity and favorable acquisition effects were insufficient to offset lower volume and unfavorable mix.
Profitability, Cash Flow, and the Balance Sheet
The cash flow figures cover the first nine months of 2026 rather than the quarter alone. Operating cash flow increased to $604.0 million from $543.7 million, while capital expenditures rose to $64.6 million from $58.5 million. Available cash flow, defined as operating cash flow less capital expenditures, increased by $54.2 million to $539.4 million.
Allegion ended the quarter with $388.1 million in cash and cash equivalents and $2.032 billion in total debt. During Q3, it repurchased approximately 0.8 million shares for about $120 million and paid roughly $46 million in dividends, equal to $0.55 per ordinary share.
Tariff Refunds Widened the Gap Between GAAP and Adjusted Growth
Q3 GAAP results included $19.9 million of IEEPA tariff refunds in operating income and another $0.9 million in interest income. Allegion excluded both benefits from adjusted operating income and adjusted EPS.
The refunds helped explain why GAAP operating margin expanded by 250 basis points while adjusted operating margin increased by a more modest 60 basis points. Similarly, GAAP diluted EPS rose 18.8%, compared with 13.0% adjusted EPS growth. The underlying adjusted improvement still reflected volume leverage and positive price and productivity, but the reported figures received an additional benefit from the refunds.
A higher tax rate offset part of the operating improvement. The GAAP effective tax rate increased to 17.5% from 9.8%, while the adjusted rate rose to 17.5% from 14.9%.
Full-Year 2026 Guidance
Allegion raised its full-year reported and organic revenue growth outlook and increased its adjusted EPS forecast. It also updated reported EPS guidance while maintaining its expectations for the adjusted tax rate and cash conversion.
| Metric | Latest 2026 Guidance | Status |
|---|---|---|
| Reported revenue growth | 9.5% to 10.5% | Raised |
| Organic revenue growth | 5.0% to 6.0% | Raised |
| Adjusted EPS | $9.05 to $9.10 | Raised |
| Reported EPS | $8.35 to $8.40 | Updated |
| Adjusted effective tax rate | About 18% to 19% | Continued |
| Average diluted share count | About 85.6 million | Assumption |
| Available cash flow | 85% to 95% of adjusted net income | Continued |
The reported EPS outlook incorporates approximately $0.60 per share of acquisition-related amortization and $0.28 of restructuring, M&A, and other adjustments, partially offset by an estimated $0.18 benefit from tariff refunds.
Recent Insider Transactions
Reported insider activity over the past six months included 14,210 shares purchased across 12 transactions and 15,830 shares sold across six transactions. That produced net sales of 1,620 shares, equivalent to 0.8% of reported insider holdings, so the aggregate balance was a modest net sale.
Selected recent direct transactions show one director purchase alongside several officer sales. These records describe the transactions but do not establish the insiders’ motives.
| Date | Insider | Position | Transaction | Price per Share | Reported Value |
|---|---|---|---|---|---|
| Aug. 28, 2026 | Steven Mizell | Director | Purchase | $158.28 | $26,908 |
| Aug. 18, 2026 | David S. Ilardi | Officer | Sale | $161.09 | $88,438 |
| Aug. 6, 2026 | Vincent Wenos | Officer | Sale | $168.25 | $168,250 |
| July 27, 2026 | Timothy P. Eckersley | Officer | Sale | $157.26 | $1,009,137 |
| July 23, 2026 | Nickolas A. Musial | Officer | Sale | $155.00 | $106,485 |
| July 23, 2026 | Michael J. Wagnes | Chief Financial Officer | Sale | $150.98 | $480,720 |
Risks Investors Should Monitor
- Dependence on Americas growth: The Americas generated $942.4 million of the company’s $1.173 billion in quarterly revenue. Sustaining non-residential volume and pricing is therefore important to the company-wide outlook.
- International volume and mix pressure: International organic revenue declined slightly, and adjusted operating margin contracted by 40 basis points as lower volume and unfavorable mix offset pricing and productivity benefits.
- Acquisition-related margin dilution: Acquisitions reduced the Americas adjusted operating margin by 40 basis points, while acquisition, integration, and restructuring expenses remained part of the GAAP-to-adjusted reconciliation.
- A higher tax burden: The quarterly effective tax rate increased materially from the prior year, and full-year adjusted guidance assumes an 18% to 19% rate.
- Reported results benefited from tariff refunds: The refunds lifted GAAP operating income and interest income but were excluded from adjusted results, making adjusted measures more useful for evaluating the quarter’s underlying operating progress.
Summary
Allegion’s Q3 2026 growth was led by Americas non-residential demand, with higher volume and pricing supporting revenue, adjusted earnings, and margin expansion. International operations remained comparatively weak, while tariff refunds amplified the improvement in GAAP results. The raised full-year outlook points to continued momentum, with Americas demand, International volumes, acquisition-related margin effects, and cash conversion serving as the main items to monitor.
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