The investor's view
+8.4%
growth in revenue a year, FY2020 to FY2025
- Five fundamentals, each ranked against the Industrials companies covered
- A peer map of growth against margin
- Where the profit is made: 2 segments, by share of sales and of profit
One region earns more than the whole company
Q3 FY2026, the quarter to Sep 30, 2026 · 10-Q filed Oct 22, 2026
Largest source of revenue: Allegion Americas, 80.4% of the total.
International adds little profit and corporate costs sit outside the segments, so Allegion's earnings are essentially a North American business.
Allegion Americas brought in $942.4M, 80.4% of the quarter's $1,172.6M of net revenues, and earned $294.6M of segment operating income, a 31.3% margin. That is 103.5% of the company's $284.6M operating income. The two segments together earn more than the total because the filing reports corporate expense outside them.1
Allegion International brought in $230.2M, 19.6% of revenue, and earned $17.2M, a 7.5% margin against 31.3% in the Americas and 6.0% of company operating income. Its revenue grew 1.77% against 11.66% in the Americas, and its share of company revenue fell 1.5 points. The filing cites lower volumes in Western Europe and higher acquisition, integration and restructuring expenses.1
AnalysisAnalysis: acquisitions abroad have added revenue much faster than profit, so company earnings move with North American commercial and institutional building rather than with the group's wider geographic reach.
Selling costs barely grew, but the filing's largest margin driver was tariff refunds, which it does not expect to stay material.
Operating income rose 21.73% to $284.6M while net revenues rose 9.57% to $1,172.6M. Operating margin reached 24.27%, up 2.42 points. Cost of goods sold grew 7.58% and selling and administrative expenses 2.97%, so gross margin rose 0.98 points to 46.75% and selling and administrative costs fell 1.44 points as a share of revenue.1
The filing's operating margin bridge lists tariff refunds as the largest single contributor, following the court rulings that certain IEEPA tariffs were invalid. It adds: "The impact of future IEEPA tariff refunds is not expected to be material." Pricing and productivity ahead of inflation and investment spending, and favorable volume and product mix, supplied most of the remaining gain.1
For comparison, operating income was 21.1% of revenue across FY2025, on $859.5M of operating income and $4,067.3M of revenue.1
AnalysisAnalysis: even without the refund the quarter shows leverage, since selling and administrative costs grew far more slowly than sales. But the reported margin is lifted by an item the company does not expect to recur at material size, so the coming quarters are the cleaner test of the underlying gain.
Capital spending takes 2.2% of revenue, so most operating cash is free to fund dividends, buybacks and bolt-on deals.
Operating cash flow was $304.3M against net earnings of $220.9M. Capital expenditures were $25.7M, 2.2% of revenue, leaving free cash flow of $278.6M: 23.8% of revenue and 97.9% of operating income. A year earlier, third-quarter free cash flow was $209.8M.1
Quarterly cash flow is seasonal: free cash flow was $80.3M and $180.5M in the first two quarters of 2026. Over a full year the pattern holds. In FY2025, free cash flow of $685.7M was 106.5% of net income of $643.8M, on capital spending of $98.1M.1
The filing describes a business with "strong operating cash flows, low leverage and low capital intensity". This year it repurchased shares and bought two door makers, DCI and Overly, funded with cash on hand and its revolving facility. Diluted shares fell to 85.2M from 86.5M a year earlier.1
AnalysisAnalysis: the cash comes from an assembly and sourcing model rather than heavy process plants. The open question is where it goes: acquisitions bought for growth, as in International, have so far earned well below the core business.
Pre-tax earnings rose 28.2%, but a higher tax rate held net earnings growth to 17.25%.
The provision for income taxes rose 128.78% to $46.9M from $20.5M, an effective rate of 17.5% against 9.8% a year earlier. The filing attributes the increase to "favorable discrete charges in the prior year" and the unfavorable mix of income earned in higher-tax jurisdictions.1
The lines between operating income and tax helped: interest expense fell 9.02% to $24.2M on a lower average rate, and other income rose to $7.4M from $1.7M. Earnings before taxes rose 28.2% to $267.8M. Net earnings rose 17.25% to $220.9M, and diluted earnings per share rose to $2.59 from $2.18 as diluted shares fell to 85.2M from 86.5M.1
AnalysisAnalysis: much of the tax drag is the absence of a prior-year benefit the filing calls discrete, rather than a new cost. Allegion is incorporated in Ireland, and the filing lists changes in tax rates and risks tied to that incorporation among the factors that could move results.
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Where Allegion stands among its peers, ten years of growth and cash, where the profit is made, and the edge and the risks.
How Allegion's model works step by step, where every $100 of revenue goes against the industry, and how long it took to scale.
Revenue went from $2.0B in FY2012 to $4.1B in FY2025, the operating margin from 18.4% to 21.1%, over 13 years.
Member research, then your own questions on ChatGPT.
What Allegion's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
Which prices and costs set the underlying margin from here, and how much room pricing has left against the new tariffs.
The levers that could narrow the profit gap between the two segments, and what the recent deals show so far.
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Business Lens describes Allegion from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.