Oct 22, 2026 earnings call — Raised outlook after Americas Non-Residential strength
Company raised reported revenue outlook to 9.5% to 10.5% and raised adjusted EPS outlook to $9.05 to $9.10 for 2026.
Revenue $1.2B (est $1.1B) · EPS $2.60 (est $2.50)
Key quotes
"Third quarter results were driven by strong organic growth in the Americas, led by double-digit organic growth in our Non-Residential business."
"So we take pricing as needed to combat inflationary pressures. So we put in multiple price increases across select parts of our business."
"We expect Overly to add approximately 1 point to Americas revenues on an annualized basis at margins consistent with the overall enterprise."
Analyst Q&A 8
Why commercial (Non-Res) is strong
Q (Joseph O'Dea · Vertical): They asked for details on what drove the Americas Non-Res strength — volume vs price, end-market strength, spec writing activity, and whether share gains explain it. They also asked about Schlage's smart-home integrations and risks from new hardware entrants.
A: Americas Non-Res is the largest segment and is growing in high single digits this year from a combination of volume and price. Spec activity remains strong and broad-based, and data center growth helps support 2027 volume. Schlage is integrated with major smart home providers and the company said new entrants would represent a low single-digit portion of Americas revenue.
"Our spec activity continues to be strong, as we've said the past few quarters, and that strength continues to be broad-based." — John Stone (CEO)
Pricing actions and inflation outlook
Q (Rafe Jadrosich · BofA): They asked whether there was incremental pricing in 3Q versus 2Q and how to think about pricing going forward. They also asked how much inflation they expect next year and how much price will be needed to offset it.
A: Pricing stepped up last year starting in the back half of 2025, so this year's comps got tougher starting in Q3. The company has taken multiple, targeted price increases as needed to cover ongoing inflationary pressure and will continue to drive pricing and productivity. Management said they plan for a high inflationary environment into next year and will give exact magnitude when they give outlook in February.
"The thing to remember about our business is we've been facing consistent inflationary pressure." — Michael Wagnes (CFO)
Q4 guide slowdown and price carryover
Q (Alexander Virgo · Evercore): He asked if the implied Q4 slowdown is prudence or due to lumpiness, and asked how much pricing will carry into the first half of next year.
A: Quarter-to-quarter lumpiness can come from growing project size and construction seasonality, so looking at full-year high single-digit growth is better than extrapolating one quarter. There will be carryover pricing into next year, and the company expects to put a pricing increase in early February to cover the back half of the year.
"Project size has been growing, and that's going to put a little lumpiness when you look quarter-to-quarter." — John Stone (CEO)
Pricing timing and AI for spec writing
Q (Timothy Wojs · Baird): He asked whether selective pricing changes the timing or lag in matching price to inflation. He also asked how Allegion is using AI in spec writing and if it can boost productivity or volume.
A: The company says it has gotten better over the last 1.5 years at reacting to inflation, so it does not expect long lags and will take pricing to combat inflation, targeting neutral PPII on a dollar basis. They are investing in AI across functions; with 2.5 million openings specified yearly, they have a large data set to train models that improve accuracy and speed in specs and change orders.
"When you think about what does an AI model of any flavor, LLM or otherwise, need to really do a good job for you, it needs a very large and robust data set." — John Stone (CEO)
Residential volumes and data center exposure
Q (Aanvi Patodia · Goldman Sachs): She asked whether Residential mid-single-digit growth was mostly price-driven and when volumes might turn positive without price. She also asked where Allegion participates in data centers and how large that opportunity is for Non-Res growth.
A: Residential growth recently has been driven primarily by price while end-market volume has been flat, and management does not expect a strong residential recovery given high inflation and rates. Allegion is active in data centers, has a leading position in doors and door hardware, and said data centers were approaching 5% of Non-Res as of the second quarter and are growing rapidly as a source of volume.
"As we mentioned in second quarter, data centers were approaching 5% of our Non-Res business." — John Stone (CEO)
M&A pace and inventory impact
Q (David S. MacGregor · Longbow): He asked why M&A was slower in 2026 — integration vs valuations or funnel — and whether 2027 could be more active. He also asked how higher freight and logistics costs affect inventory and cash conversion.
A: 2025 had an unusually high deal count and M&A timing is episodic; the company seeks complementary acquisitions in mechanical, electronics, electromechanical and software and will be disciplined on strategy and valuation, which will throttle deal pace. On cash flow, they expect long-term adjusted cash flow conversion around 85% to 95% and do not expect freight to change that framework; inflation raises inventory costs but inventory levels won't move enough to affect that guidance.
"We're going to be very disciplined on what we buy strategically and what we buy from a valuation perspective." — John Stone (CEO)
Electronics growth and price pushback
Q (Brandon Knutson · Morgan Stanley): He asked if electronics adoption is accelerating and what actions are driving that acceleration. He also asked whether it's getting harder to get price in Residential and if customers push back.
A: They are driving electronics growth with demand generation, new products and end-user consulting, including a new family of connected commercial locks recently launched; they see conversion from mechanical to electronic and upgrades as ongoing growth drivers and expect high single-digit growth over the cycle. On residential pricing, they expect pushback and negotiation but will continue to push price to cover real, high inflation.
"We have introduced a new family of connected locks in the commercial space." — John Stone (CEO)
End markets, rates effect, and margins
Q (Julian Mitchell · JPMorgan): He asked how recent rate moves affect end-market composition and timing for rates to slow commercial construction. He also asked whether the 50 bps PPII tailwind is a good placeholder and about the Q4 margin step-up.
A: Data centers are new-build with their own dynamics and are late cycle on projects; other commercial verticals are showing recovery signs, including office in major metros, while multifamily is mixed, and the company views its portfolio and demand engine as broad-based. For 2026 they expect flat to slightly up margins for the full year with a Q4 step-up partly due to comps; they expect margin expansion next year and will give magnitude in February while driving PPII and core Americas incrementals per the Investor Day framework.
"For this year, 2026, we would expect to see flat to slightly up margins for the full year." — Michael Wagnes (CFO)