Allegion sells locks, door hardware, automatic entrances and systems that control who can enter a building. In the third quarter ended September 30, 2026, stronger sales in the Americas helped revenue rise 9.6% and operating profit rise 21.7% from a year earlier. A tariff refund amplified the profit increase, but higher sales volumes, pricing and production improvements also contributed. Those gains give Allegion more money to develop products and buy businesses, while weaker international demand and substantial share repurchases limit how much cash it keeps.
Analysis period: third quarter and first nine months of 2026. Research cutoff: October 23, 2026, New York time; the latest company financial materials used were issued October 22.
Source: Allegion third-quarter 2026 Form 10-Q, consolidated statements, p. 1, and management’s discussion, pp. 20–28.
1. Americas customers bought more, even as prices increased
The Americas generated about 96% of Allegion’s third-quarter revenue increase. Sales there rose to $942.4 million from $844.0 million, adding $98.4 million of the group’s $102.4 million increase. International sales added just $4.0 million.
The Americas improvement had two substantial parts. Higher prices contributed 4.5 percentage points of growth, while sales volumes contributed 4.6 points. Acquired businesses supplied another 2.6 points. Removing acquisitions and currency effects leaves 9.1% organic growth—the company’s measure of growth from a comparable business base.
Allegion’s sales of products for commercial and institutional buildings grew faster than its residential business. Americas non-residential revenue increased by a low-teens percentage, including acquisitions. Residential revenue increased by a mid-single-digit percentage, primarily from pricing and acquisitions. The distinction matters: the residential result provides less evidence of a broad increase in buying activity.
Across Allegion, price contributed 3.8 percentage points and volume 3.4 points, producing 7.2% organic growth. Net acquisitions added 2.6 points and currency translation subtracted 0.2 points. These are contributions to revenue growth, not counts of locks or doors sold; the company’s volume category also includes new products and services.
Source: Third-quarter 2026 Form 10-Q, Note 20, p. 19, and revenue explanations, pp. 21 and 24–26.
This builds on an existing sales expansion. In the third quarter of 2025, group organic revenue grew 5.9% and Americas organic revenue grew 6.4% against 2024. Both rates strengthened in the corresponding 2026 quarter. International organic growth moved in the opposite direction, from 3.6% a year earlier to a slight decline this quarter.
Source: Allegion’s October 23, 2025 results release, company and segment results; 2026 Form 10-Q, pp. 21 and 24–26. Organic comparisons remove each period’s acquisition, divestiture and currency effects.
Allegion’s sales network helps explain how it competes for this business. Its specialists work with architects, engineers, contractors and distributors to specify door openings that meet security, accessibility and building-code needs. A door, frame, lock and closer must work together. Helping customers select that combination can support sales across several product categories.
Most products reach customers through distributors and retailers, although some businesses sell directly to building operators. The ten largest customers accounted for approximately 26% of 2025 revenue, with none individually reaching 10%. This gives Allegion a broad customer base, but its commercial success still depends on distributors choosing, stocking and installing its products.
Source: Allegion 2025 Form 10-K, business description, pp. 4–5, and customers, sales and marketing, p. 9.
2. The refund magnified a real improvement in operating profit
Third-quarter operating profit still grew 13.2% after removing only the tariff refund. That calculation leaves all other reported income and expenses in place. It shows that the quarter’s improvement extended beyond the repayment of earlier import duties.
The reported accounts show both the quarterly acceleration and the more modest improvement over the full nine months:
| Consolidated results, USD millions except percentages and EPS | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Revenue | 1,070.2 | 1,172.6 | 3,034.1 | 3,357.7 |
| Operating profit | 233.8 | 284.6 | 649.9 | 734.6 |
| Operating margin | 21.8% | 24.3% | 21.4% | 21.9% |
| Net profit | 188.4 | 220.9 | 496.3 | 543.6 |
| Net margin, calculated | 17.6% | 18.8% | 16.4% | 16.2% |
| Diluted EPS, USD per share | 2.18 | 2.59 | 5.73 | 6.33 |
Source: Third-quarter 2026 Form 10-Q, consolidated income statement, p. 1, and management’s discussion, pp. 21–23. Margins measure the share of revenue left as the named profit; calculated net margins use the displayed profit and revenue amounts.
Management’s explanation identifies $17.3 million of additional quarterly operating profit from pricing and productivity after allowing for inflation and investment spending. Higher sales volumes and changes in the products sold added $12.9 million. Together, those two operating improvements exceeded the $19.9 million tariff benefit.
Costs also grew more slowly than revenue. Selling and administrative expenses rose to $263.6 million from $256.0 million, an increase of 3.0%. Allegion therefore spent less on these activities for each dollar of revenue, even though the dollar expense increased.
The tariff benefit represented approximately 39% of the $50.8 million operating-profit increase. It covered refunds already received and amounts expected to be received, so the entire benefit should not be treated as cash collected during the quarter. Management expects future refunds to be immaterial.
Source: Third-quarter 2026 Form 10-Q, tariff discussion, p. 20, and operating-profit explanation, pp. 21–22. The complete arithmetic appears in the calculation notes.
The longer period sets a useful boundary. Removing the same refund from nine-month operating profit leaves a calculated margin of 21.3%, compared with the prior year’s reported 21.4%. Thus, the third quarter improved more clearly than the year to date.
Management’s broader adjusted measure tells a similar story: quarterly operating margin increased to 24.7% from 24.1%, while both nine-month margins rounded to 23.5%. That measure removes acquisition-related amortization, restructuring and acquisition costs, as well as the tariff benefit. The reconciliation is included below. These exclusions improve comparability, but buying businesses and reorganizing operations remain part of Allegion’s strategy and can require real cash.
Sources: Third-quarter 2026 Form 10-Q, pp. 21–23; October 22, 2026 earnings release, Supplemental Schedule 2.
Higher taxes absorbed part of the operating improvement. Quarterly tax expense increased to $46.9 million from $20.5 million, and the effective tax rate rose to 17.5% from 9.8%. Management attributes the increase to favorable items in the prior year and more income earned in higher-tax locations. Net profit consequently grew 17.3%, less than operating profit. Over nine months, the tax rate rose to 18.5% from 15.1%, helping explain why net margin declined slightly despite higher sales and operating profit.
Source: Third-quarter 2026 Form 10-Q, Notes 15–16, p. 17, and consolidated income statement, p. 1.
3. International acquisitions have added sales without restoring profit growth
International revenue growth still depends on acquisitions while existing-business volume falls. In the quarter, pricing added 1.3 percentage points of growth, but volume subtracted 1.5 points. The resulting 0.2% organic decline was outweighed by acquisitions, allowing reported revenue to rise 1.8% to $230.2 million.
The nine-month comparison makes the dependence clearer. International revenue increased 12.4% to $686.8 million, but acquisitions and divestitures contributed 10.5 percentage points and currency added 4.0 points. Pricing added 1.1 points while volume fell 3.2 points. The company attributes the volume weakness primarily to Western European market conditions.
Profit moved the other way. Quarterly segment operating profit fell to $17.2 million from $19.7 million. For the first nine months, it fell to $40.3 million from $47.1 million, a 14.4% decline. Adding purchased sales has therefore not yet produced higher reported profit for the combined international business.
The quarterly profit explanation separates demand from reorganization costs. Weaker volume and product mix reduced profit by $2.6 million. Higher acquisition, integration and restructuring expenses reduced it by another $2.1 million. Pricing and productivity, plus acquired operations, offset much of that pressure. The issue extends beyond the cost of integrating purchases: customers also bought a less profitable mix or less volume of existing offerings.
Source: Third-quarter 2026 Form 10-Q, Note 20, p. 19, and International discussion, pp. 26–27.
Management is reducing staff and simplifying operations in both regions. Group restructuring expense reached $13.8 million over nine months, with $9.6 million paid and $6.1 million still accrued at September 30. The intended benefit is a lower ongoing cost base. Management’s 2027 preview specifically identifies carryover savings from the international restructuring.
That response can improve profit even before demand recovers. Its effectiveness will depend on whether savings exceed the profit lost from lower sales, while preserving service and product development. The company has not supplied a quantified savings target in the reviewed quarterly materials, so the present evidence supports a cost-reduction plan rather than a measured recovery.
Sources: Third-quarter 2026 Form 10-Q, Note 14, p. 16; October 22, 2026 earnings presentation, slide 10.
4. New products and purchases broaden what Allegion can supply at each entrance
Allegion is expanding both the physical doorway and the technology used to manage it. These investments address customers’ need for secure entrances that are easier to install, maintain and operate.
Americas electronic-product revenue grew by a low-double-digit percentage in the quarter. Across the group, services and software revenue rose 22.2% to $73.8 million from $60.4 million. Even so, this category supplied only 6.3% of total revenue. It includes inspection, maintenance, installation and other services alongside software, so it is not a measure of subscription revenue alone. Physical products remain the main source of sales.
Sources: Third-quarter 2026 Form 10-Q, Note 18, pp. 17–18, and electronics discussion, p. 25; 2025 Form 10-K, services and software description, p. 4.
The Optimize mobile application illustrates the practical purpose of product development. Its first supported device is the LCN Senior Swing automatic door operator. Installers can use the app to calibrate and adjust the device and diagnose errors from the ground. Allegion plans to extend support to more connected products. Simpler maintenance gives Allegion another way to compete for installers’ and building operators’ business.
Source: Allegion’s third-quarter 2026 product highlights, “Allegion Optimize”; the product was introduced in September 2026.
Acquisitions expand the range of doors that the existing sales network can offer. Allegion bought Door Components, a supplier of custom hollow-metal doors and frames, on March 2 for approximately $69.3 million net of acquired cash. On October 2, it bought Overly for approximately $88.7 million. Overly adds specialty doors for acoustic, blast, bullet-resistant and vault applications, with customers in government, education and healthcare. Management’s stated purpose is to specify and supply a wider range of custom doors. Overly closed after September 30 and contributed no sales to the quarter analyzed here.
Sources: Third-quarter 2026 Form 10-Q, Note 3, p. 4; October 5, 2026 Overly announcement.
Allegion also invested another $40.0 million in Ambient.ai during the third quarter. Ambient uses existing cameras and sensors to identify physical-security events. The October 20 announcement describes closer collaboration in secure access, threat detection and data analysis. This is an investment in another company, recorded among noncurrent investments, rather than a wholly owned acquisition whose sales can be added to Allegion’s revenue.
Sources: Third-quarter 2026 Form 10-Q, Note 11, p. 12, and investing activities, p. 28; Ambient.ai and Allegion Ventures announcement, October 20, 2026.
Competition requires continued spending. Allegion identifies ASSA ABLOY and dormakaba as principal global competitors. In its second-quarter 2026 report, ASSA ABLOY said approximately one-quarter of sales came from products launched within the previous three years. Allegion’s established brands and distributor relationships therefore need continuing product support. Its own research and development expense was $132.0 million in 2025, up from $112.7 million in 2024. Those costs were expensed as incurred and sit outside capital spending on long-lived assets.
Sources: Allegion 2025 Form 10-K, competition, p. 9, and Note 2, research and development costs, p. F-10; ASSA ABLOY second-quarter 2026 report, July 17, 2026, p. 2.
Acquisitions also leave a substantial accounting asset base. Goodwill—the part of acquisition cost not assigned to separately identified net assets—rose to $1,926.1 million from $1,912.4 million. Acquisitions and adjustments added $37.1 million. Converting foreign balances into U.S. dollars reduced goodwill by $23.4 million. Identifiable intangible assets, including customer relationships and technology, fell to $798.5 million from $826.0 million; nine-month amortization expense was $55.9 million.
Together, goodwill and intangible assets represent approximately half of total assets. No goodwill impairment was recorded during the first nine months of 2026. The business test remains whether the acquired operations generate sufficient sales and profit; the International result shows why a larger purchased portfolio alone does not establish success.
Source: Third-quarter 2026 Form 10-Q, balance sheet, p. 2, and Notes 5–6, p. 7.
5. Better cash generation funded more spending, with little left before borrowing
Operating cash covered capital spending, dividends and buybacks, but acquisitions and other investments used nearly all the remainder. Cash generated by operations increased 11.1% to $604.0 million for the first nine months, compared with $543.7 million a year earlier.
To reconcile profit with operating cash, net profit of $543.6 million was increased by $107.4 million of depreciation and amortization, expenses that do not require an equivalent current-period cash payment. Changes in assets and liabilities and other noncash items then reduced the total by $47.0 million. The corresponding prior-year amounts were $496.3 million, $98.6 million and a $51.2 million reduction. Higher profit explains most of the cash-flow increase; the quarterly statement does not separately disclose every collection, payment and noncash adjustment within that final combined line.
Source: Third-quarter 2026 Form 10-Q, cash-flow statement, p. 3, and operating activities, p. 28.
The following table shows how much cash remained after the main uses. Free cash flow here means operating cash less the cash-flow statement’s capital expenditures. It is the same calculation that Allegion calls available cash flow.
| Cash generation and allocation, USD millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Operating cash generated | 543.7 | 604.0 |
| Capital spending | 58.5 | 64.6 |
| Free cash flow, calculated | 485.2 | 539.4 |
| Cash dividends paid | 131.4 | 140.2 |
| Cash spent repurchasing shares | 80.0 | 280.3 |
| Business acquisitions, net of acquired cash | 594.0 | 74.7 |
| Other investing cash use, net | -3.2 | 38.9 |
| Cash remaining before debt, other financing and currency effects, calculated | -317.0 | 5.3 |
Sources: Third-quarter 2026 Form 10-Q, p. 3; October 22 earnings release, Schedule 4, for the company’s available-cash-flow definition. Spending rows are positive amounts to subtract; the negative 2025 other-investing amount represents a net cash receipt. Free cash flow is a subtotal, not an additional source of cash.
The main change in allocation was the retreat from 2025’s large acquisition outlay and a sharp increase in buybacks. Acquisition cash spending fell by $519.3 million, while share repurchases increased by $200.3 million. This gave Allegion room to fund both business investment and shareholder distributions without repeating the prior year’s large cash drawdown.
Cash balances nevertheless benefited from financing. Net debt proceeds were $50.4 million. After other financing outflows and currency effects, cash rose by $31.9 million to $388.1 million from $356.2 million. The complete opening-to-closing reconciliation appears below.
Source: Third-quarter 2026 Form 10-Q, p. 3 and liquidity discussion, pp. 27–28.
Customers owed Allegion $551.6 million at September 30, up $113.9 million from year-end. A seasonally closer comparison gives useful context: receivables were $501.0 million at September 30, 2025, making the annual increase 10.1%, broadly similar to quarterly sales growth. More sales were awaiting collection, but the same-date comparison shows that this balance broadly kept pace with the larger business.
Inventory rose $20.4 million from year-end to $539.4 million. Raw materials accounted for $15.2 million of the increase, while finished goods added $3.9 million. Most of the added stock value therefore sat before the final stage of production. Supplier bills awaiting payment also increased, to $283.2 million from $244.8 million, funding part of the operating asset base until payment came due.
Sources: 2026 Form 10-Q, balance sheet, p. 2, and Note 4, p. 7; 2025 third-quarter Form 10-Q, balance sheet, p. 2. These balance changes include acquisition and currency effects and are not an exact breakdown of operating cash movements. Inventory uses the first-in, first-out cost method in both periods.
Other current obligations rose to $539.5 million from $510.4 million. Identified increases included deferred revenue—amounts billed or received before the related sale is recognized—and current lease obligations. These are operating commitments, with different purposes from bank and bond borrowing.
Physical property and equipment increased to $457.2 million from $444.6 million after capital spending, depreciation and other changes. The filing does not split the $64.6 million capital outlay into maintenance and expansion projects.
Other noncurrent assets rose by $73.2 million: investments without readily determinable market values increased by $63.8 million, and assets representing the right to use leased property and equipment rose by $21.3 million, with offsets elsewhere. The balance sheet is consequently expanding through investments and leased assets as well as factories and equipment.
Source: Third-quarter 2026 Form 10-Q, balance sheet and cash-flow statement, pp. 2–3; Notes 9, 11 and 18, pp. 10, 12 and 18.
6. Liquidity is substantial, but the 2027 bond maturity competes with other uses of cash
Allegion has room to fund operations and acquisitions, while a $400 million bond repayment approaches in October 2027. At September 30, it had $388.1 million of cash and a calculated $733.8 million of unused revolving-credit capacity after outstanding loans and letters of credit. Borrowing capacity is access to additional debt, rather than cash already earned.
The main debt obligations are spread across several years:
| Financing at September 30, 2026 | Principal, USD millions | Contractual rate | Maturity |
|---|---|---|---|
| Senior notes | 400.0 | 3.550% | October 1, 2027 |
| Senior notes | 400.0 | 3.500% | October 1, 2029 |
| Revolving credit loans | 240.9 | 4.939% | May 20, 2030 |
| Senior notes | 600.0 | 5.411% | July 1, 2032 |
| Senior notes | 400.0 | 5.600% | May 29, 2034 |
Source: Third-quarter 2026 Form 10-Q, Note 7, pp. 8–9. The revolving rate is variable and shown at September 30. Other debt of $0.3 million is excluded from this schedule of the main facilities.
The four bond issues require approximately $83.1 million of annual contractual interest. The September revolving balance would add approximately $11.9 million annually at its then-current rate, before fees and changes in rates or borrowings. About 88% of principal carries fixed rates. Actual interest expense for the first nine months was $73.2 million, down from $75.9 million because the weighted-average borrowing rate fell.
The revolving agreement limits borrowing relative to earnings under its own defined leverage calculation and includes other restrictions. Allegion reported compliance with both bank and bond covenants. The disclosed cash and available credit support near-term funding flexibility, while continued cash generation or refinancing will be needed to address the 2027 maturity alongside normal business spending.
Source: Third-quarter 2026 Form 10-Q, Note 7, pp. 8–9, and liquidity discussion, pp. 27–29. Annual interest estimates are calculated from principal and contractual rates, not forecasts of actual interest expense.
Debt’s balance-sheet carrying amount rose to $2,032.0 million from $1,980.1 million. Subtracting cash leaves calculated net debt of $1,643.9 million, $20.0 million above year-end. After the reporting date, Allegion borrowed a further $40.0 million on October 1 to help fund Overly. That borrowing and the October acquisition payment are outside the September cash and debt balances.
Source: Third-quarter 2026 Form 10-Q, Note 7, p. 8, and balance sheet, p. 2.
Share repurchases represent a deliberate competing use of cash. They return funds to shareholders and reduce the number of shares among which future profit is divided. Allegion retires repurchased shares on settlement. Issued and outstanding shares declined to 84.32 million from 86.07 million at year-end, even as employee share plans added shares.
For quarterly EPS, the relevant average diluted share count fell to 85.2 million from 86.5 million. Using the prior-year count with current profit would lower calculated quarterly EPS by about four cents. Repurchases therefore helped EPS grow faster than total profit, while consuming cash that could otherwise support acquisitions or debt repayment. Employee awards also remain a cost: nine-month share-based compensation expense was $24.1 million, and potential awards added 0.4 million shares to the quarterly diluted denominator.
Sources: Third-quarter 2026 Form 10-Q, balance sheet and Notes 12, 13 and 17, pp. 2, 13–17; 2025 Form 10-K, Note 2, “Share Repurchases,” p. F-11.
Shareholders’ equity increased by $104.8 million to $2,172.4 million. Retained profit increased it, while buybacks, dividends and currency-related changes reduced the amount left in the business. The reconciliation below separates those movements from cash payments.
Lease commitments also use future operating cash. Recorded lease liabilities totaled $192.4 million; the undiscounted payments total $238.7 million, including $15.1 million for the rest of 2026 and $56.4 million in 2027. Minimum software and IT purchases add $61.8 million through 2030. These obligations sit alongside financing debt and must be allowed for when deciding how much additional cash to distribute or invest.
Source: Third-quarter 2026 Form 10-Q, Notes 9, 12 and 19, pp. 10, 13–15 and 19.
7. The outlook rests on customer demand and cost control after the refund
Allegion’s stronger core sales support further business expansion, but sustained improvement requires international cost savings and continued Americas demand. Management raised its full-year 2026 reported revenue-growth outlook to 9.5%–10.5% from 7.5%–8.5%. Its organic-growth outlook increased to 5.0%–6.0% from 3.5%–4.5%.
The outlook remains geographically uneven. Management expects Americas organic growth of 7%–8% for 2026 and a low-single-digit organic decline internationally. Its preliminary 2027 assumptions include continued Americas non-residential strength, residential growth supported by pricing, and continued international market softness. These are management expectations, not results already secured.
Source: October 22, 2026 earnings presentation, slides 9–10.
The construction pipeline provides the strongest external caution. The American Institute of Architects reported a September Architecture Billings Index of 44.7, below the 50 level that separates rising from falling billings. Institutional-specialist firms reported declining billings for a sixth consecutive month. Architects’ work typically leads non-residential construction activity by approximately nine to twelve months, so weaker design activity could affect later demand for building products.
There is also support for near-term work: institutional firms retained approximately eight months of backlog. Allegion serves existing buildings through repairs, upgrades and services as well as new construction. The survey therefore points to a risk to future project demand, rather than measuring Allegion’s current orders or predicting an immediate sales decline.
Sources: AIA September 2026 Architecture Billings Index, released October 21, 2026, billings, backlog and methodology discussion; Allegion 2025 Form 10-K, business and service descriptions, pp. 4 and 9.
Pricing must also keep covering new costs without materially weakening orders. Allegion says price actions offset tariff inflation through September. Its estimated sourcing exposure includes 20%–25% of cost of goods sold from Mexico, less than 5% from China and 5%–10% from other countries outside the United States. Changes in trade costs therefore remain relevant even after the refund of earlier duties.
Source: Third-quarter 2026 Form 10-Q, trade and macroeconomic discussion, p. 20. The sourcing percentages describe cost exposure, not tariff rates.
The overall business assessment is constructive: Allegion has strengthened Americas sales, increased cash generation and retained the ability to invest in a wider product range. The clearest improvement is in the third quarter; nine-month margins and International profit show that the gains are not yet equally broad. Successful integration, lower international costs and conversion of building projects into orders would strengthen the next stage of growth. If demand slows, the size of future buybacks and acquisitions will determine how much of Allegion’s cash remains available for the 2027 repayment.
Reporting basis:
This analysis uses Allegion plc and its consolidated subsidiaries under U.S. GAAP. The selected filing is Form 10-Q, accession 0001579241-26-000034, filed October 22, 2026, for the quarter ended September 30, 2026. Quarterly comparisons cover July 1–September 30; cumulative comparisons cover January 1–September 30. Balance-sheet comparisons use December 31, 2025 unless another date is specified. The financial statements are unaudited. Parent and guarantor-only supplementary accounts are excluded from group calculations.
Company developments incorporated here include the October 2 Overly purchase, the October 20 Ambient.ai announcement and the October 22 outlook. The research cutoff is October 23, 2026, New York time. The analysis does not assume that every subsequent event through the cutoff has been independently identified.
Sources: Selected SEC filing, cover, Note 1 and signatures; SEC filing-history record; SEC company XBRL facts. XBRL checks used consolidated facts attached to the relevant accession, matching dollar units and the actual start and end dates. The 2025 annual filing is accession 0001579241-26-000007, filed February 17, 2026; the prior September filing is 0001579241-25-000043, filed October 23, 2025.
Calculation notes:
A. What remains after the tariff benefit is removed
All dollar amounts in this note are USD millions. Quarterly operating profit increased by 50.8, from 233.8 to 284.6. The refund’s share of that increase is 19.9 divided by 50.8, or 39.2%.
Removing the refund from reported quarterly profit of 284.6 gives 264.7. Dividing that amount by prior-year profit of 233.8 and subtracting one gives 13.2% growth. Dividing 264.7 by current revenue of 1,172.6 gives a 22.6% margin.
For nine months, reported profit of 734.6 less the refund of 19.9 equals 714.7. Dividing by revenue of 3,357.7 gives a 21.3% margin. These are calculated non-GAAP operating comparisons, before interest and income tax. They do not estimate an after-tax refund benefit.
Source: Third-quarter 2026 Form 10-Q, pp. 21–23.
Management’s adjusted operating-profit calculation removes a broader set of items:
| Operating-profit reconciliation, USD millions except margins | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Reported operating profit | 233.8 | 284.6 | 649.9 | 734.6 |
| Add restructuring, acquisition and integration expenses | 4.6 | 8.0 | 14.2 | 21.4 |
| Add acquired-intangible amortization | 19.0 | 17.0 | 48.6 | 51.3 |
| Remove tariff refunds | 0.0 | -19.9 | 0.0 | -19.9 |
| Adjusted operating profit | 257.4 | 289.7 | 712.7 | 787.4 |
| Adjusted operating margin | 24.1% | 24.7% | 23.5% | 23.5% |
Source: October 22, 2026 earnings release, Schedule 2. All adjustments above are pretax operating amounts; this is not an adjusted-net-profit reconciliation. Other operating costs, including share compensation, remain. Amortization allocates the recorded cost of acquired assets over time; removing it does not reverse the cash paid to acquire those assets.
B. Cash generation, allocation and the closing balance
For 2026, free cash flow of USD 539.4 million equals operating cash of 604.0 less capital spending of 64.6. After dividends of 140.2 and buybacks of 280.3, 118.9 remains. Subtracting acquisitions of 74.7 and net other investing outflows of 38.9 leaves 5.3 before debt proceeds and other financing and currency movements. The 40.0 Ambient.ai investment is included in other investing activities and is not subtracted again.
| Cash-balance reconciliation, USD millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Opening cash and cash equivalents | 503.8 | 356.2 |
| Operating cash flow | 543.7 | 604.0 |
| Investing cash flow | -649.3 | -178.2 |
| Financing cash flow | -115.2 | -388.0 |
| Currency effect on cash | 19.7 | -5.9 |
| Closing cash and cash equivalents | 302.7 | 388.1 |
Source: Third-quarter 2026 Form 10-Q, p. 3. The closing amounts match balance-sheet cash and cash equivalents; these statements disclose no separate restricted-cash adjustment. The acquisition cash-flow total of 74.7 is used as reported and is not assumed to equal DCI’s separately disclosed purchase consideration of 69.3.
C. Equity grew after distributions and currency losses
The equity statement records transactions when recognized, while the cash-flow statement records payments. The following bridge uses the equity statement throughout.
| Equity movement during the first nine months of 2026, USD millions | Amount |
|---|---|
| Equity at December 31, 2025 | 2,067.6 |
| Net profit | 543.6 |
| Net share-plan equity activity | 18.5 |
| Share repurchases recorded in equity | -280.4 |
| Dividends recorded in equity | -140.7 |
| Other comprehensive loss | -36.2 |
| Equity at September 30, 2026 | 2,172.4 |
Retained earnings track accumulated profit after distributions and other charges to that account. They reconcile from USD 2,238.1 million, plus profit of 543.6, less dividends of 140.7 and repurchase charges of 227.6, to 2,413.4.
Paid-in capital records amounts associated with issuing shares and employee share plans. In USD millions, it reconciles from 34.2, plus net share-plan activity of 18.5, less repurchase charges of 52.7, to zero. Share retirement also reduced ordinary share capital by 0.1. Repurchased shares are retired, so they do not accumulate in a treasury-share account.
Other comprehensive loss increased the accumulated loss from USD 205.6 million to 241.8 million. Exchange-rate changes contributed a loss of 45.6 to this equity account, partly offset by pension and currency-hedge movements totaling 9.4. These changes affect reported equity without being the same thing as a current cash payment. Cash buybacks of 280.3 and cash dividends of 140.2 remain the amounts used in the cash-allocation analysis.
Sources: Third-quarter 2026 Form 10-Q, Notes 12–13, pp. 13–16, and p. 3; 2025 Form 10-K, Note 2, share-repurchase policy.
D. Debt, interest and balance-sheet checks
At September 30, borrowing principal was USD 2,041.2 million. The accounts deduct 9.2 of bond discounts and financing fees still being spread over the borrowing terms, giving reported debt of 2,032.0. Bank-and-bond debt excludes operating lease liabilities. Unused revolving capacity equals the 1,000.0 commitment less loans of 240.9 and letters of credit of 25.3, giving 733.8.
Annual fixed interest is calculated by multiplying each of the four bond balances in Section 6 by its contractual rate, then adding the results: USD 83.1 million after rounding. Revolving interest at the September balance and rate is USD 240.9 million multiplied by 4.939%, or approximately USD 11.9 million. These calculations exclude financing fees and subsequent borrowing changes.
The accounting equation balances: September assets of USD 5,466.9 million equal liabilities of 3,294.5 plus equity of 2,172.4. December assets of 5,223.7 equal liabilities of 3,156.1 plus equity of 2,067.6. Segment profit also reconciles: quarterly Americas profit of 294.6 plus International profit of 17.2, less corporate expense of 27.2, equals group operating profit of 284.6.
The approximate four-cent EPS effect holds current profit fixed: USD 220.9 million divided by 85.2 million diluted shares, less the same profit divided by 86.5 million shares, equals approximately USD 0.039 per share. Published share counts are rounded, so this is an approximation, not a replacement for reported EPS.
Source: Third-quarter 2026 Form 10-Q, balance sheet and Notes 7, 17 and 20, pp. 2, 8–9, 17 and 19.
E. Other claims on future cash
Environmental liabilities were USD 19.5 million at September 30, including 8.0 associated with previously disposed sites; 3.0 was classified as current. The company says ultimate cleanup costs remain uncertain. The warranty liability was 25.3, compared with 26.2 at year-end. It reconciles from 26.2, less cash payments of 10.2, plus new warranty accruals of 9.1 and acquired liabilities of 0.3, less currency effects of 0.1. Payments exceeding new warranty expense explain most of the decline in this liability.
Management does not expect pending legal matters to have a material adverse effect. The quarterly filing supplies no separate quantified reasonably possible additional-loss range. Recorded provisions are estimates, rather than maximum possible costs.
Tax authorities could also disagree with Allegion’s calculation of what it owes. The latest full annual tax disclosure, at December 31, 2025, reported USD 54.8 million of unrecognized tax benefits and 12.0 of related interest and penalties, net of tax. The company could not reasonably estimate payment timing. These are dated annual amounts, not an asserted September 2026 balance.
Sources: Third-quarter 2026 Form 10-Q, Note 19, pp. 18–19, and legal proceedings, p. 33; 2025 Form 10-K, contractual obligations and Note 16, pp. F-31–F-32.
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