Allegion (NYSE: ALLE) raised its full-year revenue and earnings outlook after reporting strong second-quarter results fueled by continued demand across its Americas business, particularly in nonresidential markets, while acknowledging ongoing softness in Europe.

The security products manufacturer said second-quarter performance reflected healthy specification activity, expanding electronics adoption and improving margins in its core Americas segment, leading management to increase its full-year organic revenue growth forecast to 3.5% to 4.5% and adjusted earnings per share guidance to $8.85 to $9.00.

“Second quarter results were driven by strong organic growth in the Americas, and we see continued momentum in nonresidential indicators,” Allegion President and CEO John Stone said during the company’s earnings call.

Stone said specification activity has remained strong across institutional markets while commercial segments such as office and multifamily have begun to recover. He also highlighted growing demand from data centers, which he described as “still small compared to some of our legacy markets, but will continue to gain relevance as that installed base grows and fuels aftermarket over time.”

Electronics, particularly mobile credentials, remain a key focus of Allegion's organic growth strategy.

Stone cited higher education as an example of customers replacing mechanical keys and plastic cards with mobile credentials, creating opportunities for both software and hardware upgrades.

“In a recent example from our team, two flagship university deployments turned into multimillion-dollar opportunities for our company, stemming from thousands of Allegion reader and lock upgrades paired with system-wide Allegion credential standardization,” Stone said. He added that off-campus housing operators and property managers are increasingly adopting the same technologies to provide seamless access across residential properties.

Chief Financial Officer Mike Wagnes said second-quarter revenue reached approximately $1.2 billion, up 12.7% year over year, while organic revenue increased 6.9%. Adjusted earnings per share rose 17.6% to $2.40, driven primarily by higher operating income.

Within the Americas segment, organic revenue increased 8.9%, supported by high single-digit growth in both residential and nonresidential businesses. Electronics revenue for the segment increased in the low teens during the quarter.

“Our nonresidential business increased high single digits organically, driven by price and volume growth,” Wagnes said. “Demand for our non-res products remains healthy. And as John mentioned earlier, spec activity continues to be strong.”

The international business presented a more mixed picture.

Although reported international revenue increased because of acquisitions and favorable currency exchange rates, organic revenue declined 1.2% as demand weakened across several European markets, particularly Germany.

Stone said the company has made progress addressing ERP-related production challenges that affected first-quarter performance, noting, “We saw strong sequential margin improvement and expect to build on that in the second half of the year.” However, he added that “demand is weaker in several of our European markets, including Germany, which is our largest market, and we have taken additional restructuring actions in response.”

Looking ahead, management expects continued strength in the Americas to outweigh international challenges.

Stone said Allegion raised its Americas growth assumptions to reflect stronger demand and pricing actions intended to offset inflationary pressures. The company also expects continued margin expansion during the second half of the year while maintaining flexibility to implement additional pricing if costs increase.

“We see momentum building in our largest market, which gives us confidence in our organic growth potential over the next several years,” Stone said.

(Editor’s note: This article was produced with the assistance of generative AI using Allegion’s publicly available earnings call transcript as source material. The content was reviewed, edited and verified by the SecurityInfoWatch editorial team to ensure accuracy, context and adherence to our editorial standards.)