Allegion (ALLE) investor relations material

Business outlook and performance

• Non-residential segment expected to see volume growth in line with 2025, with Q1 and Q4 typically lighter and Q2/Q3 busier due to construction seasonality.

• International segment anticipates organic growth from a mix of price and volume, while residential remains soft and volatile.

• Institutional markets remain stable due to a large installed base and strong municipal bond issuance, while commercial and office segments show early signs of recovery, especially in metro New York.

• Multifamily new builds were soft but show some green shoots, and residential continues to experience lumpiness due to channel dynamics and inventory corrections.

• Market share trends suggest the two largest players have gained share against smaller competitors, though precise measurement is difficult.

Pricing, costs, and margins

• Strong pricing power in non-residential due to industry structure, product criticality, and long-standing relationships, allowing for inflation and tariff cost pass-through.

• Residential pricing power is lower due to customer concentration, with recent margin pressure driven by volume deleverage.

• Margin pressure expected in Q1, with improvement anticipated through the year as volume growth and tariff anniversary effects play out.

Technology, supply chain, and product innovation

• Lessons from past chip shortages led to modularized software and diversified supply base, mitigating current chip supply risks.

• Electronics, software, and services now comprise about 33% of revenue, with double-digit electronics growth in 2025 and continued outperformance expected.

• Acquisitions like ELATEC and Waitwhile support growth in connected locks and recurring revenue models, with a focus on software that differentiates hardware.

• Real-time connected locks offer lower installation costs and enhanced functionality, enabling new data-driven services.