Allegion (ALLE) Baird 2026 Global Industrial Conference summary

Market outlook and demand

• North American non-residential demand has recently turned positive; electronics remains a tailwind and the highest single-digit growth driver.

• For 2027, non-residential growth could resemble this year, supported by both pricing and volume; residential and international markets remain soft.

• Residential recovery is not included in the 2027 view; any improvement would be upside.

• Specification activity is strong in both count and dollar value, with revenue typically following 12–24 months later; data centers are growing rapidly.

• Data centers are ~5% of non-residential revenue; large institutional verticals represent 50%–60% and are growing, while office and multifamily are no longer the headwinds seen in 2022–2024.

Product and technology priorities

• Data center specifications are established with hyperscalers; modular designs suit this offering, and Krieger Specialty Products added premium doors for high-security and data center needs.

• The business mix is roughly 50% aftermarket and 50% new build; data center projects currently skew to new build.

• Connected commercial e-locks launched in the last year enable real-time visibility and audit trails; electronic content in non-residential specifications is higher than in prior years.

• Higher education is upgrading early-generation e-locks for smartphone-wallet credentials; ultra-wideband intent-based unlocking is in a residential lock, with commercial potential and rollout planned.

• Access-control software launched first in multifamily, with plans to expand to other verticals; AI tools are making software development faster and more capable.

Portfolio, capital allocation and international markets

• Capital priorities are investment-grade credit, organic growth investment, then roughly 50/50 M&A and shareholder distributions over a long cycle; acquisitions target North American non-residential and electronics bolt-ons.

• Share repurchases have been active and are expected to continue; M&A pipeline is active, but deal timing is episodic and deal count is not a target.

• Door-factory modernization is in its fifth or sixth inning; Krieger, Overly and DCI add product or geographic reach, with further opportunity for share of wallet and margin expansion.

• International conditions are weak, with Germany deteriorating and no meaningful near-term improvement expected; investment will focus on SimonsVoss, Interflex and ELATEC electronics businesses.

• International portfolio pruning remains in progress following the China wind-down and South Korea and Australia divestitures.