Allegion (ALLE) Bank of America Global Industrials Conference 2025 summary

Americas business outlook

• Non-residential segment represents 80% of Americas revenue, led by institutional markets like K-12, higher ed, and healthcare, which are expected to remain stable and resilient in 2025.

• Commercial office and multifamily segments were weak in 2024 and are expected to remain soft in 2025, but are not significant headwinds.

• Data centers are a small but fast-growing segment, with strong growth in 2024 expected to continue in 2025.

• Residential business is primarily aftermarket (about two-thirds), with growth tied to secondary home sales and interest rates; completions matter more than starts.

• Fourth quarter 2024 saw pre-buy activity in residential, creating a headwind for Q1 2025.

Tariffs, pricing, and manufacturing

• 20%-25% of enterprise COGS is manufactured in Mexico, mainly for residential; competitors also manufacture outside the U.S.

• Plans to offset tariffs through price increases and surcharges, aiming for EBIT dollar neutrality, though some margin dilution may occur.

• Pricing actions are announced quickly in response to tariff changes, with surcharges already in place for select categories.

Competitive dynamics and market share

• Supply chain challenges in 2021-2022 led to temporary market share loss, but performance has rebounded since mid-2022, with a more resilient supply chain now.

• Market share recovery is expected to continue, with growth rates matching or exceeding public peers.