Allegion (NYSE:ALLE) FY Conference Summary Company Overview - **Company**: Allegion - **Date of Conference**: February 19, 2026 - **Speakers**: John Stone (President and CEO), Josh Pokrzywinski (Investor Relations) Key Points Industry and Market Outlook - **Non-Residential Business**: Expected volume growth in 2026 will be similar to 2025, which is the largest segment of Allegion's business [3][5] - **International Growth**: Organic growth anticipated from a mix of price and volume, with a focus on institutional markets [5][10] - **Residential Market**: A cautious outlook for the residential side, expecting continued softness [5][24] Institutional and Commercial Markets - **Institutional Markets**: Allegion is well-positioned with broad end-market exposure; however, federal budget pressures may impact higher education [10][13] - **Commercial Markets**: Office demand is showing signs of recovery, particularly in Class A spaces, with New York experiencing a 20-year high in demand [16][19] - **Multifamily Sector**: New builds have been soft, but there are signs of recovery in various regions [21] Pricing and Cost Dynamics - **Pricing Power**: Strong pricing power in the non-residential sector due to the nature of products and established relationships [47][50] - **Residential Pricing**: Less pricing power compared to non-residential, with volume-related pressure impacting margins [52][56] Financial Performance and Margins - **Operating Margins**: Expected to face pressure in the first half of the year, with a potential recovery in the second half as volume growth improves [56][61] - **Chip Supply Issues**: Allegion has learned from past supply chain issues and feels prepared for potential chip constraints in 2026 [62][65] Electronics and Software Growth - **Electronics Revenue**: Electronics, software, and services account for about 33% of total revenue, with double-digit growth expected to continue [66][67] - **M&A Activity**: Allegion plans to grow through acquisitions, particularly in electronics and complementary software [71][72] International Business Strategy - **Growth Strategy**: Focus on profitable growth in existing markets, with selective pruning of non-core businesses [88][94] - **Geographic Focus**: Concentration on Australia, New Zealand, and Western Europe, avoiding new emerging markets due to higher risks [104][106] Data Center Market - **Data Center Exposure**: Growing segment with high security needs, providing a rich product mix for Allegion [109][111] Audience Insights - **Market Sentiment**: Neutral bias towards Allegion, with concerns about organic growth being the primary valuation headwind [116][119] Additional Insights - **Installed Base Stability**: The aftermarket segment benefits from a stable installed base, providing resilience against market volatility [15] - **Product Innovation**: Allegion is focusing on connected locks that reduce installation costs and enhance functionality [76][80] - **Recurring Revenue Models**: Some acquisitions have introduced recurring revenue streams, which are expected to grow [82][84]

Core Viewpoint - The company, Lihe Micro, has confirmed that its new generation of Beidou multi-mode navigation core chips is primarily designed for the State Grid and can be widely applied in smart city construction, transportation, and IoT applications [1] Group 1 - Investors inquired about the applicability of the company's IoT chips and technology in smart internet vehicles and autonomous driving [1] - The company responded that its navigation chips are mainly focused on the State Grid [1] - The technology is also relevant for various sectors including smart city development and transportation [1]

Group 1: Overall Industry Overview - The total import and export value of China's chip industry is projected to reach $545.14 billion in 2024, with a year-on-year growth of 12.32%, and a trade deficit of $226.14 billion, increasing by 5.97% [1] - In the first four months of 2025, the trade scale of the chip industry has already reached $179.61 billion, with a trade deficit of $66.73 billion [1] Group 2: Import Situation - In 2024, China's chip import volume is expected to be 549.18 billion units, reflecting a year-on-year increase of 14.52%, while the import value is approximately $385.64 billion, up by 10.38% [2] - For the first four months of 2025, the chip import volume is recorded at 181.33 billion units, with an import value of about $123.17 billion [2] - The import price of chips in China fluctuates between $0.60 and $0.80 per unit, remaining relatively stable due to the rapid development of the domestic IoT chip industry [5] Group 3: Export Situation - In 2024, China's chip export volume is projected to be 298.11 billion units, with a year-on-year growth of 11.31%, and the export value is expected to reach $159.50 billion, increasing by 17.31% [7] - In the first five months of 2025, the semiconductor export volume has reached 106.29 billion units, with an export value of $56.44 billion [7] - The export price of chips from China has shown a rising trend, increasing from $0.40 per unit in 2014 to $0.54 per unit in 2024, indicating improved self-innovation capabilities and increased market competitiveness [8]