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 Insights - JD.com has launched its Autumn Home Decoration Festival, collaborating with major brands to offer a wide range of home and appliance products at discounts of up to 50% [1][10] - The festival features smart bathroom products, emphasizing the growing consumer demand for hygiene and comfort in bathroom spaces [1] - The event includes various categories of products, from bedding to kitchen appliances, catering to different home needs [3][7][9] Group 1: Smart Bathroom Products - JD.com is promoting smart toilet products like the JOMOO smart toilet 770p, available at a 40% discount and offering free installation in 2,531 cities [1] - The OPPO JC series bathroom heater S3 can increase temperature by 10 degrees Celsius in one minute, with discounts exceeding 75% during the event [1] Group 2: Bedding and Comfort - The Xilinmen latex mattress offers up to 1,018 yuan savings during the event, highlighting the importance of comfort in home life [3] - The Kuka latex mattress is positioned as a quality option under 1,000 yuan, with discounts of up to 27% [3] Group 3: Living Room and Office Comfort - The Xihou B100Pro ergonomic chair is available at a 40% discount, designed for comfort and flexibility [5] - The Fashadi vintage-style sofa features a new seating design and is also discounted by over 40% [5] Group 4: Kitchen Appliances - The Joyoung electric rice cooker features a 316L stainless steel inner pot and is available at over 30% off [7] - The Siji Muge kitchen storage rack offers a maximum discount of 440 yuan, emphasizing practicality in kitchen organization [7] Group 5: Major Appliances - The Little Swan washing machine is available at a 20% discount, designed for efficient washing of wool garments [9] - The Midea air conditioner utilizes AI technology for energy savings and offers discounts of up to 400 yuan [9] - The Hisense 85-inch TV features advanced AI technology and is available at a 20% discount [9] Group 6: Smart Home Security - The Kaadas fingerprint lock Q9 Plus features dual recognition technology and offers additional discounts during the event [9] - The Deshman facial recognition lock Q5FPRO is available with a maximum discount of 715 yuan [9]