Allegion plc Q4 FY2025 earnings call

• Allegion had high single-digit enterprise revenue growth in 2025, over $600 million of accretive M&A. • Launched Schlage Performance Series locks and Von Duprin 70 Series exit devices in 2025. • 2025 had ~$630 million of acquisitions aligning with strategy. • Paid $175 million in dividends in 2025, announced 12th consecutive annual dividend increase. • Q4 2025 revenue over $1 billion, up 9.3%; organic revenue up 3.3%, led by Americas nonresidential; adjusted operating margin 22.4%, up 30 basis points; adjusted EPS $1.94, up 4.3%. • Year-to-date available cash flow $685.7 million, up 17.6%.

Americas segment: Revenue of $795.5 million in Q4, up 6.1% reported and 4.8% organic; nonresidential up high single digits organically, residential down high single digits; electronics up low double digits. Americas adjusted operating income $216.2 million, up 5.4%, adjusted operating margin down 30 basis points. International segment: Revenue $237.7 million, up 21.5% reported, down 2.3% organic; growth in electronics offset by mechanical weakness; net acquisitions contributed 16 points; International adjusted operating income $39.4 million, up 27.5%, adjusted operating margin up 90 basis points.

• Fiscal year 2026 adjusted EPS guidance $8.70 to $8.90. • Total Allegion revenue growth expected 5% to 7%, organic revenue growth 2% to 4%. • Americas organic growth low to mid-single digits led by nonresidential; electronics to outpace mechanical. • International segment low single-digit growth led by electronics. • Anticipate available cash flow conversion in 2026 to be approximately 85% to 95% of adjusted net income.

Q: Can you elaborate on the softer U.S. residential market in Q4 and into 2026, including pricing and inventory?

A: Resi in Americas ended 2025 softer than contemplated, started 2026 better; no short-term pricing reaction, channel doesn't hold much inventory so inventory corrections are short-lived.

Q: Break down contributions to margins from pricing, productivity, and acquisitions in 2025 and outlook for 2026?

A: On enterprise level, pricing productivity in excess of inflation and investment provided margin tailwind; Americas had headwind from residential volume deleverage; 2026 expects price and productivity to be positive on dollar basis and not negative on margin rate basis.

Q: Color on international markets, specific geographies and demand recovery?

A: Electronics businesses in Western Europe (DACH region) performing well, expect continued growth; Australia and New Zealand end markets weak but possible improvement; mechanical markets sluggish, electronics to lead.

Q: Pricing dynamics for 2026, net pricing capture and calibration?

A: Expect more list price increases in 2026, inflation expected less than 2025, so less total pricing; organic growth includes price and volume, more pricing than volume.

Q: Investment allocation and flexibility in 2026?

A: Price and productivity to fund investments and inflation, Q1 2026 has tough comp but full year expects price and productivity positive on dollar basis.

Q: Americas institutional and commercial volume growth in 2026?

A: Don't provide subvertical details of volume, refer to broad end market exposure and spec activity.

Q: M&A pipeline and competition for deals?

A: Pipeline active in international and Americas, in line with strategy, disciplined, focused on shareholder returns.

Q: M&A vs stock buyback thought process?

A: Priority is profitable growth, then dividends, then share repurchase when right conditions; attractive acquisitions with synergies will be pursued.

Q: Americas margins in Q4 and outlook past Q1?

A: Q4 Americas margin decline due to residential volume decline; past Q1, fundamentals remain sound, margin expansion expected as per Investor Day core incrementals.