Robert Schultz

Robert Schultz asked about the assumptions for institutional and commercial volume growth in the Americas for 2026, inquiring if they are expected to be similar or if one vertical is anticipated to outperform. He also asked about the current M&A pipeline and whether there's an increase in competition for deals.

Answer

CFO Mike Wagnes declined to provide sub-vertical volume details for Americas non-residential, referring back to John Stone's remarks on broad end market exposure and spec activity. CEO John Stone described the M&A pipeline as very active in both international and Americas segments, aligning with the strategic overlay shared at Investor Day (core mechanical, electronics, complementary software). He emphasized that Allegion remains disciplined, sticking to its strategy, competitive advantages, and focus on shareholder returns.

Robert Schultz from Robert W. Baird & Co. Inc. asked about the assumed volume growth for institutional and commercial verticals within the Americas in 2026, and whether one was expected to outperform the other. He also inquired about the current M&A pipeline and any observed increase in competition for deals.

Answer

CFO Mike Wagnes declined to provide sub-vertical volume details for non-residential markets, referring to CEO John Stone's earlier remarks on broad end-market exposure and spec activity. CEO John Stone described the M&A pipeline as 'very active' in both international and Americas segments, aligning with strategic priorities for core mechanical, electronics, and software. He emphasized continued discipline, focus on competitive advantage, and shareholder returns despite the busy pipeline.

Robert Schultz asked for a comparison of Allegion's spec activity commentary versus its largest competitor, specifically questioning if Allegion was seeing similar weakness in healthcare and if there were any market share gains. He also inquired about the strategic fit of the SOSS acquisition and the outlook for the M&A pipeline and cadence into 2025.

Answer

CEO John Stone stated that spec activity is in line with their overall stable market commentary and that institutional verticals as a whole remain strong. He suggested any recent share shifts have likely been at the expense of smaller suppliers. Regarding M&A, he noted the SOSS acquisition is a complementary fit for the Americas nonresidential business. He described the M&A pipeline as exciting and affirmed Allegion's commitment to disciplined capital deployment through accretive acquisitions or share repurchases.

Robert Schultz from Baird asked about price realization in the Home and Building Products (HBP) segment compared to initial expectations and sought details on demand trends across HBP's residential, commercial, and new construction end markets.

Answer

EVP & CFO Brian Harris stated that price realization in HBP is tracking in line with expectations, as the market generally accepts their price increases. He noted that while the commercial market remains soft, the high-end residential repair and remodel sector is active, and the lower-end new construction market is weaker.

Robert Schultz asked about the geographical sourcing mix for the Consumer and Professional Products (CPP) segment in light of potential tariffs, and also inquired about Griffon's capital allocation priorities between debt paydown and share buybacks.

Answer

Chairman and CEO Ronald Kramer addressed the tariff question, stating that Griffon is comfortable with its 2025 guidance and plans to mitigate any impacts through pricing, supplier negotiations, and further supply chain diversification. He confirmed significant sourcing from China for the Lawn & Garden and Hunter Fan businesses. On capital allocation, Kramer noted that the company views its stock as opportunistically attractive and prefers buying back shares over paying down debt at current levels, though it has the capacity to do both.

Robert Schultz of Baird requested quantification of the project timing benefit that contributed to Q1 results and asked about the competitive landscape regarding manufacturing footprints and pricing actions in response to tariffs.

Answer

CFO Sarah Lauber noted that while some project volume was pulled into Q1 from Q2, the impact was not considered 'overly material.' CEO Mark Van Genderen added that in the Attachments segment, competitor pricing is in line with their own, and for the Solutions segment, Henderson's U.S. manufacturing base provides a competitive advantage, with pricing adjusted to cover tariffs.