Allegion leans on non-residential as it navigates volatile start to 2026

DUBLIN—Allegion opened 2026 with strong demand in its core non-residential business in the Americas, offset by execution challenges abroad. 

While topline growth approached double digits, Allegion President and CEO John Stone pointed to a business leaning on pricing discipline and steady project pipelines as it works through short-term disruption in its international segment. 

“We’ve remained agile in a volatile environment and stayed focused on serving our customers alongside our strong channel partners,” he said during the company’s Q1 earnings call. 

Non-residential demand remains firm 

A central theme of the call was continued strength in non-residential markets, which continue to anchor Allegion’s performance. Stone pointed to “very strong” specification activity across a broad range of verticals, reinforcing confidence in the pipeline of future projects. 

Equally important, Allegion is not seeing meaningful delays from specification to project execution, a key concern across the industry. 

“That environment hasn’t meaningfully changed,” Stone said. 

The strength appears broad-based, supported by channel checks with integrators and distributors, with no indication that growing segments such as data centers are crowding out other construction activity. 

“That’s not something we’re seeing as an impact in our space,” he added. 

Pricing, not volume, driving growth 

Allegion’s growth remains largely driven by pricing rather than volume gains. CFO Michael Wagnes acknowledged some volume softness tied to prior-year comparisons but said demand fundamentals remain intact. 

That model is expected to continue as the company navigates tariff and inflation pressures, projected to create a roughly 1% headwind to cost of goods sold. Allegion plans to offset that impact through pricing and internal cost controls, consistent with its approach in recent years. 

“It’s the same playbook - price and productivity to cover inflation and investment,” Stone said. 

Wagnes noted that pricing actions tied to these pressures have not yet been implemented, meaning any associated benefit is not reflected in current guidance, though customers will be notified once actions are finalized. 

International disruption tied to ERP rollout 

The most significant challenge in the quarter came from Allegion’s international segment, where an enterprise resource planning (ERP) system implementation in a legacy mechanical business disrupted production and weighed on results. 

Stone emphasized the issue was operational, not demand-related, with customer orders and backlog remaining intact. 

“This was our execution that needs to improve,” he said. 

Production rates have begun to recover, and the company expects to make up the first-quarter shortfall over the remainder of the year. Stone said Allegion has retained customer demand despite the disruption. 

While ERP implementations are a routine part of Allegion’s modernization efforts, the setback was unusual. 

“We’ve done a lot of these… and we’ve never had to talk about this before,” Stone said. 

Electronics continue to lead long-term strategy 

Electronics remained a growth area, with Stone pointing to continued adoption and product development as key drivers. 

The segment continues to outpace mechanical solutions over time, reflecting broader industry demand for connected and integrated access technologies across commercial and institutional environments. 

“Electronics is still a long-term growth driver for Allegion,” he said. 

Steady outlook despite uncertainty 

Looking ahead, Allegion maintained its expectations for organic growth and earnings while raising its reported revenue outlook to reflect acquisition contributions. 

“We’re committed to serving our customers while remaining agile in the current environment,” Stone said.