Allegion sees growth in non-residential demand

DUBLIN – With mobile credential adoption spreading across its core institutional markets, Allegion is positioning itself to build on that demand, say company execs.

Mobile credential adoption fuels campus opportunity

In particular, demand for mobile technology is increasing on college campuses, and Allegion is investing organically to capture more of that business, said John Stone, president and CEO on a recent call to discuss the company’s second quarter earnings.

“These customers are moving from plastic cards and mechanical keys to contactless mobile credentials provided and managed by Allegion,” he said. “This also drives large-scale hardware modernization. We also see off-campus housing and property managers adopting the same approach, extending secure seamless access from the campuses where students learn into the communities where they live and connect.”

Data centers emerge as fast-growing end market

Allegion is also seeing an acceleration in other non-residential demand, with data centers approaching 5% of the non-res business – and growing, driven by strong team engagement across sales, marketing and spec writers, said Stone.

“Our end user demand playbook is exactly what we’re doing here, and I do feel we’re the best at it,” he said. “Getting in early in the design phases, creating end user standards that meet code, meet specification and have all the SKUs that meet the specifics around data centers.”

Allegion’s previous acquisition of Krieger Specialty Products, which offers high-technology doors, also strengthens the company’s commitment to the space, said Stone.

“As these hyperscalers build new campuses, we expect to be there,” he said.

Residential segment delivers stronger-than-expected growth

Residential was still strong, posting a 9% increase in organic growth, which was “stronger than expected,” said Stone, who cautioned that part of that growth reflected a price increase at the end of May, pushing customers to order in advance.

“We’re encouraged by the quarter we just had, but I would say the outlook doesn’t assume that level of performance going forward,” he said.

Germany continues to pressure European performance

Despite the bright spots in the Americas segment, Allegion’s European business saw organic revenue fall, with Germany, where the company is “overweighted,” dragging down the segment, says Stone.

“The macro backdrop in Germany has just been worsening, so that does have an outsized impact on us,” he said.