Capital Allocation Insights: $SBGSY, $SU-FP, $PTC What concerns us about Schneider Electric’s PTC acquisition is the opportunity cost—and what it signals about management’s priorities. Energy Management has been growing faster and generating higher margins than Industrial Automation, supported by strong data-center demand. Yet Schneider is committing approximately €21 billion of enterprise value to expand in industrial software. Our Capital Allocation Framework starts with a simple principle: today’s capital allocation decisions drive tomorrow’s returns. We evaluate acquisitions against the company’s other opportunities to deploy capital, including the borrowing capacity and management attention required to make them work. PTC is a high-margin business, and management sees a complementary software platform. But Schneider expects the transaction’s return on capital employed to exceed its cost of capital by year five, including full synergies. The financing plan also includes €16–17 billion of new debt. The competitive implications matter too. While a large company integrates an acquisition and manages additional debt, smaller, more focused businesses may have an opening to invest and gain ground. The decision also makes us question our understanding of Energy Management’s reinvestment runway. If the opportunity is as compelling as management describes, why commit so much capital and attention elsewhere? Does the business need relatively little additional investment, are the opportunities more limited than we appreciate, or does PTC strengthen it in ways we are missing? Our framework pushes us to compare what management says with where it commits resources. When those appear to point in different directions, we want to understand why. Sources: ptc.com/en/news/2026/schneid… se.com/ww/en/about-us/invest… Views are those of the author and not necessarily Vaughan Nelson. For educational purposes only, not investment advice. Any reliance is at your own risk. Vaughan Nelson does not guarantee accuracy. Past performance is not indicative of future results. Securities mentioned may be held in Vaughan Nelson strategies.