Allegion plc

Previous wording

During the nine months ended September 30, 2024, we paid dividends of $1.44 per ordinary share to shareholders and repurchased approximately 0.9 million shares for $120.0 million.

Current wording

During the three months ended March 31, 2025, we paid dividends of $0.51 per ordinary share to shareholders and repurchased approximately 0.3 million shares for $40.0 million.

Previous wording

Net revenues for the three months ended September 30, 2024, increased by 5.4%, or $49.2 million, compared with the same period in 2023, due to the following:

Current wording

Net revenues for the three months ended March 31, 2025, increased by 5.4%, or $48.0 million, compared with the same period in 2024, due to the following:

Previous wording

Operating income for the three months ended September 30, 2024, increased $21.9 million compared to the same period in 2023. Operating margin, which we define as Operating income as a percentage of total Net revenues, for the three months ended September 30, 2024, increased to 22.2% from 21.0% for the same period in 2023, due to the following:

Current wording

Operating income for the three months ended March 31, 2025, increased $24.3 million compared to the same period in 2024. Operating margin, which we define as Operating income as a percentage of total Net revenues, for the three months ended March 31, 2025, increased to 20.9% from 19.3% for the same period in 2024, due to the following:

Previous wording

The increase in Operating income and Operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending, the contribution to operating income from recent acquisition activity and lower acquisition, integration and restructuring expenses. These increases were partially offset by unfavorable volume/product mix and unfavorable foreign currency exchange rate movements.

Current wording

The increase in Operating income and Operating margin was driven by favorable volume/product mix, the favorable impact from acquisitions, favorable foreign currency exchange rate movements, inclusive of transactional currency gains and losses, and lower acquisition, integration and restructuring expenses. These increases were partially offset by slightly higher inflation and investment spending than pricing and productivity.

Previous wording

Pricing and productivity in excess of inflation and investment spending includes the impact to both Operating income and Operating margin from pricing, as defined above, in addition to productivity, inflation and investment spending. Productivity represents improvements in unit costs of materials, cost reductions related to improvements to our manufacturing design and processes and reductions in selling and administrative expenses due to productivity projects. Inflation includes both unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes, and current period costs of ongoing selling and administrative functions compared to the same ongoing expenses in the prior period. Expenses related to increased head count for strategic initiatives, new facilities or other significant spending for strategic initiatives or new product and channel development, are captured in investment spending.

Current wording

Inflation and investment spending in excess of pricing and productivity includes the impact to both Operating income and Operating margin from pricing, as defined above, in addition to productivity, inflation and investment spending. Productivity represents improvements in unit costs of materials, cost reductions related to improvements to our manufacturing design and processes and reductions in selling and administrative expenses due to productivity projects. Inflation includes both unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes, and current period costs of ongoing selling and administrative functions compared to the same ongoing expenses in the prior period. Expenses related to increased head count for strategic initiatives, new facilities or other significant spending for strategic initiatives or new product and channel development, are captured in investment spending.

Previous wording

Interest expense for the three months ended September 30, 2024, increased $5.9 million compared with the same period in 2023, primarily due to higher outstanding indebtedness compared to the same period in the prior year.

Current wording

Interest expense for the three months ended March 31, 2025, increased $1.8 million compared with the same period in 2024, primarily due to higher interest rates on outstanding indebtedness compared to the same period in the prior year.

Previous wording

The components of Other (income) expense, net for the three months ended September 30 were as follows:

Current wording

The components of Other income, net for the three months ended March 31 were as follows:

Previous wording

The effective income tax rates for the three months ended September 30, 2024 and 2023, were 10.5% and 8.1%, respectively. The increase in the effective income tax rate compared to 2023 is primarily due to the enactment of global minimum tax in 2024, the unfavorable year over year change in the amounts recognized for uncertain tax positions and the unfavorable mix of income earned in higher tax rate jurisdictions.

Current wording

The effective income tax rates for the three months ended March 31, 2025 and 2024, were 15.4% and 19.0%, respectively. The decrease in the effective income tax rate compared to 2024 is primarily due to discrete items, including the favorable year over year changes in the amounts recognized for uncertain tax positions and income tax credits.

Previous wording

Segment Results of Operations - For the three and nine months ended September 30:

Current wording

Segment Results of Operations - For the three months ended March 31:

Previous wording

Our Allegion Americas segment is a leading provider of security products, services and solutions throughout North America. The segment sells a broad range of products and solutions including locks, locksets, key systems, door controls and systems, exit devices, doors, accessories, electronic security products, access control systems and software and service solutions to customers in commercial, institutional and residential facilities, including the education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets. This segment’s primary brands are LCN, Schlage, Von Duprin and Stanley Access Technologies, which we utilize with permission in accordance with the terms of an agreement with Stanley Black & Decker ("Stanley" is the property of Stanley Logistics L.L.C.).

Current wording

Our Allegion Americas segment is a leading provider of security products, services and solutions throughout North America. The segment sells a broad range of products and solutions including locks, locksets, key systems, door controls and door control systems, exit devices, doors, glass and door systems, accessories, electronic security products, access control systems and software and service solutions to customers in institutional, commercial and residential facilities, including the education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets. This segment’s primary brands are LCN, Schlage, Von Duprin and Stanley Access Technologies, which we utilize with permission in accordance with the terms of an agreement with Stanley Black & Decker ("Stanley" is the property of Stanley Logistics L.L.C.).

Previous wording

Net revenues from non-residential products for the nine months ended September 30, 2024, increased by a low-single digits percent compared to the same period in the prior year, driven by improved pricing and acquisition activity, partially offset by lower volumes. We currently anticipate low-single digit growth from our non-residential products and services for 2024.

Current wording

Net revenues from non-residential products for the three months ended March 31, 2025, increased by a high-single digits percent compared to the same period in the prior year, as demand for our products remains healthy. We currently anticipate growth in revenues from our non-residential products and services for 2025.

Previous wording

Net revenues from residential products for the nine months ended September 30, 2024, increased by a low-single digits percent compared to the same period in the prior year, driven by higher volumes. We expect low-single digits growth from our residential business for 2024.

Current wording

Net revenues from residential products for the three months ended March 31, 2025, decreased by a mid-single digits percent compared to the same period in the prior year as a result of softer residential markets. Given current market conditions around new construction and existing home sales, we expect continued softness in our residential business in 2025.

Previous wording

Growth in electronic security products and solutions is a metric that is actively monitored by management and a focus of our investors. Electronic security products encompass both residential and non-residential solutions and include all electrified product categories including, but not limited to, electronic and electrified locks, access control systems and electronic and electrified door controls and systems and exit devices. For the three months ended September 30, 2024, Net revenues from the sale of electronic security products in the Allegion Americas segment decreased by a high-single digits percent compared to the same period in the prior year in which the sale of electronic security products grew by a high-teens percent.

Current wording

Growth in electronic security products and solutions is a metric that is actively monitored by management and a focus of our investors. Electronic products encompass both residential and non-residential solutions and include all electrified product categories including, but not limited to, electronic and electrified locks, access control systems and electronic and electrified door controls and systems and exit devices. For the three months ended March 31, 2025, Net revenues from the sale of electronic products in the Allegion Americas segment increased by a low-double digits percent compared to the same period in the prior year. We expect continued growth in our electronic products in 2025.

Previous wording

Segment operating income for the nine months ended September 30, 2024, increased $40.2 million compared to the same period in 2023, and Segment operating margin for the nine months ended September 30, 2024, increased to 27.5% from 26.4%, due to the following:

Current wording

Segment operating income for the three months ended March 31, 2025, increased $24.4 million compared to the same period in 2024, and Segment operating margin for the three months ended March 31, 2025, increased to 27.9% from 26.4%, due to the following:

Previous wording

Our Allegion International segment provides security products, services and solutions primarily throughout Europe, Asia and Oceania. The segment offers end-users a broad range of products, services and solutions including locks, locksets, portable locks, key systems, door closers and systems, exit devices, doors, electronic security products, access control systems, time and attendance and workforce productivity solutions, among other software and service solutions. This segment’s primary brands are AXA, Bricard, Briton, CISA, Gainsborough, Interflex, Kryptonite and SimonsVoss.

Current wording

Our Allegion International segment provides security products, services and solutions primarily throughout Europe, Asia and Oceania. The segment offers end-users a broad range of products, services and solutions including locks, locksets, portable locks, key systems, door controls and door control systems, exit devices, doors, electronic security products, access control systems, time and attendance and workforce productivity solutions, among other software and service solutions. This segment’s primary brands are AXA, CISA, Gainsborough, Interflex, and SimonsVoss.

Previous wording

The increase in Segment operating income and Segment operating margin was primarily driven by favorable pricing and productivity in excess of inflation and investment spending, the favorable impact from foreign currency exchange rate movements, current year acquisitions, and lower acquisition, integration and restructuring expenses. These increases were partially offset by unfavorable volume/product mix.

Current wording

The decrease in Segment operating income and Segment operating margin was primarily driven by the unfavorable impact from foreign currency exchange rate movements, inflation and investment spending in excess of pricing and productivity, and higher acquisition, integration and restructuring expenses. These decreases were partially offset by the favorable impact from volume/product mix and recent acquisitions.

Previous wording

Our primary source of liquidity is cash provided by operating activities. Cash provided by operating activities is used to invest in new product development and fund capital expenditures and working capital requirements. Our ability to generate cash from operating activities, our unused borrowing capacity under the Revolving Facility and our access to the capital and credit markets enable us to fund these capital needs, execute our long-term growth strategies and return value to our shareholders. Further, our business operates with strong operating cash flows, low leverage and low capital intensity, providing financial flexibility, including sufficient access to credit markets.

Current wording

Our primary source of liquidity is cash provided by operating activities. Cash provided by operating activities is used to invest in new product development and fund capital expenditures and working capital requirements. Our ability to generate cash from operating activities, our unused borrowing capacity under the Revolving Facility and our access to the capital and credit markets enable us to fund these capital needs, execute our long-term growth strategies and return value to our shareholders. Further, our business operates with strong operating cash flows, low leverage and low capital intensity, providing financial flexibility.

Previous wording

Our short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, dividend payments and principal and interest payments on our long-term debt. Long-term financing needs depend largely on potential growth opportunities, including potential acquisitions, repayment or refinancing of our long-term obligations and repurchases of our ordinary shares. Of our total outstanding indebtedness as of September 30, 2024, approximately 91% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.

Current wording

Our short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, dividend payments and principal and interest payments on our long-term debt. Long-term financing needs depend largely on potential growth opportunities, including potential acquisitions, repayment or refinancing of our long-term obligations and repurchases of our ordinary shares. Of our total outstanding indebtedness as of March 31, 2025, approximately 90% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.

Previous wording

Based upon our operations, existing cash balances and unused borrowing capacity under the Revolving Facility, as of September 30, 2024, we expect our cash flows from operations will be sufficient to maintain a sound financial position and liquidity and to meet our current financing needs for at least the next 12 months. Further, we do not anticipate any covenant compliance challenges with any of our outstanding indebtedness for at least the next 12 months. We also believe existing borrowing capacity under the Revolving Facility, together with financing we believe would be accessible to us in the credit and capital markets, are sufficient to achieve our longer-term strategic plans.

Current wording

Based upon our operations, existing cash balances and unused borrowing capacity under the Revolving Facility, as of March 31, 2025, we expect our cash flows from operations will be sufficient to maintain a sound financial position and liquidity and to meet our current financing needs for at least the next 12 months. Further, we do not anticipate any covenant compliance challenges with any of our outstanding indebtedness for at least the next 12 months. We also believe existing borrowing capacity under the Credit Facilities and access to credit and capital markets are sufficient to achieve our longer-term strategic plans.

Previous wording

The following table reflects the major categories of cash flows for the nine months ended September 30. For additional details, see the Condensed and Consolidated Statements of Cash Flows in the Condensed and Consolidated Financial Statements.

Current wording

The following table reflects the major categories of cash flows for the three months ended March 31. For additional details, see the Condensed and Consolidated Statements of Cash Flows in the Condensed and Consolidated Financial Statements.

Previous wording

Operating Activities: Net cash provided by operating activities during the nine months ended September 30, 2024, increased $74.9 million compared to the same period in 2023, primarily driven by higher net earnings and lower cash used for working capital.

Current wording

Operating Activities: Net cash provided by operating activities during the three months ended March 31, 2025, increased $53.4 million compared to the same period in 2024, primarily driven by higher net earnings and lower cash used for working capital.

Previous wording

Investing Activities: Net cash used in investing activities during the nine months ended September 30, 2024, increased $106.8 million compared to the same period in 2023, primarily due to cash used for acquisitions and higher capital expenditures.

Current wording

Investing Activities: Net cash used in investing activities during the three months ended March 31, 2025, decreased $15.4 million compared to the same period in 2024, primarily due to lower capital expenditures and less cash used for acquisitions.

Previous wording

We have an unsecured credit agreement consisting of a $250.0 million term loan facility (the “Term Facility”), of which $215.6 million was outstanding at September 30, 2024, and a $750.0 million revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”), of which no balance was outstanding at September 30, 2024. The Credit Facilities are unconditionally guaranteed jointly and severally on an unsecured basis by Allegion plc, Allegion US Holding Company Inc. ("Allegion US Hold Co"), the Company’s wholly-owned subsidiary, and Allegion (Ireland) Finance Designated Activity Company (“Allegion Ireland DAC”), the Company’s wholly-owned subsidiary.

Current wording

We have an unsecured credit agreement in place, consisting of a $250.0 million term loan facility (the “Term Facility”), of which $209.4 million was outstanding at March 31, 2025, and a $750.0 million revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”), of which no balance was outstanding at March 31, 2025.

Previous wording

The Revolving Facility matures on May 20, 2029 and includes up to $100.0 million for the issuance of letters of credit. We had $18.5 million of letters of credit outstanding at September 30, 2024. Borrowings under the Revolving Facility may be repaid at any time without premium or penalty, and amounts repaid may be reborrowed.

Current wording

The Term Facility requires quarterly principal payments through its maturity on November 18, 2026. Future payments total $18.8 million for the remainder of 2025 and $190.6 million due in 2026. We repaid $3.1 million of principal on the Term Facility during the three months ended March 31, 2025. The Revolving Facility matures on May 20, 2029 and includes up to $100.0 million for the issuance of letters of credit. We had $18.5 million of letters of credit outstanding at March 31, 2025. Borrowings under the Revolving Facility may be repaid at any time without premium or penalty, and amounts repaid may be reborrowed.

Previous wording

Outstanding borrowings under the Credit Facilities accrue interest, at the option of the Company, equal to either: (i) a Secured Overnight Financing Rate ("SOFR") rate plus an applicable margin or (ii) a base rate plus the applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on the Company’s credit ratings. At September 30, 2024, the Company's outstanding borrowings under the Credit Facilities accrued interest at SOFR plus a margin of 1.225%, resulting in an interest rate of 6.070%. The Credit Facilities also contain negative and affirmative covenants and events of default that, among other things, limit or restrict the Company’s ability to enter into certain transactions. In addition, the Credit Facilities require the Company to comply with a maximum leverage ratio as defined in the credit agreement. As of September 30, 2024, the Company was in compliance with all applicable covenants under the credit agreement.

Current wording

Outstanding borrowings under the Credit Facilities accrue interest, at our option, equal to either: (i) a Secured Overnight Financing Rate ("SOFR") rate plus an applicable margin or (ii) a base rate plus the applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on our credit ratings. At March 31, 2025, our outstanding borrowings under the Credit Facilities accrued interest at SOFR plus a margin of 1.225%, resulting in an interest rate of 5.550%. The Credit Facilities also contain negative and affirmative covenants and events of default that, among other things, limit or restrict our ability to enter into certain transactions. In addition, the Credit Facilities require us to comply with a maximum leverage ratio as defined in the credit agreement. As of March 31, 2025, we were in compliance with all applicable covenants under the credit agreement.

Previous wording

As of September 30, 2024, Allegion US Hold Co had $400.0 million outstanding of its 3.200% Senior Notes due 2024 (the "3.200% Senior Notes"), $400.0 million outstanding of its 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”), $600.0 million outstanding of its 5.411% Senior Notes due 2032 (the "5.411% Senior Notes") and $400.0 million outstanding of its 5.600% Senior Notes due 2034 (the "5.600% Senior Notes"), and Allegion plc had $400.0 million outstanding of its 3.500% Senior Notes due 2029 (the “3.500% Senior Notes”, and all five senior notes collectively, the “Senior Notes”). The 3.550% Senior Notes and 3.500% Senior Notes require semi-annual interest payments on April 1 and October 1 of each year and will mature on October 1, 2027 and October 1, 2029, respectively. The 5.411% Senior Notes require semi-annual interest payments on January 1 and July 1 of each year, and will mature on July 1, 2032. The 5.600% Senior Notes require semi-annual interest payments on May 29 and November 29, beginning November 29, 2024, and mature on May 29, 2034. We repaid the 3.200% Senior Notes on October 1, 2024.

Current wording

As of March 31, 2025, we also have $400.0 million outstanding of 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”), $600.0 million outstanding of 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”), $400.0 million outstanding of 5.600% Senior Notes due 2034 (the "5.600% Senior Notes"), and $400.0 million outstanding of 3.500% Senior Notes due 2029 (the “3.500% Senior Notes”, and all four senior notes collectively, the "Senior Notes"). The 3.550% Senior Notes and 3.500% Senior Notes both require semi-annual interest payments on April 1 and October 1 of each year and mature on October 1, 2027 and October 1, 2029, respectively. The 5.411% Senior Notes require semi-annual interest payments on January 1 and July 1 of each year and mature on July 1, 2032. The 5.600% Senior Notes require semi-annual interest payments on May 29 and November 29 of each year and mature on May 29, 2034.

Previous wording

Allegion US Hold Co is or was, as applicable, the issuer of the 3.200% Senior Notes, 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes and is the guarantor of the 3.500% Senior Notes. Allegion plc (the “Parent”) is or was, as applicable, the issuer of the 3.500% Senior Notes and is or was, as applicable, the guarantor of the 3.200% Senior Notes, 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes. Allegion US Hold Co is directly or indirectly 100% owned by the Parent and each of the guarantees of Allegion US Hold Co and the Parent is full and unconditional and joint and several.

Current wording

Allegion US Hold Co is or was, as applicable, the issuer of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes and is the guarantor of the 3.500% Senior Notes. Allegion plc (the “Parent”) is or was, as applicable, the issuer of the 3.500% Senior Notes and is or was, as applicable, the guarantor of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes. Allegion US Hold Co is directly or indirectly 100% owned by the Parent and each of the guarantees of Allegion US Hold Co and the Parent is full and unconditional and joint and several.

Previous wording

The 3.200% Senior Notes, 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes are or were, as applicable, senior unsecured obligations of Allegion US Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.200% Senior Notes, 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes is or was, as applicable, the senior unsecured obligation of the Parent and ranks equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The 3.500% Senior Notes are senior unsecured obligations of the Parent and rank equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.500% Senior Notes is the senior unsecured obligation of Allegion US Hold Co and ranks equally with all of Allegion US Hold Co's existing and future senior unsecured and unsubordinated indebtedness.

Current wording

The 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes are or were, as applicable, senior unsecured obligations of Allegion US Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes is or was, as applicable, the senior unsecured obligation of the Parent and ranks equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The 3.500% Senior Notes are senior unsecured obligations of the Parent and rank equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.500% Senior Notes is the senior unsecured obligation of Allegion US Hold Co and ranks equally with all of Allegion US Hold Co's existing and future senior unsecured and unsubordinated indebtedness.

Previous wording

Each guarantee is effectively subordinated to any secured indebtedness of the applicable guarantor to the extent of the value of the assets securing such indebtedness. The Senior Notes are structurally subordinated to indebtedness and other liabilities of the subsidiaries of the applicable guarantor, none of which guarantee the notes. The obligations of the applicable guarantor under its guarantee are limited as necessary to prevent such guarantee from constituting a fraudulent conveyance under applicable law and, therefore, are limited to the amount that the applicable guarantor could guarantee without such guarantee constituting a fraudulent conveyance; this limitation, however, may not be effective to prevent such guarantee from constituting a fraudulent conveyance. If the guarantee was rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable guarantor, and, depending on the amount of such indebtedness, the applicable guarantor’s liability on its guarantee could be reduced to zero. In such an event, the notes would be structurally subordinated to the indebtedness and other liabilities of the applicable guarantor.

Current wording

Each guarantee is effectively subordinated to any secured indebtedness of the guarantor to the extent of the value of the assets securing such indebtedness. The Senior Notes are structurally subordinated to indebtedness and other liabilities of the subsidiaries of the guarantor, none of which guarantee the notes. The obligations of the guarantor under its guarantee are limited as necessary to prevent such guarantee from constituting a fraudulent conveyance under applicable law and, therefore, are limited to the amount that the applicable guarantor could guarantee without such guarantee constituting a fraudulent conveyance; this limitation, however, may not be effective to prevent such guarantee from constituting a fraudulent conveyance. If the guarantee was rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable guarantor, and, depending on the amount of such indebtedness, the applicable guarantor’s liability on its guarantee could be reduced to zero. In such an event, the notes would be structurally subordinated to the indebtedness and other liabilities of the guarantor.

Previous wording

Management believes there have been no significant changes during the nine months ended September 30, 2024, to the items we disclosed as our critical accounting policies in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Management believes there have been no significant changes during the three months ended March 31, 2025, to the items we disclosed as our critical accounting policies in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.