Allegion plc

Previous wording

In the first quarter of 2025, we delivered mid-single digit revenue growth compared to the same period in 2024, driven by the Americas non-residential business, as demand for our products remains healthy.

Current wording

In the second quarter of 2025, we delivered mid-single digit revenue growth compared to the same period in 2024, driven by the Allegion Americas segment, as demand for our non-residential products remains healthy.

Previous wording

Demand for electronic security products has also remained strong. Macroeconomic conditions in our International markets remain mixed.

Current wording

Demand for electronic security products has also remained strong and continues to be a long-term growth driver. Macroeconomic conditions in our International markets remain mixed.

Previous wording

In the first quarter of 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or import products and components. Subsequent to their announcement, there have been changes to the effective dates and amounts, and as a result, we are unable to quantify the impact that tariffs, when ultimately enacted, will have on our results of operations. We continue to analyze the impact of these actions and what, if any, steps, including pricing actions, we may take to mitigate the impact of the tariffs. We estimate we source approximately 20-25% of cost of goods sold ("COGS") from Mexico, less than 5% of COGS from China, and 5-10% of COGS from all other countries. Additionally, this could impact future demand.

Current wording

In the first half of 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or import products and components. We continue to analyze the impact of these actions and what, if any, steps, including pricing actions, we may take to mitigate the impact of the tariffs. We estimate we source approximately 20-25% of cost of goods sold ("COGS") from Mexico, less than 5% of COGS from China, and 5-10% of COGS from all other non-US countries. Additionally, this could impact future demand.

Previous 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.

Current wording

During the six months ended June 30, 2025, we paid dividends of $1.02 per ordinary share to shareholders and repurchased approximately 0.6 million shares for $80.0 million.

Previous 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:

Current wording

Operating income for the three months ended June 30, 2025, increased $10.7 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 June 30, 2025, decreased to 21.5% from 21.6% for the same period in 2024, due to the following:

Previous 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.

Current wording

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

Previous 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.

Current wording

Interest expense for the six months ended June 30, 2025, increased $1.3 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 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.

Current wording

The effective income tax rates for the six months ended June 30, 2025 and 2024, were 18.0% and 18.3%, respectively. The decrease in the effective income tax rate compared to 2024 is primarily due to the favorable year over year discrete changes in the amounts recognized for uncertain tax positions, partially offset by the enactment of discrete legislative changes and the unfavorable mix of income earned in higher tax rate jurisdictions.

Previous wording

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

Current wording

Segment Results of Operations - For the three and six months ended June 30:

Previous 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.

Current wording

Net revenues from non-residential products for the three months ended June 30, 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 for the remainder of 2025.

Previous wording

The increase in Segment operating income and Segment operating margin was primarily driven by favorable volume/product mix, favorable foreign currency exchange rate movements, the favorable impact of recent acquisitions, and lower acquisition, integration, and restructuring expenses. These increases were partially offset by inflation and investment spending in excess of pricing and productivity. The currency impact above is primarily due to the strengthening of the U.S. dollar versus the Mexican peso compared to the prior year.

Current wording

The increase in Segment operating income and Segment operating margin was primarily driven by favorable volume/product mix, the favorable impact of recent acquisitions, favorable foreign currency exchange rate movements, and lower acquisition, integration, and restructuring expenses. These increases were partially offset by inflation and investment spending in excess of pricing and productivity. The currency impact above is primarily due to the strengthening of the U.S. dollar versus the Mexican peso compared to the prior year.

Previous wording

The increase in Net revenues was driven by higher volumes, the favorable impact from acquisitions, and improved pricing, which was partially offset by unfavorable foreign currency exchange rate movements.

Current wording

The increase in Net revenues was primarily driven by favorable foreign currency exchange rate movements, favorable impact from acquisitions, and improved pricing, which was partially offset by lower volumes.

Previous wording

The decrease in Net revenues was primarily driven by unfavorable foreign currency exchange rate movements and lower volumes. This decrease was partially offset by favorable impact from acquisitions as well as improved pricing.

Current wording

The increase in Net revenues was primarily driven by favorable impact from acquisitions, improved pricing, and favorable foreign currency exchange rate movements, which was partially offset by lower volumes.

Previous 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.

Current wording

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

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 March 31, 2025, approximately 90% 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 June 30, 2025, approximately 87% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.

Previous 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.

Current wording

The following table reflects the major categories of cash flows for the six months ended June 30. 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 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.

Current wording

Operating Activities: Net cash provided by operating activities during the six months ended June 30, 2025, increased $90.1 million compared to the same period in 2024, primarily driven by less cash used for working capital and higher net earnings.

Previous 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.

Current wording

Investing Activities: Net cash used in investing activities during the six months ended June 30, 2025, decreased $83.4 million compared to the same period in 2024, primarily due to less cash used for acquisitions and lower capital expenditures.

Previous 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.

Current wording

We have an unsecured credit agreement in place, consisting of a $250.0 million term loan facility (the “Term Facility”), of which $203.1 million was outstanding at June 30, 2025, and a $750.0 million revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”), of which $76.0 million was outstanding at June 30, 2025. On July 3, 2025, the Company borrowed an additional $72.0 million on the Revolving Facility. Borrowings on the Revolving Facility were used to primarily fund previously announced acquisitions.

Previous 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.

Current wording

The Term Facility requires quarterly principal payments through its maturity on November 18, 2026. Future payments total $12.5 million for the remainder of 2025 and $190.6 million in 2026. We repaid $9.4 million of principal on the Term Facility during the six months ended June 30, 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 $18.7 million of letters of credit outstanding at June 30, 2025. Borrowings under the Revolving Facility are due upon its maturity but 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 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.

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 June 30, 2025, our outstanding borrowings under the Credit Facilities accrued interest at SOFR plus a margin of 1.225%, resulting in an interest rate of 5.552%. 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 June 30, 2025, we were in compliance with all applicable covenants under the credit agreement.

Previous 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.

Current wording

Management believes there have been no significant changes during the six months ended June 30, 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.

Previous wording

Certain statements in this report, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements.

Current wording

Certain statements in this report, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements generally are identified by the words "believe," "aim," "projected," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "scheduled," "targets," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements.