Allegion plc

Previous 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.

Current wording

Throughout 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or import products and components. Through the nine months ended September 30, 2025, we have offset inflation due to tariffs with pricing actions. We continue to analyze the impact of changes in tariffs 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

The following acquisitions were completed during the six months ended June 30, 2025:

Current wording

The following acquisitions were completed during the nine months ended September 30, 2025:

Previous wording

On February 4, 2025, the Company, through its subsidiaries, acquired Next Door Company ("Next Door"), a global provider of security products and solutions based in the United States. Next Door is reported in the Company's Allegion Americas segment.

Current wording

On February 4, 2025, we, through our subsidiaries, acquired Next Door Company ("Next Door"), a global provider of security products and solutions based in the United States. Next Door is reported in the Allegion Americas segment.

Previous wording

On March 1, 2025, the Company, through its subsidiaries, acquired Lemaar Pty Ltd ("Lemaar"), a global provider of security products and solutions based in Australia. Lemaar is reported in the Company's Allegion International segment.

Current wording

On March 1, 2025, we, through our subsidiaries, acquired Lemaar Pty Ltd ("Lemaar"), a global provider of security products and solutions based in Australia. Lemaar is reported in the Allegion International segment.

Previous wording

On April 2, 2025, the Company, through its subsidiaries, acquired 100% of Trimco Hardware ("Trimco"), a manufacturer of high-performance and custom-designed architectural hardware primarily sold for commercial and institutional markets based in the United States. Trimco is reported in the Company's Allegion Americas segment.

Current wording

On April 2, 2025, we, through our subsidiaries, acquired 100% of Trimco Hardware ("Trimco"), a manufacturer of high-performance and custom-designed architectural hardware primarily sold for commercial and institutional markets based in the United States. Trimco is reported in the Allegion Americas segment.

Previous wording

On June 2, 2025, the Company, through its subsidiaries, acquired 100% of Nova Hardware Pty Ltd ("Novas"), an architectural door hardware company based in Australia. Novas is reported in the Company's Allegion International segment.

Current wording

On June 2, 2025, we, through our subsidiaries, acquired 100% of Nova Hardware Pty Ltd ("Novas"), an architectural door hardware company based in Australia. Novas is reported in the Allegion International segment.

Previous wording

On July 1, 2025, the Company, through its subsidiaries, completed the previously announced acquisition of 100% of ELATEC, including Elatec GmbH and other group entities ("ELATEC"). ELATEC is a leading manufacturer of security and access technology based in Germany. This acquisition helps the Company expand its global electronics portfolio in attractive end markets while also increasing strategic relationships with channel partners. The closing purchase price of the acquisition was €330.0 million (approximately $389.0 million), subject to customary working capital adjustments. The Company used cash on hand and borrowings under the Revolving Facility to finance the acquisition. ELATEC will be reported in the Company's Allegion International segment.

Current wording

On July 1, 2025, we, through our subsidiaries, acquired 100% of ELATEC, including Elatec GmbH and other group entities ("ELATEC"). ELATEC is a leading manufacturer of security and access technology based in Germany. This acquisition helps the Company expand its global electronics portfolio in attractive end markets while also increasing strategic relationships with channel partners. The closing purchase price of the acquisition was €330.0 million (approximately $389.0 million), subject to customary working capital adjustments. We used cash on hand and borrowings under the Revolving Facility to finance the acquisition. ELATEC is reported in the Allegion International segment.

Previous wording

On July 2, 2025, the Company, through its subsidiaries, acquired 100% of Gatewise Inc. (“Gatewise"), a provider of smart access control solutions in the U.S. multifamily marketplace based in the United States. Gatewise will be reported in the Company's Allegion Americas segment.

Current wording

On July 2, 2025, we, through our subsidiaries, acquired 100% of Gatewise Inc. (“Gatewise"), a provider of smart access control solutions in the U.S. multifamily marketplace based in the United States. Gatewise is reported in the Allegion Americas segment.

Previous wording

On July 7, 2025, the Company, through its subsidiaries, acquired 100% of Waitwhile Inc. (“Waitwhile"), a software-as-a-service provider that specializes in cloud-based appointment scheduling and queue management based in the United States. Waitwhile will be incorporated into the Company's Allegion Americas segment.

Current wording

On July 7, 2025, we, through our subsidiaries, acquired 100% of Waitwhile Inc. (“Waitwhile"), a software-as-a-service provider that specializes in cloud-based appointment scheduling and queue management based in the United States. Waitwhile is reported in the Allegion Americas segment.

Previous 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.

Current wording

During the nine months ended September 30, 2025, we paid dividends of $1.53 per ordinary share to shareholders and repurchased approximately 0.6 million shares for $80.0 million.

Previous wording

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

Current wording

The increase in Net revenues was driven by improved pricing, favorable impact from acquisitions/divestitures, higher volumes, and favorable foreign currency exchange rate movements.

Previous 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:

Current wording

Operating income for the three months ended September 30, 2025, increased $18.8 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 September 30, 2025, decreased to 21.8% from 22.2% for the same period in 2024, due to the following:

Previous wording

The increase in Operating income 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.

Current wording

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

Previous wording

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

Current wording

The decrease in Operating margin was driven by inflation and investment spending in excess of pricing and productivity, higher acquisition, integration and restructuring expenses, and the unfavorable impact on operating margin from acquisitions/divestitures. These decreases were partially offset by favorable volume/product mix.

Previous wording

Interest expense for the three months ended June 30, 2025, decreased $0.5 million compared with the same period in 2024, primarily due to lower outstanding indebtedness compared to the same period in the prior year.

Current wording

Interest expense for the three months ended September 30, 2025, decreased $2.2 million compared with the same period in 2024, primarily due to lower outstanding indebtedness compared to the same period in the prior year.

Previous 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.

Current wording

The effective income tax rates for the three months ended September 30, 2025 and 2024, were 9.8% and 10.5%, respectively. The decrease in the effective income tax rate compared to 2024 is primarily due to a tax benefit related to the enactment of a tax legislative change, partially offset by the unfavorable year over year changes in amounts recognized for uncertain tax positions.

Previous wording

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

Current wording

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

Previous wording

Operating income for the six months ended June 30, 2025, increased $35.0 million compared to the same period in 2024. Operating margin for the six months ended June 30, 2025, increased to 21.2% from 20.5% for the same period in 2024, due to the following:

Current wording

Operating income for the nine months ended September 30, 2025, increased $53.8 million compared to the same period in 2024. Operating margin for the nine months ended September 30, 2025, increased to 21.4% from 21.1% 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, 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.

Current wording

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

Previous 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.

Current wording

Interest expense for the nine months ended September 30, 2025, increased $0.9 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, net for the six months ended June 30 were as follows:

Current wording

The components of Other income, net for the nine months ended September 30 were as follows:

Previous wording

The effective income tax rates for the three months ended June 30, 2025 and 2024, were 20.3% and 17.8%, respectively. The increase in the effective income tax rate compared to 2024 is primarily due to the enactment of discrete legislative changes and the unfavorable mix of income earned in higher tax rate jurisdiction.

Current wording

The effective income tax rates for the nine months ended September 30, 2025 and 2024, were 15.1% and 15.5%, respectively. The decrease in the effective income tax rate compared to 2024 is primarily due to a tax benefit related to the enactment of a tax legislative change, partially offset by the unfavorable year over year changes in amounts recognized for uncertain tax positions.

Previous wording

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

Current wording

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

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 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 June 30, 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.

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 September 30, 2025, Net revenues from the sale of electronic products in the Allegion Americas segment increased by a mid-teens percent compared to the same period in the prior year. We expect continued growth in our electronic products in 2025.

Previous wording

Net revenues from non-residential products for the six 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.

Current wording

Net revenues from non-residential products for the nine months ended September 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.

Previous wording

Net revenues from residential products for the six months ended June 30, 2025, decreased by a mid-single digits percent compared to the same period in the prior year as a result of softer residential markets.

Current wording

Net revenues from residential products for the nine months ended September 30, 2025, decreased by a low-single digits percent compared to the same period in the prior year as a result of softer residential markets.

Previous 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, recent acquisitions, and the favorable impact from foreign currency exchange rate movements.

Current wording

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

Previous 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.

Current wording

The increase in Segment operating margin was primarily driven by favorable volume/product mix, and lower acquisition, integration, and restructuring expenses. These increases were partially offset by unfavorable foreign currency exchange rate movements, and the unfavorable impact on operating margin from recent acquisitions.

Previous wording

The increase in Segment operating income was primarily driven by favorable volume/product mix, the favorable impact of recent acquisitions, lower acquisition, integration, and restructuring expenses, favorable foreign currency exchange rate movements, and higher pricing and productivity in excess of inflation and investment spending.

Current wording

The increase in Segment operating income was primarily driven by favorable volume/product mix, the favorable impact of recent acquisitions, pricing and productivity in excess of inflation and investment spending, favorable foreign currency exchange rate movements, and lower acquisition, integration, and restructuring expenses.

Previous wording

The increase in Segment operating margin was primarily driven by favorable volume/product mix, lower acquisition, integration, and restructuring expenses, and favorable foreign currency exchange rate movements. These increases were partially offset by the impact to Segment operating margin from inflation and investment spending which exceeded the impact to Segment operating margin from pricing and productivity improvements, and the unfavorable impact to Segment operating margin from recent acquisition activity.

Current wording

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

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 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.

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, ELATEC, Gainsborough, Interflex, and SimonsVoss.

Previous 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.

Current wording

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

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 June 30, 2025, approximately 87% 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 September 30, 2025, approximately 86% 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 six months ended June 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 nine months ended September 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 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.

Current wording

Operating Activities: Net cash provided by operating activities during the nine months ended September 30, 2025, increased $87.7 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 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.

Current wording

Investing Activities: Net cash used in investing activities during the nine months ended September 30, 2025, increased $459.1 million compared to the same period in 2024, primarily due to higher cash used for acquisitions.

Previous 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.

Current wording

We have an unsecured credit agreement in place, consisting of a $250.0 million term loan facility (the “Term Facility”), of which $196.9 million was outstanding at September 30, 2025, and a $750.0 million revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”), of which $99.0 million was outstanding at September 30, 2025.

Previous 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.

Current wording

The Term Facility requires quarterly principal payments through its maturity on November 18, 2026. Future payments total $6.3 million for the remainder of 2025 and $190.6 million in 2026. We repaid $15.6 million of principal on the Term Facility during the nine months ended September 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 September 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 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.

Current wording

Outstanding borrowings under the Credit Facilities accrue interest, at our option, equal to either: (i) a Secured Overnight Financing Rate ("SOFR") 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 September 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 5.388%. 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 September 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 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.

Current wording

Management believes there have been no significant changes during the nine months ended September 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.