10q10k10q10k.net

What changed in Allegion's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Allegion's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+226 added−230 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-18)

Top changes in Allegion's 2025 10-K

226 paragraphs added · 230 removed · 188 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

46 edited+12 added−13 removed39 unchanged
Biggest changeNext generation of multi-function mortice locks, 991 Multi-Function Mortice Lock Series (Legge), allows easy conversions and anti-lockout function. Services and software SimonsVoss, Zentra 2023/2024 SimonsVoss AXM Plus Software, first on-premise software variant with an optional cloud con nection, to give customers the opportunity to deploy mobile credentials in a virtual networked environment.
Biggest changeSimonsVoss AXM Plus Software, first on-premise software variant with an optional cloud connection, to give customers the opportunity to deploy mobile credentials in a virtual networked environment. 8 Table of Contents Industry and Competition We serve customers within institutional, commercial and residential construction and remodeling markets throughout North America, Europe, Asia and Oceania.
We believe the security products industry will continue to benefit from several global macroeconomic trends, including: • Expected growth in global electronic and electromechanical products and solutions as end-users adopt newer technologies in their facilities and homes; • Heightened awareness of security and privacy requirements; • Increased focus and adoption of mobile technology; and • The shift to a digital, interconnected and increasingly interoperable environments that require a strong ecosystem of partners.
We believe the security products industry will continue to benefit from several global macroeconomic trends, including: • Expected growth in global electronic and electromechanical products and solutions as end-users adopt newer technologies in their facilities and homes; • Heightened awareness of security and privacy requirements; • Increased focus and adoption of mobile technology; and • The shift to digital, interconnected and increasingly interoperable environments that require a strong ecosystem of partners.
We monitor leading and lagging indicators related to health and safety as part of our ongoing management of the Allegion Operating System and regularly update the Corporate Governance and Nominating Committee of the Board of Directors on key developments and employee health and safety topics.
We monitor leading and lagging indicators related to health and safety as part of our ongoing management of the Allegion Operating System and we regularly update the Corporate Governance and Nominating Committee of the Board of Directors on key developments and employee health and safety topics.
Products and Services We offer the following extensive and versatile portfolio of security and access control products and solutions across a range of market-leading brands: • Door controls, door control systems, and exit devices : An extensive portfolio of life-safety products and solutions generally installed on fire doors and facility entrances and exits.
We offer the following extensive and versatile portfolio of security and access control products and solutions across a range of market-leading brands: • Door controls, door control systems, and exit devices : An extensive portfolio of life-safety products and solutions generally installed on fire doors and facility entrances and exits.
We use a variety of recruitment tactics to ensure a strong base of labor for manufacturing operations and to build the base of talent with these capabilities. Throughout the recruitment cycle, we provide a technology-enabled seamless experience for internal and external candidates and hiring managers.
We use a variety of recruitment tactics to help ensure a strong base of labor for manufacturing operations and to build the base of talent with these capabilities. Throughout the recruitment cycle, we provide a technology-enabled seamless experience for internal and external candidates and hiring managers.
We use trademarks on nearly all of our products and believe such distinctive marks are an important factor in creating a market for our goods, in identifying us and in distinguishing our products from others.
We use trademarks on nearly all our products and believe such distinctive marks are an important factor in creating a market for our goods, in identifying us and in distinguishing our products from others.
Strengths-based leadership is an element of our commitment to inclusion: the more employees understand their own strengths, the better equipped they are to add value and appreciate the contributions of diverse members of their teams. We believe in fundamental standards that support our employees, while building and maintaining diverse and inclusive workplaces.
Strengths-based leadership is an element of our commitment to inclusion: the more employees understand their own strengths, the better equipped they are to add value and appreciate the contributions of team members. We believe in fundamental standards that support our employees, while building and maintaining diverse and inclusive workplaces.
Several of our brands were established more than 100 years ago, and many originally created their categories: • Von Duprin, established in 1908, was awarded the first exit device patent; • Schlage, established in 1920, was awarded the first patents granted for the cylindrical lock and the push button lock; • LCN, established in 1926, created the first door closer; • CISA, established in 1926, devised the first electronically controlled lock; • SimonsVoss, established in 1995, created the first keyless digital transponder; and • Stanley Access Technologies patented the world's first hands-free door operator in 1931.
Several of our brands were established more than 100 years ago, and many originally created their categories: • Von Duprin, established in 1908, was awarded the first exit device patent; • Schlage, established in 1920, was awarded the first patents granted for the cylindrical lock and the push button lock; 5 Table of Contents • LCN, established in 1926, created the first door closer; • CISA, established in 1926, devised the first electronically controlled lock; • SimonsVoss, established in 1995, created the first keyless digital transponder; and • Stanley Access Technologies patented the world's first hands-free door operator in 1931.
Recent examples of successful product launches by Allegion are illustrated in the table below: Products and Services Brands Year Innovation Door controls, door control systems, and exit devices CISA, Stanley Access Technologies, Von Duprin 2023/2024 CISA Multitop Matic Exit, a secondary lock for single and double leaf aluminum and iron panic doors, brings to market the only "Made in Italy" counter-lock featuring a long faceplate.
Recent examples of successful product launches by Allegion are illustrated in the table below: Products and Services Brands Year Innovation Door controls, door control systems, and exit devices CISA, LCN, Stanley Access Technologies, Von Duprin, 2024/2025 CISA Multitop Matic Exit, a secondary lock for single and double leaf aluminum and iron panic doors, brings to market the only "Made in Italy" counter-lock featuring a long faceplate.
This high degree of fragmentation primarily reflects local regulatory requirements and highly variable end-user needs. We believe our principal global competitors are Assa Abloy AB and dormakaba Group. We also face competition in various markets and product categories throughout the world, including Fortune Brands Innovations, Inc. in the North American residential market.
This high degree of fragmentation primarily reflects local regulatory requirements and highly variable end-user needs. We believe our principal global competitors are Assa Abloy AB and dormakaba Group. We also face competition in various markets and product categories throughout the world, including Fortune Brands Innovations, Inc. in the North American residential market and from private label brands.
Our strategy is to produce in the region of use, wherever appropriate, to allow us to be closer to the end-user and increase efficiency and timely product delivery. Much of our U.S. based residential portfolio is manufactured in the Baja region of Mexico under the Maquiladora, Manufacturing and Export Services Industry ("IMMEX") program.
Our strategy is to produce in the region of use, wherever appropriate, to allow us to be closer to the end-user and increase efficiency and timely product delivery. Much of our U.S. based residential portfolio is manufactured in the Baja region of Mexico under the Maquiladora, 9 Table of Contents Manufacturing and Export Services Industry ("IMMEX") program.
We create, protect and enforce our intellectual property investments in a variety of ways. We work actively in the U.S. and internationally to try to ensure the protection and enforcement of our intellectual property rights.
We create, protect and enforce our intellectual property investments in a variety of ways. We work actively in the U.S. and internationally to help ensure the protection and enforcement of our intellectual property rights.
For example, we are members of the American Association of Automatic Door Manufacturers (AAADM), Builders Hardware Manufacturers Association (BHMA), Connectivity Standards Alliance (CSA), Construction Specification Institute, Door and Hardware Institute (DHI), FiRa Consortium, National Association of State Fire Marshals (NASFM), Partner Alliance for Safer Schools (PASS), Physical Security Interoperability Alliance (PSIA), Security Industry Association (SIA), Security Technology Alliance, Z-Wave Alliance, The European Federation of Associations of Locks and Builders Hardware Manufacturers (ARGE), ASSOFERMA (Italy), BHE (Germany), Door Hardware Federation (UK), Open Security Standards Association (Germany) and UNIQ (France).
For example, we are members of the American Association of Automatic Door Manufacturers (AAADM), American Institute of Architects (AIA), Builders Hardware Manufacturers Association (BHMA), Connectivity Standards Alliance (CSA), Door Security and Safety Foundation (DSSF), Construction Specification Institute, Door and Hardware Institute (DHI), FiRa Consortium, National Association of State Fire Marshals (NASFM), Partner Alliance for Safer Schools (PASS), Physical Security Interoperability Alliance (PSIA), Security Industry Association (SIA), Security Technology Alliance, Z-Wave Alliance, The European Federation of Associations of Locks and Builders Hardware Manufacturers (ARGE), ASSOFERMA (Italy), BHE (Germany), Door Hardware Federation (UK), Open Security Standards Association (Germany) and UNIQ (France).
Throughout this Annual Report on Form 10-K, we refer to additional information that may be found or is available on our websites. The information contained on, or that may be accessed through, our websites is not incorporated by reference into, and is not part of, this Annual Report on Form 10-K. 14 Table of Contents
Throughout this Annual Report on Form 10-K, we refer to additional information that may be found or is available on our websites. The information contained on, or that may be accessed through, our websites is not incorporated by reference into, and is not part of, this Annual Report on Form 10-K.
We operate with principles and practices that support our commitments, including: • Integrating sound EHS and sustainability strategies in all elements of our business, we set quantitative metrics and targets to provide clear accountability and to monitor and measure improvement in EHS performance; 13 Table of Contents • Conducting periodic, formal evaluations and audits of our compliance status, while also routinely reviewing our objectives and metrics; • Fostering a workplace culture where everyone at Allegion is responsible for safety; • Implementing measures to enhance internal and external stakeholder awareness of our environmental management policy and its impacts; • Establishing prioritization and action plans to continuously improve our EHS and sustainability management systems and performance; this includes reduction in use of natural resources, minimization of waste and prevention of pollution, as well as prevention and elimination of workplace accidents, injuries and risks; • Designing, operating and maintaining our facilities in a manner that minimizes negative EHS and sustainability impacts; • Using materials responsibly, including, where feasible, the recycling and reuse of materials; and • Acting in a way that shows sensitivity to community concerns about EHS and sustainability issues.
These include: • Integrating sound EHS and sustainability strategies in all elements of our business, we set quantitative metrics and targets to provide clear accountability and to monitor and measure improvement in EHS performance; • Conducting periodic, formal evaluations and audits of our compliance status, while also routinely reviewing our objectives and metrics; • Fostering a workplace culture where everyone at Allegion is responsible for safety: • Implementing measures to enhance internal and external stakeholder awareness of our environmental management policy and its impacts; 11 Table of Contents • Establishing prioritization and action plans to continuously improve our EHS and sustainability management systems and performance; this includes reduction in use of natural resources, minimization of waste and prevention of pollution, as well as prevention and elimination of workplace accidents, injuries and risks; • Designing, operating and maintaining our facilities in a manner that minimizes negative EHS and sustainability impacts; • Using materials responsibly, including, where feasible, the recycling and reuse of materials; and • Acting in a way that shows sensitivity to community concerns about EHS and sustainability issues.
We are committed to conducting business in a safe, environmentally responsible and sustainable manner, in compliance with all applicable EHS laws and regulations, as well as some applicable voluntary programs and collective agreements. We continously work to promote and protect the health and safety of our environment, associates, customers, contractors and members of our local communities worldwide.
We are committed to conducting business in a safe, environmentally responsible and sustainable manner, in compliance with all applicable EHS laws and regulations, as well as some applicable voluntary programs and collective agreements. We continuously work to promote and protect the health and safety of the environment, employees, customers, contractors and members of our local communities worldwide.
Our talent attraction efforts are focused on and highlight a culture that reflects our core values, Allegion leadership behaviors and business objectives. We want to attract talent with core capabilities relevant to our long-term corporate business strategy: customer focus, innovation, partnering, pace and agility and collaboration.
Our talent attraction efforts are focused on and highlight a culture that reflects our core values, Allegion leadership behaviors and business objectives. 10 Table of Contents We want to attract talent with core capabilities relevant to our long-term corporate business strategy: customer focus, innovation, partnering, pace and agility and collaboration.
For a further discussion of our potential environmental liabilities, see Notes 2 and 21 to the Consolidated Financial Statements. Environmental, social and governance ("ESG") factors important to our business are embedded into our values and our leadership's commitment to create a workplace culture committed to doing the right thing in the right way.
For a further discussion of our potential environmental liabilities, see Notes 2 and 19 to the Consolidated Financial Statements. Environmental, social and governance ("ESG") factors important to our business are embedded into our values and our leadership's commitment to create a workplace culture grounded in doing the right thing in the right way.
Additional information about our ESG priorities and progress may be found in the ESG section of our website (found under the ESG tab at www.allegion.com ). The website highlights our ongoing progress and advancements in ESG matters, and includes our materiality matrix of ESG priorities.
Additional information about our ESG priorities and progress may be found in the ESG section of our website (found under the ESG tab at www.allegion.com ). The website highlights our ongoing progress and advancements in ESG matters.
Our experts across the globe deliver high-quality hardware, software, services and systems, and we use our deep expertise to serve as trusted partners to end-users who seek customized solutions to their security needs.
Our experts around the world deliver high-quality hardware, software, services and systems, and we use our deep expertise to serve as trusted partners to end-users who seek customized solutions to their security needs.
Central to our work is partnering and developing ecosystems to create flawless, seamless access experiences and enable an uninterrupted and secure flow of people and assets. We offer an extensive and versatile portfolio of security and access control security products and solutions across a range of market-leading brands.
Both developing and partnering are central to our work to create ecosystems that enable seamless access experiences and an uninterrupted and secure flow of people and assets. We offer an extensive and versatile portfolio of security and access control products and solutions across a range of market-leading brands.
Environmental Protection Agency ("EPA") and similar state authorities. We have also been identified as a potentially responsible party ("PRP") for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all such sites, there are other PRPs and we believe our involvement is minimal.
We have also been identified as a potentially responsible party ("PRP") for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all such sites, there are other PRPs, and we believe our involvement is minimal.
Today, we continue to develop, acquire and introduce innovative products. 7 Table of Contents In 2018, we announced the formation of Allegion Ventures to invest in and help accelerate the growth of companies that have innovative, digital-first technologies and products such as touchless access and workspace monitoring solutions that complement our core business solutions.
In 2018, we announced the formation of Allegion Ventures to invest in and help accelerate the growth of companies that have innovative, digital-first technologies and products such as touchless access and workspace monitoring solutions that complement our core business solutions.
Through a few of our businesses, most notably Stanley Access Technologies, Interflex and our Global Portable Security brands, we also provide products and services directly to end-users. Our 10 largest customers represented approximately 27% of our total Net revenues in 2024.
Through a few of our businesses, most notably Stanley Access Technologies, Interflex and our Global Portable Security brands, we also provide products and services directly to end-users. Our 10 largest customers represented approximately 26% of our total Net revenues in 2025. No single customer represented 10% or more of our total Net revenues in 2025.
We accomplish this with: • Our extensive and versatile product and service portfolio, combined with our deep expertise, which enables us to deliver the right products and solutions to meet diverse security and functional specifications and to successfully and securely integrate into leading technologies and systems; • Our consultative approach and expertise, which enables us to develop the most efficient and appropriate building security and access control specifications to fulfill the unique needs of our end-users and their partners, including architects, designers, security consultants, contractors, homebuilders and engineers; • Our access to and management of key channels in the market, which is critical to delivering our products in an efficient and consistent manner; and • Our enterprise excellence capabilities, including our global manufacturing operations and agile supply chain, which facilitate our ability to deliver specific product and system configurations to end-users and consumers worldwide, quickly and efficiently.
We accomplish this with: • Our innovative, market-leading brands, many of which are known as pioneers in safety and / or invented their product categories, including: CISA, Interflex, LCN, Schlage, SimonsVoss and Von Duprin; • Our extensive and versatile product and service portfolio, combined with our deep expertise, which enable us to deliver the right products and solutions to meet diverse security and functional specifications and to successfully and securely integrate into leading technologies and systems; • Our consultative approach and expertise, which enable us to develop the most efficient and appropriate building security and access control specifications to fulfill the unique needs of our end-users and their partners, including architects, designers, security consultants, contractors, homebuilders and engineers; 4 Table of Contents • Our access to and management of key channels in the market, which is critical to delivering our products in an efficient and consistent manner; and • Our enterprise excellence capabilities, including our global manufacturing operations and agile supply chain, which facilitate our ability to deliver specific product and system configurations to end-users and consumers worldwide, quickly and efficiently.
Our workplace culture is based on practices that reward performance, provide growth and development opportunities, and support employees with competitive compensation and benefits packages. As a testament to this, Allegion received the 2024 Gallup Exceptional Workplace Award. This award recognizes the most engaged workplace cultures in the world. As of December 31, 2024, we had approximately 14,400 employees worldwide.
Our workplace culture is based on practices that reward performance, provide growth and development opportunities, and support employees with competitive compensation and benefits packages. As a testament to this, Allegion received the Gallup Exceptional Workplace Award in both 2024 and 2025. This award recognizes the most engaged workplace cultures in the world.
We have built upon these founding legacies since our entry into the security products market through the acquisition of Schlage, Von Duprin and LCN.
We have built upon these founding legacies since our entry into the security products market through the acquisition of Schlage, Von Duprin and LCN. Today, we continue to develop, acquire and introduce innovative products.
No single customer represented 10% or more of our total Net revenues in 2024. 10 Table of Contents Sales and Marketing In markets where we sell through commercial and institutional distribution channels, we employ sales professionals around the world who work with a combination of end-users, security professionals, architects, contractors, engineers and distribution partners to develop specific, custom-configured solutions to meet our end-users’ needs.
Sales and Marketing In markets where we sell through commercial and institutional distribution channels, we employ sales professionals around the world who work with a combination of end-users, security professionals, architects, contractors, engineers and distribution partners to develop specific, custom-configured solutions to meet our end-users’ needs.
Approximately 48% of employees are employed within the U.S. and approximately 52% based outside the U.S. Among our U.S. based employees, approximately 14% were subject to collective bargaining agreements with various labor unions. Outside the U.S., we have employees in certain countries, particularly in Europe, that are represented by an employee representative organization, such as a works council.
Among our U.S. based employees, approximately 16% were subject to collective bargaining agreements with various labor unions. Outside the U.S., we have employees in certain countries, particularly in Europe, that are represented by an employee representative organization, such as a works council. We believe our relations with our workforce in both unionized and non-unionized settings are generally positive.
Employee-led resource and affinity groups provide opportunities for women's leadership, early career professionals, allies and members of the LGBTQIA+, Black, veteran and Hispanic communities, among others. Employee Health and Safety Employee health and safety are top priorities and integral to the Company's growth strategy. ‘Be safe, be healthy’ is a core organizational value in our proactive safety culture.
Employee-led resource and affinity groups provide opportunities for a variety of members of our workforce. Employee Health and Safety Employee health and safety are top priorities and integral to the Company's growth strategy. ‘Be safe, be healthy’ is a core organizational value in our proactive safety culture.
We recognize that these principles are critical to our future success. We are currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former production facilities.
We recognize these principles are critical to our future success. We are currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former production facilities. We also regularly evaluate our remediation methods that are in addition to, or in replacement of, those we currently utilize based upon enhanced technology and regulatory changes.
Production and Distribution We manufacture products in several geographic markets around the world. We operate 34 principal production and assembly facilities – 21 in our Allegion Americas segment and 13 in our Allegion International segment. We own 16 of these facilities and lease the others.
Production and Distribution We manufacture products in several geographic markets around the world. We operate 37 principal production and assembly facilities – 22 in our Allegion Americas segment and 15 in our Allegion International segment.
We sell our products and solutions under the following brands: 4 Table of Contents 5 Table of Contents 6 Table of Contents We sell a wide range of security and access control solutions for end-users in commercial, institutional and residential facilities worldwide, including the education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets.
We sell a wide range of security and access control solutions for end-users in commercial, institutional and residential facilities worldwide, including education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets. Our portfolio spans more than 40 brands, including brands like CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin.
Our regionally located resources leverage expertise in local standards and configurations and apply those to adapt products for the benefit of our customers. Further, we operate a global technology center in Bengaluru, India, which augments and supports our regional engineering and technology teams. Seasonality Our business experiences seasonality that varies by product and service line.
Regional teams apply their expertise in local standards and configurations to adapt products to specific market requirements, thereby enhancing customer value. Additionally, we operate a global technology center in Bengaluru, India, which provides engineering support and augments the capabilities of our regional R&D teams. Seasonality Our business experiences seasonality that varies by product and service line.
We believe our relations with our workforce in both unionized and non-unionized settings are generally positive. 12 Table of Contents Talent Attraction and Retention Our employer brand creates a differentiated employee experience intended to attract and retain the right talent for Allegion.
Talent Attraction and Retention Our employer brand creates a differentiated employee experience intended to attract and retain the right talent for Allegion.
History and Developments We were incorporated in Ireland on May 9, 2013, to hold the commercial and residential security businesses of what was then Ingersoll Rand plc ("Ingersoll Rand").
During the year ended December 31, 2025, we generated Net revenues of $4,067.3 million and Operating income of $859.5 million. The following table presents percentage of Net revenues by category. History and Developments We were incorporated in Ireland on May 9, 2013, to hold the commercial and residential security businesses of what was then Ingersoll Rand plc ("Ingersoll Rand").
Additionally, we offer software as a service ("SaaS") offerings throughout the U.S. and internationally, including access control, platform integration and workforce management solutions through our Interflex business. We also offer ongoing aftermarket services, design and installation offerings and locksmith services in select locations.
Additionally, we offer software as a service ("SaaS") offerings throughout the U.S. and internationally, including access control, platform integration and workforce management solutions through brands like Interflex, Yonomi ® and Zentra ® among others. Security and access control products and solutions are critical elements in every building and home.
Our employee base is supplemented by contingent labor where business demand fluctuates or we experience short-term needs for specialized skills.
As of December 31, 2025, we had approximately 13,300 employees worldwide. Our employee base is supplemented by contingent labor where business demand fluctuates or we experience short-term needs for specialized skills. Approximately 45% of employees are employed within the U.S. and approximately 55% based outside the U.S.
UL Certification of American Architectural Manufacturers Association (AAMA) 501.8 human impact resistant curtain wall using durable SentryGlas Plus (SGP) laminated glass (Unicel). 8 Table of Contents Products and Services Brands Year Innovation Electronic security products and access control systems, including time, attendance, and workforce productivity Gainsborough,Schlage, SimonsVoss, 2023/2024 Schlage XE360 series electronic lock is the next generation wireless lock from Schlage, designed specifically for multifamily properties.
Doors, glass and door systems, and accessories Unicel 2024/2025 UL Certification of American Architectural Manufacturers Association (AAMA) 501.8 human impact resistant curtain wall using durable SentryGlas Plus laminated glass (Unicel). 6 Table of Contents Products and Services Brands Year Innovation Electronic security products and access control systems, including time, attendance, and workforce productivity Brisant, ELATEC, Schlage, SimonsVoss 2024/2025 Brisant Ultion Nuki 2025 features built-in WiFi, enhanced motor performance, Matter compatibility ensuring it can work with home platforms including Apple Home, Google Home, Amazon Alexa and Samsung SmartThings.
We also regularly evaluate our remediation methods that are in addition to, or in replacement of, those we currently utilize based upon enhanced technology and regulatory changes. We are sometimes a party to environmental lawsuits and claims and have, from time to time, received notices of potential violations of environmental laws and regulations from the U.S.
We are sometimes a party to environmental lawsuits and claims and have, from time to time, received notices of potential violations of environmental laws and regulations from the U.S. Environmental Protection Agency ("EPA") and similar state authorities.
Although certain proprietary intellectual property rights are important to our success, we do not believe we are materially dependent on any particular patent or license, or any particular group of patents or licenses. Facilities We operate through a broad network of sales offices, engineering centers, 34 principal production and assembly facilities and several distribution centers throughout the world.
Although certain proprietary intellectual property rights are important to our success, we do not believe we are materially dependent on any particular patent or license, or any particular group of patents or licenses. Research and Development Our research and development ("R&D") efforts focus on advancing innovative products and solutions designed to drive growth and enhance competitiveness.
Enables the automatic and secure locking of the main leaf against the door jam. Stanley Access Technologies new automatic door/window solution for increased efficiencies for drive-through restaurants (DuraGlide DT). Telescopic manual and automatic version of ICU doors, providing the biggest clear door opening in the industry, proprietary handle design and the slimmest header (ProCare 8500).
Telescopic manual and automatic version of ICU doors, providing the biggest clear door opening in the industry, proprietary handle design and the slimmest header (ProCare 8500). More energy-efficient and robust hurricane-rated sliding doors (DuraStorm Class E).
It delivers innovation, intelligence and reliability wrapped in a modern, sleek design for a variety of lock applications (mortice, tubular and exit device). Schlage, in collaboration with Airbnb, was the first to launch the “airkey” integration, connecting Schlage smart locks and Airbnb accounts for easy guest check-ins.
Schlage Arrive™ Smart WiFi Deadbolt, Schlage’s first push-button keypad deadbolt equipped with built-in WiFi, integrating with existing smart home technology. Schlage, in collaboration with Airbnb, was the first to launch the “airkey” integration, connecting Schlage smart locks and Airbnb accounts for easy guest check-ins.
In addition, we invest in initiatives that continuously drive improvements in product cost, quality, safety and sustainability. Our research and development resources are managed globally to permit leveraging of innovative technologies and product platforms across businesses as well as to optimize development cost and resource efficiency.
Key areas of emphasis include the development of new product platforms as well as initiatives aimed at improving product cost efficiency, quality, safety and sustainability. R&D resources are managed globally to leverage technologies and product platforms across our business units, while optimizing development costs and resource utilization.
More energy-efficient and robust hurricane-rated sliding doors (DuraStorm Class E). Von Duprin 70 series delivering both performance and value at a medium price point and is ideal for heavy duty warehouse, industrial, office, multifamily, retail and hospitality applications.
Von Duprin 70 series delivering both performance and value at a medium price point for heavy duty warehouse, industrial, office, multifamily, retail and hospitality applications. Von Duprin Outdoor Defense for 98/99 exit devices protects device functionality in outdoor applications, as it’s engineered to safeguard against moisture, temperature variations and corrosion in normal outdoor conditions.
Locks, locksets, portable locks, and key systems Bricard, Legge 2023/2024 Bricard Evidence handle range for commercial and residential markets, with an exclusive and unique rose fixation and adjustment design, functionality and finishes. Bricard Bi-Pass key is equipped with an integrated RFID tag, enabling seamless operation of both mechanical and electronic access control devices.
SimonsVoss FortLox, a battery-less electronic cylinder, offering customers the high-quality and ease of use without the need for a battery. 7 Table of Contents Products and Services Brands Year Innovation Locks, locksets, portable locks, and key systems Bricard, Schlage 2024/2025 Bricard Bi-Pass key is equipped with an integrated RFID tag, enabling seamless operation of both mechanical and electronic access control devices.
Removed
Allegion Principal Products and Services Door controls, door control systems, and exit devices Doors, glass and door systems, and accessories Electronic security products and access control systems, including time, attendance and workforce productivity Locks, locksets, portable locks, and key systems Services and software Security and access control security products and solutions are critical elements in every building and home.
Added
In addition, we offer a full range of automatic entrance solutions, including sliding, swing, folding and ICU doors, as well as an array of sensors, controls and security options for commercial and institutional buildings.
Removed
We operate in and report financial results for two segments: Allegion Americas and Allegion International, the latter of which provides security and access control security products, services and solutions primarily throughout Europe, Asia and Oceania.
Added
Sold under leading brands like Briton ® , CISA ® , LCN ® , STANLEY ® Access Technologies ("Stanley Access Technologies" or "Stanley"; "STANLEY" is the property of Stanley Logistics L.L.C.) and Von Duprin ® ; • Doors, glass and door systems, and accessories : A portfolio of hollow metal doors and frames, glass and specialty door systems, as well as a variety of additional security products and components, including hinges, door pulls, door stops, louvers, weather stripping, thresholds and other accessories.
Removed
Our leading brands include CISA®, Interflex®, LCN®, Schlage®, SimonsVoss®, and Von Duprin®. During the year ended December 31, 2024, we generated Net revenues of $3,772.2 million and Operating income of $780.7 million.
Added
Sold under leading brands like Falcon ® , Glynn-Johnson ® , Ives ® , Republic™, Steelcraft ® , TGP ® and Trimco ® ; • Electronic security products and access control systems, including time, attendance and workforce productivity : A broad range of electronic locks, electronic door closers and exit devices, access control products and systems, credentials and credential readers and accessories, including Bluetooth Low Energy, Power over Ethernet and cloud-based solutions, including products designed to help business customers manage and monitor workforce access, attendance and employee scheduling.
Removed
Doors, glass and door systems, and accessories TGP, Unicel 2023/2024 Smoke-rated partition featuring doors, sidelites/transoms and standalone windows suitable for enclosed elevator lobbies in multifamily buildings. It is comprised of glass, frames and hardware and is the first system fully tested to UL 1784 (TGP SmokeSafe™ Window & Door System).
Added
Sold under leading brands like Bricard ® , CISA, ELATEC ® , Interflex ® , LCN, Schlage ® , SimonsVoss ® and Von Duprin; • Locks, locksets, portable locks, and key systems : A broad array of cylindrical, tubular and mortice door locksets, security levers and master key systems that are used to protect and control access and a range of portable security products, including bicycle, small vehicle and travel locks.
Removed
North America’s first fire-rated full-lite door system certified to forced-entry standards (TGP TGProtect™ FR System).
Added
Sold under leading brands like Bricard, AXA, CISA, Falcon, Gainsborough ® , Schlage and SimonsVoss; and • Services and software : Our Stanley Access Technologies business offers extensive planned inspection, maintenance and repair services for its automatic entrance solutions throughout the U.S. and Canada. We offer ongoing aftermarket services and design and installation offerings in select locations.
Removed
Schlage Encode Smart WiFi Lever is for use in doors without a deadbolt; connects to home WiFi and pairs with the Schlage app. Gainsborough Freestyle Trilock now has built-in Wi-Fi, no longer needing a separate bridge to communicate to the router.
Added
LCN Senior Swing 9500IQ/2800, self-adjusted auto operator, is a fully loaded controller with innovative AdaptivIQ™ technology, minimizing seasonal adjustments and reducing nuisance calls. Stanley Access Technologies new automatic door/window solution for increased efficiencies for drive-through restaurants (DuraGlide DT).
Removed
The latest version of this residential product includes Matter over Thread - the first smart lock in Australia to feature this technology. Narrow profile smart lock for Australia and New Zealand for use on aluminum and timber doors, utilizing the Schlage Breeze app (Schlage Artus).
Added
ELATEC software development toolkit, TWN4 DevPack 5.07, delivers faster performance, stronger security and greater flexibility for configuring and managing RFID readers. Schlage launched Resident Key mobile credential for multifamily properties through internal (Zentra) and external technology alliances. Achieved first-to-market with the credential in Apple Wallet® and among the first in Google Wallet™, both supporting unique No-Tour system.
Removed
Next-generation smart entry door lock for the New Zealand market, operating on the Schlage Breeze app and offering a retrofit solution to Schlage S-6000 and competitor products (Schlage Resolute). SimonsVoss AX2Go, a BLE-based mobile app for iOS and Android, supporting the same user experience, regardless the OS of the smartphone.
Added
Schlage XE360 series electronic lock is the next generation wireless lock from Schlage, designed specifically for multifamily properties. It delivers innovation, intelligence and reliability for a variety of lock applications (mortice, tubular and exit device). The XE360 ecosystem broadened with more than seven integrations, including Zentra.
Removed
Users can place unlocked smartphone on the lock and the app will send the needed data in the background. SimonsVoss PinCode keypad AX, a BLE-based pincode keypad suitable for communication with SimonsVoss based AX products, with a range up to 1.5 meters.
Added
Schlage indication series includes various security devices designed for public buildings and facilities. The security indicators provide at-a-glance verification of the door’s status (LOCKED / UNLOCKED) from inside a room. Schlage Performance Series are medium-price-point mortise, cylindrical, and tubular locks built to balance style, security, and simplicity for commercial real estate and multifamily projects.
Removed
Multifamily access control solution providing a turnkey, simple, secure and smart offering of software and integrated hardware covering all access needs for the building (Zentra). 9 Table of Contents Industry and Competition We serve customers within institutional, commercial and residential construction and remodeling markets throughout North America, Europe, Asia and Oceania.
Added
Schlage Advanced Rekey™ is a rekeying solution for key management to rekey locks without removing them from the door. Services and software Interflex, Overtur, SimonsVoss 2024/2025 Interflex Software System IF-6040 enhancements enable remote firmware updates for its IF-8xx series readers via the ITS-phyCORE controller, including improved visitor management.
Removed
In addition, we offer a full range of automatic entrance solutions, including sliding, swing, folding and ICU doors, as well as an array of sensors, controls and security options for commercial and institutional buildings; • Doors, glass and door systems, and accessories : A portfolio of hollow metal doors and frames, glass and specialty door systems, as well as a variety of additional security products and components, including hinges, door pulls, door stops, bike lights, louvers, weather stripping, thresholds and other accessories, as well as certain bathroom fittings and accessibility aids; • Electronic security products and access control systems, including time, attendance and workforce productivity : A broad range of electronic locks, electronic door closers and exit devices, access control products and systems, credentials and credential readers and accessories, including Bluetooth Low Energy, Power over Ethernet and cloud-based solutions, including products designed to help business customers manage and monitor workforce access, attendance and employee scheduling; • Locks, locksets, portable locks, and key systems : A broad array of cylindrical, tubular and mortice door locksets, security levers and master key systems that are used to protect and control access and a range of portable security products, including bicycle, small vehicle and travel locks; and • Services and software : Our Stanley Access Technologies business offers extensive planned inspection, maintenance and repair services for its automatic entrance solutions throughout the U.S. and Canada.
Added
Overtur for Revit 5.1 is the ultimate tool for door hardware coordination, with faster exports, improved workflows and non-modal functionality. Overtur Key System Management, a cloud-based subscription solution, offers authorized users a simpler way to view, manage, track and update a building’s key system, regardless of complexity.
Removed
Our active properties represent approximately 7.7 million square feet, of which approximately 44% is leased.
Added
We operate with principles and practices that support our commitments.
Removed
The following table shows the location of our principal production and assembly facilities under the business segments in which they operate: 11 Table of Contents Production and Assembly Facilities Allegion Americas Allegion International Blue Ash, Ohio Auckland, New Zealand Chino, California Blackburn, Australia Ensenada, Mexico Brooklyn, Australia Everett, Washington Clamecy, France Farmington, Connecticut Durchhausen, Germany Greenfield, Indiana (2) Faenza, Italy Indianapolis, Indiana Feuquieres, France Irving, Texas Monsampolo, Italy Jurong, Singapore Osterfeld, Germany Longueuil, Canada Renchen, Germany McKenzie, Tennessee Valencia, Spain Mississauga, Canada Veenendaal, Netherlands Perrysburg, Ohio Zawiercie, Poland Pico Rivera, California Princeton, Illinois Queretaro, Mexico Security, Colorado Snoqualmie, Washington Tecate, Mexico Tijuana, Mexico Research and Development We are committed to investing in our research and development capabilities with a focus on innovations that will deliver growth through the introduction of new products and solutions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+6 added−6 removed158 unchanged
Biggest changeWe may not be successful in this regard, the costs of doing so may exceed our original estimates or we may encounter other potential difficulties. 18 Table of Contents Acquisitions also involve numerous other risks, including: • Difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • Our ability to raise capital on reasonable terms to finance attractive acquisitions; • Inability to obtain regulatory approvals and/or required financing on favorable terms; • Potential loss of key employees, key contractual relationships or key customers of acquired companies or of us; • Difficulties competing in any new markets we may enter; • Assumption of the liabilities and exposure to unforeseen liabilities (including, but not limited to, regulatory, legal and product or personal liability claims) of acquired companies; • Cybersecurity related vulnerabilities or data security incidents that may be present in the IT Systems of acquired companies, or emerge when integrating the acquired company into our IT Systems; • Dilution of interests of holders of our ordinary shares through the issuance of equity securities or equity-linked securities; • Labor disruptions, work stoppages or other employee-related issues, particularly if employees of the acquired companies are represented by labor unions or trade councils; and • Difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including disclosure controls and procedures and internal control over financial reporting appropriate for public companies of our size at companies that, prior to the acquisition, had lacked such controls, procedures and policies.
Biggest changeAcquisitions also involve numerous other risks, including: • Difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • Our ability to raise capital on reasonable terms to finance attractive acquisitions; • Inability to obtain regulatory approvals and/or required financing on favorable terms; • Potential loss of key employees, key contractual relationships or key customers of acquired companies or of us; • Difficulties competing in any new markets we may enter; • Assumption of the liabilities and exposure to unforeseen liabilities (including, but not limited to, regulatory, legal and product or personal liability claims) of acquired companies; • Cybersecurity related vulnerabilities or data security incidents that may be present in the IT Systems of acquired companies, or emerge when integrating the acquired company into our IT Systems; • Dilution of interests of holders of our ordinary shares through the issuance of equity securities or equity-linked securities; • Labor disruptions, work stoppages or other employee-related issues, particularly if employees of the acquired companies are represented by labor unions or trade councils; and • Difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including disclosure controls and procedures and internal control over financial reporting appropriate for public companies of our size at companies that, prior to the acquisition, had lacked such controls, procedures and policies. 16 Table of Contents Further, as part of our innovation strategy, from time to time we invest in start-up companies and/or development stage technology or other companies.
Accordingly, we are subject to multiple risks that are inherent in operating and sourcing globally, including: • Changes to trade agreements, foreign trade policies, sanctions, import and export regulations, including the imposition or threatened imposition of new or increased tariffs, quotas, customs duties and similar restrictions, as well as retaliatory actions that may be imposed by other governments in response to such tariffs or other trade restrictions; • Changes in applicable tax regulations and interpretations; • Economic downturns; 15 Table of Contents • Social and political unrest, instability, national and international conflict, including the conflicts in the Middle East and the war between Russia and Ukraine, border closures, civil disturbances, terrorist acts and other geographical disputes and uncertainties; • Government measures to restrict business activity, for example, to prevent the spread of a communicable disease; • Changes in laws and regulations or imposition of currency restrictions and other restraints in various jurisdictions; • Limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to repatriate earnings; • Sovereign debt crises and currency instability in developed and developing countries; • Difficulty in staffing and managing global operations; • Difficulty in enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems; and • Difficulty in transporting materials, components and products.
Accordingly, we are subject to multiple risks that are inherent in operating and sourcing globally, including: • Changes to trade agreements, foreign trade policies, sanctions, import and export regulations, including the imposition or threatened imposition of new or increased tariffs, quotas, customs duties and similar restrictions, as well as retaliatory actions that may be imposed by other governments in response to such tariffs or other trade restrictions; • Changes in applicable tax regulations and interpretations; • Economic downturns; • Social and political unrest, instability, national and international conflict, including the conflicts in the Middle East and the war between Russia and Ukraine, border closures, civil disturbances, terrorist acts and other geographical disputes and uncertainties; • Government measures to restrict business activity, for example, to prevent the spread of a communicable disease; • Changes in laws and regulations or imposition of currency restrictions and other restraints in various jurisdictions; • Limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to repatriate earnings; • Sovereign debt crises and currency instability in developed and developing countries; • Difficulty in staffing and managing global operations; • Difficulty in enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems; and • Difficulty in transporting materials, components and products.
Our global operations subject us to political, economic and regulatory risks, including uncertainty related to the imposition of new or increased tariffs and the global trade environment more generally. Our businesses operate around the world in various geographic regions and product markets. Additionally, we procure various product s, parts, components and services from supplier partners located throughout the world.
Our global operations subject us to political, economic and regulatory risks, including uncertainty related to the imposition of new or increased tariffs and the global trade environment more generally. Our businesses operate around the world in various geographic regions and product markets. Additionally, we procure various products, parts, components and services from supplier partners located throughout the world.
In particular, the ultimate extent of the impact of any epidemic, pandemic or other global health crisis on our business, financial condition and results of operations will depend on future developments which are highly uncertain and cannot be predicted. We may be subject to risks relating to our information technology and operational technology systems.
In particular, the ultimate extent of the impact of any epidemic, pandemic or other global health crisis on our business, financial condition and results of operations will depend on future developments which are highly uncertain and cannot be predicted. We may be subject to risks relating to systems failures or disruptions to our information technology and operational technology systems.
If we are unable to effectively manage these relationships, or if these third parties experience delays, disruptions, shortages of materials, labor, electronic and other components, capacity constraints, new or increased tariffs and/or other trade restrictions, regulatory issues or quality control problems in their operations, freight delays and other supply chain constraints and disruptions, or otherwise fail to meet our future requirements for timely delivery, our ability to ship and deliver certain of our products to our customers could be impaired and our business could be harmed.
If we are unable to effectively manage these relationships, or if these third parties experience delays, disruptions, shortages of materials, labor, electronic and other components, capacity constraints, new or increased tariffs and/or other trade restrictions, regulatory issues or quality control problems in their operations, freight delays and other supply chain constraints and 19 Table of Contents disruptions, or otherwise fail to meet our future requirements for timely delivery, our ability to ship and deliver certain of our products to our customers could be impaired and our business could be harmed.
If we fail, or are perceived to have failed, in any number of ESG matters, such as environmental stewardship, good corporate governance, workplace conduct and support for local communities, or to effec tively respond to changes in, or new, legal, regulatory or reporting requirements concerning climate change or other sustainability concerns, we may be subject to regulatory fines and penalties, and our reputation or the reputation of our brands may suffer.
If we fail, or are perceived to have failed, in any number of ESG matters, such as environmental stewardship, good corporate governance, workplace conduct and support for local communities, or to effectively respond to changes in, or new, legal, regulatory or reporting requirements concerning climate change or other sustainability concerns, we may be subject to regulatory fines and penalties, and our reputation or the reputation of our brands may suffer.
Certain provisions in our Memorandum and Articles of Association, among other things, could prevent or delay an acquisition of us, which could decrease the trading price of our ordinary shares. Our Memorandum and Articles of Association contains provisions to deter takeover practices, inadequate takeover bids and unsolicited offers.
Certain provisions in our Memorandum and Articles of Association, among other things, could prevent or delay an acquisition of us, which could decrease the trading price of our ordinary shares. Our Memorandum and Articles of Association contain provisions to deter takeover practices, inadequate takeover bids and unsolicited offers.
Subsequent developments in legal proceedings and other contingencies may affect our assessment and estimates of the loss contingency recorded as a reserve, and we may incur additional costs or be required to make material payments beyond our previously recorded reserves. 22 Table of Contents Allegations that we have infringed the intellectual property rights of third parties could negatively affect us.
Subsequent developments in legal proceedings and other contingencies may affect our assessment and estimates of the loss contingency recorded as a reserve, and we may incur additional costs or be required to make material payments beyond our previously recorded reserves. Allegations that we have infringed the intellectual property rights of third parties could negatively affect us.
In particular, any changes and/or differing interpretations of applicable tax law that have the effect of disregarding our incorporation in Ireland, limiting our ability to take advantage of tax treaties between jurisdictions, modifying or eliminating the deductibility of various currently deductible payments or increasing the tax burden of operating or being resident in a particular country, could subject us to increased taxation.
In particular, any changes and/or differing interpretations of applicable tax law that have the effect 22 Table of Contents of disregarding our incorporation in Ireland, limiting our ability to take advantage of tax treaties between jurisdictions, modifying or eliminating the deductibility of various currently deductible payments or increasing the tax burden of operating or being resident in a particular country, could subject us to increased taxation.
As a result, weakness or instability in one or more of these markets could slow demand for new construction or remodeling projects and cause current and potential customers to delay or cancel capital projects or otherwise choose not to make purchases, which could negatively impact the demand for our products and solutions and result in declines in our revenues, profitability and cash flows.
As a result, weakness or instability in one or more of these markets could 12 Table of Contents slow demand for new construction or remodeling projects and cause current and potential customers to delay or cancel capital projects or otherwise choose not to make purchases, which could negatively impact the demand for our products and solutions and result in declines in our revenues, profitability and cash flows.
Future instability in U.S. and global capital and credit markets, including market disruptions, limited liquidity and interest rate volatility or reductions in the credit ratings assigned to us by independent ratings agencies, could reduce our access to capital 16 Table of Contents markets, increase our costs of borrowing or adversely impact our ability to obtain favorable financing terms in the future.
Future instability in U.S. and global capital and credit markets, including market disruptions, limited liquidity and interest rate volatility or reductions in the credit ratings assigned to us by independent ratings agencies, could reduce our access to capital markets, increase our costs of borrowing or adversely impact our ability to obtain favorable financing terms in the future.
Changes in customer and consumer preferences and the inability to maintain beneficial relationships with large customers could adversely affect our business. We have significant customers, particularly major retailers, althoug h no one customer represented 10% or more of our total Net revenues in any of the past three fiscal years.
Changes in customer and consumer preferences and the inability to maintain beneficial relationships with large customers could adversely affect our business. We have significant customers, particularly major retailers, although no one customer represented 10% or more of our total Net revenues in any of the past three fiscal years.
Also, Irish companies, including us, may alter their Memorandum of Association and Articles of Association only with the approval of at least 75% of the votes of the company’s shareholders cast in person or by proxy at a general meeting of the company. Item 1B. UNRESOLVED STAFF COMMENTS None. 25 Table of Contents
Also, Irish companies, including us, may alter their Memorandum of Association and Articles of Association only with the approval of at least 75% of the votes of the company’s shareholders cast in person or by proxy at a general meeting of the company. Item 1B. UNRESOLVED STAFF COMMENTS None.
Such issues could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners.
Such issues could result in the disruption of business processes, network degradation 18 Table of Contents and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners.
The speed of development by our competitors and new market 17 Table of Contents entrants is increasing. We cannot provide any assurance that any new product or service will be successfully commercialized in a timely manner, if ever, or, if commercialized, will result in returns greater than our investment.
The speed of development by our competitors and new market entrants is increasing. We cannot provide any assurance that any new product or service will be successfully commercialized in a timely manner, if ever, or, if commercialized, will result in returns greater than our investment.
Our tax returns are subject to review by taxing authorities in the jurisdictions in which 23 Table of Contents we operate. Although we believe we have provided for all tax exposures, the ultimate outcome of a tax review could differ materially from our provisions.
Our tax returns are subject to review by taxing authorities in the jurisdictions in which we operate. Although we believe we have provided for all tax exposures, the ultimate outcome of a tax review could differ materially from our provisions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures About Market Risk." Approximately 24% of our 2024 Net revenues were derived outside the U.S., and we expect sales to non-U.S. customers to continue to represent a significant portion of our consolidated Net revenues.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures About Market Risk." Approximately 25% of our 2025 Net revenues were derived outside the U.S., and we expect sales to non-U.S. customers to continue to represent a significant portion of our consolidated Net revenues.
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our Consolidated Financial Statements and may materially affect our financial results in the period or periods for which such determination is made.
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the 21 Table of Contents amounts recorded in our Consolidated Financial Statements and may materially affect our financial results in the period or periods for which such determination is made.
We procure certain products, including raw materials and other commodities, including steel, zinc, brass and other non-ferrous metals, as well as parts, components (including electronic components) and logistical services from supplier partners located 21 Table of Contents throughout the world.
We procure certain products, including raw materials and other commodities, including steel, zinc, brass and other non-ferrous metals, as well as parts, components (including electronic components) and logistical services from supplier partners located throughout the world.
Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control, such as the credit ratings assigned to us by independent ratings agencies or our ability to access capital markets on acceptable terms.
Item 7A. 14 Table of Contents Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control, such as the credit ratings assigned to us by independent ratings agencies or our ability to access capital markets on acceptable terms.
Any improper conduct could damage our reputation and subject us to, among other things, civil and criminal penalties, material fines, equitable remedies (including profit disgorgement and injunctions on future conduct), securities litigation, adverse publicity and a general loss of investor or public confidence. Our operations are subject to regulatory risks.
Any improper conduct could damage our reputation and subject us to, among other things, civil and criminal penalties, material fines, equitable remedies (including profit disgorgement and injunctions on future conduct), securities litigation, adverse publicity and a general loss of investor or public confidence. Our operations are subject to regulatory risks related to domestic and international, environmental, health and safety laws.
The degree to which any new or increased tariffs would impact our business and results of operations is largely dependent on factors outside of our control, including if the tariffs are ultimately implemented, the timing, duration and magnitude of their implementation, and responses or retaliatory actions taken by other countries or regions.
The degree to 13 Table of Contents which any new or increased tariffs would impact our business and results of operations is largely dependent on factors outside of our control, including the timing, duration and magnitude of their implementation, and responses or retaliatory actions taken by other countries or regions.
Cybersecurity attacks and intrusion efforts are continuous and evolving, and in certain cases they have been successful at the 20 Table of Contents most robust institutions.
Cybersecurity attacks and intrusion efforts are continuous and evolving, and in certain cases they have been successful at the most robust institutions.
We may be required to recognize impairment charges for our goodwill, indefinite-lived intangible assets and other long-lived assets. At December 31, 2024, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately $1.5 billion and $101 million, respectively.
We may be required to recognize impairment charges for our goodwill, indefinite-lived intangible assets and other long-lived assets. At December 31, 2025, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately $1.9 billion and $107.2 million, respectively.
Further, we have made several public commitments regarding our intended reduction of carbon emissions, including a commitment to achieve carbon neutral emissions by 2050. Although we intend to meet these commitments, we may be required to expend significant resources to do so, which could increase our operational costs.
Further, we have made several public commitments regarding our intended reduction of carbon emissions. Although we intend to meet these commitments, we may be required to expend significant resources to do so, which could increase our operational costs.
There are risks associated with our outstanding and future indebtedness. We had approximately $2 billion of outstanding indebtedness at December 31, 2024. In addition, we have a senior unsecured revolving credit facility (the "Revolving Facility") that permits borrowings of up to $750 million.
There are risks associated with our outstanding and future indebtedness. We had approximately $2.0 billion of outstanding indebtedness at December 31, 2025. We have a senior unsecured revolving credit facility (the "Revolving Facility") that permits borrowings of up to $1.0 billion.
If we are unable to successfully manage and implement restructuring and other organizational changes, we may not achieve or sustain the expected growth or cost savings benefits of these activities or do so within the expected timeframe.
If we are unable to successfully manage and implement restructuring and other organizational changes, we may not achieve or sustain the expected growth or cost savings benefits of these activities or do so within the expected timeframe. These effects could recur in connection with future acquisitions and other organizational changes, and our results of operations could be negatively affected.
Changes in tax laws, regulations or treaties, changes in our status under the tax laws of many jurisdictions or adverse determinations by taxing authorities could increase our tax burden or otherwise affect our financial condition or operating results, as well as subject our shareholders to additional taxes. 24 Table of Contents The realization of any tax benefit related to our incorporation and tax residence in Ireland could be impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by the tax authorities of many jurisdictions.
Changes in tax laws, regulations or treaties, changes in our status under the tax laws of many jurisdictions or adverse determinations by taxing authorities could increase our tax burden or otherwise affect our financial condition or operating results, as well as subject our shareholders to additional taxes.
In addition, inconsistent regulations among jurisdictions may also affect our cost to comply with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.
Any assessment of the potential impact of future climate change legislation, regulations, or 17 Table of Contents industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.
Adverse intellectual property litigation or claims of infringement against us may become extremely disruptive if the plaintiffs succeed in blocking the trade of our products and services and may have a material adverse effect on our business.
Adverse intellectual property litigation or claims of infringement against us may become extremely disruptive if the plaintiffs succeed in blocking the trade of our products and services and may have a material adverse effect on our business. 20 Table of Contents Our reputation, ability to do business and results of operations could be impaired by improper conduct by any of our employees, agents or business partners.
We utilize a number of tools to improve efficiency and productivity. Implementation of new processes to our operations could cause disruptions and may prove to be more difficult, costly or time consuming than expected.
We utilize a number of tools to improve efficiency and productivity. Implementation of new processes to our operations could cause disruptions and may prove to be more difficult, costly or time-consuming than expected. Additionally, from time to time, we undertake substantial capital projects for varying reasons, such as to increase production capacity or to insource certain products, parts or components.
If our products or solutions fail to meet certification and specification requirements, are defective, cause, or are alleged to have caused, bodily harm or injury, or otherwise fall short of end-users' needs and expectations, our business may be negatively impacted.
If we or our major customers are not successful in navigating the shifting consumer preferences to distribution channels such as e-commerce, our expected future revenues may be negatively impacted. 15 Table of Contents If our products or solutions fail to meet certification and specification requirements, are defective, cause, or are alleged to have caused, bodily harm or injury, or otherwise fall short of end-users' needs and expectations, our business may be negatively impacted.
These effects could recur in connection with future acquisitions and other organizational changes and our results of operations could be negatively affected. 19 Table of Contents The effects of global climate change or other unexpected events, including global health crises, may disrupt our operations and have a negative impact on our business.
The effects of global climate change or other unexpected events, including global health crises, may disrupt our operations and have a negative impact on our business.
For these businesses to achieve acceptable levels of profitability, we may need to improve their management, operations, products and market penetration or incur significant capital expenditures.
For these businesses to achieve acceptable levels of profitability, we may need to improve their management, operations, products and market penetration or incur significant capital expenditures. We may not be successful in this regard, the costs of doing so may exceed our original estimates or we may encounter other potential difficulties.
However, there can be no assurance that all our planned enterprise excellence projects or other capital expenditures will be fully implemented, or if implemented, will realize the expected improvements or financial returns. We may not be able to effectively manage and implement restructuring initiatives or other organizational changes.
We invest in areas we believe best align with our business strategies and that will optimize future returns. However, there can be no assurance that all our planned enterprise excellence projects or other capital expenditures will be fully implemented, or if implemented, will realize the expected improvements or financial returns.
Further, as part of our innovation strategy, from time to time we invest in start-up companies and/or development stage technology or other companies. In evaluating these opportunities, we follow a structured evaluation process that considers factors such as potential financial returns, new expertise in emerging technology and business benefits.
In evaluating these opportunities, we follow a structured evaluation process that considers factors such as potential financial returns, new expertise in emerging technology and business benefits. Despite our best efforts to calculate potential return and risk, some or all of the companies we invest in may be unprofitable at the time of, and subsequent to, our investment.
Depending on the function involved, such non-performance, ineffective performance or failures of service may lead to business disruptions, processing inefficiencies or security breaches. Disruptions or breaches of our information systems could adversely affect us.
Depending on the function involved, such non-performance, ineffective performance or failures of service may lead to business disruptions, processing inefficiencies or security breaches. Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact the Company's reputation, operating results, and financial condition.
We are also exposed to the risk of continued rising interest rates to the extent we fund our short or long-term financing needs with variable-rate borrowings under the Revolving Facility. If variable base rates under the Credit Facilities continue to increase in the future, our Interest expense could increase as well.
At December 31, 2025, we had $190.6 million outstanding on the Revolving Facility, which exposes us to variable interest rate risk. We are also exposed to the risk of continued rising interest rates to the extent we fund our short or long-term financing needs with variable-rate borrowings under the Revolving Facility.
If our IT Systems cease to function properly or if these systems do not provide the anticipated benefits, our ability to manage our operations could be impaired.
If our IT Systems cease to function properly or if these systems do not provide the anticipated benefits, our ability to manage our operations could be impaired. As artificial intelligence and machine learning (“AI”) technologies advance and are increasingly adopted by threat actors, the frequency, sophistication and scale of cyberattacks may increase.
For more details about our interest rate exposure under the Credit Facilities, please see Part II. Item 7A.
If variable base rates under the Revolving Facility increase in the future, our Interest expense could increase as well. For more details about our interest rate exposure under the Revolving Facility, please see Part II.
As an example, in February 2025, the U.S. government announced tariffs on imports from Canada, Mexico and China, countries from which we manufacture and/or export products and components. Subsequently, the tariffs on Canada and Mexico were paused.
Throughout 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or import products and components. In 2025, we have offset inflation due to tariffs with pricing actions. We estimate we source approximately 20-25% of Cost of goods sold from Mexico and less than 5% of Cost of goods sold from China.
We also sell our products through various trade channels, including traditional retail and e-commerce channels. If we or our major customers are not successful in navigating the shifting consumer preferences to distribution channels such as e-commerce, our expected future revenues may be negatively impacted.
We also sell our products through various trade channels, including traditional retail and e-commerce channels.
Removed
We are evaluating the potential impact of these actions and considering what, if any, steps we take to mitigate the impact of the tariffs. We estimate we source approximately 20-25% of Cost of goods sold from Mexico and less than 5% of Cost of goods sold from China.
Added
We may not be able to effectively manage and implement restructuring initiatives or other organizational changes.
Removed
At December 31, 2024, our borrowings included a variable rate term loan facility (the "Term Facility", and together with the Revolving Facility, the "Credit Facilities"). The Credit Facilities had a combined outstanding variable rate balance of $212.5 million at December 31, 2024, which exposes us to variable interest rate risk.
Added
In addition, inconsistent regulations among jurisdictions may also affect our cost to comply with such laws and regulations.
Removed
Despite our best efforts to calculate potential return and risk, some or all of the companies we invest in may be unprofitable at the time of, and subsequent to, our investment.
Added
AI‑enabled methods, including automated vulnerability discovery, automated credential‑stuffing, deepfake‑assisted social engineering and other generative‑AI techniques, could make attacks more successful and harder to detect. In addition, our own or third‑party use of AI could introduce new classes of vulnerabilities.
Removed
Additionally, our pursuit of new business opportunities that diverge from our core business may expose us to different risks and uncertainties other than those described in this “Risk Factors” section or elsewhere in this Annual Report on Form 10-K.
Added
These developments could increase the likelihood and potential impact of disruptions, unauthorized disclosures or other compromises of our IT Systems, products or data, and could increase our remediation and compliance costs, harm our reputation and subject us to regulatory or legal liability.
Removed
Additionally, from time to time, we undertake substantial capital projects for varying reasons, such as to increase production capacity or to insource certain products, parts or components. We invest in areas we believe best align with our business strategies and that will optimize future returns.
Added
We are exposed to risks related to compliance with data privacy and governance laws.
Removed
Our reputation, ability to do business and results of operations could be impaired by improper conduct by any of our employees, agents or business partners.
Added
The realization of any tax benefit related to our incorporation and tax residence in Ireland could be impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by the tax authorities of many jurisdictions.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+3 added−1 removed9 unchanged
Biggest changeRisk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the CISO. With over 20 years of experience in the field of information technology, the CISO brings a wealth of expertise to the role. The CISO’s education includes a Master’s in Cybersecurity Management.
Biggest changeWith over 20 years of experience in the field of information technology, the CISO brings a wealth of expertise to the role. The CISO’s education includes a Master’s in Cybersecurity Management. The CISO has in-depth knowledge and experience in developing and executing our cybersecurity strategies.
These risks are further described in the risk factors within Item 1A, particularly under the headings “We may be subject to risks relating to our information technology and operational technology systems,” “We currently rely on third-party service providers for many of the critical elements of our global information and operational technology infrastructure, and their failure to provide effective support for such infrastructure could increase our cybersecurity risk or otherwise negatively impact our business and financial results,” and “Disruptions or breaches of our information systems could adversely affect us.” We have not encountered any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
These risks are further described in the risk factors within Item 1A, particularly under the headings “We may be subject to risks relating to systems failures or disruptions to our information technology and operational technology systems;” “We currently rely on third-party service providers for many of the critical elements of our global information and operational technology infrastructure, and their failure to provide effective support for such infrastructure could increase our cybersecurity risk or otherwise negatively impact our business and financial results;” and “Disruptions or breaches of our information systems could adversely affect us.” We have not encountered any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Our collaboration with these third parties includes regular audits, threat assessments, and consultation on security enhancements. Our cybersecurity programs generally align with the NIST Cybersecurity Framework, and third party audits on portions of our cybersecurity program or processes apply the NIST Cybersecurity Framework controls.
Our collaboration with these third parties includes regular audits, threat assessments, and consultation on security enhancements. Our cybersecurity programs generally align with the NIST Cybersecurity Framework 2.0, and third-party audits on portions of our cybersecurity program or processes apply the NIST Cybersecurity Framework 2.0 controls.
To address cybersecurity threats, we leverage a multi-layer approach, with our Chief Information Security Officer (“CISO”) leading a team that is responsible for forming our enterprise-wide information security strategy, training, policy, standards, architecture and processes to protect us against cybersecurity risks. Our risk management group works with our cybersecurity team to continuously evaluate and address cybersecurity risks.
To address cybersecurity threats, we leverage a multi-layer approach, with our Chief Information Security Officer (“CISO”) leading a team that is responsible for forming our enterprise-wide information security strategy, training, policy, standards, architecture and processes to protect us against cybersecurity risks.
These briefings encompass a broad range of topics, including: • Threat intelligence; • Risk updates with regional vice presidents; • Third-party assessments and results of tabletop exercises; • Training programs for employees; • Results of phishing simulations; 26 Table of Contents • Cybersecurity technologies and best practices; and • Significant cybersecurity incidents and/or trends (if any).
These briefings encompass a broad range of topics, including: • Threat intelligence; • Risk updates with regional vice presidents; • Third-party assessments and results of tabletop exercises; • Training programs for employees; • Results of phishing simulations; • Cybersecurity technologies and best practices; and • Significant cybersecurity incidents and/or trends (if any). 24 Table of Contents Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the CISO.
This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, we have a well-defined incident response plan.
The CISO implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, we have a well-defined incident response plan.
Monitor Cybersecurity Incidents The CISO and the cybersecurity team are continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques, which is an important component in designing programs to prevent, detect, mitigate, and remediate cybersecurity incidents. The CISO implements and oversees processes for the regular monitoring of our information systems.
Monitor Cybersecurity Incidents The CISO and the cybersecurity team are continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques, which is an important component in designing programs to prevent, detect, mitigate and remediate cybersecurity incidents. This includes monitoring emerging AI-driven threats and adapting our detection, prevention and response capabilities to address them.
The CISO is also responsible for building and overseeing a cybersecurity team, including internal and external resources, who provide subject matter expertise and operational talents to achieve our cybersecurity objectives.
The CISO oversees our governance programs, tests our compliance with standards, remediates known risks and leads our comprehensive employee security awareness program. The CISO is also responsible for building and overseeing a cybersecurity team, including internal and external resources, who provide subject matter expertise and operational talents to achieve our cybersecurity objectives.
Further, we have an employee security awareness program in place and a security training program for technical personnel that provides mandatory and on-demand training. Engage Third Parties on Risk Management We engage a range of external experts, including cybersecurity consultants and auditors to evaluate and test our risk management systems.
Employees may report incidents through established channels such as the security operations mailbox, our ticketing portal or service desk, or by contacting local IT support. Engage Third Parties on Risk Management We engage a range of external experts, including cybersecurity consultants and auditors to evaluate and test our risk management systems.
Removed
The CISO has in-depth knowledge and experience in developing and executing our cybersecurity strategies. The CISO oversees our governance programs, tests our compliance with standards, remediates known risks, and leads our comprehensive employee security awareness program.
Added
Our risk management group works with our cybersecurity team to continuously evaluate and address cybersecurity risks. 23 Table of Contents All employees are required to comply with our information security policies and are responsible for helping protect our information security, including promptly reporting suspected security events through established channels.
Added
We maintain an employee security awareness program and a security training program for technical personnel that provide mandatory and on‑demand training. As part of these programs, every employee is expected to report any suspected security event immediately upon discovery.
Added
The adoption of AI by threat actors has resulted in more sophisticated and scalable attacks. These may include AI‑enabled social engineering, deepfake impersonation, automated vulnerability discovery and exploitation of AI models themselves. The use of AI by our stakeholders, including vendors and customers, may also introduce new vulnerabilities into our ecosystem.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeItem 2. PROPERTIES We operate through a broad network of sales offices, engineering centers, 34 principal production and assembly facilities and several distribution centers throughout the world. Our active properties represent about 7.7 million square feet, of which approximately 44% is leased. We own 16 of our production and assembly facilities, with the remainder under long-term lease arrangements.
Biggest changeItem 2. PROPERTIES We operate through a broad network of production and assembly facilities, distribution centers, sales offices and engineering centers, across North America, Europe, Asia and Oceania.
We believe that our plants have been well maintained, are generally in good condition and are suitable for the conduct of our business.
We own 16 of our 37 production and assembly facilities, with the remaining 21 under long-term lease arrangements. We believe our plants are well maintained, generally in good condition and suitable for the conduct of our business.
Added
Our production and assembly facilities for the Allegion Americas business segment are primarily located in the United States, Mexico and Canada, and for the Allegion International business segment primarily in Australia, France, Germany, Italy, the Netherlands, New Zealand, Poland, Spain and the United Kingdom. Our active properties represent approximately 7.7 million square feet, of which approximately 45% is leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed4 unchanged
Biggest changeDecember 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Allegion plc 100.00 94.61 108.85 87.90 107.51 112.54 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P 400 Capital Goods 100.00 119.84 153.00 137.67 189.57 218.59 Item 6. [RESERVED] 29 Table of Contents
Biggest changeDecember 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 Allegion plc 100.00 115.05 92.90 113.63 118.95 146.95 S&P 500 100.00 128.71 105.40 133.10 166.40 196.16 S&P 400 Capital Goods 100.00 127.67 114.87 158.19 182.40 219.77 Item 6. [RESERVED] 27 Table of Contents
The Board of Directors may suspend, modify or terminate the repurchase program at any time without prior notice. 28 Table of Contents Performance Graph The annual changes for the five-year period shown below are based on the assumption that $100 had been invested in Allegion plc ordinary shares, the Standard & Poor’s 500 Stock Index ("S&P 500") and the Standard & Poor's 400 Capital Goods Index ("S&P 400 Capital Goods") on December 31, 2019, and that all quarterly dividends were reinvested.
The Board of Directors may suspend, modify or terminate the repurchase program at any time without prior notice. 26 Table of Contents Performance Graph The annual changes for the five-year period shown below are based on the assumption that $100 had been invested in Allegion plc ordinary shares, the Standard & Poor’s 500 Stock Index ("S&P 500") and the Standard & Poor's 400 Capital Goods Index ("S&P 400 Capital Goods") on December 31, 2020, and that all quarterly dividends were reinvested.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31, 2024.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31, 2025.
Under the Irish Companies Act, dividends and distributions may only be made from distributable reserves. Distributable reserves, broadly, means the accumulated realized profits of Allegion plc ("ALLE-Ireland") which are unrelated to any GAAP reported amounts (e.g., retained earnings). As of December 31, 2024, we had distributable reserves of $3.8 billion.
Under the Irish Companies Act, dividends and distributions may only be made from distributable reserves. Distributable reserves, broadly, means the accumulated realized profits of Allegion plc ("ALLE-Ireland") which are unrelated to any GAAP reported amounts (e.g., retained earnings). As of December 31, 2025, we had distributable reserves of $4.1 billion.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are traded on the New York Stock Exchange under the symbol ALLE. As of February 13, 2025, the number of record holders of ordinary shares was 1,750.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are traded on the New York Stock Exchange under the symbol ALLE. As of February 12, 2026, the number of record holders of ordinary shares was 1,635.
We paid a total of $167.0 million in cash for dividends to ordinary shareholders during the year ended December 31, 2024.
We paid a total of $175.3 million in cash for dividends to ordinary shareholders during the year ended December 31, 2025.
Issuer Purchases of Equity Securities Period Total number of shares purchased (000s) Average price paid per share Total number of shares purchased as part of the Share Repurchase Authorization (000s) Approximate dollar value of shares still available to be purchased under the Share Repurchase Authorization (000s) October 1 - October 31 48 $ 140.64 48 $ 333,301 November 1 - November 30 307 140.83 307 290,024 December 1 - December 31 361 138.56 361 240,024 Total 716 $ 139.66 716 $ 240,024 Our Board of Directors has approved a share repurchase program (the "Share Repurchase Authorization") which authorizes the repurchase of up to, and including, $500 million of the Company's ordinary shares.
Issuer Purchases of Equity Securities Period Total number of shares purchased (000s) Average price paid per share Total number of shares purchased as part of the Share Repurchase Authorization (000s) Approximate dollar value of shares still available to be purchased under the Share Repurchase Authorization (000s) October 1 - October 31 — $ — — $ 160,019 November 1 - November 30 — — — 160,019 December 1 - December 31 — — — 160,019 Total — $ — — $ 160,019 Our Board of Directors has approved a share repurchase program (the "Share Repurchase Authorization") which authorizes the repurchase of up to, and including, $500 million of the Company's ordinary shares.
Dividend Policy Our Board of Directors declared dividends of $0.48 per ordinary share on February 7, 2024, April 11, 2024, September 5, 2024 and December 5, 2024. On February 6, 2025, our Board of Directors declared a dividend of $0.51 per ordinary share payable on March 31, 2025, to shareholders of record on March 14, 2025.
Dividend Policy Our Board of Directors declared dividends of $0.51 per ordinary share on February 6, 2025, April 10, 2025, September 4, 2025 and December 3, 2025. On February 4, 2026, our Board of Directors declared a dividend of $0.55 per ordinary share payable on March 31, 2026, to shareholders of record on March 13, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+15 added−21 removed51 unchanged
Biggest changeDuring 2023, we paid quarterly dividends of $0.45 per ordinary share to shareholders on record as of March 15, 2023, June 15, 2023, September 18, 2023, and December 18, 2023, for a total of $158.7 million, and repurchased approximately 0.5 million ordinary shares for approximately $59.9 million. 31 Table of Contents Results of Operations - For the years ended December 31 Dollar amounts in millions, except per share amounts 2024 % of Net revenues 2023 % of Net revenues Net revenues $ 3,772.2 $ 3,650.8 Cost of goods sold 2,103.7 55.8 % 2,069.3 56.7 % Selling and administrative expenses 887.8 23.5 % 865.6 23.7 % Impairment of intangible assets — — % 7.5 0.2 % Operating income 780.7 20.7 % 708.4 19.4 % Interest expense 102.0 93.1 Other income, net (20.1) (1.9) Earnings before income taxes 698.8 617.2 Provision for income taxes 101.3 76.6 Net earnings 597.5 540.6 Less: Net earnings attributable to noncontrolling interests — 0.2 Net earnings attributable to Allegion plc $ 597.5 $ 540.4 Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders: $ 6.82 $ 6.12 The discussions that follow describe the significant factors contributing to the changes in our results of operations for the years presented and form the basis used by management to evaluate the financial performance of the business.
Biggest changeResults of Operations - For the years ended December 31 Dollar amounts in millions, except per share amounts 2025 % of Net revenues 2024 % of Net revenues Net revenues $ 4,067.3 $ 3,772.2 Cost of goods sold 2,229.0 54.8 % 2,103.7 55.8 % Selling and administrative expenses 978.8 24.1 % 887.8 23.5 % Operating income 859.5 21.1 % 780.7 20.7 % Interest expense 101.0 102.0 Other income, net (9.9) (20.1) Earnings before income taxes 768.4 698.8 Provision for income taxes 124.6 101.3 Net earnings 643.8 597.5 Diluted net earnings per ordinary share: $ 7.44 $ 6.82 The discussions that follow describe the significant factors contributing to the changes in our results of operations for the years presented and form the basis used by management to evaluate the financial performance of the business.
Review of Business Segments We operate in and report financial results for two segments: Allegion Americas and Allegion International. These segments represent the level at which our chief operating decision maker (the "CODM") reviews our financial performance and makes operating decisions.
Review of Business Segments We operate in and report financial results for two segments: Allegion Americas and Allegion International. These segments represent the level at which our chief operating decision maker ("CODM") reviews our financial performance and makes operating decisions.
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.
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 guarantor, and, depending on the amount of such indebtedness, the applicable guarantor’s liability on its guarantee could be reduced to zero.
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.
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.
Inflation includes unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes. 32 Table of Contents 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.
Inflation includes unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes. Expenses related to increased head count for strategic initiatives, new facilities or other significant spending for strategic 29 Table of Contents initiatives or new product and channel development, are captured in investment spending.
See Note 18 to the Consolidated Financial Statements for additional information regarding matters relating to income taxes, including unrecognized tax benefits and tax authority disputes. Contingent Liabilities – We are involved in various litigation, claims and administrative proceedings, including those related to environmental, asbestos-related and product liability matters.
See Note 16 to the Consolidated Financial Statements for additional information regarding matters relating to income taxes, including unrecognized tax benefits and tax authority disputes. Contingent Liabilities – We are involved in various litigation, claims and administrative proceedings, including those related to environmental, asbestos-related and product liability matters.
Further, our business operates with strong operating cash flows, low leverage and low capital intensity, providing us financial flexibility. 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.
Further, our business operates with strong operating cash flows, low leverage and low capital intensity, providing us financial flexibility. Our short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, potential acquisitions, dividend payments and principal and interest payments on our long-term debt.
We believe that these liabilities are subject to the uncertainties inherent in estimating future costs for contingent liabilities and will likely be resolved over an extended period of time. See Note 21 to the Consolidated Financial Statements for additional information.
We believe that these liabilities are subject to the uncertainties inherent in estimating future costs for contingent liabilities and will likely be resolved over an extended period of time. See Note 19 to the Consolidated Financial Statements for additional information.
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 Senior Notes are structurally subordinated to indebtedness and other liabilities of the subsidiaries of the guarantor, none of which guarantee the notes.
An estimated 0.5% rate decline in the discount rate would have increased net periodic pension benefit cost by approximately $0.4 million in 2024, while a 0.5% rate decline in the estimated return on assets would have increased net periodic pension benefit cost by approximately $2.2 million.
An estimated 0.5% rate decline in the discount rate would have increased net periodic pension benefit cost by approximately $0.4 million in 2025, while a 0.5% rate decline in the estimated return on assets would have increased net periodic pension benefit cost by approximately $2.2 million.
A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. • Income taxes – We account for income taxes in accordance with ASC Topic 740.
A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. 37 Table of Contents • Income taxes – We account for income taxes in accordance with ASC Topic 740.
At December 31, 2024, we analyzed our working capital requirements and the potential tax liabilities that would be incurred if certain subsidiaries made distributions and concluded that no material changes to our historic permanent reinvestment assertions were required. Scheduled future principal repayments on our outstanding indebtedness can be found in Note 9 to the Consolidated Financial Statements.
At December 31, 2025, we analyzed our working capital requirements and the potential tax liabilities that would be incurred if certain subsidiaries made distributions and concluded that no material changes to our historic permanent reinvestment assertions were required. Scheduled future principal repayments on our outstanding indebtedness can be found in Note 8 to the Consolidated Financial Statements.
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.
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 35 Table of Contents conveyance.
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 December 31, 2024, approximately 89% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
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 December 31, 2025, approximately 90% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
We assess the appropriateness of each royalty rate 40 Table of Contents assumption annually, based on our assessment of observable market royalty rates and an analysis of the profitability of the primary business that owns or otherwise uses the indefinite-lived asset.
We assess the appropriateness of each royalty rate assumption annually, based on our assessment of observable market royalty rates and an analysis of the profitability of the primary business that owns or otherwise uses the indefinite-lived asset.
Based upon our operations, existing cash balances and unused availability under the Revolving Facility, as of December 31, 2024, we expect cash flows from operations to be sufficient to maintain a sound financial position and liquidity and to meet our financing needs for at least the next 12 months.
Based upon our operations, existing cash balances and unused availability under the Revolving Facility, as of December 31, 2025, we expect cash flows from operations to be sufficient to maintain a sound financial position and liquidity and to meet our financing needs for at least the next twelve months.
For a discussion of our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2023 Annual Report on Form 10-K filed with the SEC on February 20, 2024.
For a discussion of our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Annual Report on Form 10-K filed with the SEC on February 18, 2025.
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. 38 Table of Contents 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 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. Each guarantee is effectively subordinated to any secured indebtedness of the guarantor to the extent of the value of the assets securing such indebtedness.
To the extent that the carrying value of a reporting unit exceeds its estimated fair value, a goodwill impairment charge will be recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the carrying amount of the reporting unit's goodwill.
To the extent that the carrying value of a reporting unit exceeds 36 Table of Contents its estimated fair value, a goodwill impairment charge will be recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the carrying amount of the reporting unit's goodwill.
As of December 31, 2024, we also have $400.0 million outstanding of 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”), $400.0 million outstanding of 3.500% Senior Notes due 2029 (the “3.500% Senior Notes”), $600.0 million outstanding of 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”), and $400.0 million outstanding of our 5.600% Senior Notes (all four senior notes collectively, the "Senior Notes").
As of December 31, 2025, we also have $400.0 million outstanding of our 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”), $600.0 million outstanding of our 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”), $400.0 million outstanding of the 5.600% Senior Notes due 2034 (the "5.600% Senior Notes") and $400.0 million outstanding of its 3.500% Senior Notes due 2029 (the “3.500% Senior Notes”, and all four senior notes collectively, the "Senior Notes").
For further details on defined benefit plan activity, see Note 12 to the Consolidated Financial Statements.
For further details on defined benefit plan activity, see Note 11 to the Consolidated Financial Statements.
See Note 11 to the Consolidated Financial Statements for further information as to the short and long-term lease liabilities included within the Consolidated Balance Sheets, as well as future minimum lease payments for 2025 and future years.
See Note 10 to the Consolidated Financial Statements for further information as to the short and long-term lease liabilities included within the Consolidated Balance Sheets, as well as future minimum lease payments for 2026 and future years.
Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements. 41 Table of Contents
Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements.
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 availability under the Credit Facilities and access to credit and capital markets are sufficient to achieve our longer-term strategic plans.
Further, we do not anticipate any covenant compliance challenges with any of our outstanding indebtedness for at least the next twelve months. We also believe unused availability under the Revolving Facility and access to credit and capital markets are sufficient to achieve our longer-term strategic plans.
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 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes are 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 guarantee of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes is the senior unsecured obligation of the Parent and ranks equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness.
Such purchase commitments are made in the normal course of business and are not anticipated to materially impact our liquidity or financial position over the next 12 months. Leases – We have numerous real estate and equipment leasing arrangements for which we are a lessee.
Such purchase commitments are made in the normal course of business and are not anticipated to materially impact our liquidity or financial position over the next twelve months. See Note 19 to the Consolidated Financial Statements for further information. Leases – We have numerous real estate and equipment leasing arrangements for which we are a lessee.
The funded status for all of our pension plans at December 31, 2024 increased to 101.1% from 99.9% at December 31, 2023. We currently expect to contribute approximately $5 million to our plans worldwide in 2025.
The funded status for all of our pension plans at December 31, 2025 increased to 103.0% from 101.1% at December 31, 2024. We currently expect to contribute approximately $3.9 million to our plans worldwide in 2026.
Dividends and Share Repurchases During 2024, we paid quarterly dividends of $0.48 per ordinary share to shareholders on record as of March 15, 2024, June 14, 2024, September 20, 2024, and December 17, 2024, for a total of $167.0 million, and repurchased approximately 1.6 million ordinary shares for approximately $220.0 million.
Dividends and Share Repurchases During 2025, we paid quarterly dividends of $0.51 per ordinary share to shareholders on record as of March 14, 2025, June 13, 2025, September 15, 2025, and December 16, 2025, for a total of $175.3 million, and repurchased approximately 0.6 million ordinary shares for approximately $80.0 million. 28 Table of Contents During 2024, we paid quarterly dividends of $0.48 per ordinary share to shareholders on record as of March 15, 2024, June 14, 2024, September 20, 2024, and December 17, 2024, for a total of $167.0 million, and repurchased approximately 1.6 million ordinary shares for approximately $220.0 million.
Income Taxes – At December 31, 2024, we have total unrecognized tax benefits for uncertain tax positions of $44.5 million and $9.2 million of related accrued interest and penalties, net of tax, although we are unable to reasonably estimate the timing over which these liabilities might be paid.
Income Taxes – At December 31, 2025, we have total unrecognized tax benefits for uncertain tax positions of $54.8 million and $12.0 million of related accrued interest and penalties, net of tax, although we are unable to reasonably estimate the timing over which these liabilities might be paid.
Selected Condensed Statement of Comprehensive Income Information Year ended December 31, 2024 In millions Allegion plc Allegion US Hold Co Net revenues $ — $ — Gross profit — — Operating loss (7.8) (0.1) Equity earnings in affiliates, net of tax 669.6 421.4 Transactions with related parties and subsidiaries (a) (31.4) (87.3) Net earnings 597.5 311.4 Net earnings attributable to the entity 597.5 311.4 (a) Transactions with related parties and subsidiaries include intercompany interest and fees.
Selected Condensed Statement of Comprehensive Income Information Year ended December 31, 2025 In millions Allegion plc Allegion US Hold Co Net revenues $ — $ — Gross profit — — Operating loss (7.6) — Equity earnings in affiliates, net of tax 711.5 483.4 Transactions with related parties and subsidiaries (a) (27.4) (92.1) Net earnings 643.8 362.0 Net earnings attributable to the entity 643.8 362.0 (a) Transactions with related parties and subsidiaries include intercompany interest and fees.
Cost of Goods Sold For the year ended December 31, 2024, Cost of goods sold as a percentage of Net revenues decreased to 55.8% from 56.7%, as compared to the year ended December 31, 2023, due to the following: Pricing and productivity in excess of inflation and investment spending (0.8) % Volume / product mix (0.1) % Acquisitions 0.1 % Currency exchange rates (0.1) % Total (0.9) % Cost of goods sold as a percentage of Net revenues decreased primarily due to pricing and productivity, which exceeded the impacts from inflation and investment spending, favorable product mix and favorable foreign currency exchange rate movements.
Cost of Goods Sold For the year ended December 31, 2025, Cost of goods sold as a percentage of Net revenues decreased to 54.8% from 55.8%, as compared to the year ended December 31, 2024, due to the following: Pricing and productivity in excess of inflation and investment spending (0.1) % Volume / product mix (0.6) % Currency exchange rates (0.2) % Restructuring / integration / acquisition expenses (0.1) % Total (1.0) % Cost of goods sold as a percentage of Net revenues decreased primarily due to favorable product mix, favorable foreign currency exchange rate movements, a year-over-year decrease in restructuring, integration, and acquisition expenses and pricing and productivity, which exceeded the impacts from inflation and investment spending.
Outstanding borrowings under the Credit Facilities accrue interest, at our option, equal to either: (i) 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.
Outstanding borrowings under the Revolving Facility accrue interest, at our option, of (i) a SOFR plus an applicable margin, or (ii) a base rate (as defined in the credit agreement) plus an applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on our credit ratings.
At December 31, 2024, we had net pension assets of $5.3 million, which consist of plan assets of $473.0 million and benefit obligations of $467.7 million. It is our objective to contribute to our pension plans in order to ensure adequate funds are available to make benefit payments to plan participants and beneficiaries when required.
At December 31, 2025, we had net pension assets of $14.6 million, which consist of plan assets of $498.5 million and benefit obligations of $483.9 million. It is our objective to contribute to our pension plans in order to ensure adequate funds are available to make benefit payments to plan participants and beneficiaries when required.
Segment Results of Operations - For the years ended December 31 In millions 2024 2023 % Change Net revenues Allegion Americas $ 3,012.4 $ 2,913.6 3.4 % Allegion International 759.8 $ 737.2 3.1 % Total $ 3,772.2 $ 3,650.8 Segment operating income Allegion Americas $ 816.2 $ 757.2 7.8 % Allegion International 66.3 58.1 14.1 % Total $ 882.5 $ 815.3 Segment operating margin Allegion Americas 27.1 % 26.0 % Allegion International 8.7 % 7.9 % Allegion Americas Our Allegion Americas segment is a leading provider of security products, services and solutions throughout North America.
Segment Results of Operations - For the years ended December 31 In millions 2025 2024 % Change Net revenues Allegion Americas $ 3,218.8 $ 3,012.4 6.9 % Allegion International 848.5 $ 759.8 11.7 % Total $ 4,067.3 $ 3,772.2 Segment operating income Allegion Americas $ 896.5 $ 816.2 9.8 % Allegion International 76.5 66.3 15.4 % Total $ 973.0 $ 882.5 Segment operating margin Allegion Americas 27.9 % 27.1 % Allegion International 9.0 % 8.7 % Allegion Americas Our Allegion Americas segment is a leading provider of security products, services and solutions throughout North America.
Net revenues Net revenues for the year ended December 31, 2024, increased by 3.1%, or $22.6 million, as compared to the year ended December 31, 2023, due to the following: Pricing 1.5 % Volume (1.1) % Acquisitions 2.5 % Currency exchange rates 0.2 % Total 3.1 % The increase in Net revenues was driven by improved pricing, the impact from our acquisitions made during the year and favorable foreign currency exchange rate movements.
Net Revenues Net revenues for the year ended December 31, 2025, increased by 7.8%, or $295.1 million, as compared to the year ended December 31, 2024, due to the following: Pricing 3.1 % Volume 1.0 % Acquisitions / divestitures 3.1 % Currency exchange rates 0.6 % Total 7.8 % The increase in Net revenues was driven by improved pricing, favorable impact from acquisitions / divestitures, higher volumes and favorable foreign currency exchange rate movements.
Guarantor Financial Information 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.
Guarantor Financial Information Allegion US Hold Co is 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 the issuer of the 3.500% Senior Notes and is the guarantor of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes.
At December 31, 2024, the funded status of our U.S. pension plans decreased to 100.8% from 101.6% at December 31, 2023. The funded status for our non-U.S. pension plans increased to 101.4% at December 31, 2024 from 98.5% at December 31, 2023.
At December 31, 2025, the funded status of our U.S. pension plans increased to 101.0% from 100.8% at December 31, 2024. The funded status for our non-U.S. pension plans increased to 104.8% at December 31, 2025 from 101.4% at December 31, 2024.
Selling and Administrative Expenses For the year ended December 31, 2024, Selling and administrative expenses as a percentage of Net revenues decreased to 23.5% from 23.7%, as compared to the year ended December 31, 2023, due to the following: Inflation in excess of productivity and investment spending 0.1 % Volume leverage 0.1 % Acquisitions (0.1) % Restructuring / integration / acquisition expenses (0.3) % Total (0.2) % Selling and administrative expenses as a percentage of Net revenues decreased due to a year-over-year decrease in restructuring, integration, and acquisition expenses and the beneficial impacts from current and prior year acquisition activity.
Selling and Administrative Expenses For the year ended December 31, 2025, Selling and administrative expenses as a percentage of Net revenues increased to 24.1% from 23.5%, as compared to the year ended December 31, 2024, due to the following: Inflation in excess of productivity and investment spending 0.5 % Volume leverage (0.2) % Restructuring / integration / acquisition expenses 0.3 % Total 0.6 % Selling and administrative expenses as a percentage of Net revenues increased due to inflation in excess of productivity and investment spending and a year-over-year increase in restructuring, integration, and acquisition expenses.
At December 31, 2024, our outstanding borrowings under the Credit Facilities accrued interest at SOFR plus a margin of 1.225%, resulting in an interest rate of 5 .582%. T he 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.
At December 31, 2025, our outstanding borrowings under the Revolving Facility accrued interest at SOFR plus a margin of 1.125%, resulting in an interest rate of 4.902%. The credit agreement also contains negative and affirmative covenants and events of default that, among other things, limit or restrict our ability to enter into certain transactions.
The change in cash used in financing activities was primarily due to an increase in cash used for share repurchases and dividend payments, partially offset by lower net repayments on debt compared to 2023. 36 Table of Contents Capitalization At December 31, long-term debt and other borrowings consisted of the following: In millions 2024 2023 Term Facility $ 212.5 $ 225.0 3.200% Senior Notes due 2024 — 400.0 3.550% Senior Notes due 2027 400.0 400.0 3.500% Senior Notes due 2029 400.0 400.0 5.411% Senior Notes due 2032 600.0 600.0 5.600% Senior Notes due 2034 400.0 — Other debt — 0.1 Total borrowings outstanding 2,012.5 2,025.1 Discounts and debt issuance costs, net (13.0) (10.1) Total debt 1,999.5 2,015.0 Less current portion of long-term debt 21.9 412.6 Total long-term debt $ 1,977.6 $ 1,602.4 We have an unsecured credit agreement in place, consisting of a $250.0 million term loan facility (the "Term Facility"), of which $212.5 million was outstanding at December 31, 2024, and a revolving credit facility (the "Revolving Facility" and, together with the Term Facility, the “Credit Facilities”), of which there was no balance outstanding at December 31, 2024.
The change in cash used in financing activities was primarily due to a decrease in cash used for share repurchases, partially offset by higher net repayments on debt and higher dividend payments. 33 Table of Contents Capitalization At December 31, long-term debt and other borrowings consisted of the following: In millions 2025 2024 Term Facility $ — $ 212.5 Revolving Facility 190.6 — 3.550% Senior Notes due 2027 400.0 400.0 3.500% Senior Notes due 2029 400.0 400.0 5.411% Senior Notes due 2032 600.0 600.0 5.600% Senior Notes due 2034 400.0 400.0 Other debt 0.2 — Total borrowings outstanding 1,990.8 2,012.5 Discounts and debt issuance costs, net (10.7) (13.0) Total debt 1,980.1 1,999.5 Less current portion of long-term debt 0.2 21.9 Total long-term debt $ 1,979.9 $ 1,977.6 We have an unsecured revolving credit facility (the "Revolving Facility") in place, of which $190.6 million was outstanding at December 31, 2025.
Net Revenues Net revenues for the year ended December 31, 2024, increased by 3.3%, or $121.4 million, as compared to the year ended December 31, 2023, due to the following: Pricing 2.4 % Volume (0.3) % Acquisitions 1.3 % Currency exchange rates (0.1) % Total 3.3 % The increase in Net revenues was driven by improved pricing and the impact from acquisitions made during the year.
Net Revenues Net revenues for the year ended December 31, 2025, increased by 6.9%, or $206.4 million, as compared to the year ended December 31, 2024, due to the following: Pricing 3.6 % Volume 1.6 % Acquisitions 1.8 % Currency exchange rates (0.1) % Total 6.9 % The increase in Net revenues was driven by improved pricing, the favorable impact of acquisitions and higher volumes.
In millions 2024 2023 Net cash provided by operating activities $ 675.0 $ 600.6 Net cash used in investing activities (228.4) (129.1) Net cash used in financing activities (394.5) (298.7) Operating activities : Net cash provided by operating activities for the year ended December 31, 2024, increased by $74.4 million compared to 2023, driven primarily by higher net earnings and improvements in working capital.
In millions 2025 2024 Net cash provided by operating activities $ 783.8 $ 675.0 Net cash used in investing activities (685.5) (228.4) Net cash used in financing activities (266.7) (394.5) Operating activities : Net cash provided by operating activities for the year ended December 31, 2025, increased by $108.8 million compared to 2024, driven primarily by higher net earnings and less cash used for working capital.
Operating income/margin Segment operating income for the year ended December 31, 2024, increased $59.0 million, and Segment operating margin increased to 27.1% from 26.0% as compared to the year ended December 31, 2023, due to the following: In millions Operating Income Operating Margin December 31, 2023 $ 757.2 26.0 % Pricing and productivity in excess of inflation and investment spending 46.4 0.9 % Volume / product mix 0.7 — % Currency exchange rates 1.4 0.1 % Acquisitions 8.0 — % Restructuring/ integration / acquisition expenses 2.5 0.1 % December 31, 2024 $ 816.2 27.1 % The increase in Segment operating income was primarily driven by pricing and productivity improvements in excess of inflation and investment spending, favorable volume/product mix, favorable foreign currency exchange rate movements, operating income from our acquired businesses and a year-over-year decrease in restructuring, integration, and acquisition expenses.
Operating Income/Margin Segment operating income for the year ended December 31, 2025, increased $80.3 million, and Segment operating margin increased to 27.9% from 27.1% as compared to the year ended December 31, 2024, due to the following: In millions Operating Income Operating Margin December 31, 2024 $ 816.2 27.1 % Pricing and productivity in excess of inflation and investment spending 18.5 (0.3) % Volume / product mix 41.8 0.9 % Currency exchange rates 2.3 0.1 % Acquisitions 12.5 (0.1) % Restructuring / integration / acquisition expenses 5.2 0.2 % December 31, 2025 $ 896.5 27.9 % The increase in Segment operating income was primarily driven by favorable volume/product mix, pricing and productivity in excess of inflation and investment spending, the favorable impact of recent acquisitions, lower restructuring, integration, and acquisition expenses and favorable foreign currency exchange rate movements.
If updated information or actual amounts are different from previous estimates, the revisions are included in our results for the period in which they become known. 39 Table of Contents The following is a summary of certain accounting estimates and assumptions made by management that we consider critical: • Goodwill – Goodwill is tested annually during the fourth quarter for impairment or when there is a significant change in events or circumstances that indicate the fair value of a reporting unit is, more likely than not, less than its carrying amount.
The following is a summary of certain accounting estimates and assumptions made by management that we consider critical: • Goodwill – Goodwill is tested annually during the fourth quarter for impairment or when there is a significant change in events or circumstances that indicate the fair value of a reporting unit is, more likely than not, less than its carrying amount.
Selected Condensed Balance Sheet Information December 31, 2024 In millions Allegion plc Allegion US Hold Co Current assets: Amounts due from related parties and subsidiaries $ 0.1 $ 932.8 Total current assets 10.0 954.9 Noncurrent assets: Amounts due from related parties and subsidiaries — 1,296.5 Total noncurrent assets 1,792.9 1,399.7 Current liabilities: Amounts due to related parties and subsidiaries $ 12.1 $ 801.4 Total current liabilities 48.0 824.2 Noncurrent liabilities: Amounts due to related parties and subsidiaries 472.4 2,756.6 Total noncurrent liabilities 1,061.1 4,145.8 Critical Accounting Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Selected Condensed Balance Sheet Information December 31, 2025 In millions Allegion plc Allegion US Hold Co Current assets: Amounts due from related parties and subsidiaries $ 1.2 $ 781.3 Total current assets 8.2 835.2 Noncurrent assets: Amounts due from related parties and subsidiaries — 1,299.1 Total noncurrent assets 1,792.7 1,425.7 Current liabilities: Amounts due to related parties and subsidiaries $ 10.8 $ 702.1 Total current liabilities 31.7 730.4 Noncurrent liabilities: Amounts due to related parties and subsidiaries 484.0 2,737.6 Total noncurrent liabilities 1,073.0 4,124.4 Critical Accounting Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
The 3.550% Senior Notes, 3.500% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes all require semi-annual interest payments, and mature on October 1, 2027, October 1, 2029, July 1, 2032, and May 29, 2034, respectively.
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.
These increases were partially offset by unfavorable volume/product mix. The increase in Operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending, favorable foreign currency exchange rate movements, the year-over-year decrease in restructuring, integration and acquisition expenses, as well as the impairment charges recorded in the prior year.
The increase in Segment operating margin was driven by favorable volume/product mix, lower restructuring, integration and acquisition expenses and favorable foreign currency exchange rate movements. These increases were partially offset by lower operating margin from pricing and productivity in excess of inflation and investment spending and the unfavorable impact on operating margin from recent acquisitions.
Operating income margin Segment operating income for the year ended December 31, 2024, increased $8.2 million, and Segment operating margin increased to 8.7% from 7.9% as compared to the year ended December 31, 2023, due to the following: In millions Operating Income Operating Margin December 31, 2023 $ 58.1 7.9 % Pricing and productivity in excess of inflation and investment spending 1.8 0.1 % Volume / product mix (1.9) (0.2) % Currency exchange rates 0.5 0.1 % Acquisitions 2.0 0.1 % Restructuring/ integration / acquisition expenses (1.7) (0.2) % Impairment of intangible assets 7.5 0.9 % December 31, 2024 $ 66.3 8.7 % The increases in Segment operating income and Segment operating margin were primarily driven by pricing and productivity improvements in excess of inflation and investment spending, favorable movements in foreign currency exchange rates, current year acquisition activity and impairment charges on intangible assets recorded in the prior year.
These increases were partially offset by lower volumes. 32 Table of Contents Operating Income/Margin Segment operating income for the year ended December 31, 2025, increased $10.2 million, and Segment operating margin increased to 9.0% from 8.7% as compared to the year ended December 31, 2024, due to the following: In millions Operating Income Operating Margin December 31, 2024 $ 66.3 8.7 % Inflation and investment spending in excess of pricing and productivity (0.2) (0.1) % Volume / product mix (0.7) — % Currency exchange rates 6.6 0.7 % Acquisitions / divestitures 11.9 0.7 % Restructuring / integration / acquisition expenses (7.4) (1.0) % December 31, 2025 $ 76.5 9.0 % The increases in Segment operating income and Segment operating margin were primarily driven by the favorable impact from acquisitions/divestitures and favorable movements in foreign currency exchange rates.
These decreases were partially offset by inflation in excess of productivity and investment spending, as well as the unfavorable impact of lower volumes. Volume leverage represents the contribution margin related to changes in sales volume, excluding the impact of price, productivity, mix and inflation.
These increases were partially offset by the favorable impact of higher volume leverage. Volume leverage represents the contribution margin related to changes in sales volume, excluding the impact of price, productivity, mix and inflation.
Expected principal and interest payments related to our long-term indebtedness in 2025 amount to $21.9 million and approximately $95.0 million, respe ctively, given our current level of indebtedness and effective interest rates as of December 31, 2024. 37 Table of Contents Contractual Obligations and Other Commitments In addition to the scheduled principal and interest payments discussed above, our material cash requirements include the following contractual and other obligations: Purchase Commitments – We occasionally enter into short-term, firm purchase commitments to mitigate pricing risk related to certain of our commodity, parts and component purchases, which represent commitments under enforceable and legally binding agreements.
Contractual Obligations and Other Commitments In addition to the scheduled principal and interest payments discussed above, our material cash requirements include the following contractual and other obligations: 34 Table of Contents Purchase Commitments – We occasionally enter into short-term, firm purchase commitments to mitigate pricing risk related to certain of our commodity, parts and component purchases, which represent commitments under enforceable and legally binding agreements.
Volume includes increases or decreases of revenue due to changes in unit volume of existing products and services, as well as new products and services.
Pricing includes increases or decreases of price, including discounts, surcharges and/or other sales deductions, on our existing products and services. Volume includes increases or decreases of revenue due to changes in unit volume of existing products and services, as well as new products and services.
Historically, the majority of our earnings were considered to be permanently reinvested in jurisdictions where we have made, and intend to continue to make, substantial investments to support the ongoing development and growth of our global operations.
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. Historically, the majority of our earnings were considered to be permanently reinvested in jurisdictions where we have made, and intend to continue to make, substantial investments to support the ongoing development and growth of our global operations.
Operating Income/Margin Operating income for the year ended December 31, 2024, increased $72.3 million as compared to the year ended December 31, 2023, and Operating margin increased to 20.7% from 19.4%, due to the following: In millions Operating Income Operating Margin December 31, 2023 $ 708.4 19.4 % Pricing and productivity in excess of inflation and investment spending 44.5 0.7 % Volume / product mix (1.2) — % Currency exchange rates 1.9 0.1 % Acquisitions 10.0 — % Restructuring / integration / acquisition expenses 9.6 0.3 % Impairment of intangible assets 7.5 0.2 % December 31, 2024 $ 780.7 20.7 % The increase in Operating income was driven by pricing and productivity improvements in excess of inflation and investment spending, favorable foreign currency exchange rate movements, the contributions from recent acquisition activity, a year-over-year decrease in restructuring, integration, and acquisition costs and impairment charges on intangible assets recorded in the prior year.
Operating Income/Margin Operating income for the year ended December 31, 2025, increased $78.8 million as compared to the year ended December 31, 2024, and Operating margin increased to 21.1% from 20.7%, due to the following: In millions Operating Income Operating Margin December 31, 2024 $ 780.7 20.7 % Pricing and productivity in excess of inflation and investment spending 8.7 (0.4) % Volume / product mix 41.1 0.9 % Currency exchange rates 9.1 — % Acquisitions / divestitures 24.4 — % Restructuring / integration / acquisition expenses (4.5) (0.1) % December 31, 2025 $ 859.5 21.1 % The increase in Operating income was driven by favorable volume/product mix, the favorable impact from acquisitions/divestitures, favorable foreign currency exchange rate movements, and pricing and productivity improvements in excess of inflation and investment spending.
Interest Expense Interest expense for the year ended December 31, 2024, increased $8.9 million as compared to the year ended December 31, 2023, primarily due to higher outstanding indebtedness compared to the same period in the prior year. 33 Table of Contents Other Income, net The components of Other income, net, for the years ended December 31 were as follows: In millions 2024 2023 Interest income $ (20.5) $ (6.8) Currency translation loss 2.2 3.9 Earnings and gains from the sale of equity method investments, net (1.1) (1.0) Net periodic pension and postretirement benefit (income) cost, less service cost (0.2) 1.0 Other (income) expense (0.5) 1.0 Other income, net $ (20.1) $ (1.9) For the year ended December 31, 2024, Other income, net, increased $18.2 million compared to 2023, primarily due to higher cash on hand and higher interest rates earned on deposits.
Other Income, net The components of Other income, net, for the years ended December 31 were as follows: In millions 2025 2024 Interest income $ (12.0) $ (20.5) Currency translation loss 3.4 2.2 Earnings and gains from the sale of equity method investments, net (1.6) (1.1) Net periodic pension and postretirement benefit (income) cost, less service cost 1.0 (0.2) Other income (0.7) (0.5) Other income, net $ (9.9) $ (20.1) For the year ended December 31, 2025, Other income, net, decreased $10.2 million compared to 2024, primarily due to less interest income generated as a result of less cash on hand throughout the year due to the increase in acquisition activity. 30 Table of Contents Provision for Income Taxes For the year ended December 31, 2025, our effective tax rate was 16.2%, compared to 14.5% for the year ended December 31, 2024.
Electronic products encompass both residential and non-residential products, 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. Net revenues from the sale of electronic products decreased by a low single-digits percent compared to 2023.
Growth in Americas electronic security products and solutions is a metric monitored by management and a focus of our investors. Electronic products encompass both residential and non-residential products, 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.
These increases were partially offset by unfavorable volume/product mix and a year-over-year increase in restructuring, integration and acquisition expenses. Liquidity and Capital Resources Liquidity Outlook, Sources and Uses 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.
These increases were partially offset by higher restructuring, integration and acquisition expenses, unfavorable volume/product mix and inflation and investment spending in excess of pricing and productivity improvements. Macroeconomic conditions in our International markets remain mixed. Liquidity and Capital Resources Liquidity Outlook, Sources and Uses Our primary source of liquidity is cash provided by operating activities.
Productivity represents improvements in unit costs of materials and cost reductions related to improvements to our manufacturing design and processes.
Pricing and productivity in excess of inflation and investment spending includes the impact to Cost of goods sold from pricing, as defined above, in addition to productivity, inflation and investment spending. Productivity represents improvements in unit costs of materials and cost reductions related to improvements to our manufacturing design and processes.
Financing activities : Net cash used in financing activities for the year ended December 31, 2024, increased by $95.8 million compared to 2023.
Investing activities : Net cash used in investing activities for the year ended December 31, 2025, increased by $457.1 million compared to 2024, primarily due to higher cash used for acquisitions and an increase in capital expenditures. Financing activities : Net cash used in financing activities for the year ended December 31, 2025, decreased by $127.8 million compared to 2024.
The demand trends and macroeconomic conditions discussed above and a number of other challenges and uncertainties that could affect our businesses are described under Part I, Item 1A, "Risk Factors." 2024 and 2023 Significant Events Acquisitions On February 1, 2024, we, through our subsidiaries, acquired 100% of Boss Door Controls, a door solutions provider in the United Kingdom.
Additionally, this could impact future demand. The demand trends and macroeconomic conditions discussed above and a number of other challenges and uncertainties that could affect our businesses are described under Part I, Item 1A, "Risk Factors." 2025 and 2024 Significant Events Acquisitions We have made several recent business acquisitions across our Allegion Americas and Allegion International segments.
In addition, the Credit Facilities require us to comply with a maximum leverage ratio as defined in the credit agreement. As of December 31, 2024, we were in compliance with all applicabl e covenants under the credit agreement, and we do not anticipate any potential concerns for at least the next 12 months.
In addition, the Revolving Facility requires us to comply with a maximum leverage ratio as defined in the credit agreement. As of December 31, 2025, we were in compliance with all applicable covenants under the credit agreement.
The Revolving Facility aggregate commitments of up to $750.0 million includes up to $100.0 million for the issuance of letters of credit. We had $18.5 million of letters of credit outstanding at December 31, 2024. Borrowings under the Revolving Facility may be repaid at any time without premium or penalty, and amounts repaid may be reborrowed.
The Revolving Facility provides aggregate commitments of up to $1.0 billion, which includes up to $100.0 million for the issuance of letters of credit. We had $25.2 million and $18.4 million of letters of credit outstanding at December 31, 2025 and 2024, respectively.
Our leading brands include CISA, Interflex, LCN, Schlage, SimonsVoss and Von Duprin. Recent Developments Business and Industry Trends and Outlook In 2024, we delivered low-single-digit revenue growth in both our Allegion Americas and Allegion International segments, as well as operating margin expansion and strong cash flows from operations.
Our leading brands include CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®. Recent Developments Business and Industry Trends and Outlook and Global Trade and Macroeconomic Environment In 2025, we delivered high-single digit revenue growth compared to 2024, driven by favorable pricing and volume growth, as well as the impact from acquisitions made during the year.
In 2023, we experienced a low-twenties percent increase compared to 2022, driven by improvements around the availability of materials and components. We continue to believe electronic products are a long-term growth driver.
Net revenues from the sale of electronic products increased by a low-double digits percent compared to 2024. We continue to believe electronic products are a long-term growth driver.
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). 34 Table of Contents Net revenues Net revenues for the year ended December 31, 2024, increased by 3.4%, or $98.8 million, as compared to the year ended December 31, 2023, due to the following: Pricing 2.6 % Volume (0.1) % Acquisitions 1.0 % Currency exchange rates (0.1) % Total 3.4 % The increase in Net revenues was driven by improved pricing and the impact from our acquisitions made during the year.
Net Revenues Net revenues for the year ended December 31, 2025, increased by 11.7%, or $88.7 million, as compared to the year ended December 31, 2024, due to the following: Pricing 1.2 % Volume (1.3) % Acquisitions / divestitures 8.2 % Currency exchange rates 3.6 % Total 11.7 % The increase in Net revenues was driven by the favorable impact from recent acquisitions/divestitures, favorable foreign currency exchange rate movements and improved pricing.
Financing Activities On May 20, 2024, we amended and restated our Credit Facilities which, among other things, (i) increased the total commitment on the Revolving Facility from $500.0 million to $750.0 million, (ii) extended the maturity of the Revolving Facility from November 18, 2026 to May 20, 2029, and (iii) transitioned the benchmark interest rate from the Bloomberg Short-Term Bank Yield Index (“BSBY”) to the Secured Overnight Financing Rate (“SOFR”) for the Credit Facilities.
See Note 3 to the Consolidated Financial Statements for further information. Financing Activities On December 9, 2025, we amended and restated our unsecured revolving credit facility (the "Revolving Facility") which, among other things, increased the total commitment from $750.0 million to $1.0 billion, and extended the maturity from May 20, 2029 to May 20, 2030.
On May 20, 2024, we amended and restated the Credit Facilities which, among other things, (i) increased the total commitment on the Revolving Facility from $500.0 million to $750.0 million, (ii) extended the maturity of the Revolving Facility from November 18, 2026 to May 20, 2029, and (iii) transitioned the benchmark interest rate from the Bloomberg Short-Term Bank Yield Index (“BSBY”) to the Secured Overnight Financing Rate (“SOFR”) for the Credit Facilities.
On December 9, 2025, we amended and restated the Revolving Facility which, among other things, increased the total commitment from $750.0 million to $1.0 billion, and extended the maturity from May 20, 2029 to May 20, 2030.
Provision for Income Taxes For the year ended December 31, 2024, our effective tax rate was 14.5%, compared to 12.4% for the year ended December 31, 2023. The increase in the effective tax rate was primarily due to the enactment of Global Minimum Tax and the mix of income earned in higher tax rate jurisdictions.
The increase in the effective income tax rate was primarily due to the unfavorable mix of income earned in higher tax rate jurisdictions and year over year changes in amounts recognized for uncertain tax positions and income tax credits, which were partially offset by the enactment of legislative changes.
These increases were partially offset by slightly lower volumes and unfavorable foreign currency exchange rate movements. Growth in Americas electronic security products and solutions is a metric monitored by management and a focus of our investors.
These increases were partially offset by unfavorable foreign currency exchange rate movements.
The increase in Segment operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending, favorable foreign currency exchange rate movements, and a year-over-year decrease in restructuring, integration and acquisition expenses. Allegion International Our Allegion International segment provides security products, services and solutions primarily throughout Europe, Asia and Oceania.
These increases were partially offset by higher restructuring, integration, and acquisition expenses. The increase in Operating margin was driven by favorable volume/product mix, which was partially offset by lower operating margin from pricing and productivity in excess of inflation and investment spending and higher restructuring, integration and acquisition expenses.
Removed
We continued to execute our strategy of balanced capital allocation, evidenced by our acquisition activity, dividends paid and shares repurchased throughout the year. Within our Allegion Americas segment, both the non-residential and residential businesses grew by a low single-digits percent compared to the prior year. Our Allegion International segment also grew by a low single-digits percent.
Added
Demand for electronic security products has also remained strong and continues to be a long-term growth driver. Throughout 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or import products and components. In 2025, we offset inflation due to tariffs with pricing actions.
Removed
We experienced a softening of demand within certain businesses in our Allegion International segment. Electronic security products and solutions revenue declined by a low single-digit percent in 2024, as comparisons to the prior year were impacted by supply chain dynamics.
Added
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.
Removed
We expect growth in global electronic security product and solutions to continue to outperform growth in mechanical products and solutions over the long-term, as end-users continue to adopt newer technologies in their facilities and homes. We expect continued growth in 2025, and for the security products industry to benefit from increased concerns about safety and security and technology-driven innovation.
Added
The acquisitions align with our strategy of expanding our mechanical and electronic product portfolios and adding complimentary software and services. This includes the acquisition of ELATEC, including Elatec GmbH and other group entities ("ELATEC") on July 1, 2025.
Removed
Global Trade and Macroeconomic Environment In February 2025, the US government announced tariffs on imports from Mexico, Canada and China, countries from which we manufacture and/or import products and components. Subsequently, the tariffs on imports from Mexico and Canada were paused.
Added
ELATEC is a manufacturer of security and access technology based in Germany, and the acquisition helps expand our global electronics portfolio in attractive end markets while also increasing strategic relationships with channel partners.
Removed
We are evaluating the potential impact of these actions and considering what, if any, steps, including pricing actions, we take to mitigate the impact of the tariffs.
Added
The aggregate consideration, inclusive of contingent consideration and net of cash acquired, for all acquisitions completed in 2025 and 2024 was approximately $631.6 million and $147.2 million, respectively. Businesses acquired in 2025 generated $93.0 million of Net revenues since the acquisition dates, which is included within our Consolidated Statements of Comprehensive Income.

… 26 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−1 removed2 unchanged
Biggest changeTo minimize the risk of counter party non-performance, derivative instrument agreements are made only through major financial institutions with significant experience in such derivative instruments. We evaluate our exposure to changes in currency exchange rates on our foreign currency derivatives using a sensitivity analysis.
Biggest changeDerivative instruments utilized in our hedging activities are viewed as risk management tools, involve little complexity and are not used for trading or speculative purposes. To minimize the risk of counter party non-performance, derivative instrument agreements are made only through major financial institutions with significant experience in such derivative instruments.
Based on the firmly committed currency derivative instruments in place at December 31, 2024, a hypothetical change in fair value of those derivative instruments assuming a 10% adverse change in exchange rates would result in an additional unrealized loss of approximately $3.4 million.
Based on the firmly committed currency derivative instruments in place at December 31, 2025, a hypothetical change in fair value of those derivative instruments assuming a 10% adverse change in exchange rates would result in an additional unrealized loss of approximately $4.3 million.
We use fixed price contracts to manage this exposure where appropriate. We do not have committed commodity derivative instruments in place at December 31, 2024. However, an increase in commodity prices could result in lower gross profit.
We use fixed price contracts to manage this exposure where appropriate. We do not have committed commodity derivative instruments in place at December 31, 2025. However, an increase in commodity prices could result in lower gross profit.
However, outstanding borrowings under the Credit Facilities accrue variable rate interest at our option of (i) a Secured Overnight Financing Rate ("SOFR") plus the 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.
However, outstanding borrowings under the Revolving Facility accrue variable rate interest at our option of (i) a Secured Overnight Financing Rate ("SOFR") plus the 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.
Interest Rate Exposure Of our total outstanding indebtedness of $2.0 billion as of December 31, 2024, approximately 89% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
Interest Rate Exposure Of our total outstanding indebtedness of $2.0 billion as of December 31, 2025, approximately 90% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
A hypothetical increase of 1% in the interest rate on the variable rate borrowings under our Credit Facilities would increase our interest expense over the next twelve months by $2.1 million based on the balances outstanding for these borrowings as of December 31, 2024.
A hypothetical increase of 1% in the interest rate on the variable rate borrowings under our Revolving Facility would increase our interest expense over the next twelve months by $2.0 million based on the balances outstanding as of December 31, 2025.
If the SOFR or other applicable base rates of the Credit Facilities increase in the future, our Interest expense could increase. 42 Table of Contents
If the SOFR or other applicable base rates of the Revolving Facility increase in the future, our Interest expense could increase. 39 Table of Contents
At December 31, 2024, the outstanding borrowings of $212.5 million under the Credit Facilities accrue interest at SOFR plus a margin of 1.225%, resulting in an interest rate of 5.582%. We are a lso exposed to the risk of rising interest rates to the extent that we fund our operations with short-term or variable-rate borrowings.
At December 31, 2025, the outstanding borrowings of $190.6 million under the Revolving Facility accrue interest at SOFR plus a margin of 1.125%, resulting in an interest rate of 4.902%. We are also exposed to the risk of rising interest rates to the extent that we fund our operations with short-term or variable-rate borrowings.
The sensitivity analysis is a measurement of the potential loss in fair value based on a percentage change in exchange rates.
We evaluate our exposure to changes in currency exchange rates on our foreign currency derivatives using a sensitivity analysis. The sensitivity analysis is a measurement of the potential loss in fair value based on a percentage change in exchange rates.
We have $18.5 million of letters of credit outstanding and unused availability of $731.5 million under the Revolving Facility as of December 31, 2024.
We have $190.6 million outstanding and unused availability of $784.2 million under the Revolving Facility as of December 31, 2025.
As a result, we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other currencies throughout the world. We actively manage material currency exposures that are associated with purchases and sales and other assets and liabilities at the legal entity level; however, we do not hedge currency translation risk.
As a result, we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other currencies throughout the world.
Removed
We attempt to hedge exposures that cannot be naturally offset to an insignificant amount with foreign currency derivatives. Derivative instruments utilized in our hedging activities are viewed as risk management tools, involve little complexity and are not used for trading or speculative purposes.
Added
We actively manage material currency exposures that are associated with purchases and sales and other 38 Table of Contents assets and liabilities at the legal entity level; however, we do not hedge currency translation risk. We attempt to hedge exposures that cannot be naturally offset to an insignificant amount with foreign currency derivatives.

Other ALLE 10-K year-over-year comparisons