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What changed in Allegion's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Allegion's 2023 and 2024 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 2024 report.

+217 added−232 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in Allegion's 2024 10-K

217 paragraphs added · 232 removed · 179 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+11 added−17 removed36 unchanged
Biggest changeIn 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, accessories and other : A portfolio of hollow metal, glass and specialty doors, 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; and • Services and software : Our Access Technologies business offers extensive planned inspection, maintenance and repair services for its automatic entrance solutions throughout the U.S. and Canada.
Biggest changeIn 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.
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 ("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; • 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.
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, 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 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.
No single customer represented 10% or more of our total Net revenues in 2023. 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.
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.
These cross-functional reviews highlight individuals who are ready for new opportunities, individuals who are on a special assignment or project and individuals early in their career that demonstrate emerging leadership skills. Learning and Development Opportunities for on-going learning and development are delivered to employees through structured coursework, on-site and expert-led training and experiential, applied development.
These cross-functional reviews highlight individuals who are ready for new opportunities, individuals who are on a special assignment or project and individuals early in their career that demonstrate emerging leadership skills. Learning and Development Opportunities for ongoing learning and development are delivered to employees through structured coursework, on-site and expert-led training and experiential, applied development.
Additionally, we offer software as a service ("SaaS") offerings throughout the U.S. and internationally, including access control, IoT 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 our Interflex business. We also offer ongoing aftermarket services, design and installation offerings and locksmith services in select locations.
Throughout this 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 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. 14 Table of Contents
In addition, the Company's Annual Report on Form 10-K, as well as future quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on our Internet website ( www.allegion.com ) as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
In addition, the Company's Annual Report on Form 10-K, as well as future quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on our investor website (investor .allegion.com ) as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
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, safe and healthy practices.
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.
We operate in and report financial results for two segments: Allegion Americas and Allegion International, the latter of which provides security products, services and solutions primarily throughout Europe, Asia and Oceania.
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.
We have built upon these founding legacies since our entry into the security products market through the acquisition of Schlage, Von Duprin and LCN in 1974.
We have built upon these founding legacies since our entry into the security products market through the acquisition of Schlage, Von Duprin and LCN.
Our talent attraction efforts are focused on and highlight a culture that reflects our core values, Allegion leadership behaviors and business objectives. 12 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.
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.
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. 11 Table of Contents Facilities We operate through a broad network of sales offices, engineering centers, 31 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. 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.
Further, we expect continued growth in connected security products and solutions as end-users continue to adopt newer technologies, including IoT and AI, in their facilities and single and multi-family homes. The security products markets are highly competitive and fragmented throughout the world, with a number of large multi-national companies and thousands of smaller regional and local companies.
Further, we expect continued growth in connected security products and solutions as end-users continue to adopt newer technologies, including mobile solutions and artificial intelligence, in their facilities and single and multi-family homes. The security products markets are highly competitive and fragmented throughout the world, with a number of large multi-national companies and thousands of smaller regional and local companies.
Allegion Principal Products and Services Door controls and systems Locks, locksets, portable locks and key systems Exit devices Electronic security products Software-enabled access control systems Time, attendance and workforce productivity systems Doors, accessories and other Services and software Access control security products and solutions are critical elements in every building and home.
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.
As we move into more technologically advanced product categories, we may also compete against new, more specialized competitors and technology companies. Our success depends on a variety of factors, including brand and reputation, product breadth, innovation, integration with popular technology platforms, quality and delivery capabilities, price and service capabilities.
As we move into more technologically advanced product categories, we may also compete against new, more specialized competitors. Our success depends on a variety of factors, including brand and reputation, knowledge and expertise in our industry, product breadth, innovation, integration with popular technology platforms, quality and delivery capabilities, price and service capabilities.
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).
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).
Production and Distribution We manufacture products in several geographic markets around the world. We operate 31 principal production and assembly facilities – 18 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 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.
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.
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.
Through a few of our businesses, most notably our Access Technologies business, Interflex and our Global Portable Security brands, we also provide products and services directly to end-users. Our 10 largest customers represented approximately 25% of our total Net revenues in 2023.
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.
Among our U.S. based employees, approximately 15% 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.
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.
Our active properties represent approximately 7.6 million square feet, of which approximately 48% is leased.
Our active properties represent approximately 7.7 million square feet, of which approximately 44% is leased.
The following table shows the location of our principal worldwide production and assembly facilities: 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 Jinshan, China McKenzie, Tennessee Monsampolo, Italy Mississauga, Ontario Osterfeld, Germany Perrysburg, Ohio Renchen, Germany Princeton, Illinois Veenendaal, Netherlands Queretaro, Mexico Zawiercie, Poland 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.
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.
We expect the security products industry will continue to benefit from favorable trends such as increased concerns about safety and security, new attention on touchless solutions that help promote a healthy environment and technology-driven innovation that enables seamless access and a better user experience as people and assets traverse multiple locations and facilities.
We expect the security products industry will continue to benefit from favorable trends such as increased concerns about safety and security, and technology-driven innovation that enables seamless access and a better user experience as people and assets traverse multiple locations and facilities.
The Allegion Academy is offered globally, supporting multiple languages and providing thousands of self-guided online courses. We offer programs to provide successive levels of development, including reskilling and upskilling existing employees, as well as strengths-based leadership curriculum and global programs for employee mentoring and coaching.
The Allegion Academy is offered globally, supporting multiple languages and providing thousands of self-guided online courses. We offer programs to provide successive levels of development, including re-skilling and upskilling existing employees, as well as strengths-based leadership curriculum and global programs for employee mentoring and coaching. Culture and Engagement Culture and engagement are also parts of the Allegion Operating System.
We are committed to conducting our business in a safe, environmentally responsible and sustainable manner, in compliance with all applicable EHS laws and regulations, and in a manner that helps 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 continously work to promote and protect the health and safety of our environment, associates, customers, contractors and members of our local communities worldwide.
We believe the security products industry will continue to benefit from several global macroeconomic trends, including: • Expected growth in global electronic products and solutions as end-users adopt newer technologies in their facilities and homes; • Heightened awareness of security and privacy requirements; • Increased focus on touchless solutions that help promote a healthy environment; and • The shift to a digital, interconnected and increasingly interoperable environment.
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.
Engagement and Diversity, Equity and Inclusion ("DEI") Engagement and DEI are also parts of the Allegion Operating System. Engagement surveys provide a mechanism to gather direct employee feedback, give team leaders insights on potential areas of focus and allow leaders to prioritize and act on their teams’ foundational, inclusion, growth and development needs.
Engagement surveys provide a mechanism to gather direct employee feedback, give team leaders insights on potential areas of focus and allow leaders to prioritize and act on their teams’ foundational, inclusion, growth and development needs.
Item 1. BUSINESS Overview Allegion plc ("Allegion," "we," "us" or "the Company") is a leading global provider of security products and solutions that keep people and assets safe and secure in the places they live, learn, work and connect. We create peace of mind by pioneering safety and security with a vision of enabling seamless access and a safer world.
Item 1. BUSINESS Overview Allegion plc ("Allegion," "we," "us" or "the Company") is a leading global provider of security products and solutions that keep people and assets safe and secure in the places they live, learn, work and connect. We pioneer safety and security to create a safer and more accessible world.
Moreover, with the increasing adoption of the Internet of Things ("IoT"), security products – including credentials – are increasingly linked electronically, integrated into software and popular consumer technology platforms and controlled with mobile applications, creating additional functionality and complexity.
Moreover, with the growing adoption of connected hardware and software solutions, security products – including credentials – are increasingly linked electronically, integrated into access control software and popular consumer technology platforms and controlled with mobile applications, creating additional functionality and complexity.
Building on this success, in December 2021, Allegion Ventures announced a second fund with an additional allocation of $100 million to focus on investing in technologies like artificial intelligence (AI), video monitoring, machine learning and cybersecurity. For example, in 2023, Allegion Ventures made a $20 million investment in Ambient.ai, an AI powered computer vision intelligence company.
Building on this success, in December 2021, Allegion Ventures announced a second fund with an additional allocation of $100 million to focus on investing in technologies like artificial intelligence, video monitoring, machine learning and cybersecurity.
Our leading brands include CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®. During the year ended December 31, 2023, we generated Net revenues of $3,650.8 million and Operating income of $708.4 million.
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.
We offer an extensive and versatile portfolio of security and access control products and solutions across a range of market-leading brands. Our experts across the globe deliver high-quality security 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 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.
Intellectual Property Intellectual property, inclusive of certain patents, trademarks, copyrights, know-how, trade secrets and other proprietary rights, is important to our business. 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 try to ensure the protection and enforcement of our intellectual property rights.
Our employee base is supplemented by contingent labor where business demand fluctuates or we experience short-term needs for specialized skills. We believe our relations with our workforce in both unionized and non-unionized settings are generally positive. Talent Attraction and Retention Our employer brand creates a differentiated employee experience intended to attract and retain the right talent for Allegion.
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.
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. 13 Table of Contents Regulatory Matters We are subject to a variety of federal, state and local laws and regulations, both within and outside the U.S., relating to Environmental, Health and Safety ("EHS") matters.
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 operate with principles that support our proactive commitments, including: • Integrating sound EHS and sustainability strategies in all elements of our business functions, including objectives and measurements; • Conducting periodic, formal evaluation of our compliance status and annual review of objectives and targets; • Creating a workplace culture where all employees are responsible for safety; • Making continuous improvements in EHS and sustainability management systems and performance, including the reduction in the usage of natural resources, waste minimization, prevention of pollution and prevention 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 the recycling and reuse of materials, where feasible; and • Acting in a way that shows sensitivity to community concerns about EHS and sustainability issues.
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.
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 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.
Although price often serves as an important customer decision point, we also compete based on the breadth, innovation and quality of our products and solutions, our ability to custom-configure solutions to meet individual end-user requirements and our global supply chain.
As many of our businesses sell through distribution, our success also depends on building and partnering with a strong channel network. We compete based on the breadth, innovation and quality of our products and solutions, pricing, our ability to custom-configure solutions to meet individual end-user requirements and our global supply chain.
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 of December 31, 2023, we had approximately 12,400 employees worldwide, of which approximately 12,200 are full-time employees. Approximately 48% of employees are employed within the U.S. and approximately 52% based outside the U.S.
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.
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). Upgraded mortice lock platform for the Australia and New Zealand OEM market, providing increased functionality and improving installation time (Schlage Virtus).
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.
In addition, we invest in initiatives that continuously drive improvements in product cost, quality, safety and sustainability. Our research and development team is managed as a global, collaborative group to identify and develop new technologies and worldwide product platforms.
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.
As to the latter, 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.
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.
Schlage Encode Smart WiFi Lever is for use in doors without a deadbolt; connects to home WiFi and pairs with the Schlage app. Narrow profile smart lock for Australia and New Zealand for use on aluminum and timber doors, utilizing the Schlage Breeze app (Schlage Artus).
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).
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.
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 purchase a wide range of raw materials, including steel, zinc, brass and other non-ferrous metals, as well as other parts and components, such as electronic components, to support our production facilities. In late 2022, supply chain disruptions experienced in prior years moderated and the availability of many raw material categories improved.
We purchase a wide range of raw materials, including steel, zinc, brass and other non-ferrous metals, as well as other parts and components, such as electronic components, to support our production facilities. Intellectual Property Intellectual property, inclusive of certain patents, trademarks, copyrights, know-how, trade secrets and other proprietary rights, is important to our business.
We continue to adapt to changing health conditions at a local level and support a wide range of health and safety measures, including encouraging preventative health measures such as COVID-19 and influenza vaccines and booster shots. The ELT, with oversight from our Board of Directors, is responsible for risk management, employee accountability, safety hazard recognition and executing safety initiatives.
The ELT, with oversight from our Board of Directors, is responsible for risk management, employee accountability, safety hazard recognition and executing safety initiatives.
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: • Locks, locksets, portable locks and key systems : A broad array of cylindrical, tubular and mortise 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; • Electronic security products and access control systems : A broad range of electrified locks, electrified door closers and exit devices, access control products and systems, credentials and credential readers and accessories, including IoT, Bluetooth Low Energy, Power over Ethernet and cloud-based solutions; • Time, attendance and workforce productivity systems : These products are designed to help business customers manage and monitor workforce access, attendance and employee scheduling; • Door controls and systems and exit devices : An extensive portfolio of life-safety products and solutions generally installed on fire doors and facility entrances and exits.
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.
Bricard Evidence handle range for commercial and residential markets, with an exclusive and unique rose fixation and adjustment design, functionality and finishes. Electronic and Electrified Door Controls and Systems and Exit Devices Von Duprin, LCN, CISA, Stanley Access Technologies 2021/2022/2023 Security indicator (Von Duprin) for visual verification and lockdown.
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.
Seamless access allows authorized, automated and safe passage and movement through spaces and places in the most efficient and frictionless manner possible. Central to our vision is partnering and developing ecosystems to create a flawless experience and enable an uninterrupted and secure flow of people and assets.
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.
Die-rolled steel profile swinging door with sidelite(s); North America’s first fire-rated full-lite door system certified to forced-entry standards (TGP TGProtect™ FR System). 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.
North America’s first fire-rated full-lite door system certified to forced-entry standards (TGP TGProtect™ FR System).
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Seamless access capitalizes on the ability for multiple products and brands to work in tandem, allowing people and assets to move efficiently and safely by adapting access rights for various settings or use cases. These solutions can also provide insights on usage and traffic patterns to boost efficiency, improve hygiene of high-traffic areas and improve visitor, staff and tenant experiences.
Added
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.
Removed
Recent examples of successful product launches by Allegion are illustrated in the table below: Product Brands Year Innovation Electronic Locks, Locksets and Portable Locks Schlage, CISA, AXA 2021/2022/2023 Schlage Encode Plus Smart WiFi Deadbolt one of the first in the market to work with Apple home keys, allowing lock or unlock access using an iPhone or Apple Watch.
Added
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).
Removed
First CISA motorized lock solution for high-security connected smart doors (Domo Connexa), manageable in proximity and remotely using a mobile app.
Added
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.
Removed
Electronic Key Systems and Access Control, Mobile and Web Applications SimonsVoss, CISA, Schlage, Interflex, ISONAS, Zentra 2021/2022/2023 SimonsVoss new option for wireless online connections to a virtual network (SmartHandle AX, SmartIntego) and a retrofit, no-drill locking option for lockers and furniture in schools, hospitals and industry facilities that integrates into the existing SimonsVoss digital ecosystem for offline and online access (SmartLocker).
Added
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.
Removed
Expanded radio network technology to include European frequency band 868MHz and 920MHz technology. FSS1 High Security Door Position Sensors (Schlage) provide a high-security solution with adjustable anti-tamper features to help prevent against attacks through magnetic, electronic or physical means.
Added
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.
Removed
Visitor management modules and managed service featuring a cloud-based solution of time recording (Interflex); cloud-hosted access control platform with real-time events, alerts and user-initiated door control (ISONAS). Pure Access enhanced support for mobile ready Schlage TB readers connected to an ISONAS IP-Bridge to allow seamless integration with Schlage Mobile Credentials and enhanced functionality for the NDE/LE wireless locks.
Added
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.
Removed
Multi-family access control solution providing a turnkey, simple, secure and smart offering of software and integrated hardware covering all access needs for the building (Zentra). 8 Table of Contents Product Brands Year Innovation Mechanical Locks, Locksets, Portable Locks and Key Systems CISA, Schlage, Legge, Bricard, AXA, Kryptonite, Trelock 2021/2022/2023 Mortice self-locking system with a mono-point motorized lock variant, new multi-point exit mortice self-locking system for panic exit doors with narrow profile (CISA) and new platformed, modular replacement of cylindrical locks (Schlage ALX).
Added
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.
Removed
Next generation of multi-function mortice locks, 991 Multi-Function Mortice Lock Series (Legge), allows easy conversions and anti-lockout function. New key override safety feature option on mortise locks (Schlage L Series). Six mechanical and two electrified options available. Large format interchangeable core options to fit competitive locksets.
Added
Next 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.
Removed
The -2SI security indicator provides at-a-glance verification of door status from inside the room. Also available as a retrofit conversion kit for existing 98/99 Series exit devices. Range of touchless solutions, including automatic operators, actuators and wireless transmitters (LCN).
Added
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.
Removed
New 6400 Compact Series (LCN) low-energy automatic operator retrofit solution with actuators reduces the cost and complexity of touchless access and adds ADA accessibility. Enhancements to the already durable 4040XP (LCN) door closer, making it even easier to install and maintain. NA new automatic door/window solution for increased efficiencies for drive through restaurants (Stanley Access Technologies DuraGlide DT).
Added
Our employee base is supplemented by contingent labor where business demand fluctuates or we experience short-term needs for specialized skills.
Removed
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). Doors, Accessories and Other TGP, AXA 2021/2022/2023 North America's first fire-rated Full-Lite Door System (TGP), certified to meet forced entry standards (TGP ASTM E2395).
Added
Regulatory Matters We are subject to a variety of federal, state and local laws and regulations, both within and outside the U.S., relating to Environmental, Health and Safety ("EHS") matters.
Removed
As many of our businesses sell through distribution, our success also depends on building and partnering with a strong channel network.
Removed
The prior actions taken to create supply flexibility and improved safety stocks permitted reliable supply during the year. See "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a more detailed discussion of these trends and challenges.
Removed
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. The efforts of Allegion’s DEI Steering Committee, our ELT and our employee resource groups, are driving expectations and accountability while creating role models and change champions.
Removed
Our DEI strategy has three core pillars: • Learn & listen deeply: Learn to recognize biases and mitigate them.
Removed
Seek to first understand an individual's perspective rather than respond or act; • Unite widely: Create a workplace where all employees feel welcomed, respected and valued, enabling customers to more easily connect with our brands through our people; and • Take action: Identify the unique things that impact our organization, our communities and our industry.
Removed
We recognize that these principles are critical to our future success. We have a dedicated environmental program designed to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate any identified environmental concerns.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

37 edited+6 added−6 removed163 unchanged
Biggest changeThe 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.
Biggest changeChanges 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.
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 17 Table of Contents 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 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.
Subsequent developments in legal 22 Table of Contents 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.
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.
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. 25 Table of Contents Item 1B. UNRESOLVED STAFF COMMENTS None.
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
For example, many countries in Europe, as well as a number of other countries and organizations, have recently proposed, recommended or implemented changes to existing tax laws or have enacted new laws that could significantly increase our effective tax rate or cash tax obligations in countries where we do business or require us to change the manner in which we operate our business.
For example, many countries in Europe, as well as a number of other countries and organizations, have proposed, recommended or implemented changes to existing tax laws or have enacted new laws that could significantly increase our effective tax rate or cash tax obligations in countries where we do business or require us to change the manner in which we operate our business.
In the event that working capital requirements exceed operating cash flow, we may be required to draw on the 2021 Revolving Facility or pursue other external financing, which may not be readily available.
In the event that working capital requirements exceed operating cash flow, we may be required to draw on the Revolving Facility or pursue other external financing, which may not be readily available.
If inflation in these costs increases beyond our ability to control for them through measures such as implementing operating efficiencies, or we are not able to increase prices to sufficiently offset the effect of various cost increases without negatively impacting customer demand, our margin performance and results of operations would be negatively impacted.
If these costs increase beyond our ability to control for them through measures such as implementing operating efficiencies, or we are not able to increase prices to sufficiently offset the effect of various cost increases without negatively impacting customer demand, our margin performance and results of operations would be negatively impacted.
An overall or prolonged labor shortage, lack of skilled labor, increased turnover or sustained level of wage inflation could have a material adverse impact on our business, financial position, results of operations and cash flows. 21 Table of Contents Disruptions in our global supply chain, including product manufacturing and logistical services provided by our supplier partners, may negatively impact our business.
An overall or prolonged labor shortage, lack of skilled labor, increased turnover or sustained level of wage inflation could have a material adverse impact on our business, financial position, results of operations and cash flows. Disruptions in our global supply chain, including product manufacturing and logistical services provided by our supplier partners, may negatively impact our business.
Although uniform transfer pricing standards are emerging in many of the countries in which we operate, there is still a relatively high degree of uncertainty and inherent subjectivity in complying 23 Table of Contents with these rules. To the extent that any tax authority disagrees with our transfer pricing policies, we could become subject to significant tax liabilities and penalties.
Although uniform transfer pricing standards are emerging in many of the countries in which we operate, there is still a relatively high degree of uncertainty and inherent subjectivity in complying with these rules. To the extent that any tax authority disagrees with our transfer pricing policies, we could become subject to significant tax liabilities and penalties.
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.
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.
If we fail, or are perceived to have failed, in any number of ESG matters, such as environmental stewardship, DEI, 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.
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 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, 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 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.
Continued 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.
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.
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.
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.
Demand for our security products and solutions relies on the institutional, commercial and residential construction and remodeling markets, which are marked by cyclicality based on overall economic conditions, including consumer confidence and disposable income, corporate and government spending, work-from-home trends, availability of credit and demand for new housing and infrastructure.
Demand for our security products and solutions relies on the institutional, commercial, and residential construction and remodeling markets, which are marked by cyclicality based on national, regional and local economic conditions, including consumer confidence and disposable income, corporate and government spending, work-from-home trends, availability of credit and demand for new housing and infrastructure.
In particular, if we are unable to access capital and credit markets on terms that are acceptable to us, we may not be able to execute potential merger and acquisition plans, make other investments or fully execute our business plans and strategy. 16 Table of Contents Our suppliers and customers are also dependent upon the capital and credit markets.
In particular, if we are unable to access capital and credit markets on terms that are acceptable to us, we may not be able to execute potential merger and acquisition plans, make other investments or fully execute our business plans and strategy. Our suppliers and customers are also dependent upon the capital and credit markets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures About Market Risk." Approximately 25% of our 2023 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 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.
At our annual general meeting of shareholders, our shareholders authorized our Board of Directors to issue up to 33% of our issued ordinary shares and further authorized our Board of Directors to issue up to 5% of such shares for cash without first offering them to our existing shareholders.
At our annual general meeting of shareholders, our shareholders authorized our Board of Directors to issue up to 20% of our issued ordinary shares and further authorized our Board of Directors to issue up to 20% of such shares for cash without first offering them to our existing shareholders.
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.
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.
There are risks associated with our outstanding and future indebtedness. We had approximately $2 billion of outstanding indebtedness at December 31, 2023. In addition, we have a senior unsecured revolving credit facility (the "2021 Revolving Facility") that permits borrowings of up to $500 million.
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.
Accordingly, we are subject to multiple risks that are inherent in operating and sourcing globally, including: • Changes to trade agreements, sanctions, import and export regulations, including imposition of burdensome tariffs and quotas, and customs duties; • 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; 15 Table of Contents • 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; 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.
We may be required to recognize impairment charges for our goodwill, indefinite-lived intangible assets and other long-lived assets. At December 31, 2023, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately $1.4 billion and $104 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, 2024, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately $1.5 billion and $101 million, respectively.
At December 31, 2023, our borrowings included a variable rate term loan facility (the "2021 Term Facility", and together with the 2021 Revolving Facility, the "2021 Credit Facilities"). The 2021 Credit Facilities had a combined outstanding variable rate balance of $225.0 million at December 31, 2023, which exposes us to variable interest rate risk.
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.
We are continuing to evaluate the potential impact of this interpretative guidance and the release of GMT-implementation legislation in other countries, and such guidance or legislation could result in a material increase in our effective tax rate.
We anticipate the continued and ongoing release of OECD GMT interpretive guidance and local country GMT legislation. We are continuing to evaluate the potential impact of this interpretative guidance and the release of GMT-implementation legislation in other countries, and such guidance or legislation could result in a material increase in our effective tax rate.
Global health crises, such as the COVID-19 pandemic or any other actual or threatened epidemic, pandemic, or outbreak and spread of a communicable disease or virus in the countries where we operate or sell products and provide services, could adversely affect our operations and financial performance.
Global health crises or outbreak and spread of a communicable disease or virus in the countries where we operate or sell products and provide services, could adversely affect our operations and financial performance.
Weakness or instability in one or more of these markets may cause current and potential customers to delay or cancel major capital projects or otherwise choose not to make purchases, which could negatively impact the demand for our products and solutions and erode average selling prices.
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.
Our global operations subject us to economic risks. 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.
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.
Applicable variable interest rates have increased throughout 2023, resulting in increased Interest expense. 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 2021 Revolving Facility.
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.
These challenges may also make it more challenging for us to manufacture and deliver products to our customers, could cause periodic production interruptions and supply constraints, impact our ability to forecast and plan for future business activities and, if not adequately managed, could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Negative macroeconomic trends, future market disruptions or uncertainty related to potential changes to fiscal and monetary policy and/or trade policy, including the imposition, or threatened imposition, of tariffs and potential retaliatory trade restrictions, may make it more challenging for us to manufacture and deliver products to our customers, could cause periodic production interruptions and supply constraints, impact our ability to forecast and plan for future business activities and, if not adequately managed by us, could cause a material adverse impact on our business, results of operations, financial condition and cash flows.
If variable base rates under the 2021 Credit Facilities continue to increase in the future, our Interest expense could increase as well. For more details about our interest rate exposure under the 2021 Credit Facilities, please see Part II. Item 7A.
For more details about our interest rate exposure under the Credit Facilities, please see Part II. Item 7A.
Both of these authorizations will expire after a certain period unless renewed by our shareholders, and we cannot guarantee that the renewal of these authorizations will always be approved.
Both of these authorizations will expire after a certain period unless renewed by our shareholders, and we cannot guarantee that the renewal of these authorizations will always be approved. If the Directors' authority to issue ordinary shares is not renewed, then we may be limited in our ability to use our shares, for example, as consideration for acquisitions.
To mitigate this exposure, we may use annual price contracts to minimize the impact of inflation and to benefit from deflation. Additionally, we are exposed to fluctuations in other costs such as packaging, freight, labor and energy prices.
Additionally, we are exposed to fluctuations in other costs such as packaging, freight, labor and energy prices.
Macroeconomic challenges, including ongoing supply chain disruptions and delays, material, electronic component and labor shortages, cost inflation, rising interest rates and volatility in the capital markets, have impacted, and may continue to impact, our business, our customers and our suppliers.
In the recent past, our business operations and performance were also impacted by global macroeconomic challenges, including supply chain disruptions and delays, material, electronic component and labor shortages, prolonged periods of cost inflation, and increased interest rates.
Any charges relating to such impairments could have a material adverse impact on our results of operations in the periods when recognized. Based on our 2023 assessment, it was determined that two of the Company's indefinite-lived trade names in the International segment were impaired, and we recorded a $7.5 million impairment charge.
Any charges relating to such impairments could have a material adverse impact on our results of operations in the periods when recognized. The capital and credit markets are important to our business.
Increased prices and inflation could negatively impact our margin performance and our financial results. Elevated levels of inflation, including rising prices for raw materials, parts and components, freight, packaging, labor and energy, increases our costs to manufacture and distribute our products and services, and we may be unable to pass these increased costs on to our customers.
Higher prices for raw materials, parts and components, freight, packaging, labor and energy, whether caused by inflationary pressures or other geopolitical factors, such as new or increased tariffs, duties, or other charges as a result of changes to U.S. or international trade policies or trade agreements, increase our costs to manufacture and distribute our products and services, and we may be unable to pass these increased costs on to our customers.
Further, demand for our products and solutions is impacted by the strength of institutional, commercial and residential construction and remodeling markets, which are sensitive to national, regional and local economic conditions.
Economic, Market and Financial Risks Our business performance is impacted by the strength of the institutional, commercial and residential construction and remodeling markets and global macroeconomic factors.
Over 130 countries agreed to the general framework of the GMT rules and approximately 25 countries have implemented the GMT rules. Further, on December 15, 2022, the European Union adopted a Council Directive which requires GMT rules to be transposed into member states’ national laws starting in 2024.
Over 130 countries agreed to the general framework of the GMT rules and numerous countries in which we operate have transposed those rules into national laws, including Ireland, the location of our incorporation. Additional countries are in various stages of implementing the rules into their national laws.
Removed
Economic, Market and Financial Risks Our business operations and performance have been, and are expected to continue to be, impacted by global macroeconomic factors. Ongoing macroeconomic challenges could adversely impact our business, results of operations, financial conditions and cash flows.
Added
Increased prices, whether due to inflationary pressures or other factors, could negatively impact our margin performance and our financial results.
Removed
As a result, deterioration of these macroeconomic conditions (or weakness in these conditions existing for an extended period of time), a decline in general economic activity or recession in the U.S. or global economy could slow demand for new construction or remodeling projects and result in our customers cancelling or delaying orders, which in turn could erode average selling prices and result in declines in our revenues, profitability and cash flows.
Added
To mitigate this exposure, we may use annual price contracts to minimize the impact of inflation and to benefit from deflation. However, these hedging and pricing strategies may not fully protect us against cost increases caused by factors such as new or increased tariffs, changing import duties, market illiquidity and specific local regulations.
Removed
Our business relies on the institutional, commercial and residential construction and remodeling markets.
Added
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.
Removed
The capital and credit markets are important to our business.
Added
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.
Removed
On December 18, 2023, Ireland, the location of our incorporation, enacted legislation which includes provisions regarding the implementation of GMT. We are currently assessing the impact of the legislation, but we expect our effective income tax rate to increase beginning in 2024. Further, we anticipate the continued and ongoing release of OECD GMT interpretive guidance.
Added
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.
Removed
If the Directors' authority to issue ordinary shares is not renewed, then we may be limited in our ability to use our shares, for example, as consideration for acquisitions. 24 Table of Contents 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.
Added
We can give no assurance that the impact of any tariffs will not have a material adverse effect upon our results of operations, financial condition or liquidity or that actions we may take to mitigate the impact of the tariffs will be effective.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed15 unchanged
Biggest changeThese briefings encompass a broad range of topics, including: • Threat intelligence; • Risk updates with regional vice presidents; 26 Table of Contents • 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).
Biggest changeThese 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).
Governance The Board of Directors has established oversight mechanisms designed to ensure effective governance in managing risks associated with cybersecurity threats. Board of Directors Oversight Due to the importance of cybersecurity to the Company, the full Board is charged with oversight responsibility for our risk management and security strategy and policy.
Governance The Board of Directors (the "Board") has established oversight mechanisms designed to ensure effective governance in managing risks associated with cybersecurity threats. Board of Directors Oversight Due to the importance of cybersecurity to the Company, the full Board is charged with oversight responsibility for our risk management and security strategy and policy.
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 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.
The Board receives updates from the CISO and management at its quarterly board meeting, which updates cover the Company's cybersecurity strategy, current cybersecurity risk assessment, key risk areas, current cyber trends, and any significant cyber incidents that have occurred or are reasonably likely to occur. Management’s Role Management is responsible for assessing and managing cybersecurity risk.
The Board receives updates from the CISO and management at least quarterly at board meetings, which updates cover the Company's cybersecurity strategy, current cybersecurity risk assessment, key risk areas, current cyber trends, and any significant cyber incidents that have occurred or are reasonably likely to occur. Management’s Role Management is responsible for assessing and managing cybersecurity risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES We operate through a broad network of sales offices, engineering centers, 31 principal production and assembly facilities and several distribution centers throughout the world. Our active properties represent about 7.6 million square feet, of which approximately 48% 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 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer 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 — $ — — $ 500,000 November 1 - November 30 — — — 500,000 December 1 - December 31 342 116.85 342 460,024 Total 342 $ 116.85 342 $ 460,024 In February 2020, our Board of Directors approved a share repurchase authorization of up to, and including, $800 million of the Company’s ordinary shares (the "Share Repurchase Authorization").
Biggest changeIssuer 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.
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, 2023, we had distributable reserves of $3.9 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, 2024, we had distributable reserves of $3.8 billion.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31, 2023.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31, 2024.
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 14, 2024, the number of record holders of ordinary shares was 1,920.
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.
We paid a total of $158.7 million in cash for dividends to ordinary shareholders during the year ended December 31, 2023.
We paid a total of $167.0 million in cash for dividends to ordinary shareholders during the year ended December 31, 2024.
Dividend Policy Our Board of Directors declared dividends of $0.45 per ordinary share on February 9, 2023, April 13, 2023, September 7, 2023 and December 7, 2023. On February 7, 2024, our Board of Directors declared a dividend of $0.48 per ordinary share payable on March 29, 2024, to shareholders of record on March 15, 2024.
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.
Based on market conditions, share repurchases may be made from time to time in the open market at the discretion of management. 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, 2018, 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. 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.
Removed
On June 8, 2023, our Board of Directors reauthorized the Company's existing share repurchase program and, as a result, authorized the repurchase of up to, and including, $500 million of the Company's ordinary shares. The Share Repurchase Authorization does not have a prescribed expiration date.
Added
The Share Repurchase Authorization does not have a prescribed expiration date and does not oblige the Company to acquire any particular amount of the Company's ordinary shares. Share repurchases may be made from time to time in open market, accelerated stock repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans.
Removed
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Allegion plc 100.00 157.88 149.38 171.86 138.78 169.74 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P 400 Capital Goods 100.00 132.75 159.09 203.10 182.76 251.41
Added
The timing and manner of any share repurchase and the actual number of ordinary shares repurchased will be determined at the discretion of management based on a variety of factors, including, among others, the Company’s stock price, corporate and regulatory requirements, and other general market and economic conditions.
Added
December 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

Item 7. Management's Discussion & Analysis

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

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Biggest changeOther Income, net The components of Other income, net, for the years ended December 31 were as follows: In millions 2023 2022 Interest income $ (6.8) $ (1.3) Foreign currency exchange loss 3.9 2.4 Earnings and gains from the sale of equity method investments, net (1.0) (0.8) Net periodic pension and postretirement benefit cost (income), less service cost 1.0 (9.4) Other expense (income) 1.0 (2.5) Other income, net $ (1.9) $ (11.6) For the year ended December 31, 2023, Other income, net, decreased $9.7 million compared to 2022, primarily due to an unfavorable net periodic pension and postretirement benefit cost (income), less service cost in 2023 compared to 2022, which was partially offset by an increase in interest income in 2023 compared to 2022.
Biggest changeInterest 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.
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 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 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 segment sells a broad range of products and solutions including, locks, locksets, portable locks, key systems, door controls and systems, exit devices, doors, accessories, electronic security products, access control systems and software and service solutions to customers in commercial, institutional and residential facilities, including the education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets.
The segment sells a broad range of products and solutions including, locks, locksets, portable locks, key systems, door controls and door control systems, exit devices, doors, glass and door systems, accessories, electronic security products, access control systems and software and service solutions to customers in commercial, institutional and residential facilities, including the education, healthcare, government, hospitality, retail, commercial office and single and multi-family residential markets.
We seek to achieve this goal while trying to mitigate volatility in plan funded status, contributions and expense by better matching the characteristics of the plan assets to that of the plan liabilities. Global asset allocation decisions are based on a dynamic approach whereby a plan's allocation to fixed income assets increases as the funded status increases.
We seek to achieve this goal while trying to mitigate volatility in plan funded status, contributions and expense by matching the characteristics of the plan assets to that of the plan liabilities. Global asset allocation decisions are based on a dynamic approach whereby a plan's allocation to fixed income assets increases as the funded status increases.
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 2021 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 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.
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. 40 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.
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.
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 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 applicable guarantor, and, depending on the amount of such indebtedness, the applicable guarantor’s liability on its guarantee could be reduced to zero.
Our ability to generate cash from our operating activities, our unused availability under the 2021 Revolving Facility and our access to the capital and credit markets enable us to fund these capital needs, execute our long-term growth strategies and return value to our shareholders.
Our ability to generate cash from our operating activities, our unused availability under the Revolving Facility and our access to the capital and credit markets enable us to fund these capital needs, execute our long-term growth strategies and return value to our shareholders.
At December 31, 2023, 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, 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.
We assess the appropriateness of each royalty rate assumption annually, based on our 41 Table of Contents 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 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.
The segment offers end-users a broad range of products, services and solutions including locks, locksets, portable locks, key systems, door controls and systems, exit devices, doors, electronic security products, access control systems, time and attendance and workforce productivity solutions, among other software and service solutions. This segment’s primary brands are AXA, Bricard, Briton, CISA, Gainsborough, Interflex, Kryptonite and SimonsVoss.
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.
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 2024 and future years.
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.
An estimated 0.5% rate decline in the discount rate would have increased net periodic pension benefit cost by approximately $0.4 million in 2023, while a 0.5% rate decline in the estimated return on assets would have increased net periodic pension benefit cost by approximately $2.4 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 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.
Based upon our operations, existing cash balances and unused availability under the 2021 Revolving Facility, as of December 31, 2023, 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, 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.
The determination of fair values of acquired intangible assets involves projections of future revenues and cash flows that are either discounted at an estimated discount rate or measured at an estimated royalty rate; fair values of other acquired assets and assumed liabilities, including potential contingencies; and the useful lives of the acquired assets.
The determination of fair values of acquired intangible assets involves projections of future revenues and cash flows that are either discounted at an estimated discount rate or measured at an estimated royalty rate; fair values of other acquired assets and assumed liabilities, including potential contingent consideration; and the useful lives of the acquired assets.
As of December 31, 2023, we also have $400.0 million outstanding of 3.200% Senior Notes due 2024 (the “3.200% Senior Notes”), $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”), and $600.0 million outstanding of 5.411% Senior Notes due 2032 (the “5.411% Senior Notes” and all four senior notes collectively, the "Senior Notes").
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").
Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements. 42 Table of Contents
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
In such an event, the notes would be structurally subordinated to the indebtedness and other liabilities of the Guarantor. For further details, terms and conditions of the Senior Notes refer to the Company’s Forms 8-K filed October 2, 2017, September 27, 2019, and June 22, 2022.
In such an event, the notes would be structurally subordinated to the indebtedness and other liabilities of the applicable guarantor. For further details, terms and conditions of the Senior Notes refer to the Company’s Forms 8-K filed October 2, 2017, September 27, 2019 June 22, 2022, and May 29, 2024.
For a discussion of our results of operations for the year ended December 31, 2022, compared to the year ended December 31, 2021, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Annual Report on Form 10-K filed with the SEC on February 22, 2023.
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.
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.
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.
Long-term financing needs depend largely on 36 Table of Contents 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, 2023, 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, 2024, approximately 89% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. The critical assumptions utilized in our annual impairment analysis for indefinite-lived intangible assets are the royalty rates and discount rates, which often differ amongst our various indefinite-lived assets.
Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. The critical assumptions utilized in our annual impairment analysis for indefinite-lived intangible assets include our estimates of revenue growth rate, royalty rates and discount rates, which often differ amongst our various indefinite-lived assets.
The 3.200% Senior Notes, 3.550% Senior Notes and 5.411% 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 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.
Consequently, intangible asset impairment charges totaling $7.5 million were recorded. The impairments related to declines in volumes which reduced the brands' expected future cash flows.
Consequently, intangible asset impairment charges totaling $7.5 million were recorded in 2023 in our Allegion International segment. The impairments related to declines in volumes which reduced the brands' expected future cash flows.
At December 31, 2023, the funded status of our U.S. pension plans increased to 101.6% from 97.8% at December 31, 2022. The funded status for our non-U.S. pension plans increased to 98.5% at December 31, 2023 from 97.4% at December 31, 2022.
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.
The guarantee of the 3.200% Senior Notes, 3.550% Senior Notes and 5.411% 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.
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.
Income Taxes – At December 31, 2023, we have total unrecognized tax benefits for uncertain tax positions of $45.1 million and $9.0 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.
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.
The funded status for all of our pension plans at December 31, 2023 increased to 99.9% from 97.6% at December 31, 2022. We currently expect to contribute approximately $5 million to our plans worldwide in 2024.
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 Senior Notes are structurally subordinated to indebtedness and other liabilities of the 39 Table of Contents subsidiaries of the Guarantor, none of which guarantee the notes.
The Senior Notes are structurally subordinated to indebtedness and other liabilities of the subsidiaries of the applicable guarantor, none of which guarantee the notes.
Expected principal and interest payments related to our long-term indebtedness in 2024 amount to $412.6 million and $97.1 million, respectively, given our current level of indebtedness and effective interest rates as of December 31, 2023. 38 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.
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.
At December 31, 2023, we had net pension liabilities of $0.3 million, which consist of plan assets of $512.1 million and benefit obligations of $512.4 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, 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.
The 3.200% Senior Notes, 3.550% Senior Notes, 3.500% Senior Notes, and 5.411% Senior Notes all require semi-annual interest payments, and will mature on October 1, 2024, October 1, 2027, October 1, 2029, and July 1, 2032, respectively.
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.
These increases were partially offset by an unfavorable volume/product mix, unfavorable foreign currency exchange rate movements and a year-over-year increase in restructuring, integration, and acquisition expenses. The increase in Segment operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending.
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.
Selected Condensed Statement of Comprehensive Income Information Year ended December 31, 2023 In millions Allegion plc Allegion US Hold Co Net revenues $ — $ — Gross profit — — Operating loss (7.4) (0.5) Equity earnings in affiliates, net of tax 606.5 330.6 Transactions with related parties and subsidiaries (a) (30.8) (77.0) Net earnings 540.4 232.6 Net earnings attributable to the entity 540.4 232.6 (a) Transactions with related parties and subsidiaries include intercompany interest and fees.
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.
We paid quarterly dividends of $0.41 per ordinary share to shareholders on record as of March 16, 2022, June 16, 2022, September 16, 2022, and December 16, 2022, for a total of $143.9 million and repurchased approximately 0.5 million ordinary shares for approximately $61.0 million during the year ended December 31, 2022. 31 Table of Contents Results of Operations - For the years ended December 31 Dollar amounts in millions, except per share amounts 2023 % of Net revenues 2022 % of Net revenues Net revenues $ 3,650.8 $ 3,271.9 Cost of goods sold 2,069.3 56.7 % 1,949.5 59.6 % Selling and administrative expenses 865.6 23.7 % 736.0 22.5 % Impairment of intangible assets 7.5 0.2 % — — % Operating income 708.4 19.4 % 586.4 17.9 % Interest expense 93.1 75.9 Loss on divestitures — 7.6 Other income, net (1.9) (11.6) Earnings before income taxes 617.2 514.5 Provision for income taxes 76.6 56.2 Net earnings 540.6 458.3 Less: Net earnings attributable to noncontrolling interests 0.2 0.3 Net earnings attributable to Allegion plc $ 540.4 $ 458.0 Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders: $ 6.12 $ 5.19 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.
During 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.
In millions 2023 2022 Net cash provided by operating activities $ 600.6 $ 459.5 Net cash used in investing activities (129.1) (994.1) Net cash (used in) provided by financing activities $ (298.7) $ 437.0 Operating activities : Net cash provided by operating activities for the year ended December 31, 2023, increased by $141.1 million compared to 2022, driven primarily by higher net earnings and higher cash provided by working capital.
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.
Selling and Administrative Expenses For the year ended December 31, 2023, Selling and administrative expenses as a percentage of Net revenues increased to 23.7% from 22.5%, as compared to the year ended December 31, 2022, due to the following: Inflation in excess of productivity and investment spending 0.7 % Volume leverage 0.5 % Acquisitions / divestitures (0.3) % Restructuring / integration / acquisition expenses 0.3 % Total 1.2 % Selling and administrative expenses as a percentage of Net revenues increased due to inflation in excess of productivity and investment spending, as well as unfavorable volume leverage and year-over-year increase in acquisition and integration expenses.
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.
Guarantor Financial Information Allegion US Hold Co is the issuer of the 3.200% Senior Notes, 3.550% Senior Notes and 5.411% 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 3.200% Senior Notes, 3.550% Senior Notes and 5.411% Senior Notes.
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.
At December 31, 2023, outstanding borrowings under the 2021 Credit Facilities accrued interest at BSBY plus a margin of 1.125%, resulting in an interest rate of 6.581%. 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.
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.
Operating income margin Segment operating income for the year ended December 31, 2023, decreased $12.3 million, and Segment operating margin decreased to 7.9% from 9.5% as compared to the year ended December 31, 2022, due to the following: In millions Operating Income Operating Margin December 31, 2022 $ 70.4 9.5 % Pricing and productivity in excess of inflation and investment spending 16.0 1.6 % Volume / product mix (23.1) (2.6) % Currency exchange rates 3.0 0.3 % Acquisitions / divestitures 4.7 0.8 % Restructuring/ integration / acquisition expenses (5.4) (0.7) % Impairment of intangible assets (7.5) (1.0) % December 31, 2023 $ 58.1 7.9 % The decreases in Segment operating income and Segment operating margin were primarily driven by unfavorable volume/product mix, a year-over-year increase in restructuring, integration and acquisition expenses, and impairment charges on intangible assets recorded in the current year.
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.
Segment Results of Operations - For the years ended December 31 In millions 2023 2022 % Change Net revenues Allegion Americas $ 2,913.6 $ 2,530.7 15.1 % Allegion International 737.2 741.2 (0.5) % Total $ 3,650.8 $ 3,271.9 Segment operating income Allegion Americas $ 757.2 $ 611.2 23.9 % Allegion International 58.1 70.4 (17.5) % Total $ 815.3 $ 681.6 Segment operating margin Allegion Americas 26.0 % 24.2 % Allegion International 7.9 % 9.5 % 34 Table of Contents 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 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.
The remaining change in cash used in financing activities was primarily due to an increase in dividend payments partially offset by slightly less cash used to repurchase shares in 2023 compared to 2022. 37 Table of Contents Capitalization At December 31, long-term debt and other borrowings consisted of the following: In millions 2023 2022 2021 Term Facility $ 225.0 $ 237.5 2021 Revolving Facility — 69.0 3.200% Senior Notes due 2024 400.0 400.0 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 Other debt 0.1 0.2 Total borrowings outstanding 2,025.1 2,106.7 Discounts and debt issuance costs, net (10.1) (12.2) Total debt 2,015.0 2,094.5 Less current portion of long-term debt 412.6 12.6 Total long-term debt $ 1,602.4 $ 2,081.9 As of December 31, 2023, we have an unsecured Credit Agreement in place, consisting of the $250.0 million 2021 Term Facility, and the 2021 Revolving Facility (together with the 2021 Term Facility, the “2021 Credit Facilities”).
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.
Operating income/margin Segment operating income for the year ended December 31, 2023, increased $146.0 million, and Segment operating margin increased to 26.0% from 24.2% as compared to the year ended December 31, 2022, due to the following: In millions Operating Income Operating Margin December 31, 2022 $ 611.2 24.2 % Pricing and productivity in excess of inflation and investment spending 159.2 3.9 % Volume / product mix (17.1) (0.5) % Currency exchange rates (13.8) (0.5) % Acquisitions 25.0 (0.8) % Restructuring/ integration / acquisition expenses (7.3) (0.3) % December 31, 2023 $ 757.2 26.0 % The increase in Segment operating income was primarily driven by pricing and productivity improvements in excess of inflation and investment spending and operating income from our acquired Access Technologies business.
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.
Selected Condensed Balance Sheet Information December 31, 2023 In millions Allegion plc Allegion US Hold Co Current assets: Amounts due from related parties and subsidiaries $ 0.1 $ 558.6 Total current assets 16.3 595.6 Noncurrent assets: Amounts due from related parties and subsidiaries — 1,439.9 Total noncurrent assets 1,792.2 1,525.7 Current liabilities: Amounts due to related parties and subsidiaries $ 64.8 $ 826.6 Total current liabilities 84.5 1,250.4 Noncurrent liabilities: Amounts due to related parties and subsidiaries 564.2 2,458.9 Total noncurrent liabilities 1,174.5 3,454.7 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, 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.
Net Revenues Net revenues for the year ended December 31, 2023, increased by 11.6%, or $378.9 million, as compared to the year ended December 31, 2022, due to the following: Pricing 7.5 % Volume (2.3) % Acquisitions / divestitures 6.2 % Currency exchange rates 0.2 % Total 11.6 % The increase in Net revenues was driven by improved pricing across our major businesses, our acquisitions of the Access Technologies and plano businesses and favorable foreign currency exchange rate movements.
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.
As a result of the sale, we recorded a net loss on divestiture of $7.6 million. 30 Table of Contents Impairment of Intangible Assets As discussed in Note 7 to the Consolidated Financial Statements, the results of our 2023 impairment test indicated that the estimated fair value of two indefinite-lived trade names in our International segment were determined to be less than book value.
Plano is reported in our Allegion International segment. 2023 Impairment of Intangible Assets As discussed in Note 7 to the Consolidated Financial Statements, the results of our 2023 impairment test indicated that the estimated fair value of two indefinite-lived trade names in our International segment were determined to be less than book value.
These decreases were partially offset by unfavorable product mix, lower gross margins associated with our acquired Access Technologies business and unfavorable foreign currency exchange rate movements. Pricing and productivity in excess of inflation and investment spending includes the impact to Costs of goods sold from pricing, as defined above, in addition to productivity, inflation and investment spending.
These decreases were partially offset by the impacts to gross margin associated with our acquired businesses. Pricing and productivity in excess of inflation and investment spending includes the impact to Costs of goods sold from pricing, as defined above, in addition to productivity, inflation and investment spending.
Operating Income/Margin Operating income for the year ended December 31, 2023, increased $122.0 million as compared to the year ended December 31, 2022, and Operating margin increased to 19.4% from 17.9%, due to the following: In millions Operating Income Operating Margin December 31, 2022 $ 586.4 17.9 % Pricing and productivity in excess of inflation and investment spending 154.9 3.1 % Volume / product mix (40.3) (0.8) % Currency exchange rates (10.8) (0.3) % Acquisitions/ divestitures 29.7 (0.2) % Impairment of intangible assets (7.5) (0.2) % Restructuring / integration / acquisition expenses (4.0) (0.1) % December 31, 2023 $ 708.4 19.4 % The increase in Operating income was driven by pricing and productivity improvements in excess of inflation and investment spending and the contribution from recent acquisition and divestiture activity.
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.
Outstanding borrowings under the 2021 Credit Facilities accrue interest at our option of (i) a Bloomberg Short-Term Bank Yield Index (“BSBY”) rate 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.
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.
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.
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.
Cost of Goods Sold For the year ended December 31, 2023, Cost of goods sold as a percentage of Net revenues decreased to 56.7% from 59.6%, as compared to the year ended December 31, 2022, due to the following: Pricing and productivity in excess of inflation and investment spending (3.8) % Volume / product mix 0.3 % Acquisitions / divestitures 0.5 % Currency exchange rates 0.3 % Restructuring / integration / acquisition expenses (0.2) % Total (2.9) % Cost of goods sold as a percentage of Net revenues decreased primarily due to the pricing and productivity improvements, which exceeded the impacts from inflation and investment spending, and lower restructuring and acquisition costs year-over- 32 Table of Contents year.
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.
Net revenues Net revenues for the year ended December 31, 2023, increased by 15.1%, or $382.9 million, as compared to the year ended December 31, 2022, due to the following: Pricing 8.3 % Volume (0.9) % Acquisitions 7.9 % Currency exchange rates (0.2) % Total 15.1 % The increase in Net revenues was driven by improved pricing and the acquisition of our Access Technologies business.
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.
We expect growth in the global electronic security product and solution categories we serve to continue to outperform growth in mechanical products and solutions over the long-term, as end-users adopt newer technologies in their facilities and homes.
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.
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.
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.
Financing activities On June 22, 2022, Allegion US Holding Company Inc., a wholly-owned subsidiary of the Company ("Allegion US Hold Co"), issued $600.0 million aggregate principal amount of its 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”). The 5.411% Senior Notes require semi-annual interest payments on January 1 and July 1, and mature on July 1, 2032.
On May 29, 2024, Allegion US Holding Company Inc. ("Allegion US Hold Co"), our wholly-owned subsidiary, issued $400.0 million principal amount of 5.600% Senior Notes due 2034 (the “5.600% Senior Notes”). The 5.600% Senior Notes require semi-annual interest payments on May 29 and November 29, and mature on May 29, 2034.
Provision for Income Taxes For the year ended December 31, 2023, our effective tax rate was 12.4%, compared to 10.9% for the year ended December 31, 2022. The increase in the effective tax rate was primarily due to the mix of income earned in higher tax rate jurisdictions, which was partially offset by the favorable resolutions of uncertain tax positions.
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.
In addition, the Credit Agreement requires us to comply with a maximum leverage ratio as defined within the agreement. As of December 31, 2023, our leverage ratio of approximately 2.0 was significantly below the covenant requirement, and we do not anticipate any potential concerns for at least the next 12 months.
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.
Dividends and Share Repurchases 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 during the year ended December 31, 2023.
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.
Productivity represents improvements in unit costs of materials and cost reductions related to improvements to our manufacturing design and processes. Inflation includes unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes.
Productivity represents improvements in unit costs of materials and cost reductions related to improvements to our manufacturing design and processes.
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. 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.
These increases were partially offset by the beneficial impact from current and prior year acquisition and divestiture activity. Inflation in excess of productivity is primarily the result of increases to variable compensation. Volume leverage represents the contribution margin related to changes in sales volume, excluding the impact of price, productivity, mix and inflation.
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.
Investing activities : Net cash used in investing activities for the year ended December 31, 2023, decreased by $865.0 million compared to 2022, primarily due to the Access Technologies acquisition in 2022, which was partially offset by an increase of $20.2 million in capital expenditures compared to 2022 and an increase in other investments by $6.2 million compared to 2022.
Investing activities : Net cash used in investing activities for the year ended December 31, 2024, increased by $99.3 million compared to 2023, primarily due to the acquisition activity in 2024 and a $7.9 million increase in capital expenditures compared to 2023. These increases were partially offset by a decrease in other investments compared to 2023.
The economic 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." 2023 and 2022 Significant Events Acquisition of plano.group ("plano") On January 3, 2023, we acquired plano for a closing purchase price of $36.6 million.
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.
Outstanding borrowings under the 2021 Revolving Facility may be repaid at any time without premium or penalty, and amounts repaid may be reborrowed.
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.
Net revenues from the sale of electronic products increased by a low twenties percent compared to the prior year, driven by improved pricing and higher volumes. Continued strong demand and improvements around the availability of materials and components helped drive the increase in revenues compared to 2022.
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.
These increases were partially offset by unfavorable volume/product mix, unfavorable foreign currency exchange rate movements, a year-over-year increase in restructuring and acquisition costs and impairment charges on intangible assets recorded in the current year. The increase in Operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending.
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.
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 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.
The segment discussions that follow describe the significant factors contributing to the changes in results for each segment included in Net Earnings. Due to a reporting change effective January 1, 2023, results for our Global Portable Security brands (inclusive of the AXA, Kryptonite and Trelock businesses) are now fully reflected within the Allegion International segment.
The segment discussions that follow describe the significant factors contributing to the changes in results for each segment included in Net Earnings.
Our leading brands include CISA, Interflex, LCN, Schlage, SimonsVoss and Von Duprin. Recent Developments Industry Trends and Outlook During 2023, we experienced stable demand for our non-residential products and services in our Allegion Americas segment.
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.
Financing activities : Net cash used in financing activities for the year ended December 31, 2023, changed by $735.7 million compared to 2022. In 2022, we issued $600.0 million of Senior Notes and had net borrowings of $69.0 million on the 2021 Revolving Facility to finance the acquisition of the Access Technologies business.
Financing activities : Net cash used in financing activities for the year ended December 31, 2024, increased by $95.8 million compared to 2023.
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 the Access Technologies acquisition agreement ("Stanley" is the property of Stanley Logistics L.L.C).
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.
We incurred and deferred $5.9 million of discounts and financing costs associated with the 5.411% Senior Notes, which is being amortized to Interest expense over their 10-year term, as well as $4.3 million of third party financing costs that were recorded within Interest expense on the Consolidated Statement of Comprehensive Income for the year ended December 31, 2022.
We incurred and deferred a total of $7.6 million of discounts and financing costs associated with amending and restating our Credit Facilities and issuing our 5.600% Senior Notes, which is being amortized to Interest expense over their respective terms.
We also experienced a continued softening of demand in our Global Portable Security and China businesses in our Allegion International segment. Growth in electronic security products and solutions remained strong throughout 2023 and continues to outperform mechanical products.
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.
Removed
As the year progressed, customers began adjusting ordering patterns in response to our reduced lead times due to improved supply chain and operational execution, which resulted in abnormal seasonality of non-residential revenues in 2023. Macroeconomic conditions had a more challenging impact on the demand for our residential products in our Allegion Americas segment which negatively impacted revenues.
Added
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.
Removed
We expect the security products industry will benefit from favorable long-term demographic trends such as continued urbanization of the global population, increased concerns about safety and security and technology-driven innovation.
Added
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.
Removed
This acquisition was financed through cash on hand and borrowings under the 2021 Revolving Facility. Plano is a SaaS workforce management solution based in Germany, and has been incorporated into our Allegion International segment. Acquisition of the Access Technologies business On July 5, 2022, we completed the acquisition of the Access Technologies business for a purchase price of $915.2 million.
Added
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.
Removed
This acquisition was financed by the net proceeds from the issuance of our 5.411% Senior Notes, together with borrowings under the 2021 Revolving Facility. The Access Technologies business has been integrated into our Allegion Americas segment.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−1 removed6 unchanged
Biggest changeWe 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. We have $18.4 million of letters of credit outstanding and unused availability of $481.6 million under the 2021 Revolving Facility as of December 31, 2023.
Biggest changeAt 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.
A hypothetical increase of 1% in the interest rate on the variable rate borrowings under our 2021 Credit Facilities would increase our interest expense over the next twelve months by $2.2 million based on the balances outstanding for these borrowings as of December 31, 2023.
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.
Based on the firmly committed currency derivative instruments in place at December 31, 2023, 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 $2.9 million.
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.
However, outstanding borrowings under the 2021 Credit Facilities accrue variable rate interest at our option of (i) a BSBY rate 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 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.
If the BSBY or other applicable base rates of the 2021 Credit Facilities increase in the future, our Interest expense could increase. 43 Table of Contents
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
We use fixed price contracts to manage this exposure where appropriate. We do not have committed commodity derivative instruments in place at December 31, 2023. Interest Rate Exposure Of our total outstanding indebtedness of $2.0 billion as of December 31, 2023, 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, 2024, approximately 89% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
Removed
At December 31, 2023, the outstanding borrowings of $225.0 million under the 2021 Credit Facilities accrue interest at BSBY plus a margin of 1.125%, resulting in an interest rate of 6.581%. Applicable variable interest rates increased throughout 2023, resulting in increased Interest expense.
Added
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.
Added
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.

Other ALLE 10-K year-over-year comparisons