UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission File No. 001-35971
ALLEGION PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Ireland
98-1108930
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer
Identification No.)
Unit No. 233
The Capel Building
Mary's Abbey
Dublin 7
Ireland
D07 X324
(Address of principal executive offices)
(Zip Code)
+(353) (1) 6833399
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbols
Name of each exchange on which registered
Ordinary shares, par value $0.01 per share
ALLE
New York Stock Exchange
3.500% Senior Notes due 2029
ALLE 3 ½
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of
the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant
to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of our ordinary shares held by non-affiliates on June 30, 2025 was approximately $12.3 billion
based on the closing price of such shares on the New York Stock Exchange on that date.
The number of ordinary shares outstanding of Allegion plc as of February 12, 2026 was 86,145,484.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission (the "SEC")
within 120 days of the close of the registrant’s fiscal year in connection with the registrant’s 2026 Annual General Meeting of
Shareholders (the "Proxy Statement") are incorporated by reference into Part III of this Form 10-K as described herein.
ALLEGION PLC
Form 10-K
For the Fiscal Year Ended December 31, 2025
TABLE OF CONTENTS
Page
Part I
Item 1.
Business
4
Item 1A.
Risk Factors
12
Item 1B.
Unresolved Staff Comments
23
Item 1C.
Cybersecurity
23
Item 2.
Properties
25
Item 3.
Legal Proceedings
25
Item 4.
Mine Safety Disclosures
25
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
26
Item 6.
[Reserved]
27
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
28
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
38
Item 8.
Financial Statements and Supplementary Data
40
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
40
Item 9A.
Controls and Procedures
40
Item 9B.
Other Information
41
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
41
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
42
Item 11.
Executive Compensation
42
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
42
Item 13.
Certain Relationships and Related Transactions, and Director Independence
42
Item 14.
Principal Accountant Fees and Services
42
Part IV
Item 15.
Exhibits and Financial Statement Schedules
43
Item 16.
Form 10-K Summary
47
Signatures
47
2
CAUTIONARY STATEMENT FOR FORWARD LOOKING STATEMENTS
Certain statements in this report, other than purely historical information, are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements generally are identified
by the words "believe," "aim," "projected," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "scheduled,"
"targets," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely
result," or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking
statements.
These statements are based on currently available information and our current assumptions, expectations and projections about
future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently
available information, you are cautioned not to place undue reliance on our forward-looking statements. Forward-looking
statements speak only as of the date they are made and are not guarantees of future performance. They are subject to future
events, risks and uncertainties – many of which are beyond our control – as well as potentially inaccurate assumptions, that
could cause actual results to differ materially from our expectations and projections including, among other things:
•
global macroeconomic factors;
•
increased prices and inflationary pressures;
•
volatility and uncertainty in the political, economic and regulatory environments in which we operate, including new
or increased tariffs, changes to trade agreements, sanctions, import and export regulations, custom duties and
applicable tax regulations and interpretations, social and political unrest, instability, national and international conflict,
terrorist acts and other geographical disputes and uncertainties;
•
the strength and stability of the institutional, commercial and residential construction and remodeling markets;
•
fluctuations in currency exchange rates;
•
potential impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets;
•
instability in the U.S. and global capital and credit markets;
•
our ability to make scheduled debt payments or to refinance our debt obligations;
•
increased competition, including from technological developments;
•
the development, commercialization and acceptance of new products and services;
•
changes in customer and consumer preferences and our ability to maintain beneficial relationships with large
customers;
•
our products or solutions failing to meet certification and specification requirements, being defective, causing property
damage, bodily harm or injury, or otherwise falling short of customers’ needs and expectations;
•
our ability to identify and successfully complete and integrate acquisitions, including achieving their anticipated
strategic and financial benefits;
•
business opportunities that diverge from our core business;
•
our ability to achieve the expected improvements or financial returns we expect from our strategic initiatives;
•
our ability to effectively manage and implement restructuring initiatives or other organizational changes;
•
global climate change or other unexpected events, including global health crises;
•
the proper functioning of our information technology and operational technology systems, including disruption or
breaches of our information systems, such as cybersecurity attacks;
•
the failure of our third-party vendors to provide effective support for many of the critical elements of our global
information and operational technology infrastructure;
•
our ability to recruit and retain a highly qualified and diverse workforce;
•
disruptions in our global supply chain, including product manufacturing and logistical services provided by our
supplier partners;
•
our ability to effectively manage real or perceived issues related to product quality, safety, corporate social
responsibility and other reputational matters;
3
•
our ability to protect our brand reputation and trademarks;
•
legal judgments, fines, penalties or settlements imposed against us or our assets as a result of legal proceedings, claims
and disputes;
•
claims of infringement of intellectual property rights by third parties;
•
improper conduct by any of our employees, agents or business partners;
•
changes to, or changes in interpretations of, current laws and regulations;
•
uncertainty and inherent subjectivity related to transfer pricing regulations in the countries in which we operate;
•
changes in tax rates, the adoption of new tax legislation or exposure to additional tax liabilities; and
•
risks related to our incorporation in Ireland, including the possible effects on us of future legislation or adverse
determinations by taxing authorities that could increase our tax burden.
These events, risks and uncertainties are further described in Item 1A. "Risk Factors" and Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations" of this report. We do not undertake to update any forward-
looking statements, except as required by law.
4
PART I
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. Both developing and partnering are central to our work to create ecosystems that enable
seamless access experiences and an uninterrupted and secure flow of people and assets. We offer an extensive and versatile
portfolio of security and access control products and solutions across a range of market-leading brands. Our experts around the
world deliver high-quality hardware, software, services and systems, and we use our deep expertise to serve as trusted partners
to end-users who seek customized solutions to their security needs.
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. Exit devices, also known as panic hardware, provide
rapid egress to allow building occupants to exit safely in an emergency. Door controls and systems include mechanical
door closers, automatic door operators, as well as high-performance interior and storefront door systems. In addition,
we offer a full range of automatic entrance solutions, including sliding, swing, folding and ICU doors, as well as an
array of sensors, controls and security options for commercial and institutional buildings. Sold under leading brands
like Briton®, CISA®, LCN®, STANLEY® Access Technologies ("Stanley Access Technologies" or "Stanley";
"STANLEY" is the property of Stanley Logistics L.L.C.) and Von Duprin®;
• Doors, glass and door systems, and accessories: A portfolio of hollow metal doors and frames, glass and specialty door
systems, as well as a variety of additional security products and components, including hinges, door pulls, door stops,
louvers, weather stripping, thresholds and other accessories. Sold under leading brands like Falcon®, Glynn-Johnson®,
Ives®, Republic™, Steelcraft®, TGP® and Trimco®;
• Electronic security products and access control systems, including time, attendance and workforce productivity: A broad
range of electronic locks, electronic door closers and exit devices, access control products and systems, credentials and
credential readers and accessories, including Bluetooth Low Energy, Power over Ethernet and cloud-based solutions,
including products designed to help business customers manage and monitor workforce access, attendance and
employee scheduling. Sold under leading brands like Bricard®, CISA, ELATEC®, Interflex®, LCN, Schlage®,
SimonsVoss® and Von Duprin;
• Locks, locksets, portable locks, and key systems: A broad array of cylindrical, tubular and mortice door locksets, security
levers and master key systems that are used to protect and control access and a range of portable security products,
including bicycle, small vehicle and travel locks. Sold under leading brands like Bricard, AXA, CISA, Falcon,
Gainsborough®, Schlage and SimonsVoss; and
• Services and software: Our Stanley Access Technologies business offers extensive planned inspection, maintenance and
repair services for its automatic entrance solutions throughout the U.S. and Canada. We offer ongoing aftermarket
services and design and installation offerings in select locations. Additionally, we offer software as a service ("SaaS")
offerings throughout the U.S. and internationally, including access control, platform integration and workforce
management solutions through brands like Interflex, Yonomi® and Zentra® among others.
Security and access control products and solutions are critical elements in every building and home. Many door openings are
configured to maximize a room’s particular form and function while also meeting local and national building and safety code
requirements and end-user security needs. Most buildings have multiple door openings, each serving its own purpose and
requiring different specific access control solutions. Each door must fit exactly within its frame, be prepared precisely for its
hinges, synchronize with its specific lockset and corresponding latch and align with a specific key to secure the door. 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.
We believe our ability to deliver a wide range of solutions that can be custom configured to meet end-users’ security needs is a
key driver of our success. We accomplish this with:
•
Our innovative, market-leading brands, many of which are known as pioneers in safety and / or invented their product
categories, including: CISA, Interflex, LCN, Schlage, SimonsVoss and Von Duprin;
•
Our extensive and versatile product and service portfolio, combined with our deep expertise, which enable us to
deliver the right products and solutions to meet diverse security and functional specifications and to successfully and
securely integrate into leading technologies and systems;
•
Our consultative approach and expertise, which enable us to develop the most efficient and appropriate building
security and access control specifications to fulfill the unique needs of our end-users and their partners, including
architects, designers, security consultants, contractors, homebuilders and engineers;
5
•
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 believe the security products industry will continue to benefit from several global macroeconomic trends, including:
•
Expected growth in global electronic and electromechanical products and solutions as end-users adopt newer
technologies in their facilities and homes;
•
Heightened awareness of security and privacy requirements;
•
Increased focus and adoption of mobile technology; and
•
The shift to digital, interconnected and increasingly interoperable environments that require a strong ecosystem of
partners.
We sell a wide range of security and access control solutions for end-users in commercial, institutional and residential facilities
worldwide, including education, healthcare, government, hospitality, retail, commercial office and single and multi-family
residential markets. Our portfolio spans more than 40 brands, including brands like CISA, Interflex, LCN, Schlage,
SimonsVoss, and Von Duprin.
During the year ended December 31, 2025, we generated Net revenues of $4,067.3 million and Operating income of $859.5
million. The following table presents percentage of Net revenues by category.
History and Developments
We were incorporated in Ireland on May 9, 2013, to hold the commercial and residential security businesses of what was then
Ingersoll Rand plc ("Ingersoll Rand"). On December 1, 2013, we became a stand-alone public company after Ingersoll Rand
completed the separation of these businesses from the rest of Ingersoll Rand via the transfer of these businesses from Ingersoll
Rand to us and the issuance by us of ordinary shares directly to Ingersoll Rand’s shareholders. Our security businesses have
long and distinguished operating histories. 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;
6
•
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 have built upon these founding legacies since our entry into the security products market through the acquisition of Schlage,
Von Duprin and LCN. Today, we continue to develop, acquire and introduce innovative products.
In 2018, we announced the formation of Allegion Ventures to invest in and help accelerate the growth of companies that have
innovative, digital-first technologies and products such as touchless access and workspace monitoring solutions that
complement our core business solutions. 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.
Recent examples of successful product launches by Allegion are illustrated in the table below:
Products and
Services
Brands
Year
Innovation
Door controls,
door control
systems, and
exit devices
CISA,
LCN,
Stanley
Access
Technologies,
Von Duprin,
2024/2025
CISA Multitop Matic Exit, a secondary lock for single and double leaf
aluminum and iron panic doors, brings to market the only "Made in Italy"
counter-lock featuring a long faceplate.
LCN Senior Swing 9500IQ/2800, self-adjusted auto operator, is a fully
loaded controller with innovative AdaptivIQ™ technology, minimizing
seasonal adjustments and reducing nuisance calls.
Stanley Access Technologies new automatic door/window solution for
increased efficiencies for drive-through restaurants (DuraGlide DT).
Telescopic manual and automatic version of ICU doors, providing the
biggest clear door opening in the industry, proprietary handle design and the
slimmest header (ProCare 8500). More energy-efficient and robust
hurricane-rated sliding doors (DuraStorm Class E).
Von Duprin 70 series delivering both performance and value at a medium
price point for heavy duty warehouse, industrial, office, multifamily, retail
and hospitality applications.
Von Duprin Outdoor Defense for 98/99 exit devices protects device
functionality in outdoor applications, as it’s engineered to safeguard against
moisture, temperature variations and corrosion in normal outdoor
conditions.
Doors, glass
and door
systems, and
accessories
Unicel
2024/2025
UL Certification of American Architectural Manufacturers Association
(AAMA) 501.8 human impact resistant curtain wall using durable
SentryGlas Plus laminated glass (Unicel).
7
Products and
Services
Brands
Year
Innovation
Electronic
security
products and
access control
systems,
including time,
attendance, and
workforce
productivity
Brisant,
ELATEC,
Schlage,
SimonsVoss
2024/2025
Brisant Ultion Nuki 2025 features built-in WiFi, enhanced motor
performance, Matter compatibility ensuring it can work with home
platforms including Apple Home, Google Home, Amazon Alexa and
Samsung SmartThings.
ELATEC software development toolkit, TWN4 DevPack 5.07, delivers
faster performance, stronger security and greater flexibility for configuring
and managing RFID readers.
Schlage launched Resident Key mobile credential for multifamily properties
through internal (Zentra) and external technology alliances. Achieved first-
to-market with the credential in Apple Wallet® and among the first in
Google Wallet™, both supporting unique No-Tour system.
Schlage XE360 series electronic lock is the next generation wireless lock
from Schlage, designed specifically for multifamily properties. It delivers
innovation, intelligence and reliability for a variety of lock applications
(mortice, tubular and exit device). The XE360 ecosystem broadened with
more than seven integrations, including Zentra.
Schlage Arrive™ Smart WiFi Deadbolt, Schlage’s first push-button keypad
deadbolt equipped with built-in WiFi, integrating with existing smart home
technology.
Schlage, in collaboration with Airbnb, was the first to launch the “airkey”
integration, connecting Schlage smart locks and Airbnb accounts for easy
guest check-ins.
SimonsVoss FortLox, a battery-less electronic cylinder, offering customers
the high-quality and ease of use without the need for a battery.
Locks, locksets,
portable locks,
and key systems
Bricard,
Schlage
2024/2025
Bricard Bi-Pass key is equipped with an integrated RFID tag, enabling
seamless operation of both mechanical and electronic access control
devices.
Schlage indication series includes various security devices designed for
public buildings and facilities. The security indicators provide at-a-glance
verification of the door’s status (LOCKED / UNLOCKED) from inside a
room.
Schlage Performance Series are medium-price-point mortise, cylindrical,
and tubular locks built to balance style, security, and simplicity for
commercial real estate and multifamily projects.
Schlage Advanced Rekey™ is a rekeying solution for key management to
rekey locks without removing them from the door.
8
Products and
Services
Brands
Year
Innovation
Services and
software
Interflex,
Overtur,
SimonsVoss
2024/2025
Interflex Software System IF-6040 enhancements enable remote firmware
updates for its IF-8xx series readers via the ITS-phyCORE controller,
including improved visitor management.
Overtur for Revit 5.1 is the ultimate tool for door hardware coordination,
with faster exports, improved workflows and non-modal functionality.
Overtur Key System Management, a cloud-based subscription solution,
offers authorized users a simpler way to view, manage, track and update a
building’s key system, regardless of complexity.
SimonsVoss AXM Plus Software, first on-premise software variant with an
optional cloud connection, to give customers the opportunity to deploy
mobile credentials in a virtual networked environment.
9
Industry and Competition
We serve customers within institutional, commercial and residential construction and remodeling markets throughout North
America, Europe, Asia and Oceania. 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. 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. This high degree of fragmentation primarily reflects
local regulatory requirements and highly variable end-user needs. We believe our principal global competitors are Assa Abloy
AB and dormakaba Group. We also face competition in various markets and product categories throughout the world, including
Fortune Brands Innovations, Inc. in the North American residential market and from private label brands. 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. 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.
Customers
We sell most of our products and solutions through distribution and retail channels, including specialty distribution, e-
commerce and wholesalers. We have built a network of channel partners that help our customers choose the right solution to
meet their security needs and help commercial and institutional end-users fulfill and install orders. We also sell through a
variety of retail channels, including large do-it-yourself home improvement centers, multiple online and e-commerce platforms,
as well as small, specialty showroom outlets. We work with our retail partners on developing marketing and merchandising
strategies to maximize their sales per square foot of shelf space. Through a few of our businesses, most notably Stanley Access
Technologies, Interflex and our Global Portable Security brands, we also provide products and services directly to end-users.
Our 10 largest customers represented approximately 26% of our total Net revenues in 2025. No single customer represented
10% or more of our total Net revenues in 2025.
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. Our field sales professionals are
assisted by specification writers who work with architects, engineers and consultants to help design door openings and security
systems to meet end-users’ functional, aesthetic and regulatory requirements. Both groups are supported by dedicated customer
care and technical sales support specialists worldwide. We also support our sales efforts with a variety of marketing efforts,
including trade-specific advertising, cooperative distributor merchandising, digital marketing and marketing at a variety of
industry trade shows.
In markets where we sell through retail and homebuilder distribution channels, we have teams of sales, merchandising and
marketing professionals who help drive brand and product awareness through our channel partners and to consumers. We utilize
a variety of advertising and marketing strategies, including traditional consumer media, retail merchandising, digital marketing,
retail promotions and builder and consumer trade shows, to support these teams.
We also work actively with several industry bodies around the world to help promote effective and consistent safety and
security open platform standards. For example, we are members of the American Association of Automatic Door Manufacturers
(AAADM), American Institute of Architects (AIA), Builders Hardware Manufacturers Association (BHMA), Connectivity
Standards Alliance (CSA), Door Security and Safety Foundation (DSSF), Construction Specification Institute, Door and
Hardware Institute (DHI), FiRa Consortium, National Association of State Fire Marshals (NASFM), Partner Alliance for Safer
Schools (PASS), Physical Security Interoperability Alliance (PSIA), Security Industry Association (SIA), Security Technology
Alliance, Z-Wave Alliance, The European Federation of Associations of Locks and Builders Hardware Manufacturers (ARGE),
ASSOFERMA (Italy), BHE (Germany), Door Hardware Federation (UK), Open Security Standards Association (Germany) and
UNIQ (France).
Production and Distribution
We manufacture products in several geographic markets around the world. We operate 37 principal production and assembly
facilities – 22 in our Allegion Americas segment and 15 in our Allegion International segment. Our strategy is to produce in the
region of use, wherever appropriate, to allow us to be closer to the end-user and increase efficiency and timely product delivery.
Much of our U.S. based residential portfolio is manufactured in the Baja region of Mexico under the Maquiladora,
10
Manufacturing and Export Services Industry ("IMMEX") program. In managing our network of production and assembly
facilities, we focus on continuous improvement in customer experience, employee health and safety, productivity, resource
utilization and operational excellence.
We distribute our products through a broad network of channel partners. In addition, third-party manufacturing and logistics
providers perform certain manufacturing, storage and distribution services for us to support certain parts of our manufacturing
and distribution network.
Raw Materials
We continue to support our region-of-use production strategy with corresponding region-of-use supplier partners for much of
our supply base. Our global and regional commodity teams work with production leadership, product management and
materials management teams to source materials for production. Where appropriate, we may enter fixed-cost contracts to lower
overall costs.
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 create, protect and enforce our intellectual property investments in a variety of ways. We work
actively in the U.S. and internationally to help ensure the protection and enforcement of our intellectual property rights. We use
trademarks on nearly all our products and believe such distinctive marks are an important factor in creating a market for our
goods, in identifying us and in distinguishing our products from others. We consider our CISA, Interflex, LCN, Schlage,
SimonsVoss, Von Duprin and other associated trademarks to be among our most valuable assets, and we have registered these
trademarks in a number of countries. Although certain proprietary intellectual property rights are important to our success, we
do not believe we are materially dependent on any particular patent or license, or any particular group of patents or licenses.
Research and Development
Our research and development ("R&D") efforts focus on advancing innovative products and solutions designed to drive growth
and enhance competitiveness. Key areas of emphasis include the development of new product platforms as well as initiatives
aimed at improving product cost efficiency, quality, safety and sustainability.
R&D resources are managed globally to leverage technologies and product platforms across our business units, while
optimizing development costs and resource utilization. Regional teams apply their expertise in local standards and
configurations to adapt products to specific market requirements, thereby enhancing customer value. Additionally, we operate a
global technology center in Bengaluru, India, which provides engineering support and augments the capabilities of our regional
R&D teams.
Seasonality
Our business experiences seasonality that varies by product and service line. For instance, as more construction and do-it-
yourself projects occur during the second and third calendar quarters in the Northern Hemisphere, our security product sales
related to those projects are typically higher in those quarters than in the first and fourth quarters. However, certain other
businesses typically experience higher sales in the fourth quarter, due to demand for services and project timing.
Human Capital
Our human capital strategy is based on our values and is foundational to achieving our business strategy. Our workplace culture
is based on practices that reward performance, provide growth and development opportunities, and support employees with
competitive compensation and benefits packages. As a testament to this, Allegion received the Gallup Exceptional Workplace
Award in both 2024 and 2025. This award recognizes the most engaged workplace cultures in the world.
As of December 31, 2025, we had approximately 13,300 employees worldwide. Our employee base is supplemented by
contingent labor where business demand fluctuates or we experience short-term needs for specialized skills. Approximately
45% of employees are employed within the U.S. and approximately 55% based outside the U.S. Among our U.S. based
employees, approximately 16% were subject to collective bargaining agreements with various labor unions. Outside the U.S.,
we have employees in certain countries, particularly in Europe, that are represented by an employee representative organization,
such as a works council. We believe our relations with our workforce in both unionized and non-unionized settings are
generally positive.
Talent Attraction and Retention
Our employer brand creates a differentiated employee experience intended to attract and retain the right talent for Allegion. Our
talent attraction efforts are focused on and highlight a culture that reflects our core values, Allegion leadership behaviors and
business objectives.
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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. We use a variety of recruitment tactics to help ensure a strong base of
labor for manufacturing operations and to build the base of talent with these capabilities. Throughout the recruitment cycle, we
provide a technology-enabled seamless experience for internal and external candidates and hiring managers. Our compensation
and benefit programs are designed to be competitive in the geographies where we work, including a total rewards package
(which varies by country/region) that includes hourly and salaried compensation, performance-based incentive and long-term
equity incentive plans, retirement, insurance and government social welfare programs, disability and family leave, health and
wellness programs, education benefits to pursue degrees and certifications and additional offerings to support financial stability
and personal planning.
Talent Development and Succession Planning
Talent development and succession planning are key components of the Allegion Operating System, which supports
governance, reporting processes and management of the business. Our performance management system includes annual
performance reviews for all permanent salaried employees. Talent development and succession planning takes place at all levels
of the organization and is supported through individual career mapping, assessment of performance and talent pipeline planning
up to and including the executive leadership team ("ELT"). As part of their quarterly business review, the ELT reviews talent
development, focusing on developing a diverse succession pipeline. 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. 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. 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. Strengths-based leadership is an element of our commitment to
inclusion: the more employees understand their own strengths, the better equipped they are to add value and appreciate the
contributions of team members.
We believe in fundamental standards that support our employees, while building and maintaining diverse and inclusive
workplaces. Employee-led resource and affinity groups provide opportunities for a variety of members of our workforce.
Employee Health and Safety
Employee health and safety are top priorities and integral to the Company's growth strategy. ‘Be safe, be healthy’ is a core
organizational value in our proactive safety culture.
The ELT, with oversight from our Board of Directors, is responsible for risk management, employee accountability, safety
hazard recognition and executing safety initiatives. We monitor leading and lagging indicators related to health and safety as
part of our ongoing management of the Allegion Operating System and we regularly update the Corporate Governance and
Nominating Committee of the Board of Directors on key developments and employee health and safety topics.
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 are committed to conducting business in a safe, environmentally
responsible and sustainable manner, in compliance with all applicable EHS laws and regulations, as well as some applicable
voluntary programs and collective agreements. We continuously work to promote and protect the health and safety of the
environment, employees, customers, contractors and members of our local communities worldwide. We operate with principles
and practices that support our commitments. These include:
•
Integrating sound EHS and sustainability strategies in all elements of our business, we set quantitative metrics and
targets to provide clear accountability and to monitor and measure improvement in EHS performance;
•
Conducting periodic, formal evaluations and audits of our compliance status, while also routinely reviewing our
objectives and metrics;
•
Fostering a workplace culture where everyone at Allegion is responsible for safety:
•
Implementing measures to enhance internal and external stakeholder awareness of our environmental management
policy and its impacts;
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•
Establishing prioritization and action plans to continuously improve our EHS and sustainability management systems
and performance; this includes reduction in use of natural resources, minimization of waste and prevention of
pollution, as well as prevention and elimination of workplace accidents, injuries and risks;
•
Designing, operating and maintaining our facilities in a manner that minimizes negative EHS and sustainability
impacts;
•
Using materials responsibly, including, where feasible, the recycling and reuse of materials; and
•
Acting in a way that shows sensitivity to community concerns about EHS and sustainability issues.
We recognize these principles are critical to our future success. We are currently engaged in site investigations and remediation
activities to address environmental cleanup from past operations at current and former production facilities. We also regularly
evaluate our remediation methods that are in addition to, or in replacement of, those we currently utilize based upon enhanced
technology and regulatory changes. 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 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.
In estimating our liability, we have assumed that we will not bear the entire cost of remediation of any site to the exclusion of
other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based
on our understanding of the parties’ financial condition and probable contributions on a per site basis. Additional lawsuits and
claims involving environmental matters are likely to arise from time to time in the future. For a further discussion of our
potential environmental liabilities, see Notes 2 and 19 to the Consolidated Financial Statements.
Environmental, social and governance ("ESG") factors important to our business are embedded into our values and our
leadership's commitment to create a workplace culture grounded in doing the right thing in the right way. Our Board of
Directors oversees the Company's ESG strategies, goals and performance, and both our leadership and employees all have a
responsibility to uphold excellence, as we believe our commitment to ESG matters helps advance engagement and business
vitality. Additional information about our ESG priorities and progress may be found in the ESG section of our website (found
under the ESG tab at www.allegion.com). The website highlights our ongoing progress and advancements in ESG matters.
Available Information
We are required to file annual, quarterly and current reports, proxy statements and other documents with the SEC under the
Exchange Act. The SEC maintains an Internet website that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. The public can obtain any documents that are filed by us at
www.sec.gov.
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.
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.
Item 1A. RISK FACTORS
We are subject to future events, risks and uncertainties – many of which are beyond our control – that could materially and
adversely affect our business, financial condition, results of operations and cash flows. You should carefully consider the risk
factors discussed below, together with all the other information included in this Form 10-K, in evaluating us and our securities.
If any of the events, risks or uncertainties below actually occurs, our business, financial condition, results of operations and
cash flows could be materially and adversely affected. Any such adverse effect may cause the trading price of our securities to
decline, and as a result, you could lose all or part of your investment in us. Our business, financial condition, results of
operations and cash flows may also be materially and adversely affected by events, risks and uncertainties not known to us or
events, risks and uncertainties that we currently believe to be immaterial.
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.
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. As a result, weakness or instability in one or more of these markets could
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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. 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. 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.
Increased prices, whether due to inflationary pressures or other factors, could negatively impact our margin performance
and our financial results.
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. We do not currently use financial derivatives to hedge
against volatility in commodity prices; however, we utilize firm purchase commitments, where possible, to help mitigate risk.
The pricing of some materials, parts and components we use is based on market prices. 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.
Additionally, we are exposed to fluctuations in other costs such as packaging, freight, labor and energy prices. 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.
Our global operations subject us to political, economic and regulatory risks, including uncertainty related to the imposition
of new or increased tariffs and the global trade environment more generally.
Our businesses operate around the world in various geographic regions and product markets. Additionally, we procure various
products, parts, components and services from supplier partners located throughout the world. Our global operations depend on
products manufactured, purchased and sold in the U.S. and internationally, including in Australia, Canada, China, Europe,
Mexico, New Zealand and the Middle East. The political, economic and regulatory environments in which we operate are
becoming increasingly volatile and uncertain. Accordingly, we are subject to multiple risks that are inherent in operating and
sourcing globally, including:
•
Changes to trade agreements, foreign trade policies, sanctions, import and export regulations, including the imposition
or threatened imposition of new or increased tariffs, quotas, customs duties and similar restrictions, as well as
retaliatory actions that may be imposed by other governments in response to such tariffs or other trade restrictions;
•
Changes in applicable tax regulations and interpretations;
•
Economic downturns;
•
Social and political unrest, instability, national and international conflict, including the conflicts in the Middle East and
the war between Russia and Ukraine, border closures, civil disturbances, terrorist acts and other geographical disputes
and uncertainties;
•
Government measures to restrict business activity, for example, to prevent the spread of a communicable disease;
•
Changes in laws and regulations or imposition of currency restrictions and other restraints in various jurisdictions;
•
Limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to
repatriate earnings;
•
Sovereign debt crises and currency instability in developed and developing countries;
•
Difficulty in staffing and managing global operations;
•
Difficulty in enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems; and
•
Difficulty in transporting materials, components and products.
These risks have increased our cost of doing business in the U.S. and internationally. These risks may also increase our
counterparty risk, disrupt our operations, disrupt the ability of suppliers and customers to fulfill their obligations, increase our
effective tax rate, increase the cost of our products, limit our ability to sell products and services in certain markets, reduce our
operating margin and cash flows and/or negatively impact our ability to compete.
Throughout 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture and/or
import products and components. In 2025, we have offset inflation due to tariffs with pricing actions. We estimate we source
approximately 20-25% of Cost of goods sold from Mexico and less than 5% of Cost of goods sold from China. The degree to
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which any new or increased tariffs would impact our business and results of operations is largely dependent on factors outside
of our control, including the timing, duration and magnitude of their implementation, and responses or retaliatory actions taken
by other countries or regions. 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.
Currency exchange rate fluctuations have had, and may continue to have, an adverse effect on our business, financial
condition, results of operations and cash flows.
We are exposed to a variety of market risks, including the effects of changes in currency exchange rates. See "Part II, Item 7A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative
Disclosures About Market Risk."
Approximately 25% of our 2025 Net revenues were derived outside the U.S., and we expect sales to non-U.S. customers to
continue to represent a significant portion of our consolidated Net revenues. Although we may enter into currency exchange
contracts to reduce our risk related to currency exchange fluctuations, changes in the relative fair values of currencies occur
from time to time and in some instances have had a significant impact on our results of operations. We do not hedge against all
our currency exposure, and therefore, our results of operations will continue to be susceptible to impacts from currency
fluctuations.
We also translate assets, liabilities, revenues and expenses denominated in non-U.S. dollar currencies into U.S. dollars for our
Consolidated Financial Statements based on applicable exchange rates. Consequently, fluctuations in the value of the U.S.
dollar compared to other currencies may have a material impact on the value of these items in our Consolidated Financial
Statements, even if their value has not changed in their original currency. Further, certain of our businesses may invoice
customers in a currency other than its functional currency, or may be invoiced by suppliers in a currency other than its
functional currency, which could result in unfavorable translation effects on these businesses and our results of operations.
We may be required to recognize impairment charges for our goodwill, indefinite-lived intangible assets and other long-lived
assets.
At December 31, 2025, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately
$1.9 billion and $107.2 million, respectively. Pursuant to U.S. generally accepted accounting principles ("GAAP"), we are
required to annually assess our goodwill and indefinite-lived intangible assets for impairment. In addition, interim assessments
must be performed for these and other long-lived assets whenever events or changes in circumstances indicate that an
impairment may have occurred. Significant disruptions to our business or end market conditions, protracted economic weakness
(including a potential economic downturn or recession), unexpected significant declines in operating results of reporting units,
divestitures or market capitalization declines may result in recognition of impairment charges to our goodwill, indefinite-lived
intangible or other long-lived assets. 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.
Future instability in U.S. and global capital and credit markets, including market disruptions, limited liquidity and interest rate
volatility or reductions in the credit ratings assigned to us by independent ratings agencies, could reduce our access to capital
markets, increase our costs of borrowing or adversely impact our ability to obtain favorable financing terms in the future. 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. Limitations on the ability of customers,
suppliers or financial counterparties to access credit could lead to insolvencies of key suppliers and customers, limit or prevent
customers from obtaining credit to finance purchases of our products and services, delay institutional, commercial and/or
residential construction and remodeling projects and cause delays in the delivery of key products from suppliers.
There are risks associated with our outstanding and future indebtedness.
We had approximately $2.0 billion of outstanding indebtedness at December 31, 2025. We have a senior unsecured revolving
credit facility (the "Revolving Facility") that permits borrowings of up to $1.0 billion. A portion of our cash flows from
operations is dedicated to servicing our indebtedness and will not be available for other purposes, including our operations,
capital expenditures, payment of dividends, share repurchases or future business opportunities or other strategic investments.
At December 31, 2025, we had $190.6 million outstanding on the Revolving Facility, which exposes us to variable interest rate
risk. We are also exposed to the risk of continued rising interest rates to the extent we fund our short or long-term financing
needs with variable-rate borrowings under the Revolving Facility. If variable base rates under the Revolving Facility increase in
the future, our Interest expense could increase as well. For more details about our interest rate exposure under the Revolving
Facility, please see Part II. Item 7A.
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Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating
performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other
factors beyond our control, such as the credit ratings assigned to us by independent ratings agencies or our ability to access
capital markets on acceptable terms. If our cash flows and capital resources are insufficient to fund our debt service obligations,
we may be forced to reduce or delay capital expenditures, reduce or eliminate the payment of dividends, sell assets, seek
additional capital or seek to restructure or refinance our indebtedness. These alternative measures may not be successful and
may not permit us to meet our scheduled debt service obligations. In such event, we could face substantial liquidity problems
and might be required to sell material assets or operations to attempt to meet our debt service and other obligations. If we are
not able to maintain compliance with stated financial covenants or if we breach other covenants in any debt agreement, we
could be in default under such agreement or trigger a cross-default of other debt instruments. Such a default would adversely
affect our credit ratings, may allow our creditors to accelerate the related indebtedness, and may result in the acceleration of any
other indebtedness to which a cross-acceleration or cross-default provision applies.
Strategic and Operational Risks
Increased competition, including from technological developments, could adversely affect our business.
The markets in which we operate include a large number of participants, including multi-national, regional and small, local
companies. We primarily compete on the basis of quality, innovation, expertise, effective channels to market, breadth of product
offering and price. We may be unable to effectively compete on all these bases. Further, in a number of our product offerings,
we compete with our retail customers and technology partners who use their own private labels. If we are unable to anticipate
evolving trends in the market or the timing and scale of our competitors’ activities and initiatives, including increased
competition from private label brands, the demand for our products and services could be negatively impacted.
In addition, we compete in an industry that is experiencing the convergence of mechanical, electronic and digital products.
Technology and innovation play significant roles in the competitive landscape. Our success depends, in part, upon the research,
development and implementation of new technologies and products including obtaining, maintaining and enforcing necessary
intellectual property protections. Securing and maintaining key partnerships and alliances, recruiting and retaining highly
skilled and qualified employee talent and having access to technologies, services, intellectual property and solutions developed
by others will play a significant role in our ability to effectively compete. The continual development of new technologies, such
as artificial intelligence and machine learning, by existing and new competitors, including non-traditional competitors with
significant resources, could adversely affect our ability to sustain operating margins and desirable levels of sales volumes. To
remain competitive, we must develop new products and service offerings and respond to new technologies in a timely manner.
Our growth is dependent, in part, on the development, commercialization and acceptance of new products and services.
We must develop and commercialize new products and services that meet the varied and evolving needs of our customers and
end-users in order to remain competitive in our current and future markets and in order to continue to grow our business. End-
users are continually adopting more advanced technologies in their facilities and homes, accelerated by the increasing adoption
of IoT technologies and connected devices, which will require us to devote significant effort and resources to the development,
maintenance and enhancement of our IT Systems (as defined below) and other infrastructure required to support and/or enhance
the functionality of our electronic products and solutions. The speed of development by our competitors and new market
entrants is increasing. We cannot provide any assurance that any new product or service will be successfully commercialized in
a timely manner, if ever, or, if commercialized, will result in returns greater than our investment. Investment in a product or
service could divert our attention and resources from other projects that become more commercially viable in the market. We
also cannot provide any assurance that any new product or service will be accepted by the market.
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. The loss or material reduction of business, either due to a reduction in demand
from one or more of our significant customers, or our inability to timely meet any elevated level of customer demand for
various reasons, the lack of success of sales initiatives or changes in customer preferences or loyalties for our products related
to any such significant customer could have a material adverse impact on our business. In addition, major customers who are
volume purchasers are much larger than us and have strong bargaining power with their suppliers. This limits our ability to
recover cost increases through higher selling prices. Furthermore, unanticipated inventory adjustments by these customers can
have a negative impact on sales.
We also sell our products through various trade channels, including traditional retail and e-commerce channels. If we or our
major customers are not successful in navigating the shifting consumer preferences to distribution channels such as e-
commerce, our expected future revenues may be negatively impacted.
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If our products or solutions fail to meet certification and specification requirements, are defective, cause, or are alleged to
have caused, bodily harm or injury, or otherwise fall short of end-users' needs and expectations, our business may be
negatively impacted.
The security and access control product markets we serve often have unique certification and specification requirements,
reflecting local regulatory requirements and highly variable end-user needs. While we strive to meet all certification and
specification requirements, if any of our products or solutions do not meet such requirements, or contain, or are perceived to
contain, defects or otherwise fall short of end-users' needs and expectations, fail to perform as intended, or are otherwise
alleged to result in property damage, bodily injury and/or death we may become subject to personal injury lawsuits and/or
product liability claims, and if found liable, may incur significant costs, which could negatively impact our business, results of
operations or financial condition.
Additionally, electronic security products and solutions are increasingly more sophisticated and technologically complex than
the mechanical security products we sell and have an increased risk of design, cybersecurity or manufacturing defects, which
could lead to recalls, product replacements or modifications, write-offs of inventory or other assets and significant warranty and
other expenses. Product quality issues could also adversely affect the end-user experience, resulting in reputational harm, loss
of competitive advantage, poor market acceptance, reduced demand for products and solutions, delay in new product and
service introductions and lost sales. Further, adverse publicity, whether or not justified, or allegations of product or service
quality issues, even if false or unfounded, could damage our reputation and negatively affect our sales.
Our business and innovation strategies include making acquisitions of, and investments in, external companies. These
acquisitions and investments could be unsuccessful, consume significant resources or increase our exposure to
cybersecurity, data privacy or other regulatory risks, which could adversely affect our business, financial condition, results
of operations and cash flows.
Our long-term growth strategies include the acquisition of businesses or product lines to strengthen our industry position,
enhance our existing set of products and services offerings or expand into adjacent markets. However, we cannot provide
assurance that we will identify or successfully complete acquisitions with suitable candidates in the future, nor can we provide
assurance that completed or future acquisitions will be successful or otherwise achieve the anticipated strategic and financial
benefits, including cost and revenue synergies.
Acquisitions often place significant demands on management, operational and financial resources, which could decrease
management’s capacity to focus on other important business strategies or divert resources from other parts of our business.
Further, the success of future or completed acquisitions will depend, in large part, on the successful integration of operations,
sales and marketing, information technology, finance and administrative operations. We cannot provide assurance that we will
be able to successfully integrate these new businesses. Additionally, the financing of future business acquisitions may increase
our leverage, impact our credit rating and/or diminish our financial position and ability to re-invest in our existing businesses.
Future acquisitions may also be dependent on our ability to access the capital and credit markets to obtain new debt or equity
financing to fund the purchase price on terms that are acceptable to us.
Some of the businesses we may seek to acquire may be marginally profitable or unprofitable. For these businesses to achieve
acceptable levels of profitability, we may need to improve their management, operations, products and market penetration or
incur significant capital expenditures. We may not be successful in this regard, the costs of doing so may exceed our original
estimates or we may encounter other potential difficulties.
Acquisitions also involve numerous other risks, including:
•
Difficulties in obtaining and verifying the financial statements and other business information of acquired businesses;
•
Our ability to raise capital on reasonable terms to finance attractive acquisitions;
•
Inability to obtain regulatory approvals and/or required financing on favorable terms;
•
Potential loss of key employees, key contractual relationships or key customers of acquired companies or of us;
•
Difficulties competing in any new markets we may enter;
•
Assumption of the liabilities and exposure to unforeseen liabilities (including, but not limited to, regulatory, legal and
product or personal liability claims) of acquired companies;
•
Cybersecurity related vulnerabilities or data security incidents that may be present in the IT Systems of acquired
companies, or emerge when integrating the acquired company into our IT Systems;
•
Dilution of interests of holders of our ordinary shares through the issuance of equity securities or equity-linked
securities;
•
Labor disruptions, work stoppages or other employee-related issues, particularly if employees of the acquired
companies are represented by labor unions or trade councils; and
•
Difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including
disclosure controls and procedures and internal control over financial reporting appropriate for public companies of
our size at companies that, prior to the acquisition, had lacked such controls, procedures and policies.
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Further, as part of our innovation strategy, from time to time we invest in start-up companies and/or development stage
technology or other companies. In evaluating these opportunities, we follow a structured evaluation process that considers
factors such as potential financial returns, new expertise in emerging technology and business benefits. Despite our best efforts
to calculate potential return and risk, some or all of the companies we invest in may be unprofitable at the time of, and
subsequent to, our investment. We may lose money in these investments, including the potential for future impairment charges
on the investments, and the anticipated benefits of the technology and business relationships may be less than expected.
We may pursue business opportunities that diverge from our core business.
We may pursue business opportunities that diverge from our core business, including expanding our products or service
offerings, seeking to expand our products and services into new international markets, investing in new and unproven
technologies and forming new alliances with companies to develop and distribute our products and services. We can offer no
assurance that any such business opportunities will prove successful. Certain international markets may be slower than our
established markets in adopting our services and products, and our operations in such markets may not develop at a rate that
supports our level of investment. Among other negative effects, our investment in new business opportunities may exceed the
returns we realize. New investments could have higher cost structures than our current business, which could reduce operating
margins and require more working capital. 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. In
addition to the risks outlined above, expansion into certain new markets may require us to compete with local businesses with
greater knowledge of the market, including the tastes and preferences of end-users, and higher market shares.
Our strategic initiatives, including enterprise excellence efforts among other significant capital expenditure projects, may
not achieve the improvements or financial returns we expect.
We utilize a number of tools to improve efficiency and productivity. Implementation of new processes to our operations could
cause disruptions and may prove to be more difficult, costly or time-consuming than expected. Additionally, from time to time,
we undertake substantial capital projects for varying reasons, such as to increase production capacity or to insource certain
products, parts or components. We invest in areas we believe best align with our business strategies and that will optimize
future returns. However, there can be no assurance that all our planned enterprise excellence projects or other capital
expenditures will be fully implemented, or if implemented, will realize the expected improvements or financial returns.
We may not be able to effectively manage and implement restructuring initiatives or other organizational changes.
We have, from time to time, restructured or made other adjustments to our workforce and manufacturing footprint, and may
need to do so in the future, in response to market or product changes, performance issues, changes in strategy, acquisitions
and/or other internal or external considerations. These restructuring activities and other organizational changes often result in
increased restructuring costs, diversion of management’s time and attention from daily operations, cybersecurity and other
operational risks and temporarily reduced productivity. If we are unable to successfully manage and implement restructuring
and other organizational changes, we may not achieve or sustain the expected growth or cost savings benefits of these activities
or do so within the expected timeframe. These effects could recur in connection with future acquisitions and other
organizational changes, and our results of operations could be negatively affected.
The effects of global climate change or other unexpected events, including global health crises, may disrupt our operations
and have a negative impact on our business.
The effects of global climate change, such as extreme weather conditions and natural disasters occurring more frequently or
with more intense effects, or the occurrence of unexpected events including wildfires, tornadoes, hurricanes, earthquakes,
floods, tsunamis and other severe hazards in the countries where we operate or sell products and services, could adversely affect
our business, financial condition, results of operations and cash flows. These events could disrupt our operations by impacting
the availability and cost of materials needed for manufacturing, cause physical damage or closure of our manufacturing sites or
distribution centers, lead to loss of human capital and/or cause temporary or long-term disruption in the manufacturing or
delivery of products and services to customers. These events and disruptions could also adversely affect our customers’ and
suppliers’ financial condition or ability to operate, resulting in reduced customer demand, delays in payments received or
supply chain disruptions. Further, these events and disruptions could increase insurance and other operating costs, including
impacting our decisions regarding construction of new facilities to select areas less prone to climate change risks and natural
disasters, which could result in indirect financial risks passed through the supply chain or other price modifications to our
products and services.
Many governmental and other regulatory bodies worldwide are enacting regulations to mitigate the impacts of climate change.
If we or others in our supply chain are required to comply with these laws and regulations, or if we choose to take voluntary
steps to reduce or mitigate our impact on the climate, we may experience increased costs for energy, production, transportation,
and raw materials, increased capital expenditures, or increased insurance premiums and deductibles, each of which could
adversely impact our operations. In addition, inconsistent regulations among jurisdictions may also affect our cost to comply
with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations, or
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industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory
change in the countries in which we operate.
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. Further, any national, state or
local government mandates or other orders taken to minimize the spread of a global health crisis could restrict our ability to
conduct business as usual, as well as the business activities of our key customers and suppliers, including the potential for labor
shortages. In particular, the ultimate extent of the impact of any epidemic, pandemic or other global health crisis on our
business, financial condition and results of operations will depend on future developments which are highly uncertain and
cannot be predicted.
We may be subject to risks relating to systems failures or disruptions to our information technology and operational
technology systems.
We rely extensively on information technology and operational technology systems, networks and services including hardware,
software, firmware and technological applications and platforms (collectively, "IT Systems") to manage and operate our
business from end-to-end, including ordering and managing materials from suppliers, design and development, manufacturing,
marketing, selling and shipping to customers, invoicing and billing, managing our banking and cash liquidity systems,
managing our enterprise resource planning and other accounting and financial systems and complying with regulatory, legal and
tax requirements. There can be no assurance that our current IT Systems will function properly. We have invested and will
continue to invest in improving our IT Systems. Some of these investments are significant and impact many important
operational processes and procedures. There is no assurance that newly implemented IT Systems will improve our current
systems, improve our operations or yield the expected returns on the investments. In addition, the implementation of new IT
Systems may be more difficult, costly or time-consuming than expected and cause disruptions in our operations and, if not
properly implemented and maintained, negatively impact our business. If our IT Systems cease to function properly or if these
systems do not provide the anticipated benefits, our ability to manage our operations could be impaired.
As artificial intelligence and machine learning (“AI”) technologies advance and are increasingly adopted by threat actors, the
frequency, sophistication and scale of cyberattacks may increase. AI‑enabled methods, including automated vulnerability
discovery, automated credential‑stuffing, deepfake‑assisted social engineering and other generative‑AI techniques, could make
attacks more successful and harder to detect. In addition, our own or third‑party use of AI could introduce new classes of
vulnerabilities. These developments could increase the likelihood and potential impact of disruptions, unauthorized disclosures
or other compromises of our IT Systems, products or data, and could increase our remediation and compliance costs, harm our
reputation and subject us to regulatory or legal liability.
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.
We have outsourced many of the critical elements of our global information and operational technology infrastructure to third-
party service providers in order to achieve efficiencies. If such service providers experience a disruption due to a cyberattack or
other internal or external factors, or they do not perform or perform effectively, we may not be able to achieve the expected
efficiencies and may have to incur additional costs to address failures in providing service by the service providers. Depending
on the function involved, such non-performance, ineffective performance or failures of service may lead to business
disruptions, processing inefficiencies or security breaches.
Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and
adversely impact the Company's reputation, operating results, and financial condition.
Despite our implementation of cybersecurity measures, which have focused on prevention, mitigation, resilience and recovery,
our network and products, including access solutions, may be vulnerable to cybersecurity attacks, computer viruses, malicious
codes, malware, ransomware, phishing, social engineering, denial of service, hacking, break-ins and similar disruptions.
Cybersecurity attacks and intrusion efforts are continuous and evolving, and in certain cases they have been successful at the
most robust institutions. The scope and severity of risks that cyber threats present have increased dramatically and include, but
are not limited to, malicious software, ransomware attacks, attempts to gain unauthorized access to data or premises, exploiting
weaknesses related to vendors or other third parties that could be exploited to attack our systems, denials of service and other
electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise
protected information and corruption of data. Any such event could have a material adverse effect on our business, financial
condition, results of operations and cash flows as we face regulatory, reputational and litigation risks resulting from potential
cyber incidents, as well as the potential of incurring significant remediation costs. Further, while we maintain insurance
coverage that may, subject to policy terms and exclusions, cover certain aspects of our cyber risks, such insurance coverage
may be insufficient to cover our losses or all types of claims that may arise in the continually evolving area of cyber risk.
Our networking infrastructure and related assets may be subject to unauthorized access by hackers, employee error or
malfeasance or other unforeseen activities. Such issues could result in the disruption of business processes, network degradation
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and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property,
proprietary business information and data related to our customers, suppliers and business partners. To the extent that such
disruptions occur, and our business continuity plans do not effectively address these disruptions in a timely manner, they may
cause delays in the manufacture or shipment of our products and the cancellation of customer orders and, as a result, our
business operating results and financial condition could be materially and adversely affected, resulting in a possible loss of
business or brand reputation.
We are exposed to risks related to compliance with data privacy and governance laws.
Our daily business operations also require us to collect and/or retain sensitive data such as intellectual property, proprietary
business information and data related to customers, employees, suppliers and business partners within our networking
infrastructure including data from individuals subject to the European Union's General Data Protection Regulation, that is
subject to privacy and security laws, regulations and/or customer-imposed controls. Despite our efforts to protect such data, the
loss or breach of such data due to various causes including material security breaches, catastrophic events, extreme weather,
natural disasters, power outages, system failures, computer viruses, improper data handling, programming errors, unauthorized
access and employee error or malfeasance could result in wide reaching negative impacts to our business. As such, the ongoing
maintenance and security of this information is pertinent to the success of our business operations and our strategic goals.
In addition, we operate in an environment where there are different and potentially conflicting data privacy laws and regulations
in effect or expected to go into effect in the future, including regulations related to devices connected through IoT, in the
various jurisdictions in which we operate, and we must understand and comply with such laws and regulations while ensuring
our data is secure.
Finally, the regulatory environment around cybersecurity is increasingly challenging, with additional reporting requirements
around cybersecurity, risk management, strategy and governance, as well as increased disclosure obligations around the
occurrence of material cybersecurity incidents. These requirements may present material obligations and risks to our business,
including significantly expanded compliance burdens, costs and enforcement risks. We may also be obligated to report a
cybersecurity incident before we have been able to fully assess its impact or remediate the underlying issue, and it could
potentially reveal system vulnerabilities to threat actors. Failure to timely report incidents under these or other similar rules
could also result in monetary fines, sanctions, or subject us to other forms of liability.
Our ability to successfully grow and expand our business depends on our ability to recruit and retain a highly qualified and
diverse workforce.
Our ability to successfully grow and expand our business is dependent upon our ability to recruit and retain a workforce with
the skills necessary to develop, manufacture and deliver the products and services desired by our customers. We need highly
skilled and qualified personnel in multiple areas, including engineering, sales, manufacturing, information technology,
cybersecurity, business development, strategy and management. We must therefore continue to effectively recruit, retain and
motivate highly qualified, skilled and diverse personnel to maintain our current business and support our projected growth. A
shortage of these employees for various reasons, including intense competition for skilled employees, labor shortages, increased
labor costs, candidates’ preference to work remotely, changes in laws and policies regarding immigration and work
authorizations or any government or public health mandates in jurisdictions where we have operations that may result in
workforce attrition and difficulty with recruiting, may jeopardize our ability to grow and expand our business.
In recent years, we have experienced labor shortages and increased turnover rates that have led to, and could in the future lead
to, increased costs, such as increased overtime to meet customer demand and increased wage rates to attract and retain
employees and could negatively affect our ability to efficiently operate our production facilities or otherwise operate at full
capacity. 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.
We procure certain products, including raw materials and other commodities, including steel, zinc, brass and other non-ferrous
metals, as well as parts, components (including electronic components) and logistical services from supplier partners located
throughout the world. Our ability to meet our customers' needs and achieve cost targets depends on our ability to maintain key
manufacturing and supply arrangements, including supplier execution and certain sole supplier or sole manufacturing
arrangements. Our reliance on these third parties reduces our control over the manufacturing and delivery process, exposing us
to risks including reduced control over product costs and delivery. Additionally, because not all of our supply arrangements
provide for guaranteed supply and some key parts and components may be available only from a single supplier or a limited
group of suppliers, we are also subject to supply and pricing risks, which could negatively impact our margin performance,
results of operations, inventory levels and cash flows.
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
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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.
Legal and Compliance Risks
We are subject to risks related to corporate social responsibility and reputational matters.
Our reputation and the reputation of our brands, including the perception held by our customers, end-users, business partners,
investors, other key stakeholders and the communities in which we do business, are influenced by various factors. There is an
increased focus from our stakeholders, as well as regulatory authorities both within the U.S. and internationally, on ESG
practices and disclosure. If we fail, or are perceived to have failed, in any number of ESG matters, such as environmental
stewardship, good corporate governance, workplace conduct and support for local communities, or to effectively respond to
changes in, or new, legal, regulatory or reporting requirements concerning climate change or other sustainability concerns, we
may be subject to regulatory fines and penalties, and our reputation or the reputation of our brands may suffer. Further, we have
made several public commitments regarding our intended reduction of carbon emissions. Although we intend to meet these
commitments, we may be required to expend significant resources to do so, which could increase our operational costs. Further,
there can be no assurance of the extent to which any of our commitments will be achieved, or that any future investments we
make to achieve such commitments will meet investor, legal and/or any other regulatory expectations and requirements.
Moreover, we may determine that it is in the best interest of our Company and our stockholders to prioritize other business,
social, governance or sustainable investments over the achievement of our current commitments based on economic,
technological developments, regulatory and social factors, business strategy or pressure from investors, activist groups or other
stakeholders. If we are unable to meet our commitments, we could incur adverse publicity and reaction from investors,
advocacy groups or other stakeholders, which could adversely impact our reputation and brand perception. Such damage to our
reputation and the reputation of our brands may negatively impact our business, demand for our products and services, our
financial condition and results of operations.
In addition, negative or inaccurate postings or comments on social media or networking websites about our company or our
brands could generate adverse publicity that could damage our reputation or the reputation of our brands. If we are unable to
effectively manage real or perceived issues, including concerns about product quality, safety, corporate social responsibility or
other matters, sentiments toward the Company or our products could be negatively impacted, and our financial results could
suffer.
Our brands are important assets of our businesses, and violation of our trademark rights by imitators could negatively
impact revenues and brand reputation.
Our brands and trademarks enjoy a reputation for quality and value and are important to our success and competitive position.
Unauthorized use of our trademarks may not only erode sales of our products but may also cause significant damage to our
brand name and reputation, interfere with relationships with our customers and increase litigation costs. There can be no
assurance that our on-going effort to protect our brand and trademark rights will prevent all violations.
Material legal judgments, fines, penalties or settlements imposed against us or our assets could adversely affect our
business, financial condition, results of operations and cash flows.
We are currently, and may in the future become, involved in legal proceedings, claims and disputes incidental to the operation
of our business in the ordinary course. Our business may be adversely affected by the outcome of these proceedings and other
contingencies (including, without limitation, environmental, product and warranty liability, claims for property damage,
physical harm or bodily injury, antitrust, intellectual property, data protection, privacy and labor and employment matters) that
cannot be predicted with certainty. As required by GAAP, we establish reserves based on our assessment of the probability of
contingencies and whether we are able to reasonably estimate the expected range of loss. Subsequent developments in legal
proceedings and other contingencies may affect our assessment and estimates of the loss contingency recorded as a reserve, and
we may incur additional costs or be required to make material payments beyond our previously recorded reserves.
Allegations that we have infringed the intellectual property rights of third parties could negatively affect us.
We may be subject to claims of infringement of intellectual property rights by third parties. In particular, we often compete in
areas having extensive intellectual property rights owned by others, and we have become subject to claims alleging
infringement of intellectual property rights of others. In general, if it is determined that one or more of our technologies,
products or services infringes the intellectual property rights owned by others, we may be required to cease marketing those
products or services, to obtain licenses from the holders of the intellectual property at a material cost or to take other actions to
avoid infringing such intellectual property rights. The litigation process is costly and subject to inherent uncertainties, and we
may not prevail in litigation matters regardless of the merits of our position. Adverse intellectual property litigation or claims of
infringement against us may become extremely disruptive if the plaintiffs succeed in blocking the trade of our products and
services and may have a material adverse effect on our business.
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Our reputation, ability to do business and results of operations could be impaired by improper conduct by any of our
employees, agents or business partners.
We are subject to regulation under a variety of U.S. federal and state and non-U.S. laws, regulations and policies including laws
related to anti-bribery and anti-corruption, export and import compliance, competition and anti-money laundering due to our
global operations. We provide compliance training for our employees and have other controls and procedures in these areas. We
cannot provide assurance that our internal controls will always protect us from the improper conduct of our employees, agents
and business partners. Any improper conduct could damage our reputation and subject us to, among other things, civil and
criminal penalties, material fines, equitable remedies (including profit disgorgement and injunctions on future conduct),
securities litigation, adverse publicity and a general loss of investor or public confidence.
Our operations are subject to regulatory risks related to domestic and international, environmental, health and safety laws.
Our U.S. and non-U.S. operations are subject to a number of laws and regulations, including fire and building codes and EHS
standards. We have incurred, and will be required to continue to incur, significant expenditures to comply with these laws and
regulations. Changes to, or changes in interpretations of, current laws and regulations, including climate change legislation or
other environmental mandates, could require us to increase our compliance expenditures, cause us to significantly alter or
discontinue offering existing products and services or cause us to develop new products and services. Altering current products
and services or developing new products and services to comply with changes in the applicable laws and regulations could
require significant research and development investments, increase the cost of providing the products and services and
adversely affect the demand for our products and services. In the event a regulatory authority concludes that we are not or have
not at all times been in full compliance with these laws or regulations, we could be fined, criminally charged or otherwise
sanctioned.
Certain environmental laws assess liability on current or previous owners of real property or operators of manufacturing
facilities for the costs of investigation, removal or remediation of hazardous substances or materials at such properties or at
properties at which parties have disposed of hazardous substances. Liability for investigative, removal and remedial costs under
certain U.S. federal and state laws and certain non-U.S. laws are retroactive, strict and joint and several. In addition to cleanup
actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of,
or exposure to, hazardous substances. We have received notifications from U.S. and non-U.S. governmental agencies, including
the EPA and similar state environmental agencies, that conditions at a number of current and formerly owned sites where we
and others have disposed of hazardous substances require investigation, cleanup and other possible remedial action. These
agencies may require that we reimburse the government for its costs incurred at these sites or otherwise pay for the costs of
investigation and cleanup of these sites, including by providing compensation for natural resource damage claims from such
sites. For more information, see "Item 1. Business – Regulatory Matters."
While we have planned for future capital and operating expenditures to maintain compliance with environmental laws and have
accrued for costs related to current remedial efforts, our costs of compliance, or our liabilities arising from past or future
releases of, or exposures to, hazardous substances, may exceed our estimates. We may also be subject to additional
environmental claims for personal injury or cost recovery actions for remediation of facilities in the future based on our past,
present or future business activities.
As a global business, we have a relatively complex tax structure, and there is a risk that tax authorities will disagree with our
tax positions.
Since we conduct operations worldwide through our subsidiaries, we are subject to complex transfer pricing regulations in the
countries in which we operate. Transfer pricing regulations generally require that, for tax purposes, transactions between us and
our affiliates be priced on a basis that would be comparable to an arm's length transaction and that contemporaneous
documentation be maintained to support the tax allocation. 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. 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.
We could be subject to changes in tax rates, the adoption of new tax legislation or exposure to additional tax liabilities.
Our future effective tax rate and cash tax obligations could be adversely affected by shifts in our mix of earnings in countries
with varying statutory tax rates, changes in the valuation of our deferred tax assets or liabilities or changes in tax laws,
regulations, interpretations or accounting principles, as well as certain discrete items. In addition, we are subject to regular
review and audit by tax authorities. As a result, we have received, and may in the future receive, assessments in multiple
jurisdictions on various tax-related assertions. Any adverse outcome of such a review or audit could have a negative effect on
our operating results and financial condition. In addition, the determination of our worldwide provision for income taxes and
other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax
determination is uncertain. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the
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amounts recorded in our Consolidated Financial Statements and may materially affect our financial results in the period or
periods for which such determination is made. Furthermore, due to shifting economic and political conditions, tax policies,
laws, interpretations and rates in various jurisdictions may be subject to significant change, which could materially affect our
financial position and results of operations. 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. Additionally, the European Commission has been investigating whether various tax
regimes or private tax rulings provided by a country to a particular taxpayer may constitute State Aid. We continue to examine
the impact the above items may have on our business and the amount of tax we must pay.
The implementation of global tax reforms could negatively impact our financial results.
In recent years, the Organization for Economic Cooperation and Development (“OECD”) has led international efforts to
implement various international tax reforms, including the introduction of a global minimum effective corporate tax (“GMT”)
rate of 15%, applied on a jurisdiction-by-jurisdiction basis. 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.
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.
Risks Related to Our Incorporation in Ireland
Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.
The U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in
civil and commercial matters. As such, there is some uncertainty as to whether the courts of Ireland would recognize or enforce
judgments of U.S. courts obtained against us or our directors or officers based on U.S. federal or state civil liability laws,
including the civil liability provisions of the U.S. federal or state securities laws, or hear actions against us or those persons
based on those laws.
As an Irish company, we are governed by the Companies Act 2014 of Ireland, as amended, which differs in some material
respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to
interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish
company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of
action against directors or officers of the company and may exercise such rights of action on behalf of the company only in
limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would
holders of securities of a corporation incorporated in a jurisdiction of the U.S.
In addition, Irish law allows shareholders to authorize share capital which then can be issued by a board of directors without
shareholder approval. Also, subject to specified exceptions, Irish law grants statutory preemptive rights to existing shareholders
to subscribe for new issuances of shares for cash. 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. 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.
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.
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.
From time to time, proposals have been made and/or legislation introduced to change the tax laws of various jurisdictions or
limit tax treaty benefits that if enacted could materially increase our tax burden and/or our effective tax rate. Moreover, other
legislative proposals could have a material adverse impact on us by overriding certain tax treaties and limiting the treaty
benefits on certain payments, which could increase our tax liability. We cannot predict the outcome of any specific legislation in
any jurisdiction.
While we monitor proposals that would materially impact our tax burden and/or our effective tax rate and investigate our
options, we could still be subject to increased taxation on a going forward basis no matter what action we undertake if certain
proposals are enacted, certain tax treaties are amended and/or our interpretation of applicable tax law is challenged and
determined to be incorrect. In particular, any changes and/or differing interpretations of applicable tax law that have the effect
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of disregarding our incorporation in Ireland, limiting our ability to take advantage of tax treaties between jurisdictions,
modifying or eliminating the deductibility of various currently deductible payments or increasing the tax burden of operating or
being resident in a particular country, could subject us to increased taxation.
Dividends received by our shareholders may be subject to Irish dividend withholding tax.
In certain circumstances, we are required to deduct Irish dividend withholding tax of 25% from dividends paid to our
shareholders. In the majority of cases, shareholders residing in the U.S. will not be subject to Irish withholding tax, and
shareholders resident in a number of other countries will not be subject to Irish withholding tax provided that they complete
certain Irish dividend withholding tax forms. However, some shareholders may be subject to withholding tax, which could
discourage the investment in our stock and adversely impact the price of our shares.
Dividends received by our shareholders may be subject to Irish income tax.
Dividends paid in respect of our shares generally are not subject to Irish income tax where the beneficial owner of these
dividends is exempt from Irish dividend withholding tax, unless the beneficial owner of the dividend has some connection with
Ireland other than his or her shareholding in Allegion.
Our shareholders who receive their dividends subject to Irish dividend withholding tax will generally have no further liability to
Irish income tax on the dividends unless the beneficial owner of the dividend has some connection with Ireland other than his or
her shareholding in Allegion.
Certain provisions in our Memorandum and Articles of Association, among other things, could prevent or delay an
acquisition of us, which could decrease the trading price of our ordinary shares.
Our Memorandum and Articles of Association contain provisions to deter takeover practices, inadequate takeover bids and
unsolicited offers. These provisions include, amongst others:
•
A provision of our Articles of Association which generally prohibits us from engaging in a business combination with
an interested shareholder (being (i) the beneficial owner, directly or indirectly, of 10% or more of our voting shares or
(ii) an affiliate or associate of us that has at any time within the last five years been the beneficial owner, directly or
indirectly, of 10% or more of our voting shares), subject to certain exceptions;
•
Rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings;
•
The right of our Board of Directors to issue preferred shares without shareholder approval in certain circumstances,
subject to applicable law; and
•
The ability of our Board of Directors to set the number of directors and to fill vacancies on our Board of Directors.
We believe these provisions will provide some protection to our shareholders from coercive or otherwise unfair takeover tactics.
These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if the offer
may be considered beneficial by some shareholders and could delay or prevent an acquisition that our Board of Directors
determines is in our best interests and our shareholders' best interests. These provisions may also prevent or discourage attempts
to remove and replace incumbent directors.
In addition, several mandatory provisions of Irish law could prevent or delay an acquisition of us. For example, Irish law does
not permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent.
We also will be subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a
cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of
interests in our shares in certain circumstances. 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.
Item 1C. CYBERSECURITY
Risk Management and Strategy
Allegion plc recognizes the significance of developing, implementing and maintaining cybersecurity measures to safeguard our
information systems and products and protect the confidentiality, integrity and availability of our data.
Managing Material Risks & Integrated Overall Risk Management
Cybersecurity is a critical part of our enterprise risk management. To address cybersecurity threats, we leverage a multi-layer
approach, with our Chief Information Security Officer (“CISO”) leading a team that is responsible for forming our enterprise-
wide information security strategy, training, policy, standards, architecture and processes to protect us against cybersecurity
risks. Our risk management group works with our cybersecurity team to continuously evaluate and address cybersecurity risks.
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All employees are required to comply with our information security policies and are responsible for helping protect our
information security, including promptly reporting suspected security events through established channels. We maintain an
employee security awareness program and a security training program for technical personnel that provide mandatory and
on‑demand training. As part of these programs, every employee is expected to report any suspected security event immediately
upon discovery. Employees may report incidents through established channels such as the security operations mailbox, our
ticketing portal or service desk, or by contacting local IT support.
Engage Third Parties on Risk Management
We engage a range of external experts, including cybersecurity consultants and auditors to evaluate and test our risk
management systems. Our collaboration with these third parties includes regular audits, threat assessments, and consultation on
security enhancements. Our cybersecurity programs generally align with the NIST Cybersecurity Framework 2.0, and third-
party audits on portions of our cybersecurity program or processes apply the NIST Cybersecurity Framework 2.0 controls.
These partnerships provide expert knowledge and insights, which are designed to ensure our cybersecurity strategies and
processes are consistent with industry best practices.
Oversee Third-party Risk
We rely on our information technology systems and networks in connection with many of our business activities. Some of these
networks and systems are managed by third-party service providers and are not under our direct control. The Company has
implemented processes designed to manage the cybersecurity risks associated with its use of third-party service providers.
Risks from Cybersecurity Threats
Despite the security measures we have implemented, certain cyber incidents could materially disrupt operational systems; result
in loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable
information regarding customers or employees; delay our ability to deliver products to customers; and/or jeopardize the security
of our facilities. The adoption of AI by threat actors has resulted in more sophisticated and scalable attacks. These may include
AI‑enabled social engineering, deepfake impersonation, automated vulnerability discovery and exploitation of AI models
themselves. The use of AI by our stakeholders, including vendors and customers, may also introduce new vulnerabilities into
our ecosystem. These risks are further described in the risk factors within Item 1A, particularly under the headings “We may be
subject to risks relating to systems failures or disruptions to our information technology and operational technology systems;”
“We currently rely on third-party service providers for many of the critical elements of our global information and operational
technology infrastructure, and their failure to provide effective support for such infrastructure could increase our cybersecurity
risk or otherwise negatively impact our business and financial results;” and “Disruptions or breaches of our information systems
could adversely affect us.”
We have not encountered any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that
have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or
financial condition.
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. The Board is composed of members with diverse expertise including, risk
management, information technology, engineering, manufacturing, innovation and finance, equipping them to oversee
cybersecurity risks effectively. 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. Specifically, the CISO is responsible for the
prevention, mitigation, detection and remediation of cybersecurity incidents. The CISO regularly meets with the Chief
Executive Officer (“CEO”) and Executive Leadership Team to inform them on cybersecurity risks. These briefings encompass a
broad range of topics, including:
•
Threat intelligence;
•
Risk updates with regional vice presidents;
•
Third-party assessments and results of tabletop exercises;
•
Training programs for employees;
•
Results of phishing simulations;
•
Cybersecurity technologies and best practices; and
•
Significant cybersecurity incidents and/or trends (if any).
25
Risk Management Personnel
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the CISO. With over 20 years
of experience in the field of information technology, the CISO brings a wealth of expertise to the role. The CISO’s education
includes a Master’s in Cybersecurity Management. The CISO has in-depth knowledge and experience in developing and
executing our cybersecurity strategies. The CISO oversees our governance programs, tests our compliance with standards,
remediates known risks and leads our comprehensive employee security awareness program. The CISO is also responsible for
building and overseeing a cybersecurity team, including internal and external resources, who provide subject matter expertise
and operational talents to achieve our cybersecurity objectives.
Monitor Cybersecurity Incidents
The CISO and the cybersecurity team are continually informed about the latest developments in cybersecurity, including
potential threats and innovative risk management techniques, which is an important component in designing programs to
prevent, detect, mitigate and remediate cybersecurity incidents. This includes monitoring emerging AI-driven threats and
adapting our detection, prevention and response capabilities to address them. The CISO implements and oversees processes for
the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular
system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, we have a well-defined incident
response plan. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and
prevention of future incidents and informing the board of significant cyber incidents in accordance with the Company’s incident
response plan.
Item 2. PROPERTIES
We operate through a broad network of production and assembly facilities, distribution centers, sales offices and engineering
centers, across North America, Europe, Asia and Oceania. Our production and assembly facilities for the Allegion Americas
business segment are primarily located in the United States, Mexico and Canada, and for the Allegion International business
segment primarily in Australia, France, Germany, Italy, the Netherlands, New Zealand, Poland, Spain and the United Kingdom.
Our active properties represent approximately 7.7 million square feet, of which approximately 45% is leased.
We own 16 of our 37 production and assembly facilities, with the remaining 21 under long-term lease arrangements. We believe
our plants are well maintained, generally in good condition and suitable for the conduct of our business.
Item 3. LEGAL PROCEEDINGS
In the normal course of business, we are involved in a variety of lawsuits, claims and legal proceedings, including commercial
and contract disputes, employment matters, product liability claims, environmental liabilities, intellectual property disputes and
tax-related matters. In our opinion, pending legal matters are not expected to have a material adverse impact on our results of
operations, financial condition, liquidity or cash flows.
This item should be read in conjunction with the Risk Factors set forth in Part I. Item 1A of this Form 10-K.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
26
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our ordinary shares are traded on the New York Stock Exchange under the symbol ALLE. As of February 12, 2026, the number
of record holders of ordinary shares was 1,635.
Dividend Policy
Our Board of Directors declared dividends of $0.51 per ordinary share on February 6, 2025, April 10, 2025, September 4, 2025
and December 3, 2025. On February 4, 2026, our Board of Directors declared a dividend of $0.55 per ordinary share payable on
March 31, 2026, to shareholders of record on March 13, 2026. We paid a total of $175.3 million in cash for dividends to
ordinary shareholders during the year ended December 31, 2025. Future dividends on our ordinary shares, if any, will be at the
discretion of our Board of Directors and will depend on, among other things, our results of operations, cash requirements and
surplus, financial condition, contractual restrictions (including under the agreements governing our indebtedness) and other
factors that the Board of Directors may deem relevant, as well as our ability to pay dividends in compliance with the Irish
Companies Act. Under the Irish Companies Act, dividends and distributions may only be made from distributable reserves.
Distributable reserves, broadly, means the accumulated realized profits of Allegion plc ("ALLE-Ireland") which are unrelated to
any GAAP reported amounts (e.g., retained earnings). As of December 31, 2025, we had distributable reserves of $4.1 billion.
In addition, no distribution or dividend may be made unless the net assets of ALLE-Ireland are equal to, or in excess of, the
aggregate of ALLE-Ireland’s called up share capital plus undistributable reserves, and the distribution or dividend does not
reduce ALLE-Ireland’s net assets below such aggregate.
Issuer Purchases of Equity Securities
Period
Total number of
shares purchased
(000s)
Average price
paid per share
Total number of shares
purchased as part of the
Share Repurchase
Authorization (000s)
Approximate dollar value
of shares still available to
be purchased under the
Share Repurchase
Authorization (000s)
October 1 - October 31
— $
—
— $
160,019
November 1 - November 30
—
—
—
160,019
December 1 - December 31
—
—
—
160,019
Total
— $
—
— $
160,019
Our Board of Directors has approved a share repurchase program (the "Share Repurchase Authorization") which authorizes the
repurchase of up to, and including, $500 million of the Company's ordinary shares. 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. 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. The Board of Directors may suspend, modify or terminate the repurchase program at
any time without prior notice.
27
Performance Graph
The annual changes for the five-year period shown below are based on the assumption that $100 had been invested in Allegion
plc ordinary shares, the Standard & Poor’s 500 Stock Index ("S&P 500") and the Standard & Poor's 400 Capital Goods Index
("S&P 400 Capital Goods") on December 31, 2020, and that all quarterly dividends were reinvested. The total cumulative dollar
returns shown on the graph represent the value that such investments would have had on December 31, 2025.
December 31,
2020
December 31,
2021
December 31,
2022
December 31,
2023
December 31,
2024
December 31,
2025
Allegion plc
100.00
115.05
92.90
113.63
118.95
146.95
S&P 500
100.00
128.71
105.40
133.10
166.40
196.16
S&P 400 Capital Goods
100.00
127.67
114.87
158.19
182.40
219.77
Item 6. [RESERVED]
28
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-
looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the
forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Part I,
Item 1A. Risk Factors in this Annual Report on Form 10-K. The following section is qualified in its entirety by the more detailed
information, including our consolidated financial statements and the notes thereto, which appears elsewhere in this Annual
Report on Form 10-K.
Overview
Organization
We are a leading global provider of security products and solutions operating in two segments: Allegion Americas and Allegion
International. We sell a wide range of security products and solutions for end-users in commercial, institutional and residential
facilities worldwide, including the education, healthcare, government, hospitality, retail, commercial office and single and
multi-family residential markets. Our leading brands include CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von
Duprin®.
Recent Developments
Business and Industry Trends and Outlook and Global Trade and Macroeconomic Environment
In 2025, we delivered high-single digit revenue growth compared to 2024, driven by favorable pricing and volume growth, as
well as the impact from acquisitions made during the year. Demand for electronic security products has also remained strong
and continues to be a long-term growth driver.
Throughout 2025, the U.S. government announced tariffs on imports from several countries from which we manufacture
and/or import products and components. In 2025, we offset inflation due to tariffs with pricing actions. We continue to analyze
the impact of changes in tariffs and what, if any, steps, including pricing actions, we may take to mitigate the impact of the
tariffs. We estimate we source approximately 20-25% of cost of goods sold ("COGS") from Mexico, less than 5% of COGS
from China, and 5-10% of COGS from all other non-US countries. Additionally, this could impact future demand.
The demand trends and macroeconomic conditions discussed above and a number of other challenges and uncertainties that
could affect our businesses are described under Part I, Item 1A, "Risk Factors."
2025 and 2024 Significant Events
Acquisitions
We have made several recent business acquisitions across our Allegion Americas and Allegion International segments. The
acquisitions align with our strategy of expanding our mechanical and electronic product portfolios and adding complimentary
software and services. This includes the acquisition of ELATEC, including Elatec GmbH and other group entities ("ELATEC")
on July 1, 2025. ELATEC is a manufacturer of security and access technology based in Germany, and the acquisition helps
expand our global electronics portfolio in attractive end markets while also increasing strategic relationships with channel
partners.
The aggregate consideration, inclusive of contingent consideration and net of cash acquired, for all acquisitions completed in
2025 and 2024 was approximately $631.6 million and $147.2 million, respectively. Businesses acquired in 2025 generated
$93.0 million of Net revenues since the acquisition dates, which is included within our Consolidated Statements of
Comprehensive Income.
See Note 3 to the Consolidated Financial Statements for further information.
Financing Activities
On December 9, 2025, we amended and restated our unsecured revolving credit facility (the "Revolving Facility") which,
among other things, increased the total commitment from $750.0 million to $1.0 billion, and extended the maturity from May
20, 2029 to May 20, 2030. We used borrowings under the Revolving Facility to repay our outstanding term loan, which was
scheduled to mature in November 2026. Outstanding borrowings under the Revolving Facility were $190.6 million at
December 31, 2025.
Dividends and Share Repurchases
During 2025, we paid quarterly dividends of $0.51 per ordinary share to shareholders on record as of March 14, 2025, June 13,
2025, September 15, 2025, and December 16, 2025, for a total of $175.3 million, and repurchased approximately 0.6 million
ordinary shares for approximately $80.0 million.
29
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.
Results of Operations - For the years ended December 31
Dollar amounts in millions, except per share amounts
2025
% of Net
revenues
2024
% of Net
revenues
Net revenues
$
4,067.3
$
3,772.2
Cost of goods sold
2,229.0
54.8 %
2,103.7
55.8 %
Selling and administrative expenses
978.8
24.1 %
887.8
23.5 %
Operating income
859.5
21.1 %
780.7
20.7 %
Interest expense
101.0
102.0
Other income, net
(9.9)
(20.1)
Earnings before income taxes
768.4
698.8
Provision for income taxes
124.6
101.3
Net earnings
643.8
597.5
Diluted net earnings per ordinary share:
$
7.44
$
6.82
The discussions that follow describe the significant factors contributing to the changes in our results of operations for the years
presented and form the basis used by management to evaluate the financial performance of the business. For a discussion of our
results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, see “Part II, Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Annual Report on
Form 10-K filed with the SEC on February 18, 2025.
Net Revenues
Net revenues for the year ended December 31, 2025, increased by 7.8%, or $295.1 million, as compared to the year ended
December 31, 2024, due to the following:
Pricing
3.1 %
Volume
1.0 %
Acquisitions / divestitures
3.1 %
Currency exchange rates
0.6 %
Total
7.8 %
The increase in Net revenues was driven by improved pricing, favorable impact from acquisitions / divestitures, higher volumes
and favorable foreign currency exchange rate movements.
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.
Cost of Goods Sold
For the year ended December 31, 2025, Cost of goods sold as a percentage of Net revenues decreased to 54.8% from 55.8%, as
compared to the year ended December 31, 2024, due to the following:
Pricing and productivity in excess of inflation and investment spending
(0.1) %
Volume / product mix
(0.6) %
Currency exchange rates
(0.2) %
Restructuring / integration / acquisition expenses
(0.1) %
Total
(1.0) %
Cost of goods sold as a percentage of Net revenues decreased primarily due to favorable product mix, favorable foreign
currency exchange rate movements, a year-over-year decrease in restructuring, integration, and acquisition expenses and pricing
and productivity, which exceeded the impacts from inflation and investment spending.
Pricing and productivity in excess of inflation and investment spending includes the impact to Cost of goods sold from pricing,
as defined above, in addition to productivity, inflation and investment spending. Productivity represents improvements in unit
costs of materials and cost reductions related to improvements to our manufacturing design and processes. Inflation includes
unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes.
Expenses related to increased head count for strategic initiatives, new facilities or other significant spending for strategic
30
initiatives or new product and channel development, are captured in investment spending. Volume/product mix represents the
impact due to increases or decreases of revenue due to changes in unit volume, including new products and services, including
the effect of changes in the mix of products and services sold on Cost of goods sold.
Selling and Administrative Expenses
For the year ended December 31, 2025, Selling and administrative expenses as a percentage of Net revenues increased to 24.1%
from 23.5%, as compared to the year ended December 31, 2024, due to the following:
Inflation in excess of productivity and investment spending
0.5 %
Volume leverage
(0.2) %
Restructuring / integration / acquisition expenses
0.3 %
Total
0.6 %
Selling and administrative expenses as a percentage of Net revenues increased due to inflation in excess of productivity and
investment spending and a year-over-year increase in restructuring, integration, and acquisition expenses. These increases were
partially offset by the favorable impact of higher volume leverage.
Volume leverage represents the contribution margin related to changes in sales volume, excluding the impact of price,
productivity, mix and inflation. Expenses related to increased head count for strategic initiatives, new facilities or significant
spending for strategic initiatives or new product and channel development, are captured in investment spending in the table
above.
Operating Income/Margin
Operating income for the year ended December 31, 2025, increased $78.8 million as compared to the year ended December 31,
2024, and Operating margin increased to 21.1% from 20.7%, due to the following:
In millions
Operating Income
Operating Margin
December 31, 2024
$
780.7
20.7 %
Pricing and productivity in excess of inflation and investment spending
8.7
(0.4) %
Volume / product mix
41.1
0.9 %
Currency exchange rates
9.1
— %
Acquisitions / divestitures
24.4
— %
Restructuring / integration / acquisition expenses
(4.5)
(0.1) %
December 31, 2025
$
859.5
21.1 %
The increase in Operating income was driven by favorable volume/product mix, the favorable impact from
acquisitions/divestitures, favorable foreign currency exchange rate movements, and pricing and productivity improvements in
excess of inflation and investment spending. These increases were partially offset by higher restructuring, integration, and
acquisition expenses.
The increase in Operating margin was driven by favorable volume/product mix, which was partially offset by lower operating
margin from pricing and productivity in excess of inflation and investment spending and higher restructuring, integration and
acquisition expenses.
Interest Expense
Interest expense for the year ended December 31, 2025, decreased $1.0 million as compared to the year ended December 31,
2024, primarily due to a lower weighted-average interest rate on our outstanding indebtedness.
Other Income, net
The components of Other income, net, for the years ended December 31 were as follows:
In millions
2025
2024
Interest income
$
(12.0) $
(20.5)
Currency translation loss
3.4
2.2
Earnings and gains from the sale of equity method investments, net
(1.6)
(1.1)
Net periodic pension and postretirement benefit (income) cost, less service cost
1.0
(0.2)
Other income
(0.7)
(0.5)
Other income, net
$
(9.9) $
(20.1)
For the year ended December 31, 2025, Other income, net, decreased $10.2 million compared to 2024, primarily due to less
interest income generated as a result of less cash on hand throughout the year due to the increase in acquisition activity.
31
Provision for Income Taxes
For the year ended December 31, 2025, our effective tax rate was 16.2%, compared to 14.5% for the year ended December 31,
2024. The increase in the effective income tax rate was primarily due to the unfavorable mix of income earned in higher tax rate
jurisdictions and year over year changes in amounts recognized for uncertain tax positions and income tax credits, which were
partially offset by the enactment of legislative changes.
Review of Business Segments
We operate in and report financial results for two segments: Allegion Americas and Allegion International. These segments
represent the level at which our chief operating decision maker ("CODM") reviews our financial performance and makes
operating decisions.
Segment operating income is the measure of profit and loss that our CODM uses to evaluate the financial performance of the
business and as the basis for resource allocation, performance reviews and compensation. For these reasons, we believe
Segment operating income represents the most relevant measure of Segment profit and loss. Our CODM may exclude certain
charges or gains, such as corporate charges and other special charges, to arrive at a Segment operating income that is a more
meaningful measure of profit and loss upon which to base our operating decisions. We define Segment operating margin as
Segment operating income as a percentage of the segment's Net revenues.
The segment discussions that follow describe the significant factors contributing to the changes in results for each segment
included in Net earnings.
Segment Results of Operations - For the years ended December 31
In millions
2025
2024
% Change
Net revenues
Allegion Americas
$
3,218.8 $
3,012.4
6.9 %
Allegion International
848.5 $
759.8
11.7 %
Total
$
4,067.3 $
3,772.2
Segment operating income
Allegion Americas
$
896.5 $
816.2
9.8 %
Allegion International
76.5
66.3
15.4 %
Total
$
973.0 $
882.5
Segment operating margin
Allegion Americas
27.9 %
27.1 %
Allegion International
9.0 %
8.7 %
Allegion Americas
Our Allegion Americas segment is a leading provider of security products, services and solutions throughout North America.
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. 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.
Net Revenues
Net revenues for the year ended December 31, 2025, increased by 6.9%, or $206.4 million, as compared to the year ended
December 31, 2024, due to the following:
Pricing
3.6 %
Volume
1.6 %
Acquisitions
1.8 %
Currency exchange rates
(0.1) %
Total
6.9 %
The increase in Net revenues was driven by improved pricing, the favorable impact of acquisitions and higher volumes. These
increases were partially offset by unfavorable foreign currency exchange rate movements.
Excluding Net revenues of businesses acquired in 2025, Net revenues from non-residential products grew by a high-single
digits percent compared to the prior year, driven by increased pricing and higher volumes, and Net revenues from residential
32
products decreased by a low-single digits percent compared to the prior year, driven by lower volumes, partially offset by
increased pricing.
Growth in Americas electronic security products and solutions is a metric monitored by management and a focus of our
investors. Electronic products encompass both residential and non-residential products, and include all electrified product
categories including, but not limited to, electronic and electrified locks, access control systems and electronic and electrified
door controls and systems and exit devices. Net revenues from the sale of electronic products increased by a low-double digits
percent compared to 2024. We continue to believe electronic products are a long-term growth driver.
Operating Income/Margin
Segment operating income for the year ended December 31, 2025, increased $80.3 million, and Segment operating margin
increased to 27.9% from 27.1% as compared to the year ended December 31, 2024, due to the following:
In millions
Operating Income
Operating Margin
December 31, 2024
$
816.2
27.1 %
Pricing and productivity in excess of inflation and investment spending
18.5
(0.3) %
Volume / product mix
41.8
0.9 %
Currency exchange rates
2.3
0.1 %
Acquisitions
12.5
(0.1) %
Restructuring / integration / acquisition expenses
5.2
0.2 %
December 31, 2025
$
896.5
27.9 %
The increase in Segment operating income was primarily driven by favorable volume/product mix, pricing and productivity in
excess of inflation and investment spending, the favorable impact of recent acquisitions, lower restructuring, integration, and
acquisition expenses and favorable foreign currency exchange rate movements.
The increase in Segment operating margin was driven by favorable volume/product mix, lower restructuring, integration and
acquisition expenses and favorable foreign currency exchange rate movements. These increases were partially offset by lower
operating margin from pricing and productivity in excess of inflation and investment spending and the unfavorable impact on
operating margin from recent acquisitions.
Allegion International
Our Allegion International segment provides security products, services and solutions primarily throughout Europe, Asia and
Oceania. The segment offers end-users a broad range of products, services and solutions including locks, locksets, portable
locks, key systems, door controls and door control systems, exit devices, doors, electronic security products, access control
systems, time and attendance and workforce productivity solutions, among other software and service solutions. This segment’s
primary brands are AXA, CISA, ELATEC, Gainsborough, Interflex, and SimonsVoss.
Net Revenues
Net revenues for the year ended December 31, 2025, increased by 11.7%, or $88.7 million, as compared to the year ended
December 31, 2024, due to the following:
Pricing
1.2 %
Volume
(1.3) %
Acquisitions / divestitures
8.2 %
Currency exchange rates
3.6 %
Total
11.7 %
The increase in Net revenues was driven by the favorable impact from recent acquisitions/divestitures, favorable foreign
currency exchange rate movements and improved pricing. These increases were partially offset by lower volumes.
33
Operating Income/Margin
Segment operating income for the year ended December 31, 2025, increased $10.2 million, and Segment operating margin
increased to 9.0% from 8.7% as compared to the year ended December 31, 2024, due to the following:
In millions
Operating Income
Operating Margin
December 31, 2024
$
66.3
8.7 %
Inflation and investment spending in excess of pricing and productivity
(0.2)
(0.1) %
Volume / product mix
(0.7)
— %
Currency exchange rates
6.6
0.7 %
Acquisitions / divestitures
11.9
0.7 %
Restructuring / integration / acquisition expenses
(7.4)
(1.0) %
December 31, 2025
$
76.5
9.0 %
The increases in Segment operating income and Segment operating margin were primarily driven by the favorable impact from
acquisitions/divestitures and favorable movements in foreign currency exchange rates. These increases were partially offset by
higher restructuring, integration and acquisition expenses, unfavorable volume/product mix and inflation and investment
spending in excess of pricing and productivity improvements. Macroeconomic conditions in our International markets remain
mixed.
Liquidity and Capital Resources
Liquidity Outlook, Sources and Uses
Our primary source of liquidity is cash provided by operating activities. Cash provided by operating activities is used to invest
in new product development and fund capital expenditures and working capital requirements. Our ability to generate cash from
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. Further, our
business operates with strong operating cash flows, low leverage and low capital intensity, providing us financial flexibility.
Our short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending,
potential acquisitions, dividend payments and principal and interest payments on our long-term debt. Long-term financing
needs depend largely on potential growth opportunities, including potential acquisitions, repayment or refinancing of our long-
term obligations and repurchases of our ordinary shares. Of our total outstanding indebtedness as of December 31, 2025,
approximately 90% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.
Based upon our operations, existing cash balances and unused availability under the Revolving Facility, as of December 31,
2025, we expect cash flows from operations to be sufficient to maintain a sound financial position and liquidity and to meet our
financing needs for at least the next twelve months. Further, we do not anticipate any covenant compliance challenges with any
of our outstanding indebtedness for at least the next twelve months. We also believe unused availability under the Revolving
Facility and access to credit and capital markets are sufficient to achieve our longer-term strategic plans.
The following table reflects the major categories of cash flows for the years ended December 31. For additional details, see the
Consolidated Statements of Cash Flows in the Consolidated Financial Statements.
In millions
2025
2024
Net cash provided by operating activities
$
783.8 $
675.0
Net cash used in investing activities
(685.5)
(228.4)
Net cash used in financing activities
(266.7)
(394.5)
Operating activities: Net cash provided by operating activities for the year ended December 31, 2025, increased by $108.8
million compared to 2024, driven primarily by higher net earnings and less cash used for working capital.
Investing activities: Net cash used in investing activities for the year ended December 31, 2025, increased by $457.1 million
compared to 2024, primarily due to higher cash used for acquisitions and an increase in capital expenditures.
Financing activities: Net cash used in financing activities for the year ended December 31, 2025, decreased by $127.8 million
compared to 2024. The change in cash used in financing activities was primarily due to a decrease in cash used for share
repurchases, partially offset by higher net repayments on debt and higher dividend payments.
34
Capitalization
At December 31, long-term debt and other borrowings consisted of the following:
In millions
2025
2024
Term Facility
$
— $
212.5
Revolving Facility
190.6
—
3.550% Senior Notes due 2027
400.0
400.0
3.500% Senior Notes due 2029
400.0
400.0
5.411% Senior Notes due 2032
600.0
600.0
5.600% Senior Notes due 2034
400.0
400.0
Other debt
0.2
—
Total borrowings outstanding
1,990.8
2,012.5
Discounts and debt issuance costs, net
(10.7)
(13.0)
Total debt
1,980.1
1,999.5
Less current portion of long-term debt
0.2
21.9
Total long-term debt
$
1,979.9 $
1,977.6
We have an unsecured revolving credit facility (the "Revolving Facility") in place, of which $190.6 million was outstanding at
December 31, 2025. We paid the outstanding $212.5 million principal balance and interest on a term loan facility during the
year ended December 31, 2025 using cash on hand and borrowings under the Revolving Facility. On December 9, 2025, we
amended and restated the Revolving Facility which, among other things, increased the total commitment from $750.0 million to
$1.0 billion, and extended the maturity from May 20, 2029 to May 20, 2030.
The Revolving Facility provides aggregate commitments of up to $1.0 billion, which includes up to $100.0 million for the
issuance of letters of credit. We had $25.2 million and $18.4 million of letters of credit outstanding at December 31, 2025 and
2024, respectively. Borrowings under the Revolving Facility may be repaid at any time without premium or penalty, and
amounts repaid may be reborrowed. We pay certain fees with respect to the Revolving Facility, including an unused
commitment fee on the undrawn portion of between 0.080% and 0.200% per year, depending on the Company's credit ratings,
as well as certain other fees.
Outstanding borrowings under the Revolving Facility accrue interest, at our option, of (i) a SOFR plus an applicable margin, or
(ii) a base rate (as defined in the credit agreement) plus an applicable margin. The applicable margin ranges from 0.875% to
1.375% depending on our credit ratings. At December 31, 2025, our outstanding borrowings under the Revolving Facility
accrued interest at SOFR plus a margin of 1.125%, resulting in an interest rate of 4.902%. The credit agreement also contains
negative and affirmative covenants and events of default that, among other things, limit or restrict our ability to enter into
certain transactions. In addition, the Revolving Facility requires us to comply with a maximum leverage ratio as defined in the
credit agreement. As of December 31, 2025, we were in compliance with all applicable covenants under the credit agreement.
As of December 31, 2025, we also have $400.0 million outstanding of our 3.550% Senior Notes due 2027 (the “3.550% Senior
Notes”), $600.0 million outstanding of our 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”), $400.0 million
outstanding of the 5.600% Senior Notes due 2034 (the "5.600% Senior Notes") and $400.0 million outstanding of its 3.500%
Senior Notes due 2029 (the “3.500% Senior Notes”, and all four senior notes collectively, the "Senior Notes"). The 3.550%
Senior Notes and 3.500% Senior Notes both require semi-annual interest payments on April 1 and October 1 of each year and
mature on October 1, 2027 and October 1, 2029, respectively. The 5.411% Senior Notes require semi-annual interest payments
on January 1 and July 1 of each year and mature on July 1, 2032. The 5.600% Senior Notes require semi-annual interest
payments on May 29 and November 29 of each year and mature on May 29, 2034.
Historically, the majority of our earnings were considered to be permanently reinvested in jurisdictions where we have made,
and intend to continue to make, substantial investments to support the ongoing development and growth of our global
operations. At December 31, 2025, we analyzed our working capital requirements and the potential tax liabilities that would be
incurred if certain subsidiaries made distributions and concluded that no material changes to our historic permanent
reinvestment assertions were required.
Scheduled future principal repayments on our outstanding indebtedness can be found in Note 8 to the Consolidated Financial
Statements. Interest payments related to our long-term indebtedness in 2026 are expected to be $90-95 million, given our
current level of indebtedness and effective interest rates as of December 31, 2025.
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:
35
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. Such purchase commitments are made in the normal course of business and are not anticipated to materially impact
our liquidity or financial position over the next twelve months. See Note 19 to the Consolidated Financial Statements for further
information.
Leases – We have numerous real estate and equipment leasing arrangements for which we are a lessee. See Note 10 to the
Consolidated Financial Statements for further information as to the short and long-term lease liabilities included within the
Consolidated Balance Sheets, as well as future minimum lease payments for 2026 and future years.
Defined Benefit Plans – Our investment objective in managing defined benefit plan assets is to ensure that all present and future
benefit obligations are met as they come due. 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. We monitor plan funded status, asset allocation and the impact of market conditions on our defined benefit
plans regularly in addition to investment manager performance. None of our defined benefit plans have experienced a
significant impact on their liquidity due to volatility in the markets.
At December 31, 2025, we had net pension assets of $14.6 million, which consist of plan assets of $498.5 million and benefit
obligations of $483.9 million. It is our objective to contribute to our pension plans in order to ensure adequate funds are
available to make benefit payments to plan participants and beneficiaries when required. At December 31, 2025, the funded
status of our U.S. pension plans increased to 101.0% from 100.8% at December 31, 2024. The funded status for our non-U.S.
pension plans increased to 104.8% at December 31, 2025 from 101.4% at December 31, 2024. The funded status for all of our
pension plans at December 31, 2025 increased to 103.0% from 101.1% at December 31, 2024. We currently expect to
contribute approximately $3.9 million to our plans worldwide in 2026.
Determining the costs and obligations associated with our defined benefit plans is dependent on various actuarial assumptions
including discount rates, expected returns on plan assets, employee mortality and turnover rates. Changes in any of the
assumptions can have an impact on the net periodic pension benefit cost. An estimated 0.5% rate decline in the discount rate
would have increased net periodic pension benefit cost by approximately $0.4 million in 2025, while a 0.5% rate decline in the
estimated return on assets would have increased net periodic pension benefit cost by approximately $2.2 million. For further
details on defined benefit plan activity, see Note 11 to the Consolidated Financial Statements.
Income Taxes – At December 31, 2025, we have total unrecognized tax benefits for uncertain tax positions of $54.8 million and
$12.0 million of related accrued interest and penalties, net of tax, although we are unable to reasonably estimate the timing over
which these liabilities might be paid. See Note 16 to the Consolidated Financial Statements for additional information regarding
matters relating to income taxes, including unrecognized tax benefits and tax authority disputes.
Contingent Liabilities – We are involved in various litigation, claims and administrative proceedings, including those related to
environmental, asbestos-related and product liability matters. We believe that these liabilities are subject to the uncertainties
inherent in estimating future costs for contingent liabilities and will likely be resolved over an extended period of time. See
Note 19 to the Consolidated Financial Statements for additional information.
Guarantor Financial Information
Allegion US Hold Co is the issuer of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes and is the
guarantor of the 3.500% Senior Notes. Allegion plc (the “Parent”) is the issuer of the 3.500% Senior Notes and is the guarantor
of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes. Allegion US Hold Co is directly or indirectly
100% owned by the Parent and each of the guarantees of Allegion US Hold Co and the Parent is full and unconditional and
joint and several.
The 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes are senior unsecured obligations of Allegion US
Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated
indebtedness. The guarantee of the 3.550% Senior Notes, 5.411% Senior Notes, and 5.600% Senior Notes is the senior
unsecured obligation of the Parent and ranks equally with all of the Parent’s existing and future senior unsecured and
unsubordinated indebtedness. The 3.500% Senior Notes are senior unsecured obligations of the Parent and rank equally with all
of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.500% Senior
Notes is the senior unsecured obligation of Allegion US Hold Co and ranks equally with all of Allegion US Hold Co's existing
and future senior unsecured and unsubordinated indebtedness.
Each guarantee is effectively subordinated to any secured indebtedness of the guarantor to the extent of the value of the assets
securing such indebtedness. The Senior Notes are structurally subordinated to indebtedness and other liabilities of the
subsidiaries of the guarantor, none of which guarantee the notes. The obligations of the guarantor under its guarantee are limited
as necessary to prevent such guarantee from constituting a fraudulent conveyance under applicable law and, therefore, are
limited to the amount that the applicable guarantor could guarantee without such guarantee constituting a fraudulent
conveyance; this limitation, however, may not be effective to prevent such guarantee from constituting a fraudulent
36
conveyance. If the guarantee was rendered voidable, it could be subordinated by a court to all other indebtedness (including
guarantees and other contingent liabilities) of the guarantor, and, depending on the amount of such indebtedness, the applicable
guarantor’s liability on its guarantee could be reduced to zero. In such an event, the notes would be structurally subordinated to
the indebtedness and other liabilities of the applicable guarantor.
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.
The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for each
issuer and guarantor. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-
X.
Selected Condensed Statement of Comprehensive Income Information
Year ended December 31, 2025
In millions
Allegion plc
Allegion US Hold Co
Net revenues
$
— $
—
Gross profit
—
—
Operating loss
(7.6)
—
Equity earnings in affiliates, net of tax
711.5
483.4
Transactions with related parties and subsidiaries(a)
(27.4)
(92.1)
Net earnings
643.8
362.0
Net earnings attributable to the entity
643.8
362.0
(a) Transactions with related parties and subsidiaries include intercompany interest and fees.
Selected Condensed Balance Sheet Information
December 31, 2025
In millions
Allegion plc
Allegion US Hold Co
Current assets:
Amounts due from related parties and subsidiaries
$
1.2 $
781.3
Total current assets
8.2
835.2
Noncurrent assets:
Amounts due from related parties and subsidiaries
—
1,299.1
Total noncurrent assets
1,792.7
1,425.7
Current liabilities:
Amounts due to related parties and subsidiaries
$
10.8 $
702.1
Total current liabilities
31.7
730.4
Noncurrent liabilities:
Amounts due to related parties and subsidiaries
484.0
2,737.6
Total noncurrent liabilities
1,073.0
4,124.4
Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated
Financial Statements, which have been prepared in accordance with GAAP. The preparation of financial statements in
accordance with GAAP requires management to use judgment in making estimates and assumptions based on the relevant
information available at the end of each period. These estimates and assumptions have a significant effect on reported amounts
of assets and liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities because they result
primarily from the need to make estimates and assumptions on matters that are inherently uncertain. Actual results may differ
from estimates. 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.
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. Recoverability of goodwill is measured at the reporting unit level and starts with a comparison of the carrying
amount of a reporting unit to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying
amount, goodwill of the reporting unit is not impaired. To the extent that the carrying value of a reporting unit exceeds its
estimated fair value, a goodwill impairment charge will be recognized for the amount by which the carrying value of the
reporting unit exceeds its fair value, not to exceed the carrying amount of the reporting unit's goodwill.
37
As quoted market prices are not available for our reporting units, the calculation of their estimated fair values is based on
two valuation techniques, a discounted cash flow model (income approach) and a market multiple of earnings (market
approach), with each method being weighted in the calculation. The income approach relies on our estimates of revenue
growth rates, margin assumptions and discount rates to estimate future cash flows and explicitly addresses factors such
as timing, with due consideration given to forecasting risk. These assumptions are subject to varying degrees of
judgment and complexity. Estimates of future revenue growth rates and margin assumptions represent our best estimates
of future cash flows given our expectations of market growth for the security products industry in the specific markets in
which we operate, as well as factors such as our market positioning, brand strength, pricing and marketing efforts and
other growth and productivity opportunities and initiatives. Discount rate assumptions represent our best estimates of
market participant adjusted weighted-average costs of capital. Although these assumptions represent our best estimates
as of the assessment date, certain factors could potentially create variances in these estimates, including, but not limited
to:
•
Decreases in estimated market sizes or market growth rates due to greater than expected declines in volumes,
pricing pressures or disruptive technology;
•
Declines in our market share and penetration assumptions due to increased competition or an inability to
develop or launch new products;
•
The impacts of market volatility, including but not limited to, impacts of global pandemics, greater than
expected inflation, supply chain disruption and delays, declines in pricing, reductions in volumes or fluctuations
in foreign currency exchange rates;
•
The level of success of on-going and future research and development efforts, including those related to
acquisitions, and increases in the research and development costs necessary to obtain regulatory approvals and
launch new products; and
•
Volatility in market interest rates that could impact the selection of an appropriate discount rate.
The market approach requires determining an appropriate peer group, which is utilized to derive estimated fair values of
our reporting units based on selected market multiples. The market approach reflects the market’s expectations for future
growth and risk, with adjustments to account for differences between the selected peer group companies and the subject
reporting units. While market multiples are based on observable, arm’s-length evidence of value, these assumptions are
still subject to inherent uncertainty, as the peer-group companies may differ in significant ways from one or more of our
reporting units in terms of size, growth or business characteristics.
The critical accounting estimates and assumptions discussed above, include our estimates of revenue growth rates and
margin assumptions, discount rates, our selection of an appropriate peer group and selected market multiples. These
estimates and assumptions are considered critical, as they are subject to a high degree of judgment and complexity.
Forecasted revenue growth rates and margin assumptions are updated annually and often fluctuate from year to year due
to a myriad of factors, such as our assessment of the macroeconomic conditions throughout the major markets in which
we do business, supply chain challenges, elevated levels of inflation in recent years and pricing initiatives to offset
inflation, market acceptance of new product innovation, investments in productivity projects, restructuring efforts,
among other economic, strategic and operational factors impacting our businesses. Discount rate and market multiple
assumptions are similarly updated annually, based on our best estimates of market participants, which typically include
observable, arm's length-evidence of value, where possible. While we make every effort to estimate fair value as
accurately as possible with the information available at the assessment date, changes in assumptions and estimates may
affect the estimated fair value of the reporting unit and could result in impairment charges in future periods. During our
most recent annual impairment analysis, none of our reporting units were determined to be impaired.
•
Indefinite-lived intangible assets – Similar to goodwill, indefinite-lived intangible assets are 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 the asset is, more likely than not, less than its carrying amount. Recoverability of indefinite-lived intangible assets is
determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount
rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty
relief) indicates the estimated fair value of the asset. 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. We assess the appropriateness of each royalty rate
assumption annually, based on our assessment of observable market royalty rates and an analysis of the profitability of
the primary business that owns or otherwise uses the indefinite-lived asset. Discount rate assumptions typically consider
the discount rate conclusions for the reporting unit in which an underlying business operates, plus an incremental spread,
where appropriate, to consider size, country or other company-specific risk. A significant change in any or a combination
of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on
the estimated fair values.
38
•
Income taxes – We account for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are
determined based on temporary differences between financial reporting and tax bases of assets and liabilities, applying
enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. We recognize
future tax benefits, such as net operating losses and non-U.S. tax credits, to the extent that realizing these benefits is
considered in our judgment to be more likely than not. The recoverability of our deferred tax assets, which we consider
to be a critical estimate, is reviewed regularly by considering our historic profitability, projected future taxable income,
timing of the reversals of existing temporary differences and the feasibility of our tax planning strategies. Where
appropriate, we record a valuation allowance with respect to future tax benefits. We establish valuation allowances
against the realizability of any deferred tax assets based on our consideration of all available evidence, both positive and
negative, using a “more likely than not” standard. This assessment considers the nature, frequency and amount of recent
losses, the duration of statutory carryforward periods and tax planning strategies. Although our assessments of the
valuation and recoverability of our deferred tax assets can change given a change in facts and circumstances (such as a
change in a statutory tax rate), in making such judgments and estimates, significant weight is given to evidence that can
be objectively verified.
The provision for income taxes also involves a significant amount of management judgment regarding interpretation of
relevant facts and laws in the jurisdictions in which we operate. Future changes in applicable laws, projected levels of
taxable income and tax planning could change the effective tax rate and tax balances recorded by us. In addition, tax
authorities periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing
and amount of income or deductions and the allocation of income among the jurisdictions in which we operate. A
significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue
raised by a tax authority with respect to that return. We believe we have adequately provided for any reasonably
foreseeable resolution of these matters and will adjust our estimates if significant events so dictate. To the extent that the
ultimate results differ from our original or adjusted estimates, the effect will be recorded in the Provision for income
taxes in the period the matter is finally resolved.
•
Business combinations – The accounting for business combinations involves a considerable amount of judgment and
estimation, including the identification of and fair values determined for acquired intangible assets, which typically
include trade names, customer relationships and completed technologies. 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. Due to the level of judgment and
estimation required, in the case of significant acquisitions, we normally obtain the assistance of a third-party valuation
specialist in estimating fair values of acquired tangible and intangible assets and assumed liabilities. An income approach
or market approach (or both) is utilized in accordance with accepted valuation models to determine fair value. The
determination of fair value of acquired assets typically requires the use of assumptions that include projections developed
using historical information, internal forecasts, available industry and market data, estimates of revenue growth rates,
profitability, customer attrition and discount and royalty rates, which are estimated at the time of acquisition, considering
the perspective of marketplace participants. While we believe expectations and assumptions utilized for historical
business combinations have been reasonable, they are inherently uncertain, and unanticipated market or macroeconomic
events and circumstances occasionally do occur, and may occur in the future, which could affect the accuracy and
validity of such assumptions.
The impact of future business combinations on our financial condition or results of operations may also be materially
impacted by the change in or initial selection of assumptions and estimates, in addition to events and circumstances
subsequent to the acquisition that are not reasonably anticipated when finalizing our purchase accounting estimates and
assumptions.
Recent Accounting Pronouncements
See Note 2 to our Consolidated Financial Statements for a discussion of recently issued and adopted accounting
pronouncements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to fluctuations in currency exchange rates, commodity prices and interest rates which could impact our results
of operations and financial condition.
Foreign Currency Exposures
We have operations throughout the world that manufacture and sell products in various international markets. As a result, we
are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other currencies
throughout the world. We actively manage material currency exposures that are associated with purchases and sales and other
39
assets and liabilities at the legal entity level; however, we do not hedge currency translation risk. We attempt to hedge exposures
that cannot be naturally offset to an insignificant amount with foreign currency derivatives. Derivative instruments utilized in
our hedging activities are viewed as risk management tools, involve little complexity and are not used for trading or speculative
purposes. To minimize the risk of counter party non-performance, derivative instrument agreements are made only through
major financial institutions with significant experience in such derivative instruments.
We evaluate our exposure to changes in currency exchange rates on our foreign currency derivatives using a sensitivity
analysis. The sensitivity analysis is a measurement of the potential loss in fair value based on a percentage change in exchange
rates. Based on the firmly committed currency derivative instruments in place at December 31, 2025, a hypothetical change in
fair value of those derivative instruments assuming a 10% adverse change in exchange rates would result in an additional
unrealized loss of approximately $4.3 million. This amount, when realized, would be partially offset by changes in the fair
value of the underlying transactions.
Commodity Price Exposures
We purchase a wide range of raw material, including steel, zinc, brass and other non-ferrous metals, and are exposed to
volatility in the prices of these and other commodities used in our products. We use fixed price contracts to manage this
exposure where appropriate. We do not have committed commodity derivative instruments in place at December 31, 2025.
However, an increase in commodity prices could result in lower gross profit.
Interest Rate Exposure
Of our total outstanding indebtedness of $2.0 billion as of December 31, 2025, approximately 90% incurs fixed-rate interest and
is therefore not exposed to the risk of rising variable interest rates. However, outstanding borrowings under the Revolving
Facility accrue variable rate interest at our option of (i) a Secured Overnight Financing Rate ("SOFR") plus the applicable
margin or (ii) a base rate plus the applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on our
credit ratings. At December 31, 2025, the outstanding borrowings of $190.6 million under the Revolving Facility accrue interest
at SOFR plus a margin of 1.125%, resulting in an interest rate of 4.902%. We are also exposed to the risk of rising interest rates
to the extent that we fund our operations with short-term or variable-rate borrowings. We have $190.6 million outstanding and
unused availability of $784.2 million under the Revolving Facility as of December 31, 2025. A hypothetical increase of 1% in
the interest rate on the variable rate borrowings under our Revolving Facility would increase our interest expense over the next
twelve months by $2.0 million based on the balances outstanding as of December 31, 2025. If the SOFR or other applicable
base rates of the Revolving Facility increase in the future, our Interest expense could increase.
40
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a)
The following Consolidated Financial Statements and Financial Statement Schedule and the report thereon of
PricewaterhouseCoopers LLP dated February 17, 2026, are presented following Item 16 of this Annual Report on
Form 10-K.
Consolidated Financial Statements:
Report of independent registered public accounting firm (PCAOB ID 238)
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023
Consolidated Balance Sheets at December 31, 2025 and 2024
For the years ended December 31, 2025, 2024 and 2023:
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2025, 2024 and 2023
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation
of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-
15(e) under the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2025, that the Company's
disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act has been recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms, and that such information has been accumulated and communicated to
the Company's management including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
(b) Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined
under Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting
includes those policies and procedures that:
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company’s assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are
being made only in accordance with authorizations of the Company’s management and directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework (2013). We concluded that our internal control over financial
reporting was effective as of December 31, 2025.
The effectiveness of our internal control over financial reporting has been audited by PricewaterhouseCoopers LLP, the
independent registered public accounting firm, as stated in their report herein.
41
(c) Changes in Internal Control Over Financial Reporting
There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended
December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. OTHER INFORMATION
During the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-
1 trading arrangement" or "non-rule 10b5-1 trading arrangement," as each term is defined in item 408(a) of Regulation S-K.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
42
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated herein by reference to the information contained under the headings
"Proposal 1. Election of Directors" and "Corporate Governance" in the Proxy Statement.
The Company has adopted an Insider Trading Policy that restricts transactions in the Company’s securities by its directors,
officers, employees, agents, consultants and advisors and their related persons while such persons are in the possession of
material non-public information. The Insider Trading Policy is designed to promote compliance with insider trading laws, rules
and regulations, and NYSE listing standards. A copy of the Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report
on Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the information contained under the headings
"Corporate Governance - Compensation of Directors," "Compensation Discussion and Analysis" and "Executive
Compensation" in the Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to the information contained under the headings
"Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation - Equity Compensation
Plan Information" in the Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference to the information contained under the headings
"Corporate Governance" in the Proxy Statement.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated herein by reference to the information contained under the heading
"Proposal 3". Approval of Appointment of Independent Registered Public Accounting Firm and Authorization to Set
Independent Registered Public Accounting Firm’s Remuneration for Fiscal 2026–Fees of the Independent Registered Public
Accounting Firm" in the Proxy Statement.
43
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. and 2.
Financial statements and financial statement schedule
See Item 8.
3.
Exhibits
The exhibits listed on the accompanying index to exhibits are filed as part of this Annual Report on
Form 10-K.
44
ALLEGION PLC
INDEX TO EXHIBITS
(Item 15(a))
Description
Certain agreements filed as exhibits to this Annual Report on Form 10-K may contain representations and warranties by the
parties thereto. These representations and warranties have been made solely for the benefit of the parties to such agreements and
(i) may have been qualified by confidential disclosures made by parties in connection with such agreements, (ii) were made
only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more
recent developments, which may or may not be fully reflected in our public disclosure, (iii) were included in such agreements
solely to reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different
from what may be viewed as material to investors. Investors are not third-party beneficiaries under such agreements, and
accordingly, should not rely on these representations and warranties as characterizations of our actual state of affairs at the date
thereof or hereof.
(a) Exhibits
Exhibit
Number
Exhibit Description
Method of Filing
3.1
Amended and Restated Memorandum and Articles of
Association of Allegion plc.
Incorporated by reference to Exhibit 3.1 of the
Company’s Form 8-K filed with the SEC on June
13, 2016 (File No. 001-35971).
4.1
Indenture, dated as of October 2, 2017, among Allegion US
Holding Company Inc., Allegion plc and Wells Fargo
Bank, National Association.
Incorporated by reference to Exhibit 4.1 of the
Company's Form 8-K filed October 2, 2017 (File
No. 001-35971).
4.2
First Supplemental Indenture, dated as of October 2, 2017,
among Allegion US Holding Company Inc., Allegion plc
and Wells Fargo Bank, National Association.
Incorporated by reference to Exhibit 4.2 of the
Company's Form 8-K filed October 2, 2017 (File
No. 001-35971).
4.3
Second Supplemental Indenture, dated as of October 2,
2017, among Allegion US Holding Company Inc., Allegion
plc and Wells Fargo Bank, National Association.
Incorporated by reference to Exhibit 4.4 of the
Company's Form 8-K filed October 2, 2017 (File
No. 001-35971).
4.4
Form of Global Note representing the 3.550% Senior Notes
due 2027.
Incorporated by reference to Exhibit 4.5 of the
Company's Form 8-K filed October 2, 2017
(included in Exhibit 4.4) (File No. 001-35971).
4.5
Third Supplemental Indenture, dated as of September 27,
2019, among Allegion plc, Allegion US Holding Company
Inc. and Wells Fargo Bank, National Association.
Incorporated by reference to Exhibit 4.2 of the
Company’s Form 8-K filed September 27, 2019
(File No. 001-35971).
4.6
Form of Global Note representing the 3.500% Senior Notes
due 2029.
Incorporated by reference to Exhibit 4.3 of the
Company's Form 8-K filed September 27, 2019
(included in Exhibit 4.2) (File No. 001-35971).
4.7
Fourth Supplemental Indenture, dated as of June 22, 2022,
among Allegion plc, Allegion US Holding Company Inc.,
and Computershare Trust Company, N.A. as successor to
Wells Fargo Bank National Association.
Incorporated by reference to Exhibit 4.2 of the
Company’s Form 8-K filed June 22, 2022 (File No.
001-35971).
4.8
Form of Global Note representing the 5.411% Senior Notes
due 2032.
Incorporated by reference to Exhibit 4.3 of the
Company's Form 8-K filed June 22,2022 (included
in Exhibit 4.2) (File No. 001-35971).
4.9
Indenture, dated as of May 29, 2024, among Allegion US
Holding Company Inc., Allegion plc, and U.S, Bank Trust
Company, National Association.
Incorporated by reference to Exhibit 4.1 of the
Company’s Form 8-K filed May 29, 2024 (File No.
001-35971).
4.10
First Supplemental Indenture, dated as of May 29, 2024,
among Allegion plc, Allegion US Holding Company Inc.
and U.S, Bank Trust Company, National Association.
Incorporated by reference to Exhibit 4.2 of the
Company’s Form 8-K filed May 29, 2024 (File No.
001-35971).
4.11
Form of Global Note representing the 5.600% Senior Notes
due 2034.
Incorporated by reference to Exhibit 4.3 of the
Company’s Form 8-K filed May 29, 2024 (included
in Exhibit 4.2) (File No. 001-35971).
45
4.12
Description of the Registrant’s Securities registered
pursuant to Section 12 of the Securities Exchange Act of
1934.
Incorporated by reference to Exhibit 4.8 of the
Company’s Form 10-K filed with the SEC on
February 18, 2020 (File No. 001-35971).
10.1
Form of Separation Agreement and Release. *
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 10-K filed with the SEC on
February 19, 2019 (File No. 001-35971).
10.2
Tax Matters Agreement between Ingersoll-Rand plc and
Allegion plc.
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed with the SEC on
December 2, 2013 (File No. 001-35971).
10.3
Amended and Restated Credit Agreement, dated as of May
20, 2024.
Incorporated by reference to Exhibit 10.1 of the
Company's Form 8-K filed May 20, 2024 (File No.
001-35971).
10.4
First Amendment to Amended and Restated Credit
Agreement, dated as of December 9, 2025.
Incorporated by reference to Exhibit 10.1 of the
Company's Form 8-K filed with the SEC on
December 9, 2025.
10.5
2023 Incentive Stock Plan. *
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 10-Q filed with the SEC on July
26, 2023, as amended (File No. 001-35971).
10.6
Executive Deferred Compensation Plan. *
Incorporated by reference to Exhibit 10.6 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.7
Supplemental Employee Savings Plan. *
Incorporated by reference to Exhibit 10.7 of the
Company’s Form 10-K filed with the SEC on
February 18, 2020 (File No. 001-35971).
10.8
Elected Officer Supplemental Program. *
Incorporated by reference to Exhibit 10.8 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.9
Key Management Supplemental Program. *
Incorporated by reference to Exhibit 10.9 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.10
Supplemental Pension Plan. *
Incorporated by reference to Exhibit 10.10 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.11
Senior Executive Performance Plan. *
Incorporated by reference to Exhibit 10.11 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.12
John H. Stone Offer Letter, dated May 24, 2022. *
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed with the SEC on May
31, 2022 (File No. 001-35971).
10.13
Michael J. Wagnes Offer Letter, dated February 14, 2022. * Incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed with the SEC on
February 15, 2022 (File No. 001-35971).
10.14
Timothy P. Eckersley Offer Letter, dated March 3, 2021. *
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed with the SEC on March
10, 2021 (File No. 001-35971).
10.15 David S. Ilardi Offer Letter, dated February 14, 2022. *
Incorporated by reference to Exhibit 10.39 of the
Company's Form 10-K filed with the SEC on
February 15, 2022 (File No. 001-35971).
10.16 Joseph C. Blasko Offer Letter, dated May 9, 2025. *
Filed herewith.
46
10.17
Form of Allegion plc Deed Poll Indemnity.
Incorporated by reference to Exhibit 10.21 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.18
Form of Allegion US Holding Company, Inc. Deed Poll
Indemnity.
Incorporated by reference to Exhibit 10.22 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.19
Form of Allegion Irish Holding Company Limited Deed
Poll Indemnity.
Incorporated by reference to Exhibit 10.23 of the
Company’s Registration Statement on Form 10 filed
with the SEC on June 17, 2013, as amended (File
No. 001-35971).
10.20
Annual Incentive Plan. *
Incorporated by reference to Exhibit 10.1 of the
Company's Form 10-K filed with the SEC on March
10, 2014 (File No. 001-35971).
10.21
Change in Control Severance Plan. *
Incorporated by reference to Exhibit 10.2 of the
Company's Form 10-K filed with the SEC on March
10, 2014 (File No. 001-35971).
10.22
Form of Global Restricted Stock Unit Award Agreement. *
Incorporated by reference to Exhibit 10.21 of the
Company's Form 10-K filed with the SEC on
February 20, 2024 (File No. 001-35971).
10.23
Form of Global Stock Option Award Agreement. *
Incorporated by reference to Exhibit 10.22 of the
Company's Form 10-K filed with the SEC on
February 20, 2024 (File No. 001-35971).
10.24
Form of Global Performance Stock Unit Award Agreement.
*
Incorporated by reference to Exhibit 10.23 of the
Company's Form 10-K filed with the SEC on
February 20, 2024 (File No. 001-35971).
10.25
Form of Non-Employee Director Restricted Stock Unit
Award Agreement. *
Incorporated by reference to Exhibit 10.2 of the
Company's Form 10-Q filed with the SEC on July
26, 2023 (File No. 001-35971).
10.26
Transaction Agreement, dated as of April 22, 2022, by and
between Allegion US Holding Company Inc. Stanley Black
& Decker, Inc., Stanley Black & Decker Canada
Corporation, various entities thereto and Stanley Access
Technologies LLC.
Incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed with the SEC on April
22, 2022 (File No. 001-35971).
19.1
Insider Trading Policy.
Incorporated by reference to Exhibit 19.1 of the
Company’s Form 10-K filed with the SEC on
February 18, 2025.
21.1
List of subsidiaries of Allegion plc.
Filed herewith.
22
Subsidiary Guarantors and Issuers of Guaranteed
Securities.
Filed herewith.
23.1
Consent of Independent Registered Public Accounting
Firm.
Filed herewith.
31.1
Certification of Chief Executive Officer Pursuant to Rule
13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31.2
Certification of Chief Financial Officer Pursuant to Rule
13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32.1
Certifications of Chief Executive Officer and Chief
Financial Officer Pursuant to Rule 13a-14(b) or Rule 15d-
14(b) and 18U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
97
SEC Rule 10D-1 Clawback Policy.
Incorporated by reference to Exhibit 97 of the
Company's Form 10-K filed with the SEC on
February 20, 2024 (File No. 001-35971).
47
101.INS
XBRL Instance Document.
The instance document does not appear in the
Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document.
Filed herewith.
101.CA
L
XBRL Taxonomy Extension Calculation Linkbase
Document.
Filed herewith.
101.DEF XBRL Taxonomy Extension Definition Linkbase
Document.
Filed herewith.
101.LA
B
XBRL Taxonomy Extension Labels Linkbase Document.
Filed herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase
Document.
Filed herewith.
104
Cover Page Interactive Data File.
Formatted as Inline XBRL and contained in Exhibit
101.
* Management contract or compensatory plan or arrangement.
Item 16. FORM 10-K SUMMARY
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALLEGION PLC
(Registrant)
By:
/s/ John H. Stone
John H. Stone
Chief Executive Officer
Date:
February 17, 2026
48
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ John H. Stone
President and Chief Executive Officer (Principal
Executive Officer)
February 17, 2026
(John H. Stone)
/s/ Michael J. Wagnes
Senior Vice President and Chief Financial
Officer (Principal Financial Officer)
February 17, 2026
(Michael J. Wagnes)
/s/ Nickolas A. Musial
Vice President, Controller and Chief Accounting
Officer (Principal Accounting Officer)
February 17, 2026
(Nickolas A. Musial)
/s/ Lauren B. Peters
Chair of the Board
February 17, 2026
(Lauren B. Peters)
/s/ Susan L. Main
Director
February 17, 2026
(Susan L. Main)
/s/ Steven C. Mizell
Director
February 17, 2026
(Steven C. Mizell)
/s/ Nicole Parent Haughey
Director
February 17, 2026
(Nicole Parent Haughey)
/s/ Ellen Rubin
Director
February 17, 2026
(Ellen Rubin)
/s/ Gregg C. Sengstack
Director
February 17, 2026
(Gregg C. Sengstack)
/s/ Dev Vardhan
Director
February 17, 2026
(Dev Vardhan)
ALLEGION PLC
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
F-1
Consolidated Statements of Comprehensive Income
F-3
Consolidated Balance Sheets
F-4
Consolidated Statements of Equity
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-7
Financial Statement Schedule: Schedule II – Valuation and Qualifying Accounts for the years ended
December 31, 2025, 2024 and 2023
F-36
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Allegion plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Allegion plc and its subsidiaries (the "Company") as of
December 31, 2025 and 2024, and the related consolidated statements of comprehensive income, of equity and of cash flows
for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule
listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the
Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
F-2
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition
As described in Notes 2 and 18 to the consolidated financial statements, the Company has two principal revenue streams,
tangible product sales and services and software. For the year ended December 31, 2025, the Company’s net revenues were
$4,067.3 million. Net revenues are recognized based on the satisfaction of performance obligations under the terms of a
contract. A performance obligation is a promise in a contract to transfer control of a distinct product or to provide a service, or a
bundle of products or services, to a customer. Product sales involve contracts with a single performance obligation. Transfer of
control typically occurs when goods are shipped from the Company's facilities or at other predetermined control transfer points
(for instance, destination terms). Services and software offerings include inspection, maintenance and repair, aftermarket,
design and installation services, as well as on-premise, software maintenance and software as a service solutions. Unlike the
single performance obligation to ship a product or bundle of products, revenue related to services is recognized when the
service based performance obligations are satisfied.
The principal consideration for our determination that performing procedures related to revenue recognition is a critical audit
matter is the high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company’s
revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
revenue recognition process. These procedures also included, among others (i) testing the completeness, accuracy, and
occurrence of revenue recognized during the year for a sample of revenue transactions by obtaining and inspecting source
documents, such as purchase orders, invoices, shipping documentation, service order completion sheets and subsequent cash
receipts, (ii) for certain revenue transactions, testing the issuance and settlement of invoices and credit memos, tracing
transactions not settled to a detailed listing of accounts receivable, and testing the completeness and accuracy of data provided
by management; and (iii) confirming a sample of outstanding customer invoice balances as of year-end and obtaining and
inspecting source documents, such as subsequent cash receipts or shipping documentation, for confirmations not returned.
/s/ PricewaterhouseCoopers LLP
Indianapolis, Indiana
February 17, 2026
We have served as the Company’s auditor since 2013.
F-3
Allegion plc
Consolidated Statements of Comprehensive Income
In millions, except per share amounts
For the years ended December 31,
2025
2024
2023
Net revenues
$
4,067.3 $
3,772.2 $
3,650.8
Cost of goods sold
2,229.0
2,103.7
2,069.3
Selling and administrative expenses
978.8
887.8
865.6
Impairment of intangible assets
—
—
7.5
Operating income
859.5
780.7
708.4
Interest expense
101.0
102.0
93.1
Other income, net
(9.9)
(20.1)
(1.9)
Earnings before income taxes
768.4
698.8
617.2
Provision for income taxes
124.6
101.3
76.6
Net earnings
643.8
597.5
540.6
Less: Net earnings attributable to noncontrolling interests
—
—
0.2
Net earnings attributable to Allegion plc
$
643.8 $
597.5 $
540.4
Amounts attributable to Allegion plc ordinary shareholders:
Earnings per share attributable to Allegion plc ordinary shareholders:
Basic net earnings:
$
7.48 $
6.85 $
6.15
Diluted net earnings:
$
7.44 $
6.82 $
6.12
Net earnings
$
643.8 $
597.5 $
540.6
Other comprehensive income (loss), net of tax:
Currency translation
130.2
(74.2)
33.6
Cash flow hedges:
Unrealized net (losses) gains arising during period
(1.9)
2.7
0.4
Net gains reclassified into earnings
(1.1)
(0.7)
(1.4)
Tax benefit (expense)
0.6
(0.7)
0.5
Total cash flow hedges, net of tax
(2.4)
1.3
(0.5)
Defined benefit plan adjustments:
Prior service costs and net actuarial gains (losses), net
2.6
(4.4)
(9.4)
Amortization reclassified into earnings
5.2
4.6
4.1
Settlements/curtailments reclassified into earnings
—
0.1
0.4
Currency translation and other
(7.7)
2.9
(5.4)
Tax (expense) benefit
(1.9)
(0.4)
1.5
Total defined benefit plan adjustments, net of tax
(1.8)
2.8
(8.8)
Other comprehensive income (loss), net of tax
126.0
(70.1)
24.3
Total comprehensive income, net of tax
769.8
527.4
564.9
Less: Total comprehensive income attributable to noncontrolling interests
—
—
0.2
Total comprehensive income attributable to Allegion plc
$
769.8 $
527.4 $
564.7
See accompanying notes to consolidated financial statements.
F-4
Allegion plc
Consolidated Balance Sheets
In millions, except share amounts
As of December 31,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
356.2 $
503.8
Accounts and notes receivable, net
437.7
418.9
Inventories
519.0
423.0
Current tax receivable
30.0
29.8
Other current assets
48.9
46.8
Total current assets
1,391.8
1,422.3
Property, plant and equipment, net
444.6
385.3
Goodwill
1,912.4
1,489.4
Intangible assets, net
826.0
569.0
Deferred and noncurrent income taxes
321.8
331.4
Other noncurrent assets
327.1
290.4
Total assets
$
5,223.7 $
4,487.8
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
244.8 $
258.0
Accrued compensation and benefits
152.1
117.6
Accrued expenses and other current liabilities
324.0
275.4
Current tax payable
34.3
24.0
Short-term borrowings and current maturities of long-term debt
0.2
21.9
Total current liabilities
755.4
696.9
Long-term debt
1,979.9
1,977.6
Postemployment and other benefit liabilities
44.2
39.1
Deferred and noncurrent income taxes
165.8
97.9
Other noncurrent liabilities
210.8
175.6
Total liabilities
3,156.1
2,987.1
Equity:
Allegion plc shareholders’ equity
Ordinary shares, $0.01 par value (86,066,997 and 86,254,744 shares issued and
outstanding at December 31, 2025 and 2024, respectively)
0.9
0.9
Capital in excess of par value
34.2
—
Retained earnings
2,238.1
1,831.4
Accumulated other comprehensive loss
(205.6)
(331.6)
Total equity
2,067.6
1,500.7
Total liabilities and equity
$
5,223.7 $
4,487.8
See accompanying notes to consolidated financial statements.
F-5
Allegion plc Consolidated
Statements of Equity
In millions, except per share amounts
Allegion plc shareholders' equity
Total
equity
Ordinary Shares
Capital in
excess of par
value
Retained
earnings
Accumulated
other
comprehensive
loss
Noncontrolling
interests
Amount
Shares
Balance at December 31, 2022
$
944.5
$ 0.9
87.9
$
13.9
1,212.8
$
(285.8) $
2.7
Net earnings
540.6
—
—
—
540.4
—
0.2
Other comprehensive income, net
24.3
—
—
—
—
24.3
—
Repurchase of ordinary shares
(59.9)
—
(0.5)
(41.3)
(18.6)
—
—
Share-based compensation activity
27.0
—
0.1
27.0
—
—
—
Acquisition/divestiture of noncontrolling interest
(0.1)
—
—
0.4
2.3
—
(2.8)
Dividends declared to noncontrolling interests
(0.1)
—
—
—
—
—
(0.1)
Cash dividends declared ($1.80 per share)
(158.0)
—
—
—
(158.0)
—
—
Balance at December 31, 2023
1,318.3
0.9
87.5
—
1,578.9
(261.5)
—
Net earnings
597.5
—
—
—
597.5
—
—
Other comprehensive loss, net
(70.1)
—
—
—
—
(70.1)
—
Repurchase of ordinary shares
(220.0)
—
(1.6)
(42.0)
(178.0)
—
—
Share-based compensation activity
27.3
—
—
27.3
—
—
—
Shares issued under incentive stock plans
14.7
—
0.4
14.7
—
—
—
Cash dividends declared ($1.92 per share)
(167.0)
—
—
—
(167.0)
—
—
Balance at December 31, 2024
1,500.7
0.9
86.3
—
1,831.4
(331.6)
—
Net earnings
643.8
—
—
—
643.8
—
—
Other comprehensive income, net
126.0
—
—
—
—
126.0
—
Repurchase of ordinary shares
(80.0)
—
(0.6)
(18.4)
(61.6)
—
—
Share-based compensation activity
29.0
—
—
29.0
—
—
—
Shares issued under incentive stock plans
23.6
—
0.4
23.6
—
—
—
Cash dividends declared ($2.04 per share) and other
(175.5)
—
—
—
(175.5)
—
—
Balance at December 31, 2025
2,067.6
0.9
86.1
$
34.2
2,238.1
$
(205.6) $
—
See accompanying notes to consolidated financial statements.
$
$
$
$
$
$
$
F-6
Allegion plc
Consolidated Statements of Cash Flows
In millions
For the years ended December 31,
2025
2024
2023
Cash flows from operating activities:
Net earnings
$
643.8 $
597.5 $
540.6
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization
133.2
119.0
111.6
Impairment of intangible assets
—
—
7.5
Share-based compensation
29.8
28.2
26.4
Unrealized (gain) loss on investments, net
(0.9)
1.0
0.8
Deferred income taxes
(10.2)
(44.2)
(67.7)
Other items
7.3
(2.4)
(0.8)
Changes in other assets and liabilities:
Accounts and notes receivable
23.7
(6.7)
(11.9)
Inventories
(38.9)
16.7
44.6
Accounts payable
(34.4)
3.6
(33.6)
Other assets and liabilities
30.4
(37.7)
(16.9)
Net cash provided by operating activities
783.8
675.0
600.6
Cash flows from investing activities:
Capital expenditures
(98.1)
(92.1)
(84.2)
Acquisition of and equity investments in businesses, net of cash acquired
(592.2)
(137.2)
(31.7)
Other investing activities, net
4.8
0.9
(13.2)
Net cash used in investing activities
(685.5)
(228.4)
(129.1)
Cash flows from financing activities:
Debt repayments
(216.1)
(413.3)
(12.6)
Proceeds from Revolving Facility
561.9
—
30.0
Repayments of Revolving Facility
(371.3)
—
(99.0)
Proceeds from issuance of Senior Notes
—
400.0
—
Repayments of debt, net
(25.5)
(13.3)
(81.6)
Debt financing costs
(1.4)
(7.6)
—
Dividends paid to ordinary shareholders
(175.3)
(167.0)
(158.7)
Proceeds from exercise of stock options
23.6
14.7
1.3
Repurchase of ordinary shares
(80.0)
(220.0)
(59.9)
Other financing activities, net
(8.1)
(1.3)
0.2
Net cash used in financing activities
(266.7)
(394.5)
(298.7)
Effect of exchange rate changes on cash and cash equivalents
20.8
(16.4)
7.3
Net (decrease) increase in cash and cash equivalents
(147.6)
35.7
180.1
Cash and cash equivalents – beginning of period
503.8
468.1
288.0
Cash and cash equivalents – end of period
$
356.2 $
503.8 $
468.1
See accompanying notes to consolidated financial statements.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF COMPANY AND BASIS OF PRESENTATION
Allegion plc, an Irish public limited company, and its consolidated subsidiaries ("Allegion" or "the Company") are a leading
global company that provides security products and solutions that keep people and assets safe and secure in the places they live,
learn, work and connect. Allegion creates peace of mind by pioneering safety and security to create a safer and more accessible
world. The Company offers an extensive and versatile portfolio of security and access control products and solutions across a
range of market-leading brands including CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®.
Basis of presentation: The Consolidated Financial Statements were prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP") as defined by the Financial Accounting Standards Board ("FASB") within
the FASB Accounting Standards Codification ("ASC").
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies used in the preparation of the accompanying Consolidated
Financial Statements:
Principles of Consolidation: The Consolidated Financial Statements include all controlled subsidiaries of the Company, after
elimination of all intercompany accounts and transactions. A noncontrolling interest in a subsidiary is considered an ownership
interest in a controlled subsidiary that is not attributable to the Company. The Company includes noncontrolling interests as a
component of Total equity in the Consolidated Balance Sheets and the Net earnings attributable to noncontrolling interests are
presented as an adjustment from Net earnings used to arrive at Net earnings attributable to Allegion plc in the Consolidated
Statements of Comprehensive Income.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities
at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Estimates are based on several factors including the facts and circumstances available at the time the estimates are made,
historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome.
Some of the more significant estimates include useful lives of property, plant and equipment and intangible assets, purchase
price allocations of acquired businesses, valuation of assets and liabilities including goodwill and other intangible assets,
product warranties, sales allowances, assets and liabilities related to defined benefit plans, taxes, lease related assets and
liabilities, share-based compensation, environmental costs, product liability and other contingencies. Actual results could differ
from the Company's estimates. Estimates and assumptions are reviewed periodically, and the effects of changes, if any, are
reflected in the Consolidated Statements of Comprehensive Income in the period they are determined.
Currency Translation: Assets and liabilities where the functional currency is not the U.S. dollar have been translated at year-
end exchange rates, and income and expense accounts have been translated using average exchange rates throughout the year.
Adjustments resulting from the process of translating a subsidiary’s financial statements into the U.S. dollar are recorded to
Accumulated other comprehensive loss.
Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in
currencies other than the functional currency. Transaction gains and losses are recognized in Other income, net, in the
Consolidated Statements of Comprehensive Income in the period they are incurred.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits and all highly liquid
investments with original maturities at the time of purchase of three months or less.
Accounts and Notes Receivable, Net: Receivables consist of billed receivables which are currently due from customers. The
Company provides for an allowance for doubtful accounts and notes receivable, which represents the best estimate of expected
lifetime credit losses inherent in the Company’s accounts and notes receivable portfolios. The Company's estimates are
influenced by a continuing credit evaluation of customers' financial condition, trade accounts and notes receivable aging and
historical loss experience, as well as reasonable and supportable forecasts of future economic conditions. The Company has
reserved $12.9 million and $20.2 million for doubtful accounts and notes receivable as of December 31, 2025 and 2024,
respectively.
Inventories: Inventories are stated at the lower of cost and net realizable value using the first-in, first-out (FIFO) method.
Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Assets
placed in service are recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset
except for leasehold improvements, which are depreciated over the shorter of their economic useful life or their lease term.
Repair and maintenance costs that do not extend the useful life of the asset are expensed as incurred. Major replacements and
F-8
significant improvements that increase asset values and/or extend useful lives are capitalized. The range of useful lives used to
depreciate property, plant and equipment is as follows:
Buildings
10
to
50 years
Machinery and equipment
2
to
12 years
Software
2
to
7
years
The Company assesses the recoverability of the carrying value of its property, plant and equipment whenever events or changes
in circumstances indicate that the carrying amount of the asset may not be fully recoverable. Recoverability is measured by a
comparison of the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset.
If the undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized for the amount
by which the carrying value of the asset exceeds its fair value.
Investments: The Company periodically invests in debt or equity securities of start-up companies and/or development stage
technology or other companies without acquiring a controlling interest. The Company applies the equity method of accounting
when the Company has the ability to exercise significant influence over the operating and financial decision making of the
investee. Investments in equity method affiliates totaled $15.5 million and $13.7 million as of December 31, 2025 and 2024,
respectively. Equity investments that have readily determinable fair values in which the Company does not have significant
influence are measured at fair value, with any unrealized holding gains and losses being recorded to earnings. Investments
without readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or similar investment of the same issuer and are qualitatively
assessed for impairment indicators each reporting period. Investments in debt and equity securities not accounted for under the
equity method of accounting totaled $66.8 million and $66.9 million as of December 31, 2025 and 2024, respectively. The
Company's investments are recorded within Other noncurrent assets within the Consolidated Balance Sheets.
Leases: As a lessee, the Company categorizes its leases into two general categories: real estate and equipment leases. The
Company's real estate leases include leased production and assembly facilities, warehouses and distribution centers and office
space, while the Company's equipment leases primarily include vehicles, material handling and other equipment utilized in the
Company's facilities, laptops and other information technology ("IT") equipment. The Company records a right-of-use ("ROU")
asset and lease liability for substantially all leases for which it is a lessee. At inception of a contract, the Company considers all
relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The
Company assesses the specific terms and conditions of each lease to determine the appropriate classification as either an
operating or finance lease and the lease term. Substantially all of the Company's leases for which the Company is a lessee are
classified as operating leases. If at lease commencement date, a lease has a term of less than 12 months and does not include a
purchase option that is reasonably certain to be exercised, the Company does not include the lease as part of its ROU asset or
lease liability. If the Company enters into a large number of leases in the same month with the same terms and conditions, these
are considered a group (portfolio). There are no material residual value guarantees provided by the Company nor any
restrictions or covenants imposed by any leases to which the Company is a party.
The Company assesses the specific terms and conditions of each real estate lease, which can vary significantly from lease to
lease, to determine the amount of the lease payments and the length of the lease term, which includes the minimum period over
which lease payments are required plus any renewal options that are both within the Company's control to exercise and
reasonably certain of being exercised upon lease commencement. When available, the Company will utilize the rate implicit in
the lease as the discount rate to determine the lease liability; however, as this rate is not available for most leases, the Company
will use its incremental borrowing rate for debt instruments with terms approximating the weighted-average term of its real
estate or equipment leases to discount the future lease payments over the lease term to present value. The Company incurs
variable lease payments for certain of its real estate leases, such as reimbursements of property taxes, maintenance and other
operational costs to the lessor. In general, these variable lease payments are not captured as part of the lease liability or ROU
asset, but rather are expensed as incurred. Most of the Company's equipment leases are for terms ranging from two to five
years, although terms and conditions can vary from lease to lease. The Company applies similar estimates and judgments to its
equipment lease portfolio in determining the lease payments, lease term and incremental borrowing rate as it does to its real
estate lease portfolio. The Company does not typically incur variable lease payments related to its equipment leases.
Goodwill: The Company records goodwill as the excess of the purchase price of an acquired business over the fair value of the
net assets acquired. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever 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. Recoverability of goodwill is measured at the reporting unit level. The carrying amount of a reporting unit is
compared to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the
reporting unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a
goodwill impairment charge will be recognized for the amount by which the carrying value of the reporting unit exceeds its fair
value, not to exceed the carrying amount of the reporting unit's goodwill. Estimated fair value of the Company's reporting units
F-9
is based on two valuation techniques, a discounted cash flow model (income approach) and a market multiple of earnings
(market approach), with each method being weighted in the calculation.
Intangible Assets: Similar to Goodwill, indefinite-lived intangible assets are not amortized, but are tested and reviewed
annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that
indicate the fair value of the asset is more likely than not less than its carrying amount. Recoverability of indefinite-lived
intangible assets (i.e. Trade names) is determined on a relief from royalty methodology, which is based on the implied royalty
paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-
tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the
estimated fair value is recognized as an impairment loss equal to that excess.
Intangible assets such as completed technologies, patents, customer-related intangible assets and other intangible assets with
finite useful lives are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful lives
approximate the following:
Customer relationships
21 years
Trade names (finite-lived)
14 years
Completed technologies/patents
11 years
Other
5 years
Recoverability of intangible assets with finite useful lives is assessed in the same manner as property, plant and equipment, as
described above.
Business Combinations: The fair value of consideration paid in a business combination is allocated to the tangible and
identifiable intangible assets acquired, liabilities assumed and goodwill using the acquisition method of accounting. Acquired
intangible assets typically include trade names, customer relationships and completed technologies. The accounting for business
combinations involves a considerable amount of judgment and estimation, and as a result, for significant acquisitions the
Company normally obtains the assistance of a third-party valuation specialist in estimating fair values of acquired tangible and
intangible assets and assumed liabilities. The allocation of consideration paid to assets acquired and liabilities assumed may be
subject to revision based on the final determination of fair values during the measurement period, which may be up to one year
from the acquisition date. Any contingent consideration is recorded at the estimated fair value as of the date of the acquisition
and is recorded as part of the purchase price. This estimate is updated in future periods and any changes in the estimate, which
are not considered an adjustment to the purchase price, are recorded in the Consolidated Statements of Comprehensive Income.
Business acquisition and integration costs are expensed as incurred.
Income Taxes: The calculation of the Company’s income taxes involves considerable judgment and the use of both estimates
and allocations. Deferred tax assets and liabilities are determined based on temporary differences between financial reporting
and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences
are expected to reverse. The Company recognizes future tax benefits, such as net operating losses and tax credits, to the extent
that realizing these benefits is considered in its judgment to be more likely than not. The Company regularly reviews the
recoverability of its deferred tax assets considering its historic profitability, projected future taxable income, timing of the
reversals of existing temporary differences and the feasibility of its tax planning strategies. Where appropriate, the Company
records a valuation allowance with respect to future tax benefits.
Cash paid for income taxes, net of refunds, for the year ended December 31, 2025, was $121.2 million. Irish federal taxes paid
were $1.3 million, U.S. federal taxes paid were $72.5 million and other foreign taxes paid were $47.4 million. Cash paid for
income taxes, net of refunds, for the years ended December 31, 2024 and 2023 was $158.3 million and $157.9 million,
respectively. The reduction in cash taxes paid in 2025 compared to prior years was primarily attributable to the 2025 enactment
of the One Big Beautiful Bill Act in the United States, which allowed for the acceleration of certain tax deductions.
Product Warranties: The Company offers a standard warranty with most product sales, and the value of such warranty is
included in the contractual sales price. Standard product warranty accruals are recorded at the time of sale and are estimated
based upon product warranty terms and historical experience. The Company regularly assesses the adequacy of its liabilities
and makes adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available.
Revenue Recognition: Net revenues are recognized based on the satisfaction of performance obligations under the terms of a
contract. A performance obligation is a promise in a contract to transfer control of a distinct product or to provide a service, or a
bundle of products or services, to a customer. The Company has two principal revenue streams, tangible product sales and
services and software. Product sales involve contracts with a single performance obligation, the transfer of control of a product
or bundle of products to a customer. Transfer of control typically occurs when goods are shipped from the Company's facilities
or at other predetermined control transfer points (for instance, destination terms). Services and software offerings include
inspection, maintenance and repair, aftermarket, design and installation services, as well as on-premise, software maintenance
and software as a service ("SaaS") solutions. Unlike the single performance obligation to ship a product or bundle of products,
revenue related to services is recognized when the service based performance obligations are satisfied. In some instances,
F-10
customer acceptance provisions are included in sales arrangements to give the buyer the ability to ensure the service meets any
established criteria. In these instances, revenue recognition is deferred until the performance obligations are satisfied, which
could include acceptance terms specified in the arrangement being fulfilled through customer acceptance or a demonstration
that established criteria have been satisfied. Revenue from on-premise software solutions are recognized at the point in time
when the customer can benefit from the software, which generally aligns with the beginning of the license period.
Net revenues are measured as the amount of consideration expected to be received in exchange for transferring control of the
products or providing the services and takes into account variable consideration, such as sales incentive programs including
discounts and volume rebates. The existence of these programs does not preclude revenue recognition but does require the
Company's best estimate of the variable consideration to be made based on expected activity, as these items are reserved for as
a deduction to Net revenues based on the Company's historical rates of providing these incentives and annual forecasted sales
volumes. Sales returns and customer disputes involving a question of quantity or price are accounted for as variable
consideration, and therefore, as a reduction to Net revenues and as a contra receivable. At December 31, 2025 and 2024, the
Company had a reserve for customer claims of $50.6 million and $56.2 million, respectively. All other incentives or incentive
programs where the customer is required to reach a certain level of purchases, remain a customer for a certain period, provide a
rebate form or is subject to additional requirements are also considered variable consideration and are accounted for as a
reduction of revenue and a liability. At December 31, 2025 and 2024, the Company had a sales incentive accrual of $73.5
million and $62.8 million, respectively. These estimates are reviewed regularly for accuracy, and if updated information or
actual amounts are different from previous estimates, the revisions are included in the Company’s results for the period in
which they become known.
As a practical expedient allowed under ASC 606, "Revenue from Contracts with Customers", the Company recognizes
incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset would have
been one year or less. The Company also applies the practical expedients to omit the disclosure of remaining performance
obligations for contracts with an original expected duration of one year or less. The transaction price is not adjusted for the
effects of a significant financing component, as the time period between control transfer of goods and services is less than one
year. Sales, value-added and other similar taxes collected by the Company are excluded from Net revenues. The Company has
also elected to account for shipping and handling activities that occur after control of the related goods transfers as fulfillment
activities instead of performance obligations. These activities are included in Cost of goods sold in the Consolidated Statements
of Comprehensive Income. The Company’s payment terms are generally consistent with the industries in which its businesses
operate.
Environmental Costs: The Company is subject to laws and regulations relating to protecting the environment and is dedicated
to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process
and to remediate identified environmental concerns. The Company is currently engaged in site investigations and remediation
activities to address environmental cleanup from past operations at current and former production facilities. The Company is
also sometimes a party to environmental lawsuits and claims and has, from time to time, received notices of potential violations
of environmental laws and regulations from the U.S. Environmental Protection Agency and similar state authorities. It has 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 past operations. For all such sites, there are other PRPs and, in most instances, the
Company’s involvement is minimal. In estimating its liability, the Company has assumed it will not bear the entire cost of
remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to
participate has been taken into account, based on the Company's understanding of the parties’ financial condition and probable
contributions on a per site basis. The Company regularly evaluates its remediation programs and considers alternative
remediation methods that are in addition to, or in replacement of, those currently utilized by the Company based upon enhanced
technology and regulatory changes.
Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures relating to
existing conditions caused by past operations, which do not contribute to current or future revenues, are expensed. Liabilities
for remediation costs are recorded when they are probable and can be reasonably estimated, generally no later than the
completion of feasibility studies or the Company’s commitment to a plan of action. The assessment of this liability, which is
calculated based on existing technology, does not reflect any offset for possible recoveries from insurance companies and is not
discounted.
Research and Development Costs: The Company conducts research and development activities for the purpose of developing
and improving new products and services. These costs are expensed when incurred. For the years ended December 31, 2025,
2024 and 2023, expenses related to research and development activities amounted to approximately $132.0 million, $112.7
million and $101.9 million, respectively, and primarily consisted of salaries, wages, benefits, facility costs and other overhead
expenses.
Defined Benefit Plans: The Company provides a range of U.S. and non-U.S. defined benefit plan benefits to eligible current
and former employees. Noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees
F-11
provide benefits based on an average pay formula while most plans for collectively bargained U.S. employees provide benefits
based on a flat dollar benefit formula. The non-U.S. defined benefit plans generally provide benefits based on earnings and
years of service. Determining the costs associated with such benefits is dependent on various actuarial assumptions, including
discount rates, expected returns on plan assets, employee mortality and turnover rates. Actuarial valuations are performed to
determine the plan obligations and expense in accordance with GAAP. Actual results may differ from the actuarial estimates
and assumptions, and when they do, are generally recorded to Accumulated other comprehensive loss and amortized into Net
earnings over future periods.
The Company reviews its actuarial assumptions at each measurement date and makes modifications to the assumptions as
appropriate. Discount rates are generally established using hypothetical yield curves based on the yields of corporate bonds
rated AA quality. Spot rates are developed from the yield curve and used to discount future benefit payments. The expected
return on plan assets reflects the average rate of returns expected on the funds invested or to be invested to provide for the
benefits included in the projected benefit obligation. The expected return on plan assets is based on what is achievable given the
plan’s investment policy, the types of assets held and the target asset allocation.
Share-Based Compensation: The Company records share-based compensation awards using a fair value method and
recognizes compensation expense for an amount equal to the fair value of the share-based payment award issued. The
Company’s share-based compensation plans include programs for stock options, restricted stock units ("RSUs"), performance
stock units ("PSUs") and deferred compensation. The fair value of each of the Company’s stock option and RSU awards is
expensed on a straight-line basis over the required service period, which is generally the 3-year vesting period. However, for
stock options and RSUs granted to retirement eligible employees, the Company recognizes expense for the fair value of these
awards at the grant date. The Company's Performance Stock Program ("PSP") provides awards for key employees in the form
of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a number of the
Company's ordinary shares. All PSUs are settled in the form of ordinary shares.
Share Repurchases: Common shares that are repurchased by the Company subsequent to issuance are immediately retired
upon settlement and decrease the total number of shares issued and outstanding. The cost of share repurchases is charged
against shareholder's equity.
Loss Contingencies: Liabilities are recorded for various contingencies arising in the normal course of business, including
litigation and administrative proceedings, environmental matters, product liabilities, product warranties, workers' compensation
and other claims. The Company has recorded reserves in the financial statements related to these matters, which are developed
using inputs derived from actuarial estimates and historical and anticipated experience data, depending on the nature of the
reserve and, in certain instances, with consultation of legal counsel, internal and external consultants and engineers. Amounts
recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional
information when it becomes available.
Financial Instruments: The Company uses various financial instruments, including derivative instruments, to manage the risks
associated with interest and currency rate exposures. These financial instruments are not used for trading or speculative
purposes. When a derivative contract is entered into, the Company designates the derivative instrument as a cash flow hedge of
a forecasted transaction, a cash flow hedge of a recognized asset or liability or as an undesignated derivative. The Company
formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well
as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative
instruments that are designated as hedges to specific assets, liabilities or forecasted transactions.
The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging
transactions are effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed
to be an effective hedge, the fair market value changes of the instrument are recorded to Accumulated other comprehensive loss
and subsequently reclassified to Net earnings when the hedged transaction affects earnings. Changes in the fair market value of
derivatives not deemed to be an effective hedge are recorded in Net earnings in the period of change. The Company recognizes
all derivative instruments on the Consolidated Balance Sheets at their fair value, which is determined through market-based
valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due
to future fluctuations in the markets in which they are traded. If the hedging relationship ceases to be effective subsequent to
inception, or it becomes probable that a forecasted transaction will no longer occur, the hedging relationship will be
undesignated, and any future gains or losses on the derivative instrument will be recorded in Net earnings.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements:
In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, “Income Taxes (Topic 740):
Improvements to Income Tax Disclosures”, which modifies the rules on income tax disclosures to require entities to disclose (1)
specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or
benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated
F-12
by federal, state and foreign). This ASU also requires entities to disclose their income tax payments to international, federal,
state and local jurisdictions, among other changes. This guidance became effective for the Company in the current year. The
Company adopted this ASU prospectively for the fiscal year ended December 31, 2025. See Note 16 to the Consolidated
Financial Statements for further information.
Recently Issued Accounting Pronouncements:
In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires disaggregated
disclosures of certain categories of expenses that are included in expense line items on the face of the consolidated statements
of comprehensive income. This guidance will be effective for annual periods beginning after December 15, 2026 and interim
periods within fiscal years beginning after December 15, 2027. This ASU is to be applied prospectively, but retrospective
application is permitted. This ASU will result in additional required disclosures in the Company's Consolidated Financial
Statements once adopted.
In September 2025, the FASB issued ASU No. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic
350-40): Targeted Improvements to the Accounting for Internal-Use Software", which removes references to prescriptive and
sequential software development stages, and requires entities to start capitalizing software costs when management has
authorized and committed to funding the software project and it is probable that the project will be completed and the software
will be used to perform the function intended. This guidance will be effective for annual and interim periods beginning after
December 15, 2027. This ASU is to be applied prospectively, but retrospective application is permitted. The Company is
currently evaluating the impact this ASU will have on the Company's Consolidated Financial Statements.
NOTE 3 - ACQUISITIONS
2025
Acquisitions completed during the year ended December 31, 2025, included the following:
Next Door
On February 4, 2025, the Company, through its subsidiaries, acquired Next Door Company ("Next Door"), a global provider of
security products and solutions based in the United States. Next Door is reported in the Company's Allegion Americas segment.
Lemaar
On March 1, 2025, the Company, through its subsidiaries, acquired Lemaar Pty Ltd ("Lemaar"), a global provider of security
products and solutions based in Australia. Lemaar is reported in the Company's Allegion International segment.
Trimco
On April 2, 2025, the Company, through its subsidiaries, acquired 100% of Trimco Hardware ("Trimco"), a manufacturer of
high-performance and custom-designed architectural hardware primarily sold for commercial and institutional markets based in
the United States. Trimco is reported in the Company's Allegion Americas segment.
Novas
On June 2, 2025, the Company, through its subsidiaries, acquired 100% of Nova Hardware Pty Ltd ("Novas"), an architectural
door hardware company based in Australia. Novas is reported in the Company's Allegion International segment.
F-13
ELATEC
On July 1, 2025, the Company, through its subsidiaries, acquired 100% of ELATEC, including Elatec GmbH and other group
entities ("ELATEC"). ELATEC is a manufacturer of security and access technology based in Germany. This acquisition helps
the Company expand its global electronics portfolio in attractive end markets while also increasing strategic relationships with
channel partners. The purchase price of the acquisition was €327.9 million (approximately $386.5 million). The Company used
cash on hand and borrowings under the Revolving Facility to finance the acquisition. ELATEC is reported in the Company's
Allegion International segment.
Gatewise
On July 2, 2025, the Company, through its subsidiaries, acquired 100% of Gatewise Inc. (“Gatewise"), a provider of smart
access control solutions in the U.S. multifamily marketplace based in the United States. Gatewise is reported in the Company's
Allegion Americas segment.
Waitwhile
On July 7, 2025, the Company, through its subsidiaries, acquired 100% of Waitwhile Inc. (“Waitwhile"), a software-as-a-service
provider that specializes in cloud-based appointment scheduling and queue management based in the United States. Waitwhile
is reported in the Company's Allegion Americas segment.
UAP
On August 1, 2025, the Company, through its subsidiaries, acquired 100% of UAP Group Limited (“UAP"), a security solutions
provider based in the United Kingdom. UAP is reported in the Company's Allegion International segment.
Brisant
On August 12, 2025, the Company, through its subsidiaries, acquired 100% of Brisant Secure Limited (“Brisant"), a security
hardware provider based in the United Kingdom. Brisant is reported in the Company's Allegion International segment.
The aggregate consideration for all acquisitions completed in 2025 was approximately $631.6 million (net of cash acquired),
including the aggregate fair value of earnout contingent consideration. The Company estimates the fair value of this earnout
contingent consideration to be approximately $30.3 million, which becomes payable at certain dates through 2028 if certain
conditions are achieved. These acquisitions were accounted for as business combinations and were funded with available cash
on hand and borrowings under the Revolving Facility.
The following table summarizes the preliminary allocation of the aggregate purchase price for the acquisitions completed in
2025, which includes initial cash consideration and the estimated fair value of contingent consideration, to assets acquired and
liabilities assumed as of the acquisition dates:
In millions
Net working capital
$
38.9
Property, plant and equipment and other noncurrent assets
24.6
Goodwill
377.9
Intangible assets
281.9
Deferred tax liabilities related to acquired intangible assets
(70.8)
Other noncurrent liabilities
(20.9)
Total net assets acquired and liabilities assumed
$
631.6
The valuations of assets acquired and liabilities assumed had not yet been finalized as of December 31, 2025, and finalization
of the valuations during the measurement period could result in a change in the amounts recorded. The completion of the
valuations will occur no later than one year from the respective acquisition dates as required by GAAP.
Intangible assets recognized as of the acquisition dates were comprised of the following:
In millions
Value (in millions)
Weighted-average
useful life (in years)
Completed technologies/patents
$
41.0
11
Customer relationships
193.3
20
Trade names (finite-lived)
47.6
14
F-14
The following unaudited pro forma financial information for the years ended December 31, 2025 and 2024 is subject to change,
and reflects the consolidated results of operations of the Company as if these acquisitions had taken place on January 1, 2024:
Years ended
In millions
2025
2024
Net revenues
$
4,156.0 $
3,943.8
Net earnings
648.9
576.7
The unaudited pro forma financial information is presented for informational purposes only and is not intended to be indicative
of results of operations that would have occurred had the pro forma events taken place on the date indicated or the future
consolidated results of operations of the combined company. The unaudited pro forma financial information does not reflect any
synergies or other strategic benefits as a result of the acquisitions. The unaudited pro forma financial information is required
under GAAP, and has been calculated after applying the Company's accounting policies and adjusting the historical financial
results to reflect additional items directly attributable to the acquisitions that would have been incurred assuming the
acquisitions had occurred on January 1, 2024, including amortization of acquired intangible assets, interest costs for debt to
fund the acquisitions, and acquisition and integration costs.
The following financial information reflects the Net revenues and Earnings before income tax generated by the businesses since
the acquisition dates included within the Company's Consolidated Statements of Comprehensive Income:
In millions
Year ended December 31, 2025
Net revenues
$
93.0
Earnings before income taxes
4.7
2024
The following acquisitions were made during the year ended December 31, 2024:
Boss Door Controls
On February 1, 2024, the Company, through its subsidiaries, acquired 100% of Boss Door Controls, a door solutions provider in
the United Kingdom. Boss Door Controls is reported in the Company's Allegion International segment.
Dorcas
On March 4, 2024, the Company, through its subsidiaries, acquired 100% of Montajes electronicos Dorcas S.L. ("Dorcas"), a
manufacturer of electromechanical access control solutions based in Spain. Dorcas is reported in the Company's Allegion
International segment.
Krieger
On June 3, 2024, the Company, through its subsidiaries, acquired 100% of Krieger Specialty Products, LLC ("Krieger"), a
manufacturer of high-performance special purpose doors and windows based in the United States. Krieger is reported in the
Company's Allegion Americas segment.
Unicel
On June 10, 2024, the Company, through its subsidiaries, acquired 100% of Unicel Architectural Corp. ("Unicel"), a
manufacturer of advanced glass, timber and aluminum building solutions based in Canada. Unicel is reported in the Company's
Allegion Americas segment.
SOSS
On October 18, 2024, the Company, through its subsidiaries, acquired 100% of SOSS Door Hardware ("SOSS"), a
manufacturer of premium hinges and door hardware based primarily in the United States. SOSS is reported in the Company's
Allegion Americas segment.
The aggregate consideration for acquisitions was approximately $147.2 million (net of cash acquired), including the fair value
of contingent consideration, which the Company estimates to be approximately $10.5 million at the various applicable
acquisition dates. These acquisitions were accounted for as business combinations and were funded with available cash on
hand.
F-15
The following table for these 2024 acquisitions summarizes the allocation of the aggregate purchase price, which includes cash
consideration and the estimated fair value of contingent consideration, to assets acquired and liabilities assumed as of the
acquisition dates:
In millions
Net working capital
$
10.1
Property, plant and equipment
4.1
Goodwill
74.4
Intangible assets
70.5
Other noncurrent liabilities
(11.9)
Total net assets acquired and liabilities assumed
$
147.2
Intangible assets recognized for these 2024 acquisitions as of the various acquisition dates were comprised of the following:
In millions
Value (in millions)
Weighted-average
useful life (in years)
Completed technologies/patents
$
14.3
15
Customer relationships
30.6
16
Trade names (finite-lived)
15.3
15
Backlog revenue
10.3
1
During the years ended December 31, 2025, 2024 and 2023, the Company incurred $14.6 million, $11.4 million and $21.0
million, respectively, of acquisition and integration related expenses, which are included in Selling and administrative expenses
in the Consolidated Statements of Comprehensive Income.
Goodwill results from several factors, including Allegion-specific synergies that were excluded from the cash flow projections
used in the valuation of intangible assets and intangible assets that do not qualify for separate recognition. The majority of
goodwill resulting from these acquisitions is not deductible for tax purposes.
NOTE 4 – INVENTORIES
At December 31, the major classes of Inventories were as follows:
In millions
2025
2024
Raw materials
$
237.9 $
196.9
Work-in-process
55.1
48.2
Finished goods
226.0
177.9
Total
$
519.0 $
423.0
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
At December 31, the major classes of property, plant and equipment were as follows:
In millions
2025
2024
Land
$
19.8
$
18.5
Buildings
204.1
186.3
Machinery and equipment
577.2
514.6
Software
253.4
201.5
Construction in progress
75.5
90.7
Total property, plant and equipment
1,130.0
1,011.6
Accumulated depreciation
(685.4)
(626.3)
Property, plant and equipment, net
$
444.6
$
385.3
Depreciation expense for the years ended December 31, 2025, 2024 and 2023, was $59.3 million, $52.2 million and $47.3
million.
F-16
NOTE 6 – GOODWILL
The changes in the carrying amount of Goodwill were as follows:
In millions
Allegion Americas
Allegion International
Total
December 31, 2023
$
1,126.7
$
316.4 $
1,443.1
Acquisitions and adjustments
69.1
5.6
74.7
Currency translation
(9.9)
(18.5)
(28.4)
December 31, 2024
1,185.9
303.5
1,489.4
Acquisitions and adjustments
88.9
287.9
376.8
Currency translation
6.3
39.9
46.2
December 31, 2025
$
1,281.1
$
631.3 $
1,912.4
Accumulated impairment for the International segment was $573.6 million as of December 31, 2025, 2024, and 2023. There are
no accumulated impairments for the Americas segment.
There was no impairment of goodwill for the years ended December 31, 2025, 2024 and 2023.
NOTE 7 – INTANGIBLE ASSETS
At December 31, the gross amount of the Company's intangible assets and related accumulated amortization were as follows:
2025
2024
In millions
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
Completed technologies/patents
$
121.2 $
(52.1) $
69.1 $
76.6 $
(41.7) $
34.9
Customer relationships
776.3
(254.2)
522.1
542.7
(201.5)
341.2
Trade names (finite-lived)
210.8
(119.6)
91.2
151.3
(91.4)
59.9
Other
78.4
(42.0)
36.4
91.8
(59.9)
31.9
Total finite-lived intangible assets
1,186.7 $
(467.9)
718.8
862.4 $
(394.5)
467.9
Trade names (indefinite-lived)
107.2
107.2
101.1
101.1
Total
$
1,293.9
$
826.0 $
963.5
$
569.0
Intangible asset amortization expense for the years ended December 31, 2025, 2024 and 2023, was $71.3 million, $63.9 million
and $61.7 million, respectively.
Future estimated amortization expense on existing intangible assets in each of the next five years amounts to approximately
$72.5 million for 2026, $65.2 million for 2027, $56.0 million for 2028, $53.2 million for 2029 and $44.4 million for 2030.
In 2023, it was determined that two of the Company's indefinite-lived trade names in the International segment were impaired,
and an impairment charge of $7.5 million was recorded. The impairment related to declines in volumes which reduced the
brands' expected future cash flows. No intangible asset impairment charges were recorded in the years ended December 31,
2025 or 2024.
NOTE 8 – DEBT AND CREDIT FACILITIES
At December 31, long-term debt and other borrowings consisted of the following:
In millions
2025
2024
Term Facility
$
— $
212.5
Revolving Facility
190.6
—
3.550% Senior Notes due 2027
400.0
400.0
3.500% Senior Notes due 2029
400.0
400.0
5.411% Senior Notes due 2032
600.0
600.0
5.600% Senior Notes due 2034
400.0
400.0
Other debt
0.2
—
Total borrowings outstanding
1,990.8
2,012.5
Discounts and debt issuance costs, net
(10.7)
(13.0)
Total debt
1,980.1
1,999.5
Less current portion of long-term debt
0.2
21.9
Total long-term debt
$
1,979.9 $
1,977.6
F-17
Unsecured Credit Facilities
On December 9, 2025, the Company amended and restated its unsecured revolving credit facility (the "Revolving Facility")
which, among other things, increased the total commitment from $750.0 million to $1.0 billion, and extended the maturity from
May 20, 2029 to May 20, 2030. The Company used borrowings under the Revolving Facility to repay its outstanding term loan,
which was scheduled to mature in November 2026. Outstanding borrowings under the Revolving Facility were $190.6 million
at December 31, 2025.
The Revolving Facility provides aggregate commitments of up to $1.0 billion, which includes up to $100.0 million for the
issuance of letters of credit. The Company had $25.2 million and $18.4 million of letters of credit outstanding at December 31,
2025 and 2024, respectively. Borrowings under the Revolving Facility may be repaid at any time without premium or penalty,
and amounts repaid may be reborrowed. The Company pays certain fees with respect to the Revolving Facility, including an
unused commitment fee on the undrawn portion of between 0.080% and 0.200% per year, depending on the Company's credit
ratings, as well as certain other fees.
Outstanding borrowings under the Revolving Facility accrue interest, at the option of the Company, of (i) a SOFR plus an
applicable margin, or (ii) a base rate (as defined in the credit agreement) plus an applicable margin. The applicable margin
ranges from 0.875% to 1.375% depending on the Company's credit ratings. At December 31, 2025, the Company's outstanding
borrowings under the Revolving Facility accrued interest at SOFR plus a margin of 1.125%, resulting in an interest rate of
4.902%. The credit agreement also contains negative and affirmative covenants and events of default that, among other things,
limit or restrict the Company’s ability to enter into certain transactions. In addition, the Revolving Facility requires the
Company to comply with a maximum leverage ratio as defined in the credit agreement. As of December 31, 2025, the Company
was in compliance with all applicable covenants under the credit agreement.
Senior Notes
As of December 31, 2025, Allegion US Hold Co has $400.0 million outstanding of its 3.550% Senior Notes due 2027 (the
“3.550% Senior Notes”), $600.0 million outstanding of its 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”) and
$400.0 million outstanding of its 5.600% Senior Notes due 2034 (the "5.600% Senior Notes"), and Allegion plc has $400.0
million outstanding of its 3.500% Senior Notes due 2029 (the “3.500% Senior Notes”, and all four senior notes collectively, the
"Senior Notes"). The 3.550% Senior Notes and 3.500% Senior Notes both require semi-annual interest payments on April 1 and
October 1 of each year and mature on October 1, 2027 and October 1, 2029, respectively. The 5.411% Senior Notes require
semi-annual interest payments on January 1 and July 1 of each year and mature on July 1, 2032. The 5.600% Senior Notes
require semi-annual interest payments on May 29 and November 29 of each year and mature on May 29, 2034.
The 3.550% Senior Notes, 5.411% Senior Notes and 5.600% Senior Notes are senior unsecured obligations of Allegion US
Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated
indebtedness. The guarantee of the 3.550% Senior Notes, 5.411% Senior Notes and 5.600% Senior Notes is the senior
unsecured obligation of Allegion plc and ranks equally with all of the Company's existing and future senior unsecured and
unsubordinated indebtedness. The 3.500% Senior Notes are senior unsecured obligations of Allegion plc, are guaranteed by
Allegion US Hold Co and rank equally with all of the Company's existing and future senior unsecured indebtedness.
Future Repayments
Future required principal payments on indebtedness as of December 31, 2025 were as follows:
In millions
2026
$
0.2
2027
400.0
2028
—
2029
400.0
2030
190.6
Thereafter
1,000.0
Total
$
1,990.8
Cash paid for interest for the years ended December 31, 2025, 2024 and 2023 was $98.1 million, $100.3 million and $92.0
million, respectively.
NOTE 9 – FINANCIAL INSTRUMENTS
Currency Hedging Instruments
The gross notional amount of the Company’s currency derivatives was $320.1 million and $167.2 million at December 31, 2025
and 2024, respectively. Neither the fair values of currency derivatives, which are determined based on a pricing model that uses
spot rates and forward prices from actively quoted currency markets that are readily observable (Level 2 inputs under the fair
F-18
value hierarchy described in Note 12), nor the balances included in Accumulated other comprehensive loss, were material as of
December 31, 2025 and 2024. Currency derivatives designated as cash flow hedges did not have a material impact to either Net
earnings or Other comprehensive income (loss) during any of the years ended December 31, 2025, 2024 or 2023, nor is the
amount to be reclassified into Net earnings over the next twelve months expected to be material, although the actual amounts
that will be reclassified to Net earnings may vary as a result of future changes in market conditions. At December 31, 2025, the
maximum term of the Company's currency derivatives, both those that are designated as cash flow hedges and those that are
not, was less than one year.
Concentration of Credit Risk
The counterparties to the Company’s forward contracts consist of a number of investment grade major international financial
institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties. However, the credit
ratings and the concentration of risk in these financial institutions are monitored on a continuous basis and present no
significant credit risk to the Company.
NOTE 10 - LEASES
Total lease expense for the years ended December 31, 2025, 2024 and 2023, was $69.1 million, $64.2 million and $60.9
million, respectively, and is classified within Cost of goods sold and Selling and administrative expenses within the
Consolidated Statements of Comprehensive Income. Lease expense related to short-term leases, variable lease payments or
other leases or lease components not included within the ROU asset or lease liability totaled $18.6 million, $15.9 million and
$16.9 million, respectively, for the years ended December 31, 2025, 2024 and 2023. No material lease costs have been
capitalized on the Consolidated Balance Sheets as of December 31, 2025 or 2024.
Amounts included within the Consolidated Balance Sheets related to the Company's ROU asset and lease liability were as
follows:
December 31, 2025
December 31, 2024
In millions
Balance Sheet classification
Real estate
Equipment
Total
Real estate
Equipment
Total
ROU asset
Other noncurrent assets
$ 116.5 $ 49.9 $ 166.4 $ 107.1 $ 40.6 $ 147.7
Lease liability - current
Accrued expenses and other
current liabilities
22.5
19.2
41.7
19.8
16.9
36.7
Lease liability -
noncurrent
Other noncurrent liabilities
98.0
30.5
128.5
91.0
23.5
114.5
Other information:
Weighted-average remaining term (years)
10.9
3.0
11.2
2.9
Weighted-average discount rate
5.3 %
5.9 %
5.2 %
5.8 %
The following table summarizes additional information related to the Company's leases for the years ended December 31:
2025
2024
In millions
Real estate
Equipment
Total
Real estate Equipment
Total
Cash paid for amounts included in the measurement of
lease liabilities
$
27.0 $
23.5 $
50.5 $
25.3 $
23.0 $
48.3
ROU assets obtained in exchange for new lease
liabilities
14.2
22.0
36.2
12.1
20.5
32.6
Future Repayments
Future minimum lease payments required under non-cancellable operating leases for both the real estate and equipment lease
portfolios for the next five years and thereafter as of December 31, 2025, were as follows:
In millions
2026
2027
2028
2029
2030
Thereafter
Total
Real estate leases
$
28.3 $
23.8 $
15.9 $
11.1 $
9.2 $
74.1 $
162.4
Equipment leases
21.5
16.0
10.1
4.8
1.5
0.2
54.1
Total
$
49.8 $
39.8 $
26.0 $
15.9 $
10.7 $
74.3 $
216.5
The difference between the total undiscounted minimum lease payments and the combined current and noncurrent lease
liabilities as of December 31, 2025, is due to imputed interest of $46.3 million.
F-19
NOTE 11 – DEFINED BENEFIT PLANS
The Company sponsors several U.S. and non-U.S. defined benefit plans to eligible employees and retirees and also maintains
other supplemental plans for officers and other key employees. The following table details information regarding the
Company’s defined benefit plans at December 31:
U.S.
NON-U.S.
In millions
2025
2024
2025
2024
Change in benefit obligations:
Benefit obligation at beginning of year
$
225.9
$
240.6
$
241.8
$
271.8
Service cost
2.0
2.0
4.2
3.3
Interest cost
11.4
11.6
12.9
12.0
Employee contributions
—
—
0.3
0.3
Amendments
—
—
(0.1)
(0.1)
Actuarial (gains) losses
4.5
(11.1)
(3.4)
(21.3)
Benefits paid
(16.9)
(15.6)
(14.9)
(13.6)
Currency translation
—
—
20.5
(7.4)
Curtailments and settlements
—
—
—
(0.9)
Other, including expenses paid
(1.6)
(1.6)
(2.7)
(2.3)
Benefit obligation at end of year
$
225.3
$
225.9
$
258.6
$
241.8
Change in plan assets:
Fair value at beginning of year
$
227.8
$
244.4
$
245.2
$
267.7
Actual return on plan assets
18.2
0.4
18.6
(6.4)
Company contributions
0.1
0.2
4.7
5.0
Employee contributions
—
—
0.3
0.3
Benefits paid
(16.9)
(15.6)
(14.9)
(13.6)
Currency translation
—
—
19.7
(4.7)
Curtailment and settlements
—
—
—
(0.9)
Other, including expenses paid
(1.6)
(1.6)
(2.7)
(2.2)
Fair value of assets at end of year
$
227.6
$
227.8
$
270.9
$
245.2
Funded status:
Plan assets exceeding benefit obligations
$
2.3
$
1.9
$
12.3
$
3.4
Amounts included in the balance sheet:
Other noncurrent assets
$
7.6
$
7.1
$
38.8
$
26.4
Accrued compensation and benefits
(0.1)
(0.3)
(2.4)
(1.2)
Postemployment and other benefit liabilities
(5.2)
(4.9)
(24.1)
(21.8)
Net amount recognized
$
2.3
$
1.9
$
12.3
$
3.4
It is the Company’s objective to contribute to the pension plans to ensure adequate funds are available in the plans to make
benefit payments to plan participants and beneficiaries when required. However, certain plans are not funded due to either legal,
accounting or tax requirements in certain jurisdictions. As of December 31, 2025, approximately 6% of the Company's
projected benefit obligation relates to plans that are not funded, of which the majority are non-U.S. plans.
The pretax amounts recognized in Accumulated other comprehensive loss were as follows:
U.S.
In millions
Prior service cost
Net actuarial losses
Total
December 31, 2023
$
(0.4) $
(40.8) $
(41.2)
Current year changes recorded to Accumulated other comprehensive loss
—
(3.6)
(3.6)
Amortization reclassified to earnings
0.2
0.9
1.1
December 31, 2024
$
(0.2) $
(43.5) $
(43.7)
Current year changes recorded to Accumulated other comprehensive loss
—
(1.7)
(1.7)
Amortization reclassified to earnings
0.1
1.2
1.3
December 31, 2025
$
(0.1) $
(44.0) $
(44.1)
F-20
NON-U.S.
In millions
Prior service cost
Net actuarial losses
Total
December 31, 2023
$
(3.0) $
(100.4) $
(103.4)
Current year changes recorded to Accumulated other comprehensive loss
0.1
(1.2)
(1.1)
Amortization reclassified to earnings
0.1
3.5
3.6
Currency translation and other
—
1.9
1.9
December 31, 2024
$
(2.8) $
(96.2) $
(99.0)
Current year changes recorded to Accumulated other comprehensive loss
0.1
4.7
4.8
Amortization reclassified to earnings
0.1
3.7
3.8
Currency translation and other
(0.2)
(7.3)
(7.5)
December 31, 2025
$
(2.8) $
(95.1) $
(97.9)
Weighted-average discount rate assumptions utilized in determining benefit obligations as of December 31, were as follows:
2025
2024
U.S. plans
5.4 %
5.6 %
Non-U.S. plans
5.3 %
5.4 %
Information regarding pension plans with accumulated benefit obligations more than plan assets were:
U.S.
NON-U.S.
In millions
2025
2024
2025
2024
Projected benefit obligation
$
5.3 $
5.1 $
40.6 $
34.2
Accumulated benefit obligation
5.3
5.0
34.0
28.0
Fair value of plan assets
$
— $
— $
14.1 $
11.1
Future pension benefit payments are expected to be paid as follows:
In millions
U.S.
NON-U.S.
2026
$
19.4 $
17.5
2027
23.7
17.6
2028
18.5
17.5
2029
18.9
18.8
2030
18.0
18.4
2031 - 2035
84.7
98.7
The components of the Company’s net periodic pension benefit (income) cost for the years ended December 31, were as
follows:
U.S.
In millions
2025
2024
2023
Service cost
$
0.9 $
0.9 $
0.9
Interest cost
11.4
11.6
12.1
Expected return on plan assets
(15.3)
(15.2)
(15.0)
Administrative costs and other
1.1
1.1
1.0
Net amortization of:
Prior service costs
0.2
0.2
0.2
Plan net actuarial losses
1.2
0.9
0.7
Net periodic pension benefit income
$
(0.5) $
(0.5) $
(0.1)
F-21
NON-U.S.
In millions
2025
2024
2023
Service cost
$
1.9 $
1.5 $
1.4
Interest cost
12.8
12.0
12.5
Expected return on plan assets
(17.3)
(16.2)
(16.0)
Administrative costs and other
2.3
1.9
1.8
Net amortization of:
Prior service costs
0.1
0.1
0.1
Plan net actuarial losses
3.7
3.5
3.5
Net curtailment and settlement losses
—
0.1
0.3
Net periodic pension benefit cost
$
3.5 $
2.9 $
3.6
The Service cost component of Net periodic pension benefit cost is recorded in Cost of goods sold and Selling and
administrative expenses, while the remaining components are recorded within Other income, net within the Consolidated
Statements of Comprehensive Income.
Net periodic pension benefit cost for 2026 is projected to be approximately $3.6 million, utilizing the assumptions for
calculating the pension benefit obligations at the end of 2025.
Weighted-average assumptions utilized in determining net periodic pension benefit cost for the years ended December 31, were
as follows:
2025
2024
2023
Discount rate:
U.S. plans
5.6 %
5.1 %
5.4 %
Non-U.S. plans
5.4 %
4.6 %
4.9 %
Rate of compensation increase:
U.S. plans
3.0 %
3.0 %
— %
Non-U.S. plans
3.3 %
3.2 %
3.4 %
Expected return on plan assets:
U.S. plans
7.0 %
6.5 %
6.5 %
Non-U.S. plans
6.9 %
6.2 %
6.4 %
The Company generally estimates the service and interest cost components of net periodic benefit cost utilizing a full yield-
curve approach. Under this approach, the Company applies discounting using the applicable spot rates derived from the yield
curve to discount the cash flows used to measure the benefit obligation. These spot rates align to each of the projected benefit
obligation cash flows and service cost cash flows. The expected return on plan assets reflects the average rate of returns
expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation and is
based on what is achievable given the plan’s investment policy, the types of assets held and target asset allocations. The
expected long-term rate of return is determined as of the measurement date. Each plan is reviewed, along with its historical
returns and target asset allocations, to determine the appropriate expected return on plan assets to be used.
The Company's overall objective in managing its defined benefit plan assets is to ensure that all present and future benefit
obligations are met as they come due. The goal is to achieve this 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. Each plan’s
funded status and asset allocation is monitored regularly in addition to investment manager performance.
The fair values of the Company’s U.S. pension plan assets at December 31, 2025, by asset category, were as follows:
Fair value measurements
Total
In millions
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
measured at
NAV
Cash, cash equivalents and short-term investments
$
— $
— $
— $
1.6 $
1.6
Common collective trusts
—
—
—
172.3
172.3
Other(a)
—
—
—
53.7
53.7
Total U.S. pension plan assets
$
— $
— $
— $
227.6 $
227.6
(a)
Includes group trust diversified credit and real asset funds.
F-22
The fair values of the Company’s U.S. pension plan assets at December 31, 2024, by asset category, were as follows:
Fair value measurements
Total
In millions
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
measured at
NAV
Cash, cash equivalents and short-term investments
$
— $
— $
— $
1.9 $
1.9
Common collective trusts
—
—
—
169.2
169.2
Other(a)
—
—
—
56.7
56.7
Total U.S. pension plan assets
$
— $
— $
— $
227.8 $
227.8
(a)
Includes group trust diversified credit and real asset funds.
No material transfers in or out of Level 3 occurred during the years ended December 31, 2025 or 2024.
The Company's U.S. pension plan assets are valued using the following methodologies:
•
Cash, cash equivalents and short-term investments – Short-term investments are valued at their daily net asset value
(NAV) per share or the equivalent based upon the fair value of the underlying investments. NAV per share or the
equivalent is used for fair value purposes as a practical expedient and is calculated by the investment manager or
sponsor of the fund. These investments primarily consist of short-term investment funds.
•
Common collective trusts – Common collective trust ("CCT") funds are not publicly traded and are valued at NAV per
share or the equivalent based upon the fair value of the underlying investments. NAV per share or the equivalent is
used for fair value purposes as a practical expedient and is calculated by the investment manager or sponsor of the
applicable fund. CCT funds consist of a variety of publicly traded securities, including equity mutual funds, U.S.
government and agency obligations, corporate and non-U.S. bonds, securitized credit and emerging market debt. There
are no unfunded commitments, redemption frequency restrictions or other redemption restrictions related to such
investments.
The fair values of the Company’s non-U.S. pension plan assets at December 31, 2025, by asset category, were as follows:
Fair value measurements
Total
In millions
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
measured at
NAV
Cash, cash equivalents and short-term investments
$
2.5 $
— $
— $
118.0 $
120.5
Equity mutual funds
—
5.1
—
22.0
27.1
Corporate and non-U.S. bonds
—
3.5
—
111.8
115.3
Other(a)
—
0.3
5.3
2.4
8.0
Total non-U.S. pension plan assets
$
2.5 $
8.9 $
5.3 $
254.2 $
270.9
(a)
Primarily includes a core diversified credit fund, a credit opportunity fund and derivative contracts.
The fair values of the Company’s non-U.S. pension plan assets at December 31, 2024, by asset category, were as follows:
Fair value measurements
Total
In millions
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
measured at
NAV
Cash, cash equivalents and short-term investments
$
0.9 $
— $
— $
32.7 $
33.6
Equity mutual funds
—
3.6
—
72.7
76.3
Corporate and non-U.S. bonds
—
3.3
—
124.4
127.7
Other(a)
—
0.3
4.1
3.2
7.6
Total non-U.S. pension plan assets
$
0.9 $
7.2 $
4.1 $
233.0 $
245.2
(a)
Primarily includes a core diversified credit fund, a credit opportunity fund and derivative contracts.
No material transfers in or out of Level 3 occurred during the years ended December 31, 2025 or 2024.
F-23
The Company's non-U.S. pension plan assets are valued using the following methodologies:
•
Cash, cash equivalents and short-term investments – Cash equivalents are valued using a market approach with inputs
including quoted market prices for either identical or similar instruments. Short-term investments are valued at the
closing price or amount held on deposit by the custodian bank, at fair value by discounting the related cash flows
based on current yields of similar instruments with comparable durations considering the credit-worthiness of the
issuer, or at NAV per share or the equivalent based upon the fair value of the underlying investments. NAV per share or
the equivalent is used for fair value purposes as a practical expedient and is calculated by the investment manager or
sponsor of the fund. These investments primarily consist of short-term investment funds.
•
Equity mutual funds – Equity mutual funds are primarily valued at NAV per share or the equivalent. NAV per share or
the equivalent is used for fair value purposes as a practical expedient and is calculated by the investment manager or
sponsor of the fund.
•
Corporate and non-U.S. bonds – Quoted market prices are not available for these securities. Fair values are either
estimated using pricing models and/or quoted prices of securities with similar characteristics or discounted cash flows,
in which instances such securities are classified as Level 2, or valued at NAV per share or the equivalent. NAV per
share or the equivalent is used for fair value purposes as a practical expedient and is calculated by the investment
manager or sponsor of the fund.
The Company made employer contributions of $0.1 million, $0.2 million and $15.9 million to the U.S. pension plans in 2025,
2024 and 2023, respectively. The Company made employer contributions to its non-U.S. pension plans of $4.7 million, $5.0
million and $5.0 million in 2025, 2024 and 2023, respectively.
The Company currently projects that approximately $3.9 million will be contributed to its plans worldwide in 2026. The
Company’s policy allows it to fund an amount, which could be in excess of or less than the pension cost expensed, subject to
the limitations imposed by current tax regulations. The Company anticipates funding the plans in 2026 in accordance with
contributions required by funding regulations or the laws of each jurisdiction.
Most of the Company’s U.S. employees are covered by defined contribution plans. Employer contributions are determined
based on criteria specific to the individual plans and amounted to approximately $36.2 million, $33.0 million and $31.7 million
in 2025, 2024 and 2023, respectively. The Company’s contributions relating to non-U.S. defined contribution plans and other
non-U.S. benefit plans were $12.0 million, $10.9 million and $10.1 million in 2025, 2024 and 2023, respectively.
Deferred Compensation Plan
The Company maintains an Executive Deferred Compensation Plan, which is an unfunded, nonqualified plan that, prior to
2019, permitted certain employees to defer up to 50% of their annual salary and up to 100% of their annual bonus awards,
performance stock plan awards and restricted stock units into a number of investment choices, including its ordinary share
equivalents, until conclusion of their employment with the Company. As of December 31, 2025 and 2024, the deferred
compensation liability balance was $11.5 million and $12.0 million, respectively, the majority of which was recorded within
Postemployment and other benefit liabilities in the Consolidated Balance Sheets. Amounts invested in ordinary share
equivalents of the Company are not included in the deferred compensation liability balance, as these amounts will be settled in
ordinary shares of the Company at the time of distribution.
NOTE 12 – FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Fair value measurements are based on a framework that utilizes the inputs market participants use to
determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value
hierarchy is comprised of the three levels described below:
•
Level 1 – Inputs based on quoted prices in active markets for identical assets or liabilities.
•
Level 2 – Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the asset or liability.
•
Level 3 – Unobservable inputs based on little or no market activity and that are significant to the fair value of the
assets and liabilities.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third
party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability
based on the best information available under the circumstances. A financial instrument’s categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
F-24
Assets and liabilities measured at fair value at December 31, 2025, were as follows:
Fair value measurements
Total
fair value
In millions
Quoted prices in
active markets
for identical
assets (Level 1)
Significant other
observable
inputs (Level 2)
Significant
unobservable
inputs (Level 3)
Recurring fair value measurements
Assets:
Investments
$
— $
17.4 $
— $
17.4
Total asset recurring fair value measurements
$
— $
17.4 $
— $
17.4
Liabilities:
Deferred compensation and other retirement plans
$
— $
18.1 $
— $
18.1
Total liability recurring fair value measurements
$
— $
18.1 $
— $
18.1
Financial instruments not carried at fair value
Total debt
$
— $
2,021.1 $
— $
2,021.1
Total financial instruments not carried at fair value $
— $
2,021.1 $
— $
2,021.1
Assets and liabilities measured at fair value at December 31, 2024, were as follows:
Fair value measurements
Total
fair value
In millions
Quoted prices in
active markets
for identical
assets (Level 1)
Significant other
observable
inputs (Level 2)
Significant
unobservable
inputs (Level 3)
Recurring fair value measurements
Assets:
Investments
$
— $
17.1 $
— $
17.1
Total asset recurring fair value measurements
$
— $
17.1 $
— $
17.1
Liabilities:
Deferred compensation and other retirement plans
$
— $
17.4 $
— $
17.4
Total liability recurring fair value measurements
$
— $
17.4 $
— $
17.4
Financial instruments not carried at fair value
Total debt
$
— $
1,979.3 $
— $
1,979.3
Total financial instruments not carried at fair value $
— $
1,979.3 $
— $
1,979.3
The Company determines the fair value of its financial assets and liabilities using the following methodologies:
•
Investments – These instruments include equity mutual funds and corporate bond funds. The fair value is obtained
based on observable market prices quoted on public exchanges for similar instruments.
•
Deferred compensation and other retirement plans – These include obligations related to deferred compensation and
other retirement plans adjusted for market performance. The fair value is obtained based on observable market prices
quoted on public exchanges for similar instruments.
•
Debt – These instruments are recorded at cost and include the Revolving Facility and Senior Notes maturing through
2034. The fair value of these debt instruments is obtained based on observable market prices quoted on public
exchanges for similar instruments.
The carrying values of Cash and cash equivalents, Accounts and notes receivable, net, Accounts payable, Accrued
compensation and benefits and Accrued expenses and other current liabilities are a reasonable estimate of their fair values due
to the short-term nature of these instruments. As discussed in Note 2, the Company also has investments in debt and equity
securities without readily determinable fair values, which are measured at cost minus impairment, if any, plus or minus changes
resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer and are
qualitatively assessed for impairment indicators at each reporting period. As these investments are considered to be
nonrecurring fair value measurements, they are not included in the fair value tables above.
The methodologies used by the Company to determine the fair value of its financial assets and liabilities at December 31, 2025,
are the same as those used at December 31, 2024.
F-25
NOTE 13 – EQUITY
Ordinary Shares
The changes in ordinary shares outstanding for the year ended December 31, 2025, were as follows:
In millions
Total
December 31, 2024
86.3
Shares issued under equity incentive plans
0.4
Repurchase of ordinary shares
(0.6)
December 31, 2025
86.1
Allegion had 400.0 million ordinary shares authorized and 10.0 million preferred shares, $0.001 par value per share, authorized
(with none outstanding) at December 31, 2025.
In June 2023, the Company's Board of Directors reauthorized the Company's existing share repurchase program and, as a result,
authorized the repurchase of up to, and including $500.0 million of the Company's ordinary shares (the "Share Repurchase
Authorization"). During the year ended December 31, 2025, the Company paid $80.0 million to repurchase approximately 0.6
million ordinary shares on the open market under the Share Repurchase Authorization. As of December 31, 2025, the Company
has approximately $160.0 million available to be repurchased under the Share Repurchase Authorization.
Accumulated Other Comprehensive Loss
The changes in Accumulated other comprehensive loss were as follows:
In millions
Cash flow
hedges
Defined benefit
plan
adjustments
Currency
translation
Total
December 31, 2022
$
6.1 $
(117.1) $
(174.8) $
(285.8)
Other comprehensive income (loss), net of tax
(0.5)
(8.8)
33.6
24.3
December 31, 2023
5.6
(125.9)
(141.2)
(261.5)
Other comprehensive (loss) income, net of tax
1.3
2.8
(74.2)
(70.1)
December 31, 2024
6.9
(123.1)
(215.4)
(331.6)
Other comprehensive income (loss), net of tax
(2.4)
(1.8)
130.2
126.0
December 31, 2025
$
4.5 $
(124.9) $
(85.2) $
(205.6)
All amounts of Other comprehensive income (loss), net attributable to noncontrolling interests on the Consolidated Statements
of Equity relate to foreign currency items.
NOTE 14 – SHARE-BASED COMPENSATION
Under the Company's shareholder-approved equity incentive plan, a maximum of 2.7 million ordinary shares are authorized for
issuance, of which 2.1 million remained available for issuance as of December 31, 2025, for future equity incentive awards.
Compensation Expense
Share-based compensation expense is included in Cost of goods sold and Selling and administrative expenses within the
Consolidated Statements of Comprehensive Income. The following table summarizes the expenses recognized for the years
ended December 31:
In millions
2025
2024
2023
Stock options
$
5.4 $
4.9 $
4.3
RSUs
14.3
15.2
14.6
PSUs
10.1
8.1
7.5
Pre-tax expense
29.8
28.2
26.4
Tax benefit
(3.2)
(2.5)
(2.7)
After-tax expense
$
26.6 $
25.7 $
23.7
F-26
Stock Options / RSUs
The weighted-average fair value of stock options granted for the years ended December 31, 2025, 2024 and 2023, was
estimated to be $37.72, $40.92 and $33.66 per share, respectively, using the Black-Scholes option-pricing model. The
weighted-average assumptions used were as follows:
2025
2024
2023
Dividend yield
1.61 %
1.47 %
1.60 %
Volatility
29.89 %
29.28 %
28.47 %
Risk-free rate of return
4.31 %
4.29 %
4.10 %
Expected life
5.4 years
6.0 years
6.0 years
Volatility is based on the Company's historic volatility. The risk-free rate of return is based on the yield curve of a zero-coupon
U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. In 2023 and 2024,
the expected life of the Company’s stock option awards was derived from the simplified approach based on the weighted-
average time to vest and the remaining contractual term, because the company did not have sufficient history to estimate
expected life. Beginning in 2025, the expected life of the Company's stock option awards is derived from historical data, based
on the past exercise activity and post-vest cancellation activity of the Company's stock option program and represents the
period of time that awards are expected to be outstanding.
Changes in options outstanding under the plans for the years ended December 31, 2025, 2024 and 2023, were as follows:
Shares
subject
to option
Weighted-
average
exercise price(a)
Aggregate
intrinsic
value (millions)
Weighted-average
remaining life
(years)
December 31, 2022
932,582 $
100.21
Granted
156,929
112.59
Exercised
(76,969)
73.30
Canceled
(12,182)
117.82
December 31, 2023
1,000,360
104.01
Granted
135,906
130.66
Exercised
(247,729)
90.19
Canceled
(17,884)
125.72
December 31, 2024
870,653
111.65
Granted
144,504
127.40
Exercised
(289,139)
107.56
Canceled
(5,744)
125.78
Outstanding December 31, 2025
720,274 $
116.34 $
30.9
6.5
Exercisable December 31, 2025
450,138 $
110.78 $
21.8
5.4
(a)
The weighted-average exercise price of awards represents the exercise price of the awards on the grant date
converted to ordinary shares of the Company.
The following table summarizes information concerning outstanding and exercisable options as of December 31, 2025:
Options outstanding
Options exercisable
Range of
exercise price
Number
outstanding at
December 31,
2025
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
Number
exercisable at
December 31,
2025
Weighted-
average
remaining
life (years)
Weighted-
average
exercise
price
50.01
—
75.00
15,178
0.7 $
66.29
15,178
0.7 $
66.29
75.01
—
100.00
47,116
2.7
87.73
47,116
2.7
87.73
100.01
—
125.00
344,992
6.1
111.12
296,003
6.0
110.85
125.01
—
150.00
312,988
7.7
128.83
91,841
5.5
129.71
720,274
6.5 $
116.34
450,138
5.4 $
110.78
At December 31, 2025, there was $4.3 million of total unrecognized compensation cost from stock option arrangements granted
under the plan, which is primarily related to unvested stock options held by non-retirement eligible employees. The aggregate
intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024, was $16.2 million and $11.4
million, respectively. Generally, stock options expire ten years from their date of grant.
F-27
The following table summarizes RSU activity for the years ended December 31, 2025, 2024 and 2023:
RSUs
Weighted-average grant
date fair value(a)
Outstanding and unvested at December 31, 2022
261,048 $
112.79
Granted
137,677
112.38
Vested
(101,516)
115.94
Canceled
(9,844)
112.45
Outstanding and unvested at December 31, 2023
287,365
111.51
Granted
103,774
129.51
Vested
(139,023)
112.15
Canceled
(11,742)
122.14
Outstanding and unvested at December 31, 2024
240,374
118.40
Granted
100,798
130.93
Vested
(126,348)
116.95
Canceled
(5,752)
125.98
Outstanding and unvested at December 31, 2025
209,072 $
125.10
(a)
The weighted-average grant date fair value represents the fair value of the awards on the grant date converted to
ordinary shares of the Company.
At December 31, 2025, there was $11.2 million of total unrecognized compensation cost from RSU arrangements granted under
the plan, which is primarily related to unvested RSUs held by non-retirement eligible employees.
Performance Stock
In February 2023, 2024 and 2025, the Compensation Committee of the Company's Board of Directors granted PSUs that vested
based 50% upon a performance condition, measured at each reporting period by earnings per share ("EPS") performance during
a three-year performance period in relation to pre-established targets set by the Compensation Committee, and 50% upon a
market condition, measured by the Company’s relative total shareholder return ("TSR") against, for 2023, the S&P 400 Capital
Goods Index over a three-year performance period, and for 2024 and 2025, a 50/50 weighting of the S&P 400 Capitals Goods
Index and the S&P 500 Capital Goods Index over a three-year performance period. The fair values of the market conditions are
estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based
upon historical volatility, risk-free rates of return and correlation matrix.
The following table summarizes PSU activity for the maximum number of shares that may be issued upon vesting of those
awards for the years ended December 31, 2025, 2024 and 2023:
PSUs
Weighted-average grant
date fair value(a)
Outstanding and unvested at December 31, 2022
138,385 $
108.71
Granted
77,253
120.69
Vested
(13,028)
149.43
Forfeited
(49,419)
134.62
Outstanding and unvested at December 31, 2023
153,191
102.93
Granted
58,363
155.76
Vested
(39,932)
113.85
Forfeited
(18,665)
128.09
Outstanding and unvested at December 31, 2024
152,957
117.16
Granted
63,970
135.79
Vested
(44,725)
123.26
Forfeited
(2,239)
128.63
Outstanding and unvested at December 31, 2025
169,963 $
122.42
(a)
The weighted-average grant date fair value represents the fair value of the awards on the grant date converted to
ordinary shares of the Company.
At December 31, 2025, there was $8.6 million of total unrecognized compensation cost from the PSP based on actual
performance through such date, which is related to shares underlying unvested awards. This compensation cost will be
recognized over the required service period, which is generally the three-year performance/vesting period.
F-28
NOTE 15 – OTHER INCOME, NET
The components of Other income, net for the years ended December 31, were as follows:
In millions
2025
2024
2023
Interest income
$
(12.0) $
(20.5) $
(6.8)
Currency translation loss
3.4
2.2
3.9
Earnings and gains from the sale of equity method investments, net
(1.6)
(1.1)
(1.0)
Net periodic pension and postretirement benefit cost (income), less service cost
1.0
(0.2)
1.0
Other income
(0.7)
(0.5)
1.0
Other income, net
$
(9.9) $
(20.1) $
(1.9)
NOTE 16 – INCOME TAXES
As discussed in Note 2, the Company applied the disclosure requirements of ASU 2023-09 for the year ended December 31,
2025, including using Ireland, and its national tax rate of 12.5%, as the starting point for several disclosures as it is the
Company’s country of domicile. Disclosures for the years ended December 31, 2024 and 2023 are presented consistent with the
prior years and with the income tax disclosure requirements of ASC 740 prior to the adoption of ASU 2023-09.
Earnings before income taxes for the years ended December 31 were taxed within the following jurisdictions:
In millions
2025
Ireland
$
(120.5)
Non-Ireland
888.9
Total
$
768.4
In millions
2024
2023
U.S.
$
298.6 $
220.8
Non-U.S.
400.2
396.4
Total
$
698.8 $
617.2
The components of the Provision for income taxes for the years ended December 31 were as follows:
In millions
2025
Current tax expense:
Ireland
$
6.2
Non-Ireland
128.6
Total:
134.8
Deferred tax benefit:
Ireland
(0.2)
Non-Ireland
(10.0)
Total:
(10.2)
Total tax expense:
Ireland
6.0
Non-Ireland
118.6
Total
$
124.6
F-29
In millions
2024
2023
Current tax expense:
U.S.
$
111.4 $
114.7
Non-U.S.
34.1
29.5
Total:
145.5
144.2
Deferred tax benefit:
U.S.
(39.7)
(59.1)
Non-U.S.
(4.5)
(8.5)
Total:
(44.2)
(67.6)
Total tax expense:
U.S.
71.7
55.6
Non-U.S.
29.6
21.0
Total
$
101.3 $
76.6
The Provision for income taxes differs from the amount of income taxes determined by applying the applicable Irish statutory
income tax rate to pretax income, as a result of the following differences:
2025
Amount
Percent
Ireland Federal Statutory Tax Rate
$
96.1
12.5 %
State and Local Income Tax, Net of Federal Income Tax Effect
—
—
Foreign Tax Effects:
United States:
Statutory tax rate difference between Ireland and United States
30.7
4.0
State and local income taxes, net of Federal income tax effect
21.7
2.8
Research and development tax credits
(5.8)
(0.7)
Other
9.4
1.2
United Arab Emirates ("UAE"):
Statutory tax rate difference between Ireland and UAE
(13.7)
(1.8)
Exempt income
(35.4)
(4.6)
Other
1.3
0.2
Germany:
Local income tax
6.4
0.8
Effect of changes in tax rate enacted in the current period
(7.3)
(0.9)
Other
3.0
0.4
Luxembourg:
Statutory revaluation of investment in subsidiary
(13.6)
(1.8)
Other
10.7
1.4
Other foreign jurisdictions
(2.8)
(0.4)
Effect of Cross-Border Tax Laws:
Pillar II
6.2
0.8
Nontaxable or Nondeductible Items:
Nondeductible interest expense
12.4
1.6
Other
2.3
0.3
Changes in Unrecognized Tax Benefits
3.1
0.4
Other
(0.1)
—
Effective tax rate
$
124.6
16.2 %
F-30
Percent of pretax income
2024
2023
Statutory U.S. rate
21.0 %
21.0 %
Increase (decrease) in rates resulting from:
Non-U.S. tax rate differential(a)
(9.7)
(11.0)
State and local income taxes(a)
2.4
2.4
Global Minimum Tax
1.4
—
Reserves for uncertain tax positions
0.3
(0.1)
Other adjustments
(0.9)
0.1
Effective tax rate
14.5 %
12.4 %
(a)
Net of changes in valuation allowances
The majority of the Company's earnings are considered permanently reinvested, and therefore, the Company has not recorded
any incremental withholding or income tax liabilities on these permanently reinvested earnings.
At December 31, a summary of the deferred tax accounts was as follows:
In millions
2025
2024
Deferred tax assets:
Inventory and accounts receivable
$
11.7 $
12.7
Fixed assets and intangibles
5.7
4.5
Lease liabilities
41.0
36.2
Postemployment and other benefit liabilities
37.7
31.8
Other reserves and accruals
25.4
23.2
Net operating losses, tax credits and other carryforwards
597.9
557.9
Other
1.7
1.8
Gross deferred tax assets
721.1
668.1
Less: deferred tax valuation allowances
(255.8)
(247.0)
Deferred tax assets net of valuation allowances
$
465.3 $
421.1
Deferred tax liabilities:
Fixed assets and intangibles
$
(193.5) $
(96.7)
ROU assets
(39.9)
(35.4)
Postemployment and other benefit liabilities
(9.7)
(6.5)
Unremitted earnings of foreign subsidiaries
(6.1)
(4.1)
Other
(7.6)
(5.8)
Gross deferred tax liabilities
(256.8)
(148.5)
Net deferred tax assets
$
208.5 $
272.6
At December 31, 2025, $6.1 million of deferred taxes were recorded for certain undistributed earnings of subsidiaries.
Historically, no deferred taxes have been provided for any portion of the remaining undistributed earnings of the Company's
subsidiaries since these earnings have been, and will continue to be, permanently reinvested in these subsidiaries. For many
reasons, including the number of legal entities and jurisdictions involved, the complexity of the Company's legal entity
structure, the complexity of tax laws in the relevant jurisdictions and the impact of projections of income for future years to any
calculations, the Company believes it is not practicable to estimate, within any reasonable range, the amount of additional taxes
which may be payable upon the distribution of earnings.
At December 31, 2025, the Company had the following tax losses and tax credit carryforwards available to offset taxable
income in prior and future years:
In millions
Amount
Expiration Period
Ireland Federal tax loss carryforwards
$
67.7
Unlimited
Non-Ireland Federal and State credit carryforwards
5.2
2026-2037
Non-Ireland tax loss carryforwards
$
1,016.8
2026-Unlimited
The non-Ireland tax loss carryforwards were incurred in various jurisdictions, predominantly in Luxembourg and the United
Kingdom.
F-31
The Company evaluates its deferred income tax assets to determine if valuation allowances are required or should be adjusted.
GAAP requires that companies assess whether valuation allowances should be established against their deferred tax assets
based on consideration of all available evidence, both positive and negative, using a "more likely than not" standard. This
assessment considers the nature, frequency and amount of recent losses, the duration of statutory carryforward periods and tax
planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.
Activity associated with the Company’s valuation allowance is as follows:
In millions
2025
2024
2023
Beginning balance
$
247.0 $
281.0 $
264.7
Increase to valuation allowance
10.9
2.9
15.7
Decrease to valuation allowance
(5.9)
(26.5)
—
Tax rate change
1.2
(8.8)
—
Currency translation
2.6
(1.6)
0.6
Ending balance
$
255.8 $
247.0 $
281.0
During the year ended December 31, 2025, the valuation allowance increased by $8.8 million, while during the year ended
December 31, 2024, the valuation allowance decreased by $34.0 million. The Company's valuation allowance will fluctuate
from year to year as a result of changes in country specific tax laws, internal restructurings, jurisdictional profitability and
changes in judgments and facts regarding the realizability of deferred tax assets.
The Company has total unrecognized tax benefits of $54.8 million and $44.5 million as of December 31, 2025 and 2024,
respectively. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $54.8 million as
of December 31, 2025. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
In millions
2025
2024
2023
Beginning balance
$
44.5 $
45.1 $
45.2
Additions based on tax positions related to the current year
12.6
12.2
10.8
Additions based on tax positions related to prior years
6.9
0.1
1.4
Reductions based on tax positions related to prior years
(5.1)
(2.4)
(1.9)
Reductions related to settlements with tax authorities
(0.2)
(1.0)
—
Reductions related to lapses of statute of limitations
(6.0)
(8.4)
(10.9)
Currency translation
2.1
(1.1)
0.5
Ending balance
$
54.8 $
44.5 $
45.1
The Company records interest and penalties associated with the uncertain tax positions within its provision for income taxes.
The Company had reserves associated with interest and penalties, net of tax, of $12.0 million and $9.2 million at December 31,
2025 and 2024, respectively. For the year ended December 31, 2025, the Company recognized $2.0 million in interest and
penalties, net of tax, related to these uncertain tax positions. For the year ended December 31, 2024, the Company recognized
$1.0 million in interest and penalties, net of tax, related to these uncertain tax positions.
The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant
facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of
taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax
authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions,
timing and amount of income or deductions and the allocation of income among the jurisdictions in which the Company
operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an
issue raised by a tax authority with respect to that return. In the normal course of business, the Company is subject to
examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, France,
Germany, Italy, Mexico, the Netherlands, Poland and the U.S. In general, the examination of the material tax returns of
subsidiaries of the Company is complete for the years prior to 2016, with certain matters being resolved through appeals and
litigation.
NOTE 17 – EARNINGS PER SHARE (EPS)
Basic EPS is calculated by dividing Net earnings attributable to Allegion plc by the weighted-average number of ordinary
shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS
calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes shares issuable under
its share-based compensation plans.
F-32
The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per
share calculations:
In millions
2025
2024
2023
Weighted-average number of basic shares
86.1
87.2
87.9
Shares issuable under share-based compensation plans
0.5
0.4
0.4
Weighted-average number of diluted shares
86.6
87.6
88.3
As of December 31, 2025 and 2024, 0.2 million and 0.1 million stock options were excluded from the computation of
weighted-average diluted shares outstanding, respectively, because the effect of including these shares would have been anti-
dilutive.
NOTE 18 – NET REVENUES
The following table shows the Company's Net revenues related to both tangible product sales and services and software for the
years ended December 31, 2025, 2024 and 2023, respectively, disaggregated by business segment. Net revenues are shown by
tangible product sales and services and software, as contract terms, conditions and economic factors affecting the nature,
amount, timing and uncertainty around revenue recognition and cash flows are substantially similar within each of these two
revenue streams:
2025
In millions
Allegion
Americas
Allegion
International
Total
Products
$
3,047.8 $
741.0 $
3,788.8
Services and software
170.9
107.4
278.3
Total Net revenues
$
3,218.8 $
848.5 $
4,067.3
2024
In millions
Allegion
Americas
Allegion
International
Total
Products
$
2,855.4 $
663.2 $
3,518.6
Services and software
157.0
96.6
253.6
Total Net revenues
$
3,012.4 $
759.8 $
3,772.2
2023
In millions
Allegion
Americas
Allegion
International
Total
Products
$
2,756.7 $
644.6 $
3,401.3
Services and software
156.9
92.6
249.5
Total Net revenues
$
2,913.6 $
737.2 $
3,650.8
As of December 31, 2025 and 2024, the contract assets related to the Company's right to consideration for work completed but
not billed were not material. The Company does not have any material costs to obtain or fulfill a contract that are capitalized on
its Consolidated Balance Sheets.
As of December 31, 2025 and 2024, the contract liabilities related to revenues allocated to remaining performance obligations
totaled $41.2 million and $33.2 million, respectively, and are classified as Accrued expenses and other current liabilities and
Other noncurrent liabilities within the Consolidated Balance Sheets. The Company's total current contract liabilities related to
revenues as of December 31, 2025 and 2024 totaled $36.0 million and $28.1 million, respectively, and the remainder was
classified as noncurrent.
During the years ended December 31, 2025 and 2024, no adjustments related to performance obligations satisfied in previous
periods were recorded.
NOTE 19 – COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental
and product warranty matters. Amounts recorded for identified contingent liabilities are estimates, which are reviewed
periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in
estimating future costs for contingent liabilities, except as expressly set forth in this note, management believes that any
liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of
operations, liquidity or cash flows of the Company.
F-33
Environmental Matters
As of December 31, 2025 and 2024, the Company has recorded reserves for environmental matters of $22.7 million and $17.8
million, respectively. The total reserve at December 31, 2025 and 2024, included $9.3 million and $9.9 million, respectively,
related to remediation of sites previously disposed by the Company. Environmental reserves are classified as Accrued expenses
and other current liabilities or Other noncurrent liabilities within the Consolidated Balance Sheets based on the timing of their
expected future payment. The Company's total current environmental reserve at December 31, 2025 and 2024, was $6.0 million
and $2.4 million, respectively, and the remainder is classified as noncurrent.
The Company incurred $7.1 million, $1.1 million and $0.5 million of expenses during the years ended December 31, 2025,
2024 and 2023, respectively, for environmental remediation at sites presently or formerly owned or leased by the Company.
Environmental remediation costs are recorded in Cost of goods sold within the Consolidated Statements of Comprehensive
Income. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is
uncertain.
Warranty Liability
The changes in the standard product warranty liability for the years ended December 31, were as follows:
In millions
2025
2024
2023
Balance at beginning of period
$
22.8 $
20.7 $
18.2
Reductions for payments
(11.7)
(12.6)
(9.5)
Accruals for warranties issued during the current period
12.9
15.8
12.6
Changes to accruals related to preexisting warranties
(0.1)
(0.7)
(0.7)
Acquisitions
1.7
—
—
Translation
0.6
(0.4)
0.1
Balance at end of period
$
26.2 $
22.8 $
20.7
Standard product warranty liabilities are classified as Accrued expenses and other current liabilities or Other noncurrent
liabilities within the Consolidated Balance Sheets based on the timing of the expected future payments. The amount included
within current liabilities at December 31, 2025 and 2024, was $20.1 million and $16.9 million, respectively, and the remainder
is classified as noncurrent.
Contractual Obligations
As of December 31, 2025, the Company has arrangements with certain software and information technology service providers
that require future minimum purchases of $74.7 million over the period of 2026 through 2030.
NOTE 20 – BUSINESS SEGMENT INFORMATION
The Company classifies its business into the following two reportable segments based on industry and market focus: Allegion
Americas and Allegion International. The Company largely evaluates performance based on Segment operating income and
Segment operating margin. The Company’s CODM is its chief executive officer, who uses Segment operating income as the
measure of profit and loss to evaluate the financial performance of the business and as the basis for resource allocation,
performance reviews and compensation. For these reasons, the Company believes Segment operating income represents the
most relevant measure of segment profit and loss. The Company’s CODM may exclude certain charges or gains, such as
corporate charges and other special charges, from Operating income to arrive at a Segment operating income that is a more
meaningful measure of profit and loss upon which to base operating decisions. The Company defines Segment operating
margin as Segment operating income as a percentage of the segment's Net revenues.
F-34
A summary of operations and balance sheet information by reportable segments as of and for the years ended December 31,
were as follows:
Dollar amounts in millions
2025
2024
2023
Allegion Americas
Net revenues
$
3,218.8 $
3,012.4 $
2,913.6
Cost of goods sold
1,751.6
1,666.5
1,637.9
Selling and administrative expenses
570.7
529.7
518.5
Segment operating income
896.5
816.2
757.2
Segment operating margin
27.9 %
27.1 %
26.0 %
Depreciation and amortization
79.4
74.3
67.6
Capital expenditures
69.1
67.2
72.6
Total segment assets
$
2,732.5 $
2,572.7 $
2,457.7
Allegion International
Net revenues
$
848.5 $
759.8 $
737.2
Cost of goods sold
477.4
441.4
430.6
Selling and administrative expenses
294.6
252.1
241.0
Impairment of intangible assets
—
—
7.5
Segment operating income
76.5
66.3
58.1
Segment operating margin
9.0 %
8.7 %
7.9 %
Depreciation and amortization
49.4
41.0
40.0
Capital expenditures
23.5
24.2
16.2
Total segment assets
$
1,886.1 $
1,146.0 $
1,204.3
Reconciliation to earnings before income taxes
Segment operating income from reportable segments
$
973.0 $
882.5 $
815.3
Unallocated corporate expense
113.5
101.8
106.9
Interest expense
101.0
102.0
93.1
Other income, net
(9.9)
(20.1)
(1.9)
Total earnings before income taxes
$
768.4 $
698.8 $
617.2
Other reportable segment information
Depreciation and amortization from reportable segments
$
128.8 $
115.3 $
107.6
Unallocated depreciation and amortization
0.9
0.9
1.4
Total depreciation and amortization
$
129.7 $
116.2 $
109.0
Capital expenditures from reportable segments
$
92.7 $
91.4 $
88.8
Corporate capital expenditures, net of transfers to business segments
5.4
0.7
(4.6)
Total capital expenditures
$
98.1 $
92.1 $
84.2
Assets from reportable segments
$
4,618.6 $
3,718.7 $
3,662.0
Unallocated assets(a)
605.1
769.1
649.5
Total assets
$
5,223.7 $
4,487.8 $
4,311.5
(a)
Unallocated assets consist primarily of investments in unconsolidated affiliates, property, plant and equipment, net,
ROU assets, deferred income taxes and cash and cash equivalents.
Net revenues by destination and nature of products and services for the years ended December 31, were as follows:
In millions
2025
2024
2023
U.S.
$
3,049.8 $
2,858.7 $
2,754.7
Non-U.S.
1,017.5
913.5
896.1
Total Net revenues
$
4,067.3 $
3,772.2 $
3,650.8
F-35
In millions
2025
2024
2023
Mechanical products
$
2,713.9 $
2,572.2 $
2,436.3
Electronic products(a)
1,075.1
946.4
965.0
Services and software(b)
278.3
253.6
249.5
Total Net revenues
$
4,067.3 $
3,772.2 $
3,650.8
(a)
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, time and attendance
systems, electronic and electrified door controls and systems and exit devices.
(b)
Services and software revenues include inspection, maintenance and repair, design and installation and aftermarket
services, as well as software offerings such as access control, platform integration, workforce management and time,
attendance, and workforce productivity software.
In fiscal years 2025, 2024 and 2023, no customer exceeded 10% of consolidated Net revenues.
At December 31, long-lived assets by geographic area were as follows:
In millions
2025
2024
U.S.
$
453.4 $
460.1
Non-U.S.
710.0
393.1
Total
$
1,163.4 $
853.2
NOTE 21 – SUBSEQUENT EVENTS
On February 4, 2026, the Company's Board of Directors declared a quarterly dividend of $0.55 cents per ordinary share. The
dividend is payable March 31, 2026, to shareholders of record on March 13, 2026.
F-36
SCHEDULE II
ALLEGION PLC
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023
(Amounts in millions)
Allowances for Doubtful Accounts:
Balance December 31, 2022
$
6.0
Additions charged to costs and expenses
11.7
Deductions*
(3.7)
Currency translation and other
—
Balance December 31, 2023
14.0
Additions charged to costs and expenses
5.3
Deductions*
(4.2)
Currency translation and other
5.1
Balance December 31, 2024
20.2
Additions charged to costs and expenses
2.0
Deductions*
(9.8)
Currency translation and other
0.5
Balance December 31, 2025
$
12.9
*
"Deductions" include accounts and advances written off, less recoveries.
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