Allegion plc

Allegion plc 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. 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. The security products industry is expected to continue benefiting 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. 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.

The company's principal global competitors are Assa Abloy AB and dormakaba Group. Allegion also faces 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. The company's success depends on a variety of factors, including brand and reputation, knowledge and expertise in the industry, product breadth, innovation, integration with popular technology platforms, quality and delivery capabilities, price and service capabilities. The company's portfolio spans more than 40 brands, including brands like CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin. The company's 10 largest customers represented approximately 26% of total Net revenues in 2025 ¹.

Allegion generates revenue through the sale of security products and solutions, including door controls, door control systems, exit devices, doors, glass and door systems, accessories, electronic security products, access control systems, locks, locksets, portable locks, key systems, and services and software. The company sells most of its products and solutions through distribution and retail channels, including specialty distribution, e-commerce and wholesalers. Through a few of its businesses, most notably Stanley Access Technologies, Interflex and its Global Portable Security brands, the company also provides products and services directly to end-users. The company has two principal revenue streams: tangible product sales and services and software. Product sales involve contracts with a single performance obligation, with transfer of control typically occurring when goods are shipped from the company's facilities or at other predetermined control transfer points. 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.

The company's product portfolio includes door controls, door control systems, and exit devices, which are life-safety products generally installed on fire doors and facility entrances and exits, sold under brands like Briton, CISA, LCN, STANLEY Access Technologies and Von Duprin. The company also offers doors, glass and door systems, and accessories, including hollow metal doors and frames, glass and specialty door systems, and a variety of additional security products and components, sold under brands like Falcon, Glynn-Johnson, Ives, Republic, Steelcraft, TGP and Trimco. Electronic security products and access control systems, including time, attendance and workforce productivity solutions, are sold under brands like Bricard, CISA, ELATEC, Interflex, LCN, Schlage, SimonsVoss and Von Duprin. Locks, locksets, portable locks, and key systems are sold under brands like Bricard, AXA, CISA, Falcon, Gainsborough, Schlage and SimonsVoss. Services and software include planned inspection, maintenance and repair services for automatic entrance solutions throughout the U.S. and Canada, as well as SaaS offerings including access control, platform integration and workforce management solutions through brands like Interflex, Yonomi and Zentra.

The Allegion Americas segment is a leading provider of security products, services and solutions throughout North America, selling a broad range of products 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. This segment's primary brands are LCN, Schlage, Von Duprin and Stanley Access Technologies. The Allegion International segment provides security products, services and solutions primarily throughout Europe, Asia and Oceania, offering a broad range of products 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. This segment's primary brands are AXA, CISA, ELATEC, Gainsborough, Interflex, and SimonsVoss. Net revenues from the sale of electronic products in the Americas segment increased by a low-double digits percent compared to 2024 ².

During the year ended December 31, 2025, the company completed several acquisitions, including Next Door Company, Lemaar Pty Ltd, Trimco Hardware, Nova Hardware Pty Ltd, ELATEC, Gatewise Inc., Waitwhile Inc., UAP Group Limited, and Brisant Secure Limited. The aggregate consideration for all acquisitions completed in 2025 was approximately $631.6 million ³ (net of cash acquired), including the aggregate fair value of earnout contingent consideration. The company used cash on hand and borrowings under the Revolving Facility to finance the acquisitions. On December 9, 2025, the company amended and restated its unsecured revolving credit facility, increasing the total commitment from $750.0 million ⁴ to $1.0 billion ⁵ and extending the maturity to May 20, 2030. During 2025, the company paid quarterly dividends of $0.51 ⁶ per ordinary share for a total of $175.3 million ⁷ and repurchased approximately 0.6 million ⁸ ordinary shares for approximately $80.0 million ⁹.

For the year ended December 31, 2025, the company generated Net revenues of $4,067.3 million ¹⁰ and Operating income of $859.5 million ¹¹. Net revenues increased by 7.8% ¹² compared to the year ended December 31, 2024, driven by favorable pricing, volume growth, and the impact from acquisitions. Operating income increased $78.8 million ¹³ compared to the prior year, and Operating margin increased to 21.1% ¹⁴ from 20.7% ¹⁵. Net earnings were $643.8 million ¹⁶ compared to $597.5 million ¹⁷ in 2024. Diluted net earnings per ordinary share were $7.44 ¹⁸ compared to $6.82 ¹⁹ in the prior year.

A key growth vector is the continued expansion of electronic security products and solutions. Demand for electronic security products has remained strong and continues to be a long-term growth driver. In the Allegion Americas segment, Net revenues from the sale of electronic products increased by a low-double digits percent compared to 2024 ²⁰. The company expects 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. The company also expects 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.

Another growth vector is the company's acquisition strategy, which aligns with its strategy of expanding its mechanical and electronic product portfolios and adding complementary software and services. The acquisition of ELATEC on July 1, 2025, for a purchase price of €327.9 million ²¹ (approximately $386.5 million ²²), helps expand the company's global electronics portfolio in attractive end markets while also increasing strategic relationships with channel partners. Businesses acquired in 2025 generated $93.0 million ²³ of Net revenues since the acquisition dates. The company's long-term growth strategies include the acquisition of businesses or product lines to strengthen its industry position, enhance its existing set of products and services offerings or expand into adjacent markets.

For the year ended December 31, 2025, Cost of goods sold as a percentage of Net revenues decreased to 54.8% ²⁴ from 55.8% ²⁵ compared to the prior year, 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. Selling and administrative expenses as a percentage of Net revenues increased to 24.1% ²⁶ from 23.5% ²⁷ due to inflation in excess of productivity and investment spending and a year-over-year increase in restructuring, integration, and acquisition expenses. The company utilizes a number of tools to improve efficiency and productivity, including enterprise excellence efforts and other significant capital expenditure projects.

The company operates 37 principal production and assembly facilities — 22 in its Allegion Americas segment and 15 in its Allegion International segment. The company's strategy is to produce in the region of use, wherever appropriate, to allow it to be closer to the end-user and increase efficiency and timely product delivery. Much of the U.S. based residential portfolio is manufactured in the Baja region of Mexico under the Maquiladora, Manufacturing and Export Services Industry program. The company also operates a global technology center in Bengaluru, India, which provides engineering support and augments the capabilities of its regional R&D teams. As of December 31, 2025, the company had approximately 13,300 ²⁸ employees worldwide.

Capital expenditures for the year ended December 31, 2025, were $98.1 million ²⁹ compared to $92.1 million ³⁰ in 2024. The company's Board of Directors has approved a share repurchase program authorizing the repurchase of up to, and including, $500 million ³¹ of the company's ordinary shares. As of December 31, 2025, the company has approximately $160.0 million ³² available to be repurchased under the Share Repurchase Authorization. The Board of Directors declared dividends of $0.51 ³³ per ordinary share on February 6, 2025, April 10, 2025, September 4, 2025 and December 3, 2025. On February 4, 2026, the Board of Directors declared a dividend of $0.55 ³⁴ per ordinary share payable on March 31, 2026. The company paid a total of $175.3 million ³⁵ in cash for dividends to ordinary shareholders during the year ended December 31, 2025. Research and development expenses for the year ended December 31, 2025, amounted to approximately $132.0 million ³⁶.

The company faces headwinds from global macroeconomic factors, including increased prices and inflationary pressures, and volatility and uncertainty in the political, economic and regulatory environments in which it operates, including new or increased tariffs. Throughout 2025, the U.S. government announced tariffs on imports from several countries from which the company manufactures and/or imports products and components. The company estimates it sources approximately 20-25% ³⁷ of Cost of goods sold from Mexico and less than 5% ³⁸ of Cost of goods sold from China. The company also faces headwinds from currency exchange rate fluctuations, as approximately 25% ³⁹ of its 2025 Net revenues were derived outside the U.S. The company's business performance is impacted by the strength of the institutional, commercial and residential construction and remodeling markets, which are marked by cyclicality based on national, regional and local economic conditions.

The company faces constraints from disruptions in its global supply chain, including product manufacturing and logistical services provided by its supplier partners. The company procures 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. The company also faces risks related to its ability to recruit and retain a highly qualified and diverse workforce, as it has experienced labor shortages and increased turnover rates that have led to increased costs. Additionally, the company is subject to risks related to compliance with data privacy and governance laws, and the regulatory environment around cybersecurity is increasingly challenging.

The company's business performance is significantly impacted by the strength of the institutional, commercial and residential construction and remodeling markets, which are cyclical and sensitive to national, regional and local economic conditions, including consumer confidence, corporate and government spending, and interest rates. The company faces material risk from new or increased tariffs, as it estimates it sources approximately 20-25% ⁴⁰ of Cost of goods sold from Mexico and less than 5% ⁴¹ of Cost of goods sold from China, and the degree of impact depends on factors outside its control. Currency exchange rate fluctuations pose a material risk, as approximately 25% ⁴² of 2025 Net revenues were derived outside the U.S., and the company does not hedge against all its currency exposure. The company had approximately $2.0 billion ⁴³ of outstanding indebtedness at December 31, 2025, and a portion of cash flows from operations is dedicated to servicing this debt, with $190.6 million ⁴⁴ outstanding on the Revolving Facility exposing the company to variable interest rate risk. The company is subject to risks from cybersecurity attacks and intrusion efforts that are continuous and evolving, which could disrupt business operations, result in loss of critical and confidential information, and adversely impact the company's reputation, operating results, and financial condition.

Management's message emphasizes that in 2025, the company 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 remained strong and continues to be a long-term growth driver. Management notes that throughout 2025, the U.S. government announced tariffs on imports from several countries from which the company manufactures and/or imports products and components, and that in 2025, the company offset inflation due to tariffs with pricing actions. The strategic priorities emphasized for the period ahead include continuing to analyze the impact of changes in tariffs and what steps, including pricing actions, the company may take to mitigate the impact, as well as continuing to execute on its acquisition strategy to expand its mechanical and electronic product portfolios and add complementary software and services.