Allegion ALLE · USD

BUSINESS SEGMENT INFORMATIONThe 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. 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 millions202520242023Allegion AmericasNet revenues$3,218.8 $3,012.4 $2,913.6 Cost of goods sold1,751.6 1,666.5 1,637.9 Selling and administrative expenses570.7 529.7 518.5 Segment operating income896.5 816.2 757.2 Segment operating margin27.9 %27.1 %26.0 %Depreciation and amortization79.4 74.3 67.6 Capital expenditures69.1 67.2 72.6 Total segment assets$2,732.5 $2,572.7 $2,457.7 Allegion InternationalNet revenues$848.5 $759.8 $737.2 Cost of goods sold477.4 441.4 430.6 Selling and administrative expenses294.6 252.1 241.0 Impairment of intangible assets— — 7.5 Segment operating income76.5 66.3 58.1 Segment operating margin9.0 %8.7 %7.9 %Depreciation and amortization49.4 41.0 40.0 Capital expenditures23.5 24.2 16.2 Total segment assets$1,886.1 $1,146.0 $1,204.3 Reconciliation to earnings before income taxesSegment operating income from reportable segments$973.0 $882.5 $815.3 Unallocated corporate expense113.5 101.8 106.9 Interest expense101.0 102.0 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 informationDepreciation and amortization from reportable segments$128.8 $115.3 $107.6 Unallocated depreciation and amortization0.9 0.9 1.4 Total depreciation and amortization$129.7 $116.2 $109.

NET REVENUESThe 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: 2025In millionsAllegion AmericasAllegion InternationalTotalProducts$3,047.8 $741.0 $3,788.8 Services and software170.9 107.4 278.3 Total Net revenues$3,218.8 $848.5 $4,067.3 2024In millionsAllegion AmericasAllegion InternationalTotalProducts$2,855.4 $663.2 $3,518.6 Services and software157.0 96.6 253.6 Total Net revenues$3,012.4 $759.8 $3,772.2 2023In millionsAllegion AmericasAllegion InternationalTotalProducts$2,756.7 $644.6 $3,401.3 Services and software156.9 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.

COMMITMENTS AND CONTINGENCIESThe 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.Environmental MattersAs 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 LiabilityThe changes in the standard product warranty liability for the years ended December 31, were as follows:In millions202520242023Balance 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 period12.9 15.8 12.6 Changes to accruals related to preexisting warranties(0.1)(0.7)(0.7)Acquisitions1.7 — — Translation0.6 (0.4)0.1 Balance at end of period$26.2 $22.8 $20.

NOTE 8 – DEBT AND CREDIT FACILITIESAt December 31, long-term debt and other borrowings consisted of the following:In millions20252024Term Facility$— $212.5 Revolving Facility190.6 — 3.550% Senior Notes due 2027400.0 400.0 3.500% Senior Notes due 2029400.0 400.0 5.411% Senior Notes due 2032600.0 600.0 5.600% Senior Notes due 2034400.0 400.0 Other debt0.2 — Total borrowings outstanding1,990.8 2,012.5 Discounts and debt issuance costs, net(10.7)(13.0)Total debt1,980.1 1,999.5 Less current portion of long-term debt0.2 21.9 Total long-term debt$1,979.9 $1,977.6 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.

INCOME TAXESAs 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 millions2025Ireland$(120.5)Non-Ireland888.9 Total$768.4 In millions20242023U.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 millions2025Current tax expense:Ireland$6.2 Non-Ireland128.6 Total:134.8 Deferred tax benefit:Ireland(0.2)Non-Ireland(10.0)Total:(10.2)Total tax expense:Ireland6.0 Non-Ireland118.6 Total$124.6 In millions20242023Current 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:2025AmountPercentIreland 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 States30.7 4.0 State and local income taxes, net of Federal income tax effect21.7 2.8 Research and development tax credits(5.8)(0.7)Other9.4 1.2 United Arab Emirates ("UAE"):Statutory tax rate difference between Ireland and UAE(13.7)(1.8)Exempt income(35.4)(4.6)Other1.3 0.2 Germany:Local income tax6.4 0.8 Effect of changes in tax rate enacted in the current period(7.3)(0.9)Other3.0 0.4 Luxembourg:Statutory revaluation of investment in subsidiary(13.6)(1.8)Other10.7 1.4 Other foreign jurisdictions(2.8)(0.4)Effect of Cross-Border Tax Laws:Pillar II6.2 0.8 Nontaxable or Nondeductible Items:Nondeductible interest expense12.4 1.6 Other2.3 0.3 Changes in Unrecognized Tax Benefits3.1 0.4 Other(0.1)— Effective tax rate$124.6 16.2 % Percent of pretax income 20242023Statutory U.S. rate21.0 %21.

SHARE-BASED COMPENSATIONUnder 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 ExpenseShare-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 millions202520242023Stock options$5.4 $4.9 $4.3 RSUs14.3 15.2 14.6 PSUs10.1 8.1 7.5 Pre-tax expense29.8 28.2 26.4 Tax benefit(3.2)(2.5)(2.7)After-tax expense$26.6 $25.7 $23.7 Stock Options / RSUsThe 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:202520242023Dividend yield1.61 %1.47 %1.60 %Volatility29.89 %29.28 %28.47 %Risk-free rate of return4.31 %4.29 %4.10 %Expected life5.4 years6.0 years6.0 yearsVolatility 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:Sharessubjectto optionWeighted-averageexercise price(a)Aggregateintrinsicvalue (millions)Weighted-averageremaining life (years)December 31, 2022932,582 $100.21 Granted156,929 112.59 Exercised(76,969)73.30 Canceled(12,182)117.82 December 31, 20231,000,360 104.01 Granted135,906 130.66 Exercised(247,729)90.19 Canceled(17,884)125.72 December 31, 2024870,653 111.65 Granted144,504 127.

LEASESTotal 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, 2025December 31, 2024In millionsBalance Sheet classificationReal estateEquipmentTotalReal estateEquipmentTotalROU assetOther noncurrent assets$116.5 $49.9 $166.4 $107.1 $40.6 $147.7 Lease liability - currentAccrued expenses and other current liabilities22.5 19.2 41.7 19.8 16.9 36.7 Lease liability - noncurrentOther noncurrent liabilities98.0 30.5 128.5 91.0 23.5 114.5 Other information:Weighted-average remaining term (years)10.93.011.22.9Weighted-average discount rate5.3 %5.9 %5.2 %5.8 %The following table summarizes additional information related to the Company's leases for the years ended December 31:20252024In millionsReal estateEquipmentTotalReal estateEquipmentTotalCash 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 liabilities14.2 22.0 36.2 12.1 20.5 32.6 Future RepaymentsFuture 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 millions20262027202820292030ThereafterTotalReal estate leases$28.3 $23.8 $15.9 $11.1 $9.2 $74.1 $162.4 Equipment leases21.5 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.

ACQUISITIONS2025Acquisitions completed during the year ended December 31, 2025, included the following:Next DoorOn 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.LemaarOn 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.TrimcoOn 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.NovasOn 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.ELATECOn 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.GatewiseOn 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.WaitwhileOn 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.