UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

_______________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 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.)

Block D

Iveagh Court

Harcourt Road

Dublin 2, D02 VH94, Ireland

(Address of principal executive offices, including zip code)

+(353) (1) 2546200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of 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

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 x 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 x No ¨

Table of Contents

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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of ordinary shares outstanding of Allegion plc as of ~~October 24, 2022~~April 20, 2023 was ~~87,844,822.~~87,946,675.

Table of Contents

ALLEGION PLC

FORM 10-Q

INDEX



PART I - FINANCIAL INFORMATION		1

Item 1 -	Financial Statements	1

	Condensed and Consolidated Statements of Comprehensive Income for the three ~~and~~ ~~nine~~months ended ~~September 30~~March 3 1 , ~~2022~~202 3 and ~~2021~~202 2 (Unaudited)	1

	Condensed and Consolidated Balance Sheets at ~~September~~March ~~30, 2022~~3 1 , 202 3 and December 31, ~~2021~~202 2 (Unaudited)	2

	Condensed and Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September~~March ~~30, 2022~~3 1 , 202 3 and ~~2021~~202 2 (Unaudited)	3

	Notes to Condensed and Consolidated Financial Statements (Unaudited)	4

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1916

Item 3 -	Quantitative and Qualitative Disclosures about Market Risk	3325

Item 4 -	Controls and Procedures	3325

PART II - OTHER INFORMATION		3427

Item 1 -	Legal Proceedings	3427

Item 1A -	Risk Factors	3427

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	3427

Item 6 -	Exhibits	3528

SIGNATURES		3629

Table of Contents

PART I-FINANCIAL INFORMATION

Item 1 – Financial Statements

Allegion plc

Condensed and Consolidated Statements of Comprehensive Income

(Unaudited)


		Three months ended				Nine months ended					Three months ended
		September 30,				September 30,					March 31,
In millions, except per share amounts	In millions, except per share amounts	2022		2021		2022		2021		In millions, except per share amounts		2023		2022
Net revenues	Net revenues	$	913.7	$	717.0	$	2,410.4	$	2,158.2	Net revenues		$	923.0	$	723.6
Cost of goods sold	Cost of goods sold	545.7		416.5		1,438.7		1,239.8		Cost of goods sold		532.0		434.9
Selling and administrative expenses	Selling and administrative expenses	205.1		162.1		544.7		503.3		Selling and administrative expenses		220.0		171.7
Operating income	Operating income	162.9		138.4		427.0		415.1		Operating income		171.0		117.0
Interest expense	Interest expense	23.1		12.3		52.2		37.0		Interest expense		23.6		11.9
Loss on divestitures		7.6		—		7.6		—

Other income, net	Other income, net	(1.5)		(14.7)		(7.1)		(21.4)		Other income, net		(0.3)		(2.2)
Earnings before income taxes	Earnings before income taxes	133.7		140.8		374.3		399.5		Earnings before income taxes		147.7		107.3
Provision for (benefit from) income taxes		19.1		(2.8)		51.4		28.9
Provision for income taxes										Provision for income taxes		24.1		14.2
Net earnings	Net earnings	114.6		143.6		322.9		370.6		Net earnings		123.6		93.1
Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	—		0.1		0.2		0.4		Less: Net earnings attributable to noncontrolling interests		0.1		0.1
Net earnings attributable to Allegion plc	Net earnings attributable to Allegion plc	$	114.6	$	143.5	$	322.7	$	370.2	Net earnings attributable to Allegion plc		$	123.5	$	93.0
Earnings per share attributable to Allegion plc ordinary shareholders:	Earnings per share attributable to Allegion plc ordinary shareholders:									Earnings per share attributable to Allegion plc ordinary shareholders:
Basic net earnings	Basic net earnings	$	1.30	$	1.60	$	3.67	$	4.11	Basic net earnings		$	1.40	$	1.05
Diluted net earnings	Diluted net earnings	$	1.30	$	1.59	$	3.65	$	4.08	Diluted net earnings		$	1.40	$	1.05
Weighted-average shares outstanding:	Weighted-average shares outstanding:									Weighted-average shares outstanding:
Basic	Basic	87.9		89.7		88.0		90.1		Basic		88.0		88.2
Diluted	Diluted	88.2		90.3		88.4		90.7		Diluted		88.4		88.6

Total comprehensive income	Total comprehensive income	$	46.3	$	121.2	$	183.8	$	326.7	Total comprehensive income		$	133.9	$	72.1
Less: Total comprehensive (loss) income attributable to noncontrolling interests		(0.4)		—		(0.8)		0.4
Less: Total comprehensive income attributable to noncontrolling interests										Less: Total comprehensive income attributable to noncontrolling interests		0.2		0.1
Total comprehensive income attributable to Allegion plc	Total comprehensive income attributable to Allegion plc	$	46.7	$	121.2	$	184.6	$	326.3	Total comprehensive income attributable to Allegion plc		$	133.7	$	72.0

See accompanying notes to condensed and consolidated financial statements.

Table of Contents

Allegion plc

Condensed and Consolidated Balance Sheets

(Unaudited)


In millions, except share amounts	In millions, except share amounts	September 30, 2022		December 31, 2021		In millions, except share amounts	March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	282.2	$	397.9	Cash and cash equivalents	$	292.8	$	288.0

Accounts and notes receivable, net	Accounts and notes receivable, net	422.5		283.3		Accounts and notes receivable, net	445.0		395.6
Inventories	Inventories	477.9		380.4		Inventories	472.7		479.0
Other current assets	Other current assets	53.3		56.0		Other current assets	42.9		48.5

Assets held for sale						Assets held for sale	—		3.5
Total current assets	Total current assets	1,235.9		1,117.6		Total current assets	1,253.4		1,214.6
Property, plant and equipment, net	Property, plant and equipment, net	290.7		283.7		Property, plant and equipment, net	319.6		308.7
Goodwill	Goodwill	1,373.5		803.8		Goodwill	1,441.3		1,413.1
Intangible assets, net	Intangible assets, net	599.7		447.5		Intangible assets, net	614.8		608.9
Other noncurrent assets	Other noncurrent assets	443.5		398.4		Other noncurrent assets	495.3		445.9
Total assets	Total assets	$	3,943.3	$	3,051.0	Total assets	$	4,124.4	$	3,991.2
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	266.4	$	259.1	Accounts payable	$	277.8	$	280.7
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	410.2		329.5		Accrued expenses and other current liabilities	378.1		410.3
Short-term borrowings and current maturities of long-term debt	Short-term borrowings and current maturities of long-term debt	12.6		12.6		Short-term borrowings and current maturities of long-term debt	12.6		12.6

Total current liabilities	Total current liabilities	689.2		601.2		Total current liabilities	668.5		703.6
Long-term debt	Long-term debt	2,214.5		1,429.5		Long-term debt	2,109.3		2,081.9
Other noncurrent liabilities	Other noncurrent liabilities	246.0		257.9		Other noncurrent liabilities	302.0		261.2
Total liabilities	Total liabilities	3,149.7		2,288.6		Total liabilities	3,079.8		3,046.7
Equity:	Equity:					Equity:
Allegion plc shareholders’ equity:	Allegion plc shareholders’ equity:					Allegion plc shareholders’ equity:
Ordinary shares, $0.01 par value (87,844,572 and 88,215,625 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)		0.9		0.9
Ordinary shares, $0.01 par value (87,946,030 and 87,852,777 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively)						Ordinary shares, $0.01 par value (87,946,030 and 87,852,777 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively)	0.9		0.9
Capital in excess of par value	Capital in excess of par value	9.2		—		Capital in excess of par value	19.6		13.9
Retained earnings	Retained earnings	1,113.7		952.6		Retained earnings	1,296.8		1,212.8
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(332.5)		(194.4)		Accumulated other comprehensive loss	(275.6)		(285.8)
Total Allegion plc shareholders’ equity	Total Allegion plc shareholders’ equity	791.3		759.1		Total Allegion plc shareholders’ equity	1,041.7		941.8
Noncontrolling interests	Noncontrolling interests	2.3		3.3		Noncontrolling interests	2.9		2.7
Total equity	Total equity	793.6		762.4		Total equity	1,044.6		944.5
Total liabilities and equity	Total liabilities and equity	$	3,943.3	$	3,051.0	Total liabilities and equity	$	4,124.4	$	3,991.2

See accompanying notes to condensed and consolidated financial statements.

Table of Contents

Allegion plc

Condensed and Consolidated Statements of Cash Flows

(Unaudited)


		Nine months ended					Three months ended
		September 30,					March 31,
In millions	In millions	2022		2021		In millions	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings	Net earnings	$	322.9	$	370.6	Net earnings	$	123.6	$	93.1
Adjustments to arrive at net cash provided by operating activities:	Adjustments to arrive at net cash provided by operating activities:					Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	69.6		62.0		Depreciation and amortization	28.3		20.4

Loss on divestitures		7.1		—

Changes in assets and liabilities and other non-cash items	Changes in assets and liabilities and other non-cash items	(132.5)		(76.2)		Changes in assets and liabilities and other non-cash items	(82.9)		(93.0)
Net cash provided by operating activities	Net cash provided by operating activities	267.1		356.4		Net cash provided by operating activities	69.0		20.5
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(41.5)		(28.7)		Capital expenditures	(22.3)		(8.7)
Acquisition of and equity investments in businesses, net of cash acquired		(923.1)		(6.5)
Proceeds from sale of equity method investment		—		7.6
Acquisition of businesses, net of cash acquired						Acquisition of businesses, net of cash acquired	(36.6)		—

Other investing activities, net	Other investing activities, net	(1.3)		12.7		Other investing activities, net	7.5		2.4
Net cash used in investing activities	Net cash used in investing activities	(965.9)		(14.9)		Net cash used in investing activities	(51.4)		(6.3)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Debt repayments, net	Debt repayments, net	(9.4)		(0.1)		Debt repayments, net	(3.1)		(3.1)
Proceeds from revolving facility		340.0		—
Repayments of revolving facility		(141.0)		—
Proceeds from issuance of senior notes		600.0		—
Proceeds from 2021 Revolving Facility						Proceeds from 2021 Revolving Facility	30.0		—

Net proceeds from (repayments of) debt	Net proceeds from (repayments of) debt	789.6		(0.1)		Net proceeds from (repayments of) debt	26.9		(3.1)
Debt financing costs		(10.2)		—

Dividends paid to ordinary shareholders	Dividends paid to ordinary shareholders	(107.9)		(96.9)		Dividends paid to ordinary shareholders	(39.4)		(35.8)

Repurchase of ordinary shares	Repurchase of ordinary shares	(61.0)		(212.7)		Repurchase of ordinary shares	—		(61.0)
Other financing activities, net	Other financing activities, net	(4.4)		0.4		Other financing activities, net	(2.9)		(5.0)
Net cash provided by (used in) financing activities		606.1		(309.3)
Net cash used in financing activities						Net cash used in financing activities	(15.4)		(104.9)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(23.0)		(8.7)		Effect of exchange rate changes on cash and cash equivalents	2.6		(2.1)
Net (decrease) increase in cash and cash equivalents		(115.7)		23.5
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	4.8		(92.8)
Cash and cash equivalents - beginning of period	Cash and cash equivalents - beginning of period	397.9		480.4		Cash and cash equivalents - beginning of period	288.0		397.9
Cash and cash equivalents - end of period	Cash and cash equivalents - end of period	$	282.2	$	503.9	Cash and cash equivalents - end of period	$	292.8	$	305.1

See accompanying notes to condensed and consolidated financial statements.

Table of Contents

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying Condensed and Consolidated Financial Statements of Allegion plc, an Irish public limited company, and its consolidated subsidiaries ("Allegion" or "the Company"), reflect the consolidated operations of the Company and have been prepared in accordance with United States ("U.S.") Securities and Exchange Commission ("SEC") interim reporting requirements. Accordingly, the accompanying Condensed and Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the ~~United States of America~~U.S. ("GAAP") for full financial statements and should be read in conjunction with the Consolidated Financial Statements included in the Allegion Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. In the opinion of management, the accompanying Condensed and Consolidated Financial Statements contain all adjustments, which include normal recurring adjustments, necessary to state fairly the consolidated unaudited results for the interim periods presented.

NOTE 2 - ~~RECENT ACCOUNTING PRONOUNCEMENTS~~ACQUISITIONS

~~Recently Adopted Accounting Pronouncements:~~2023

~~In October 2021,~~On January 3, 2023, the ~~FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting~~Company, through its subsidiaries, completed an acquisition of the assets of plano. group, a SaaS workforce management solution business based in Germany ("plano"), for ~~Contract Assets and Contract Liabilities from Contracts with Customers."~~initial cash consideration of $36.6 million. Additional consideration may be payable in future periods in the event plano achieves certain specified financial results. This ~~ASU requires contract assets and contract liabilities (e.g. deferred revenue) acquired in~~acquisition was accounted for as a business combination, and plano has been incorporated into the Allegion International segment.

The preliminary allocation of the purchase price, which includes initial cash consideration and the estimated fair value of contingent consideration, to ~~be recognized~~assets acquired and ~~measured by the acquirer on~~liabilities assumed as of the acquisition date ~~in accordance with ASC 606, "Revenue from Contracts with Customers". Generally, this new guidance will result in the acquirer recognizing contract~~includes approximately $3 million of net working capital, approximately $17 million of finite-lived intangible assets and ~~contract~~approximately $22 million of goodwill. The finite-lived intangible assets have a weighted average useful life of approximately 15 years. The valuation of assets acquired and liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in purchase accounting. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that haveassumed had not yet been ~~issued. The Company elected to early adopt ASU 2021-08 on January 1, 2022,~~finalized as of March 31, 2023, and ~~as such, applied this new guidance to~~finalization of the ~~Access Technologies business combination (see Note 3), which did not~~valuation during the measurement period could result in a ~~material impact to~~change in the ~~Condensed and Consolidated Financial Statements for~~amounts recorded. The completion of the ~~three and nine months ended September 30, 2022.~~valuation will occur no later than one year from the acquisition date as required by GAAP.

~~NOTE 3 - ACQUISITIONS~~2022

On July 5, 2022, the Company, through its subsidiaries, completed the acquisition of Stanley Access Technologies LLC and assets related to the automatic entrance solutions business from Stanley Black & Decker, Inc. (the "Access Technologies business")~~. The total~~ for preliminary cash consideration ~~paid for the acquisition was~~of $923.1 ~~million, and the acquisition was accounted for as a business combination.~~

million. The Access Technologies business is a leading manufacturer, installer and service provider of automatic doors in North America, primarily in the U.S. and Canada. Its diversified customer base centers on non-residential settings, including retail, healthcare, education, commercial offices, hospitality and government. This acquisition helps the Company create a more comprehensive portfolio of access solutions, with the addition of automated entrances. Additionally, the Access Technologies business adds an expansive service and support network throughout the U.S. and Canada, broadening the Company's solutions to national, regional and local customers and complementing the Company's existing strengths in these non-residential markets. ~~The~~This acquisition was accounted for as a business combination, and the Access Technologies business has been integrated into the Allegion Americas segment.

The following table summarizes the preliminary allocation of the purchase price to assets acquired and liabilities assumed as of the acquisition date:

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~


In millions
Accounts receivable, net	$	~~78.2~~69.7
Inventories	~~50.3~~50.8
Other current assets	0.3
Property, plant and equipment	~~15.2~~14.6
Goodwill	~~616.0~~634.1
Intangible assets	222.5
Other noncurrent assets	~~13.7~~6.2
Accounts payable	~~(22.4)~~(20.8)
Accrued expenses and other current liabilities	~~(43.1)~~(31.3)
Other noncurrent liabilities	~~(7.6)~~(23.0)
Total net assets acquired and liabilities assumed	$	923.1

The valuation of assets acquired and liabilities assumed ~~has~~had not yet been finalized as of ~~September 30, 2022.~~March 31, 2023. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired tangible ~~and intangible~~ assets, goodwill

Table of Contents

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

and income tax assets and liabilities, among other items. The completion of the valuation will occur no later than one year from the acquisition ~~date.~~date as required by GAAP. Intangible assets recognized as of the acquisition date were comprised of the following:


In millions		Value (in millions)		Useful life (in years)
						Value (in millions)		Useful life (in years)
Completed technologies/patents	Completed technologies/patents	$	6.2	5	Completed technologies/patents	$	6.2	5
Customer relationships	Customer relationships	137.4		23	Customer relationships	137.4		23
Trade names (finite-lived)	Trade names (finite-lived)	56.8		5	Trade names (finite-lived)	56.8		5
Backlog revenue	Backlog revenue	22.1		2	Backlog revenue	22.1		2

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, such as an assembled workforce. Goodwill resulting from ~~this~~the Access Technologies business acquisition is expected to be deductible for tax purposes.

The following unaudited pro forma financial information for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ reflects the consolidated results of operations of the Company as if ~~this~~the Access Technologies business acquisition had taken place on January 1, 2021:


		Three months ended				Nine months ended
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022
Net revenues	Net revenues	$	913.7	$	802.7	$	2,587.5	$	2,407.6	Net revenues	$	923.0	$	812.9
Net earnings attributable to Allegion plc	Net earnings attributable to Allegion plc	135.5		140.7		340.1		330.2		Net earnings attributable to Allegion plc	128.2		94.5

The unaudited pro forma financial information is presented for informational purposes only and does not purport 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 has been calculated after applying the Company's accounting policies and adjusting the historical financial results to reflect additional items directly attributable to the acquisition that would have been incurred assuming the acquisition had occurred on January 1, 2021. Adjustments to historical financial information for the three ~~and nine~~ months ended ~~September 30~~March 31, 2023 and 2022, include:


		Three months ended				Nine months ended
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022
Intangible asset amortization expense, net of tax	Intangible asset amortization expense, net of tax	$	1.7	$	(5.0)	$	(10.1)	$	(18.3)	Intangible asset amortization expense, net of tax	$	1.6	$	(5.1)
Interest expense, net of tax	Interest expense, net of tax	1.6		(6.2)		(10.7)		(21.4)		Interest expense, net of tax	—		(6.2)
Acquisition and integration costs, net of tax	Acquisition and integration costs, net of tax	13.5		—		19.4		(19.4)		Acquisition and integration costs, net of tax	3.1		2.9
Inventory fair value step-up amortization, net of tax		4.1		—		4.1		(4.1)

The following financial information reflects the Net revenues and ~~Loss~~Earnings before income taxes generated by the Access Technologies business ~~since the acquisition date~~ included within the Company's Condensed and Consolidated ~~Statements~~Statement of Comprehensive ~~Income:~~

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Income for the three months ended March 31, 2023:


In millions	~~Three and nine months ended September 30, 2022~~
Net revenues	$	~~88.7~~103.1
~~Loss~~Earnings before income taxes	~~(3.3)~~7.9

Intangible asset amortization of ~~$9.0~~$6.8 million ~~and amortization of $5.5 million related to a fair value of inventory step-up are~~is included in the ~~Loss~~Earnings before income taxes amount presented above, while acquisition and integration related expenses and Interest expense related to acquisition financing are excluded from this amount.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company incurred ~~$18.6~~$4.1 million and ~~$27.4~~$4.8 million, respectively, of acquisition and integration related expenses, which are included in Selling and administrative expenses in the Condensed and Consolidated Statements of Comprehensive Income. ~~The Company anticipates future integration expenses related to the Access Technologies business acquisition in the fourth quarter of 2022, which are not expected to exceed $5 million.~~

NOTE 43 - INVENTORIES

Inventories are stated at the lower of cost and net realizable value using the first-in, first-out (FIFO) method.

The major classes of inventories were as follows:


In millions	March 31, 2023		December 31, 2022
Raw materials	$	225.7	$	212.2
Work-in-process	46.0		41.7
Finished goods	201.0		225.1
Total	$	472.7	$	479.0

Table of Contents
In millions September 30,
2022 December 31,
2021
Raw materials $ 193.1 $ 144.4
Work-in-process 44.9 42.2
Finished goods 239.9 193.8
Total $ 477.9 $ 380.4

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 54 - GOODWILL

The changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, were as follows:
In millions Allegion Americas Allegion International Total
December 31, 2021 (gross) $ 501.2 $ 876.2 $ 1,377.4
Accumulated impairment — (573.6) (573.6)
December 31, 2021 (net) 501.2 302.6 803.8
Acquisitions and adjustments 616.0 — 616.0
Currency translation (6.1) (40.2) (46.3)
September 30, 2022 (net) $ 1,111.1 $ 262.4 $ 1,373.5


In millions	Allegion Americas		Allegion International		Total
December 31, 2022 (gross)	$	1,128.1	$	858.6	$	1,986.7
Accumulated impairment	—		(573.6)		(573.6)
December 31, 2022 (net)	1,128.1		285.0		1,413.1
Acquisitions and adjustments	2.6		21.7		24.3


Currency translation	0.3		3.6		3.9
March 31, 2023 (net)	$	1,131.0	$	310.3	$	1,441.3

NOTE 65 - INTANGIBLE ASSETS

The gross amount of the Company’s intangible assets and related accumulated amortization were as follows:


		September 30, 2022						December 31, 2021							March 31, 2023						December 31, 2022
In millions	In millions	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount		In millions	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Completed technologies/patents	Completed technologies/patents	$	60.7	$	(29.0)	$	31.7	$	57.9	$	(28.8)	$	29.1	Completed technologies/patents	$	66.1	$	(33.9)	$	32.2	$	63.0	$	(32.1)	$	30.9
Customer relationships	Customer relationships	488.9		(139.3)		349.6		395.9		(141.6)		254.3		Customer relationships	528.7		(163.4)		365.3		515.0		(155.8)		359.2
Trade names (finite-lived)	Trade names (finite-lived)	128.9		(54.1)		74.8		84.0		(56.9)		27.1		Trade names (finite-lived)	140.6		(67.0)		73.6		135.7		(62.6)		73.1
Other	Other	66.8		(28.9)		37.9		45.8		(22.7)		23.1		Other	73.2		(40.4)		32.8		71.2		(35.9)		35.3
Total finite-lived intangible assets	Total finite-lived intangible assets	745.3		$	(251.3)	494.0		583.6		$	(250.0)	333.6		Total finite-lived intangible assets	808.6		$	(304.7)	503.9		784.9		$	(286.4)	498.5
Trade names (indefinite-lived)	Trade names (indefinite-lived)	105.7				105.7		113.9				113.9		Trade names (indefinite-lived)	110.9				110.9		110.4				110.4
Total	Total	$	851.0			$	599.7	$	697.5			$	447.5	Total	$	919.5			$	614.8	$	895.3			$	608.9

Intangible asset amortization expense was ~~$32.6~~$15.8 million and ~~$25.2~~$8.2 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Intangible asset amortization expense for the nine months ended September 30, 2022, included $9.0 million related to intangible assets acquired as part of the recent Access Technologies business acquisition.

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Future estimated amortization expense on existing intangible assets in each of the next five years amounts to approximately ~~$44.5~~$60.9 million for full year ~~2022, $56.4 million for~~ 2023, ~~$51.7~~$55.4 million for 2024, ~~$46.1~~$49.6 million for 2025, ~~and $43.1~~$46.4 million for ~~2026.~~2026 and $39.6 million for 2027.

~~NOTE 7 - DIVESTITURES~~

In September 2022, the Company sold Milre Systek Co. Ltd. ("Milre") in South Korea for an immaterial amount. As a result of the sale, the Company recorded a Loss on divestiture of $7.6 million, of which $1.6 million related to the reclassification of accumulated foreign currency translation adjustments to earnings upon sale. This divestiture is not expected to have a material impact on the Company's future results of operations or cash flows.

NOTE 86 - DEBT AND CREDIT FACILITIES

Long-term debt and other borrowings consisted of the following:


In millions	In millions	September 30, 2022		December 31, 2021		In millions	March 31, 2023		December 31, 2022
2021 Term Facility	2021 Term Facility	$	240.6	$	250.0	2021 Term Facility	$	234.4	$	237.5
2021 Revolving Facility	2021 Revolving Facility	199.0		—		2021 Revolving Facility	99.0		69.0
3.200% Senior Notes due 2024	3.200% Senior Notes due 2024	400.0		400.0		3.200% Senior Notes due 2024	400.0		400.0
3.550% Senior Notes due 2027	3.550% Senior Notes due 2027	400.0		400.0		3.550% Senior Notes due 2027	400.0		400.0
3.500% Senior Notes due 2029	3.500% Senior Notes due 2029	400.0		400.0		3.500% Senior Notes due 2029	400.0		400.0
5.411% Senior Notes due 2032	5.411% Senior Notes due 2032	600.0		—		5.411% Senior Notes due 2032	600.0		600.0
Other debt	Other debt	0.2		0.3		Other debt	0.2		0.2
Total borrowings outstanding	Total borrowings outstanding	2,239.8		1,450.3		Total borrowings outstanding	2,133.6		2,106.7
Discounts and debt issuance costs, net	Discounts and debt issuance costs, net	(12.7)		(8.2)		Discounts and debt issuance costs, net	(11.7)		(12.2)
Total debt	Total debt	2,227.1		1,442.1		Total debt	2,121.9		2,094.5
Less current portion of long-term debt	Less current portion of long-term debt	12.6		12.6		Less current portion of long-term debt	12.6		12.6
Total long-term debt	Total long-term debt	$	2,214.5	$	1,429.5	Total long-term debt	$	2,109.3	$	2,081.9

Unsecured Credit Facilities

~~As of September 30, 2022, the~~The Company ~~has~~is party to an unsecured ~~Credit Agreement in place,~~credit agreement consisting of a $250.0 million term loan facility (the “2021 Term Facility”), of which ~~$240.6~~$234.4 million was outstanding at ~~September 30, 2022,~~March 31, 2023, and a $500.0 million revolving credit facility (the “2021 Revolving Facility” and, together with the 2021 Term Facility, the “2021 Credit Facilities”)., of which $99.0 million was

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

outstanding at March 31, 2023. The 2021 Credit Facilities mature on November 18, 2026, and are unconditionally guaranteed jointly and severally on an unsecured basis by Allegion plc and Allegion US Holding Company Inc. ("Allegion US Hold Co"), the Company’s wholly-owned subsidiary.

The 2021 Term Facility ~~will amortize~~amortizes in quarterly installments at the following rates: 1.25% per quarter starting March 31, 2022 through March 31, 2025, 2.5% per quarter starting June 30, 2025 through September 30, 2026, with the balance due on November 18, 2026. The Company repaid ~~$9.4~~$3.1 million of principal on ~~its~~the 2021 Term Facility during the ~~nine~~three months ended ~~September 30, 2022.~~

March 31, 2023. The 2021 Revolving Facility provides aggregate commitments of up to $500.0 million, which includes up to $100.0 million for the issuance of letters of credit. ~~On July 1, 2022, the Company borrowed $340.0 million on the 2021 Revolving Facility to partially fund the acquisition of the Access Technologies business.~~ The Company ~~has subsequently made $141.0 million in repayments, resulting in $199.0 million of borrowings outstanding on the 2021 Revolving Facility as of September 30, 2022. The Company also~~ had ~~$7.6~~$13.4 million of letters of credit ~~outstanding. Commitments~~outstanding at March 31, 2023. Borrowings under the 2021 Revolving Facility may be ~~reduced~~repaid at any time without premium or penalty, and amounts repaid may be reborrowed.

Outstanding borrowings under the 2021 Credit Facilities accrue interest, at the option of the Company, ofequal to either: (i) a Bloomberg Short-Term Bank Yield Index ("BSBY") rate plus ~~the~~an applicable margin or (ii) a base rate plus the applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on the Company’s credit ratings. At ~~September 30, 2022,~~March 31, 2023, the Company's outstanding borrowings under the 2021 Credit Facilities ~~accrue~~accrued interest at BSBY plus a margin of 1.125%, resulting in an interest rate of ~~4.241%~~6.019%. The 2021 Credit Facilities also contain 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 2021 Credit Facilities require the Company to comply with a maximum leverage ratio as defined ~~within~~in the credit agreement. As of ~~September 30, 2022,~~March 31, 2023, the Company was in compliance with all ~~covenants.~~

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

applicable covenants under the credit agreement.

Senior Notes

~~On June 22, 2022,~~As of March 31, 2023, Allegion US Hold Co issued $600.0 million aggregate principal amount of its 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”) to partially fund the acquisition of the Access Technologies business, in addition to the $340.0 million drawn on the 2021 Revolving Facility, as discussed above. The 5.411% Senior Notes require semi-annual interest payments on January 1 and July 1, beginning January 1, 2023, and will mature on July 1, 2032. The Company incurred and deferred $5.9 million of discounts and financing costs associated with the 5.411% Senior Notes, which will be amortized to Interest expense over their 10-year term, as well as $4.3 million of third party financing costs that were recorded within Interest expense on the Condensed and Consolidated Statement of Income for the nine months ended September 30, 2022. The 5.411% Senior Notes are senior unsecured obligations of Allegion US Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 5.411% 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.

~~As of September 30, 2022, Allegion US Hold Co also has~~had $400.0 million outstanding of its 3.200% Senior Notes due 2024 (the “3.200% Senior Notes”) ~~and~~, $400.0 million outstanding of its 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”) and $600.0 million outstanding of its 5.411% Senior Notes due 2032 (the "5.411% Senior Notes"), ~~while~~and Allegion plc ~~has~~had $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 3.200% Senior Notes, 3.550% Senior Notes and 3.500% Senior Notes all require semi-annual interest payments on April 1 and October 1 of each year and will mature on October 1, 2024, 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 will mature on July 1, 2032.

The 3.200% Senior Notes, 3.550% Senior Notes and ~~the 3.550%~~5.411% Senior Notes are senior unsecured obligations of Allegion US Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.200% Senior Notes, the 3.550% Senior Notes and the ~~3.550%~~5.411% 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.

NOTE 97 - FINANCIAL INSTRUMENTS

Currency Hedging Instruments

The gross notional amount of the Company’s currency derivatives was ~~$168.1~~$181.1 million and ~~$164.9~~$161.5 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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 value hierarchy described in Note ~~12)~~10), nor the balances included in Accumulated other comprehensive loss were material as of ~~September 30, 2022 and~~March 31, 2023 or December 31, ~~2021.~~2022. Currency derivatives designated as cash flow hedges did not have a material impact to either Net earnings or Other comprehensive ~~loss~~income during the three ~~or nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ 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 ~~September 30, 2022,~~March 31, 2023, 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 therefore, the Company believes they present no significant credit risk to the Company.

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 108 - LEASES

Total rental expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ was ~~$34.9~~$13.6 million and ~~$33.6~~$10.7 million, respectively, and is classified within Cost of goods sold and Selling and administrative expenses within the Condensed and Consolidated Statements of Comprehensive Income. Rental expense related to short-term leases, variable lease payments or other leases or lease components not included within the ~~ROU~~right of use ("ROU") asset or lease liability totaled ~~$7.0~~$3.2 million and ~~$6.0~~$1.6 million, respectively, for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. No material lease costs have been capitalized on the Condensed and Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 or December 31, ~~2021.~~2022.

As a lessee, the Company categorizes its leases into two general categories: real estate leases and equipment leases.

Amounts included within the Condensed and Consolidated Balance Sheets related to the Company’s ROU asset and lease liability for both real estate and equipment leases were as follows:

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

September 30, 2022 December 31, 2021
In millions Balance Sheet classification Real estate Equipment Total Real estate Equipment Total
ROU asset Other noncurrent assets $ 70.9 $ 28.4 $ 99.3 $ 58.2 $ 31.7 $ 89.9
Lease liability - current Accrued expenses and other current liabilities 17.5 13.4 30.9 15.5 13.6 29.1
Lease liability - noncurrent Other noncurrent liabilities 56.6 15.0 71.6 45.1 18.2 63.3
Other information:
Weighted-average remaining term (years) 5.9 2.5 6.5 2.8
Weighted-average discount rate 3.4 % 1.9 % 3.4 % 2.1 %


		March 31, 2023								December 31, 2022
In millions	Balance Sheet classification	Real estate			Equipment			Total		Real estate			Equipment			Total
ROU asset	Other noncurrent assets	$	106.2		$	28.1		$	134.3	$	69.3		$	28.8		$	98.1
Lease liability - current	Accrued expenses and other current liabilities	17.7			13.9			31.6		17.7			14.1			31.8
Lease liability - noncurrent	Other noncurrent liabilities	91.9			14.3			106.2		54.8			14.7			69.5

Other information:
Weighted-average remaining term (years)		12.2			2.4					5.9			2.4
Weighted-average discount rate		4.8		%	2.8		%			3.5		%	2.1		%

The following table summarizes additional information related to the Company’s leases for the ~~nine~~three months ended ~~September 30:~~March 31:


		2022						2021							2023						2022
In millions	In millions	Real estate		Equipment		Total		Real estate		Equipment		Total		In millions	Real estate		Equipment		Total		Real estate		Equipment		Total
Cash paid for amounts included in the measurement of lease liabilities	Cash paid for amounts included in the measurement of lease liabilities	$	15.3	$	12.6	$	27.9	$	14.7	$	12.9	$	27.6	Cash paid for amounts included in the measurement of lease liabilities	$	5.9	$	4.5	$	10.4	$	4.9	$	4.2	$	9.1
ROU assets obtained in exchange for new lease liabilities	ROU assets obtained in exchange for new lease liabilities	31.3		8.6		39.9		12.0		8.8		20.8		ROU assets obtained in exchange for new lease liabilities	41.4		1.9		43.3		18.8		1.4		20.2

~~The Company frequently enters into both real estate and equipment leases in~~During the ~~normal course of business. While there have been lease agreements entered into that have not yet commenced as of September 30, 2022, none of these leases provide new rights or obligations to~~three months ended March 31, 2023, the Company ~~that are material individually or~~commenced a new long-term lease of a manufacturing facility in ~~the aggregate.~~Mexico, which added an ROU asset and corresponding lease liability of approximately $37 million.

Future Repayments

Scheduled minimum lease payments required under non-cancellable operating leases for both the real estate and equipment lease portfolios for the remainder of ~~2022~~2023 and for each of the years thereafter as of ~~September 30, 2022,~~March 31, 2023, are as follows:


In millions	In millions	Remainder of 2022		2023		2024		2025		2026		Thereafter		Total		In millions	Remainder of 2023		2024		2025		2026		2027		Thereafter		Total
Real estate leases	Real estate leases	$	4.9	$	19.3	$	15.4	$	13.0	$	9.9	$	20.0	$	82.5	Real estate leases	$	16.7	$	18.6	$	16.3	$	13.0	$	10.3	$	87.7	$	162.6
Equipment leases	Equipment leases	3.9		12.9		7.9		3.6		0.6		0.1		29.0		Equipment leases	11.3		10.6		5.5		1.3		0.2		0.1		29.0
Total	Total	$	8.8	$	32.2	$	23.3	$	16.6	$	10.5	$	20.1	$	111.5	Total	$	28.0	$	29.2	$	21.8	$	14.3	$	10.5	$	87.8	$	191.6

The difference between the total undiscounted minimum lease payments and the combined current and noncurrent lease liabilities as of ~~September 30, 2022,~~March 31, 2023, is due to imputed interest of ~~$9.0~~$53.8 million.

NOTE 119 - DEFINED BENEFIT PLANS

The Company sponsors several U.S. and non-U.S. defined benefit pension plans tofor eligible employees and retirees. The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on an average pay formula while most plans for collectively bargained U.S. employees provide benefits on a flat dollar benefit formula. The non-U.S. pension plans generally provide benefits based on earningsretirees and ~~years of service. The Company~~ also maintains other supplemental plans for officers and other key employees.

The components of the Company’s Net periodic pension benefit cost (income) for the three ~~and nine~~ months ended ~~September 30~~March 31 were as follows:

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


		U.S.									U.S.
		Three months ended				Nine months ended
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022
Service cost	Service cost	$	1.7	$	1.6	$	4.6	$	5.0	Service cost	$	0.2	$	1.5
Interest cost	Interest cost	2.1		1.7		6.1		5.1		Interest cost	2.9		2.0
Expected return on plan assets	Expected return on plan assets	(3.3)		(3.6)		(10.1)		(10.5)		Expected return on plan assets	(3.7)		(3.4)
Administrative costs and other	Administrative costs and other	0.2		0.3		0.8		0.9		Administrative costs and other	0.3		0.3
Net amortization of:	Net amortization of:									Net amortization of:
Prior service costs		—		0.1		0.1		0.2

Plan net actuarial losses	Plan net actuarial losses	0.3		0.8		0.8		2.6		Plan net actuarial losses	0.2		0.3
Net periodic pension benefit cost		$	1.0	$	0.9	$	2.3	$	3.3
Net periodic pension benefit (income) cost										Net periodic pension benefit (income) cost	$	(0.1)	$	0.7


		Non-U.S.									Non-U.S.
		Three months ended				Nine months ended
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022
Service cost	Service cost	$	0.4	$	0.6	$	1.1	$	1.7	Service cost	$	0.4	$	0.3
Interest cost	Interest cost	1.8		1.3		5.4		3.8		Interest cost	3.0		1.8
Expected return on plan assets	Expected return on plan assets	(3.9)		(3.4)		(11.7)		(10.3)		Expected return on plan assets	(3.9)		(3.9)
Administrative costs and other	Administrative costs and other	0.4		0.4		1.2		1.4		Administrative costs and other	0.4		0.5
Net amortization of:	Net amortization of:									Net amortization of:
Prior service costs		—		—		0.1		0.1

Plan net actuarial losses	Plan net actuarial losses	0.2		0.4		0.6		1.1		Plan net actuarial losses	0.9		0.2

Net periodic pension benefit income		$	(1.1)	$	(0.7)	$	(3.3)	$	(2.2)
Net periodic pension benefit cost (income)										Net periodic pension benefit cost (income)	$	0.8	$	(1.1)

Service cost is recorded in Cost of goods sold and Selling and administrative expenses, while the remaining components of Net periodic pension benefit cost (income) are recorded in Other income, net within the Condensed and Consolidated Statements of Comprehensive Income. Employer contributions to the plans were not material during the ~~nine~~three months ended ~~September 30, 2022 and 2021. Contributions of~~March 31, 2023 or 2022. Employer contributions totaling approximately $5$12 million are expected to be made during the remainder of ~~2022.~~2023.

NOTE 1210 - 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 three levels that are 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.

109

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Assets and liabilities measured at fair value ~~at September 30, 2022,~~as of March 31, 2023, were as follows:


		Fair value measurements						Total fair value			Fair value measurements						Total fair value
In millions	In millions	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)				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	Recurring fair value measurements									Recurring fair value measurements
Assets:	Assets:									Assets:
Investments	Investments	$	—	$	19.1	$	—	$	19.1	Investments	$	—	$	17.8	$	—	$	17.8

Total asset recurring fair value measurements	Total asset recurring fair value measurements	$	—	$	19.1	$	—	$	19.1	Total asset recurring fair value measurements	$	—	$	17.8	$	—	$	17.8
Liabilities:	Liabilities:									Liabilities:

Deferred compensation and other retirement plans	Deferred compensation and other retirement plans	$	—	$	19.2	$	—	$	19.2	Deferred compensation and other retirement plans	$	—	$	17.8	$	—	$	17.8
Total liability recurring fair value measurements	Total liability recurring fair value measurements	$	—	$	19.2	$	—	$	19.2	Total liability recurring fair value measurements	$	—	$	17.8	$	—	$	17.8
Financial instruments not carried at fair value	Financial instruments not carried at fair value									Financial instruments not carried at fair value
Total debt	Total debt	$	—	$	2,064.2	$	—	$	2,064.2	Total debt	$	—	$	2,058.1	$	—	$	2,058.1
Total financial instruments not carried at fair value	Total financial instruments not carried at fair value	$	—	$	2,064.2	$	—	$	2,064.2	Total financial instruments not carried at fair value	$	—	$	2,058.1	$	—	$	2,058.1

Assets and liabilities measured at fair value atas of December 31, ~~2021,~~2022, were as follows:


		Fair value measurements						Total fair value			Fair value measurements						Total fair value
In millions	In millions	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)				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	Recurring fair value measurements									Recurring fair value measurements
Assets:	Assets:									Assets:
Investments	Investments	$	—	$	24.5	$	—	$	24.5	Investments	$	—	$	19.9	$	—	$	19.9

Total asset recurring fair value measurements	Total asset recurring fair value measurements	$	—	$	24.5	$	—	$	24.5	Total asset recurring fair value measurements	$	—	$	19.9	$	—	$	19.9
Liabilities:	Liabilities:									Liabilities:

Deferred compensation and other retirement plans	Deferred compensation and other retirement plans	$	—	$	25.9	$	—	$	25.9	Deferred compensation and other retirement plans	$	—	$	20.3	$	—	$	20.3
Total liability recurring fair value measurements	Total liability recurring fair value measurements	$	—	$	25.9	$	—	$	25.9	Total liability recurring fair value measurements	$	—	$	20.3	$	—	$	20.3
Financial instruments not carried at fair value	Financial instruments not carried at fair value									Financial instruments not carried at fair value
Total debt	Total debt	$	—	$	1,510.4	$	—	$	1,510.4	Total debt	$	—	$	1,978.4	$	—	$	1,978.4
Total financial instruments not carried at fair value	Total financial instruments not carried at fair value	$	—	$	1,510.4	$	—	$	1,510.4	Total financial instruments not carried at fair value	$	—	$	1,978.4	$	—	$	1,978.4

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 ~~senior notes~~the 2021 Credit Facilities and Senior Notes maturing through 2032. The fair value of these debt instruments is obtained based on observable market prices quoted on public exchanges for similar instruments.

The methodologies used by the Company to determine the fair value of its financial assets and liabilities ~~at September 30, 2022,~~as of March 31, 2023, are the same as those used atas of December 31, ~~2021.~~2022. The carrying values of Cash and cash equivalents, Accounts and notes receivable, net, Accounts payable and Accrued expenses and other current liabilities are a reasonable estimate of their fair value due to the short-term nature of these instruments.

The Company also had investments in debt and equity securities without readily determinable fair values of ~~$41.6 million and $35.8~~$46.8 million as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021, respectively,~~2022, which are classified as Other noncurrent assets within the Condensed and Consolidated Balance Sheets. These investments are considered to be nonrecurring fair value measurements, and thus, are not included in the fair value tables above.

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 1311 - EQUITY

The changes in the components of Equity for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, were as follows:
Allegion plc shareholders' equity
Ordinary shares
In millions, except per share amounts Total equity Amount Shares Capital in excess of par value Retained earnings Accumulated other comprehensive loss Noncontrolling
interests
Balance at December 31, 2021 $ 762.4 $ 0.9 88.2 $ — $ 952.6 $ (194.4) $ 3.3
Net earnings 93.1 — — — 93.0 — 0.1
Other comprehensive loss, net (21.0) — — — — (21.0) —
Repurchase of ordinary shares (61.0) — (0.5) (7.5) (53.5) — —
Share-based compensation activity 7.5 — 0.1 7.5 — — —
Dividends to ordinary shareholders ($0.41 per share) (36.0) — — — (36.0) — —
Balance at March 31, 2022 745.0 0.9 87.8 — 956.1 (215.4) 3.4
Net earnings 115.2 — — — 115.1 — 0.1
Other comprehensive loss, net (49.8) — — — — (49.2) (0.6)
Share-based compensation activity 5.4 — — 5.4 — — —
Dividends to noncontrolling interests (0.1) — — — — — (0.1)
Dividends to ordinary shareholders ($0.41 per share) (36.0) — — — (36.0) — —
Balance at June 30, 2022 779.7 0.9 87.8 5.4 1,035.2 (264.6) 2.8
Net earnings 114.6 — — — 114.6 — —
Other comprehensive loss, net (68.3) — — — — (67.9) (0.4)
Share-based compensation activity 3.8 — — 3.8 — — —
Dividends to noncontrolling interests (0.1) — — — — — (0.1)
Dividends to ordinary shareholders ($0.41 per share) (36.1) — — — (36.1) — —
Balance at September 30, 2022 $ 793.6 $ 0.9 87.8 $ 9.2 $ 1,113.7 $ (332.5) $ 2.3

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~


			Allegion plc shareholders' equity
			Ordinary shares
In millions, except per share amounts	Total equity		Amount		Shares	Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Noncontrolling interests
Balance at December 31, 2022	$	944.5	$	0.9	87.9	$	13.9	$	1,212.8	$	(285.8)	$	2.7
Net earnings	123.6		—		—	—		123.5		—		0.1



Other comprehensive income, net	10.3		—		—	—		—		10.2		0.1

Share-based compensation activity	5.7		—		—	5.7		—		—		—


Dividends to ordinary shareholders ($0.45 per share)	(39.5)		—		—	—		(39.5)		—		—

Balance at March 31, 2023	$	1,044.6	$	0.9	87.9	$	19.6	$	1,296.8	$	(275.6)	$	2.9

The changes in the components of Equity for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, were as follows:


				Allegion plc shareholders' equity														Allegion plc shareholders' equity
				Ordinary shares														Ordinary shares
In millions, except per share amounts	In millions, except per share amounts	Total equity		Amount		Shares	Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Noncontrolling interests		In millions, except per share amounts	Total equity		Amount		Shares	Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Noncontrolling interests
Balance at December 31, 2020		$	832.6	$	0.9	91.2	$	—	$	985.6	$	(157.1)	$	3.2
Balance at December 31, 2021															Balance at December 31, 2021	$	762.4	$	0.9	88.2	$	—	$	952.6	$	(194.4)	$	3.3
Net earnings	Net earnings	108.2		—		—	—		108.0		—		0.2		Net earnings	93.1		—		—	—		93.0		—		0.1

Other comprehensive loss, net	Other comprehensive loss, net	(32.0)		—		—	—		—		(32.0)		—		Other comprehensive loss, net	(21.0)		—		—	—		—		(21.0)		—
Repurchase of ordinary shares	Repurchase of ordinary shares	(149.7)		—		(1.3)	(4.4)		(145.3)		—		—		Repurchase of ordinary shares	(61.0)		—		(0.5)	(7.5)		(53.5)		—		—
Share-based compensation activity	Share-based compensation activity	4.4		—		0.1	4.4		—		—		—		Share-based compensation activity	7.5		—		0.1	7.5		—		—		—

Dividends to ordinary shareholders ($0.36 per share)		(32.5)		—		—	—		(32.5)		—		—
Other		—		—		—	—		0.1		—		(0.1)
Balance at March 31, 2021		731.0		0.9		90.0	—		915.9		(189.1)		3.3
Net earnings		118.8		—		—	—		118.7		—		0.1
Dividends to ordinary shareholders ($0.41 per share)															Dividends to ordinary shareholders ($0.41 per share)	(36.0)		—		—	—		(36.0)		—		—

Balance at March 31, 2022															Balance at March 31, 2022	$	745.0	$	0.9	87.8	$	—	$	956.1	$	(215.4)	$	3.4

Other comprehensive income, net		10.5		—		—	—		—		10.4		0.1
Repurchase of ordinary shares		(50.1)		—		(0.4)	(9.7)		(40.4)		—		—
Share-based compensation activity		9.7		—		0.2	9.7		—		—		—
Dividends to noncontrolling interests		(0.1)		—		—	—		—		—		(0.1)
Dividends to ordinary shareholders ($0.36 per share)		(32.4)		—		—	—		(32.4)		—		—

Balance at June 30, 2021		787.4		0.9��		89.8	—		961.8		(178.7)		3.4
Net earnings		143.6		—		—	—		143.5		—		0.1

Other comprehensive loss, net		(22.4)		—		—	—		—		(22.3)		(0.1)
Repurchase of ordinary shares		(12.9)		—		(0.1)	(1.4)		(11.5)		—		—
Share-based compensation activity		4.2		—		—	4.2		—		—		—

Dividends to ordinary shareholders ($0.36 per share)		(32.3)		—		—	—		(32.3)		—		—

Balance at September 30, 2021		$	867.6	$	0.9	89.7	$	2.8	$	1,061.5	$	(201.0)	$	3.4

In February 2020, the Company’s Board of Directors (the "Board") approved a share repurchase authorization of up to, and including, $800 million of the Company’s ordinary shares (the "2020 Share Repurchase Authorization"). During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, ~~and 2021,~~ the Company paid $61.0 million ~~and $212.7 million, respectively,~~ to repurchase the ordinary shares reflected ~~in the tables~~ above on the open market under the 2020 Share Repurchase Authorization. As of ~~September 30, 2022,~~March 31, 2023, the Company ~~has~~had approximately $140.5 million still available to be repurchased under the 2020 Share Repurchase Authorization.

Accumulated Other Comprehensive Loss

The changes in Accumulated other comprehensive loss for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, were as follows:

In millions Cash flow hedges Pension and OPEB items Foreign currency items Total
December 31, 2021 $ 0.9 $ (96.0) $ (99.3) $ (194.4)
Other comprehensive income (loss) before reclassifications 8.8 10.0 (159.8) (141.0)
Amounts reclassified from accumulated other comprehensive loss(a)
(0.1) 1.3 1.6 2.8
Tax (expense) benefit (0.6) 0.7 — 0.1
September 30, 2022 $ 9.0 $ (84.0) $ (257.5) $ (332.5)


In millions	Cash flow hedges		Defined benefit items		Foreign currency items		Total
December 31, 2022	$	6.1	$	(117.1)	$	(174.8)	$	(285.8)
Other comprehensive (loss) income before reclassifications	(0.7)		(1.9)		11.7		9.1
Amounts reclassified from accumulated other comprehensive loss(a)	(0.2)		1.0		—		0.8
Tax benefit	0.2		0.1		—		0.3
March 31, 2023	$	5.4	$	(117.9)	$	(163.1)	$	(275.6)

1311

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The changes in Accumulated other comprehensive loss for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, were as follows:

In millions Cash flow hedges Pension and OPEB items Foreign currency items Total
December 31, 2020 $ (0.9) $ (120.3) $ (35.9) $ (157.1)
Other comprehensive income (loss) before reclassifications 2.8 1.5 (50.8) (46.5)
Amounts reclassified from accumulated other comprehensive loss(a)
(0.2) 3.5 — 3.3
Tax expense (0.7) — — (0.7)
September 30, 2021 $ 1.0 $ (115.3) $ (86.7) $ (201.0)


In millions	Cash flow hedges		Defined benefit items		Foreign currency items		Total
December 31, 2021	$	0.9	$	(96.0)	$	(99.3)	$	(194.4)
Other comprehensive (loss) income before reclassifications	(0.3)		2.3		(22.5)		(20.5)
Amounts reclassified from accumulated other comprehensive loss(a)	(0.4)		(0.4)		—		(0.8)
Tax benefit	0.2		0.1		—		0.3
March 31, 2022	$	0.4	$	(94.0)	$	(121.8)	$	(215.4)

(a) Amounts reclassified from Accumulated other comprehensive loss and recognized into Net earnings related to cash flow hedges are recorded in Cost of goods sold and Interest expense. Amounts reclassified from Accumulated other comprehensive loss and recognized into Net earnings related to ~~pension and postretirement benefits other than pensions ("OPEB")~~defined benefit items are recorded in Other income, net.~~Amounts reclassified from Accumulated other comprehensive loss and recognized into Net earnings related to foreign currency items are recorded in Loss on divestitures.~~

NOTE 1412 - SHARE-BASED COMPENSATION

The Company’s share-based compensation plans include programs for stock options, restricted stock units ("RSUs"), and performance stock units ("PSUs") ~~and deferred compensation.~~. Share-based compensation expense is included in Cost of goods sold and Selling and administrative expenses within the Condensed and Consolidated Statements of Comprehensive Income. The following table summarizes the ~~expenses~~share-based compensation expense recognized for the three ~~and nine~~ months ended ~~September 30:~~March 31:


		Three months ended				Nine months ended
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022
Stock options	Stock options	$	0.4	$	0.5	$	3.8	$	3.7	Stock options	$	2.1	$	2.9
RSUs	RSUs	2.2		2.2		11.7		10.1		RSUs	5.0		7.3
PSUs	PSUs	1.5		0.5		4.5		4.4		PSUs	1.7		1.6
Deferred compensation		(0.5)		(0.1)		(3.6)		1.3
Pre-tax expense	Pre-tax expense	3.6		3.1		16.4		19.5		Pre-tax expense	8.8		11.8
Tax benefit	Tax benefit	(0.4)		(0.4)		(1.3)		(2.4)		Tax benefit	(1.2)		(1.2)
After-tax expense	After-tax expense	$	3.2	$	2.7	$	15.1	$	17.1	After-tax expense	$	7.6	$	10.6

Stock Options / RSUs

Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. Grants issued during the ~~nine~~three months ended ~~September 30~~March 31 were as follows:


		2022			2021				2023			2022
		Number granted	Weighted- average fair value per award		Number granted	Weighted- average fair value per award			Number granted	Weighted- average fair value per award		Number granted	Weighted- average fair value per award
Stock options	Stock options	234,809	$	28.24	179,743	$	24.99	Stock options	156,929	$	33.66	157,880	$	28.59
RSUs	RSUs	176,003	$	112.07	130,126	$	112.21	RSUs	117,923	$	112.59	101,609	$	115.33

The weighted-average fair value of the stock options granted is determined using the Black-Scholes option-pricing model. The following weighted-average assumptions were used during the ~~nine~~three months ended ~~September 30:~~March 31:


		2022		2021			2023		2022
Dividend yield	Dividend yield	1.46	%	1.32	%	Dividend yield	1.60	%	1.42	%
Volatility	Volatility	27.12	%	27.14	%	Volatility	28.47	%	27.05	%
Risk-free rate of return	Risk-free rate of return	2.13	%	0.75	%	Risk-free rate of return	4.10	%	1.89	%
Expected life (years)	Expected life (years)	6.0		6.0		Expected life (years)	6.0		6.0

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. The expected life of the Company’s stock option awards is derived from the simplified approach based on the weighted-average time to vest and the remaining contractual term and represents the period of time that awards are expected to be outstanding.

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Performance Stock

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company granted PSUs with a maximum award level of approximately 0.1 million shares. In February ~~2020,~~ 2021, 2022 and ~~2022,~~2023, the Company’s Compensation Committee granted PSUs that were earned based 50% upon a performance condition, measured at each reporting period by earnings per share ("EPS") performance in relation to pre-established targets for each performance period set by the Compensation and Human Capital Committee of the

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Board, and 50% upon a market condition, measured by the Company’s relative total shareholder return against the S&P 400 Capital Goods Index over a three-year performance period. The fair values of the market ~~conditions~~condition 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.

~~Deferred Compensation~~

Prior to 2019, the Company allowed key employees to defer a portion of their eligible granted PSUs and/or compensation into a number of investment choices including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution.

NOTE 1513 - RESTRUCTURING ACTIVITIES

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company recorded ~~$3.1~~$3.0 million and ~~$3.8~~$0.2 million, respectively, of expenses associated with restructuring activities, which are included within Cost of goods sold and Selling and administrative expenses within the Condensed and Consolidated Statements of Comprehensive Income.

The changes in the restructuring reserve during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, were as follows:


In millions	Total
December 31, ~~2021~~2022	$	~~0.4~~0.2
Additions, net of reversals	~~3.1~~3.0
Cash payments	~~(3.2)~~(0.8)
~~Currency translation~~	~~(0.1)~~
~~September 30, 2022~~March 31, 2023	$	~~0.2~~2.4

The majority of the costs accrued as of March 31, 2023, are expected to be paid within one year.

The Company also incurred other non-qualified restructuring charges of ~~$1.6~~$0.2 million and $0.5 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, respectively, which represent costs that are directly attributable to restructuring activities, but that do not fall into the severance, exit or disposal category. These expenses are included in Cost of goods sold and Selling and administrative expenses within the Condensed and Consolidated Statements of Comprehensive Income.

NOTE 1614 - OTHER INCOME, NET

The components of Other income, net for the three ~~and nine~~ months ended ~~September 30~~March 31 were as follows:
Three months ended Nine months ended
In millions 2022 2021 2022 2021
Interest income $ (0.4) $ (0.3) $ (0.6) $ (0.4)
Foreign currency exchange loss — 0.8 1.9 2.0
Earnings from equity method investments, net — (6.3) (0.6) (6.0)
Net periodic pension and postretirement benefit income, less service cost (2.1) (2.1) (7.1) (6.0)
Other 1.0 (6.8) (0.7) (11.0)
Other income, net $ (1.5) $ (14.7) $ (7.1) $ (21.4)

Other income, net for the three and nine months ended September 30, 2021, included a gain of $6.4 million from the sale of the Company's interest in an equity method affiliate, which is included within Earnings from equity method investments, net in the table above.



In millions	2023		2022
Interest income	$	(0.7)	$	(0.1)
Foreign currency exchange loss	1.4		1.0

Net periodic pension and postretirement benefit income, less service cost	—		(2.6)
Other	(1.0)		(0.5)
Other income, net	$	(0.3)	$	(2.2)

NOTE 1715 - INCOME TAXES

The effective income tax rates for the three months ended ~~September 30,~~March 31, 2023 and 2022, were 16.3% and ~~2021, were 14.3% and (2.0)%~~13.2%, respectively. The increase in the effective income tax rate compared to ~~2021~~2022 is primarily due to ~~the favorable resolutions of uncertain tax positions and other discrete tax benefits~~a change in ~~2021 that have not recurred in 2022, changes in jurisdictional tax rates,~~ the mix of income earned in higher tax rate ~~jurisdictions and the unfavorable tax impact from the divestiture of Milre.~~

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

The effective income tax rates for the nine months ended September 30, 2022 and 2021, were 13.7% and 7.2%, respectively. The increase in the effective tax rate compared to 2021 is primarily due to the favorable resolutions of uncertain tax positions and other discrete tax benefits in 2021 that have not recurred in 2022, changes in jurisdictional tax rates, the mix of income earned in higher tax rate jurisdictions and the unfavorable tax impact from the divestiture of Milre.jurisdictions.

NOTE 1816 - EARNINGS PER SHARE ~~(EPS)~~("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 share-based compensation plans.

The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted EPS calculations for the three ~~and nine~~ months ended ~~September 30:~~March 31:


		Three months ended		Nine months ended
In millions	In millions	2022	2021	2022	2021	In millions	2023	2022
Weighted-average number of basic shares	Weighted-average number of basic shares	87.9	89.7	88.0	90.1	Weighted-average number of basic shares	88.0	88.2
Shares issuable under share-based compensation plans	Shares issuable under share-based compensation plans	0.3	0.6	0.4	0.6	Shares issuable under share-based compensation plans	0.4	0.4
Weighted-average number of diluted shares	Weighted-average number of diluted shares	88.2	90.3	88.4	90.7	Weighted-average number of diluted shares	88.4	88.6

At ~~September 30, 2022,~~March 31, 2023, 0.5 million stock options were excluded from the computation of weighted-average diluted shares outstanding because the effect of including these shares would have been anti-dilutive.

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 1917 - NET REVENUES

The following tables show the Company’s Net revenues related to both tangible product sales and services for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, disaggregated by business ~~segment.~~ segment:


	Three months ended March 31, 2023
In millions	Allegion Americas		Allegion International		Total
Net revenues
Products	$	697.4	$	175.5	$	872.9
Services	43.5		6.6		50.1
Total Net revenues	$	740.9	$	182.1	$	923.0


	Three months ended March 31, 2022
In millions	Allegion Americas		Allegion International		Total
Net revenues
Products	$	521.4	$	195.1	$	716.5
Services	0.5		6.6		7.1
Total Net revenues	$	521.9	$	201.7	$	723.6

Net revenues are shown by tangible product sales and services, 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 principal revenue ~~streams:~~

Three months ended September 30, 2022 Nine months ended September 30, 2022
In millions Allegion Americas Allegion International Total Allegion Americas Allegion International Total
Net revenues
Products $ 714.6 $ 156.8 $ 871.4 $ 1,834.0 $ 519.5 $ 2,353.5
Services 32.6 9.7 42.3 33.7 23.2 56.9
Total Net revenues $ 747.2 $ 166.5 $ 913.7 $ 1,867.7 $ 542.7 $ 2,410.4

Three months ended September 30, 2021 Nine months ended September 30, 2021
In millions Allegion Americas Allegion International Total Allegion Americas Allegion International Total
Net revenues
Products $ 524.1 $ 185.5 $ 709.6 $ 1,571.2 $ 563.9 $ 2,135.1
Services 0.3 7.1 7.4 1.5 21.6 23.1
Total Net revenues $ 524.4 $ 192.6 $ 717.0 $ 1,572.7 $ 585.5 $ 2,158.2

~~Historically, approximately 99% of the Company's consolidated Net revenues have involved~~streams. Product sales involve contracts with a single performance obligation, the transfer of control of a product or bundle of products to a customer. ~~However,~~Service revenue, which includes inspection, maintenance and repair, design and installation, aftermarket and locksmith services, as well as software-as-a-service offerings such as access control, IoT integration and workforce management solutions, is delayed until the ~~percentage of Net revenues from services is expected to increase with the recent acquisition of the Access Technologies business.~~service performance obligations are satisfied.

As of ~~September 30, 2022,~~March 31, 2023, neither the contract assets related to the Company’s right to consideration for work completed but not billed, nor the contract liabilities associated with contract revenue were material. The Company does not have any costs to obtain or fulfill a contract that are capitalized on its Condensed and Consolidated Balance Sheets. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ no adjustments related to performance obligations satisfied in previous periods were recorded.

NOTE 18 - 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.

Environmental Matters

As of March 31, 2023 and December 31, 2022, the Company had reserves for environmental matters of $23.5 million and $24.1 million, respectively. The total reserve at March 31, 2023 and December 31, 2022, included $13.3 million and $13.8 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 Condensed and Consolidated Balance Sheets based on the timing of their expected future payment. The Company’s total current environmental reserve at March 31, 2023 and December 31, 2022, was $3.6 million and $3.9 million, respectively, and the remainder was classified as noncurrent. Expenses related to environmental remediation were not material during either the three months ended March 31, 2023, or 2022. 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 three months ended March 31 were as follows:

ALLEGION PLC

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~NOTE 20 - BUSINESS SEGMENT INFORMATION~~


In millions	2023		2022
Balance at beginning of period	$	18.2	$	17.7
Reductions for payments	(2.0)		(2.4)
Accruals for warranties issued during the current period	2.3		3.1


Currency translation	—		(0.1)
Balance at end of period	$	18.5	$	18.3

~~The Company classifies its business into~~Standard product warranty liabilities are classified as either Accrued expenses and other current liabilities or Other noncurrent liabilities within the ~~following two reportable segments~~Condensed and Consolidated Balance Sheets based on industry and market focus: Allegion Americas and Allegion International. The Company largely evaluates performance based on Segment operating income and Segment operating margins. Segment operating income is the ~~measure of profit and loss that the Company’s chief operating decision maker uses to evaluate the financial performance~~timing of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons, the Company believes that Segment operating income represents the most relevant measure of segment profit and loss. The Company’s chief operating decision maker 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 by reportable segment for the three and nine months ended September 30 was as follows:~~

Three months ended Nine months ended
In millions 2022 2021 2022 2021
Net revenues
Allegion Americas $ 747.2 $ 524.4 $ 1,867.7 $ 1,572.7
Allegion International 166.5 192.6 542.7 585.5
Total $ 913.7 $ 717.0 $ 2,410.4 $ 2,158.2
Segment operating income
Allegion Americas $ 178.4 $ 133.7 $ 455.9 $ 419.5
Allegion International 14.9 20.5 45.9 54.0
Total 193.3 154.2 501.8 473.5
Reconciliation to Operating income
Unallocated corporate expense (30.4) (15.8) (74.8) (58.4)
Operating income 162.9 138.4 427.0 415.1
Reconciliation to earnings before income taxes
Interest expense 23.1 12.3 52.2 37.0
Loss on divestitures 7.6 — 7.6 —
Other income, net (1.5) (14.7) (7.1) (21.4)
Earnings before income taxes $ 133.7 $ 140.8 $ 374.3 $ 399.5
expected future payments.

NOTE 2119 - ~~COMMITMENTS AND CONTINGENCIES~~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 margins. Segment operating income is ~~involved in various litigation, claims~~the measure of profit and ~~administrative proceedings, including those related~~loss that the Company’s chief operating decision maker uses to ~~environmental~~evaluate the financial performance of the business and ~~product warranty matters. Amounts recorded~~as the basis for ~~identified contingent liabilities~~resource allocation, performance reviews and compensation. For these reasons, the Company believes that Segment operating income represents the most relevant measure of segment profit and loss. The Company’s chief operating decision maker 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.

Due to a reporting change effective January 1, 2023, results for the Company's Global Portable Security brands (inclusive of the AXA, Kryptonite and Trelock businesses) are ~~estimates, which are reviewed periodically~~now fully reflected within the Allegion International segment. Accordingly, the summary of operations by reportable segment below for the three months ended March 31, 2022, has been recast to conform with the current year presentation. The impact of this recast was to re-align approximately $6.3 million and ~~adjusted to reflect additional information when it becomes available. Subject~~$1.3 million of Net revenues and Segment operating income, respectively, from the Allegion Americas segment 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, resultsAllegion International segment.

A summary of operations ~~liquidity or cash flows of~~by reportable segment for the ~~Company.~~

~~Environmental Matters~~

As of September 30, 2022 and December 31, 2021, the Company has recorded reserves for environmental matters of $24.2 million and $16.4 million, respectively. The total reserve at September 30, 2022 and December 31, 2021, included $14.0 million and $4.3 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 Condensed and Consolidated Balance Sheets based on the timing of their expected future payment. The Company’s total current environmental reserve at September 30, 2022 and December 31, 2021, was $4.1 million and $3.7 million, respectively, and the remainder is classified as noncurrent. During the ninethree months ended ~~September~~March 31 was as follows:



In millions	2023		2022
Net revenues
Allegion Americas	$	740.9	$	521.9
Allegion International	182.1		201.7
Total	$	923.0	$	723.6
Segment operating income
Allegion Americas	$	186.6	$	122.6
Allegion International	10.6		20.9
Total	197.2		143.5
Reconciliation to Operating income
Unallocated corporate expense	(26.2)		(26.5)
Operating income	171.0		117.0
Reconciliation to earnings before income taxes
Interest expense	23.6		11.9

Other income, net	(0.3)		(2.2)
Earnings before income taxes	$	147.7	$	107.3

NOTE 20 - SUBSEQUENT EVENTS

Dividend Declaration

On April 13, 2023, the Board declared a quarterly dividend of $0.45 per ordinary share. The dividend is payable June 30, ~~2022 and 2021, the Company incurred $2.9 million and $0.9 million, respectively,~~2023, to shareholders of expenses for environmental remediation at sites presently or formerly owned or leased by the Company. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain.record on June 15, 2023.

~~ALLEGION PLC~~

~~NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Warranty Liability~~

~~The changes in the standard product warranty liability for the nine months ended September 30 were as follows:~~

In millions 2022 2021
Balance at beginning of period $ 17.7 $ 16.5
Reductions for payments (6.9) (7.5)
Accruals for warranties issued during the current period 6.4 9.1
Acquisitions 1.7 —
Currency translation (1.0) (0.2)
Balance at end of period $ 17.9 $ 17.9

Standard product warranty liabilities are classified as either Accrued expenses and other current liabilities or Other noncurrent liabilities within the Condensed and Consolidated Balance Sheets based on the timing of the expected future payments.

1815

Table of Contents

Item 2 – 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 may cause a difference include, but are not limited to, those discussed under Part I, Item 1A – Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. The following section is qualified in its entirety by the more detailed information, including our Condensed and Consolidated Financial Statements and the notes thereto, which appears elsewhere in this Quarterly Report.

Overview

Organization

Allegion plc and its consolidated subsidiaries ("Allegion," "the Company", "we," "our," or "us") isare 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

Throughout the ~~current year,~~first quarter of 2023, we ~~have seen~~continued to experience strong demand for our non-residential products and services ~~particularly non-residential products~~ in our Allegion Americas segment. Our ability to meet this elevated level of customer demand ~~improved throughout the year,~~continued to improve, due in part to our ~~previous~~on-going actions to ~~mitigate~~address industry-wide supply-chain challenges ~~(particularly shortages of electronic components), as well as~~and improving availability of ~~non-electronic~~ parts and materials.

~~Additionally,~~ However, lower demand continued to weigh on sales volumes of mechanical residential products within our Allegion Americas segment. We have also begun to experience softness in ~~an effort to combat~~demand for our Global Portable Security products in our Allegion International segment, as the ~~persistent, elevated levels of inflation, we have implemented a series of pricing initiatives across our global businesses. These initiatives have resulted~~market environment for these products stabilizes following the surge in ~~strong pricing momentum which we expect to continue to contribute to revenue growth and offset the impact of inflation throughout the remainder of~~demand during COVID that extended into early 2022.

~~In spite~~We also achieved strong year-over-year growth in sales of ~~these positive factors,~~electronic security products throughout our major global businesses during the first quarter of 2023. While supply chain challenges ~~around the availability~~and shortages of electronic parts and components ~~persist, and continue to negatively impact our ability to meet~~persisted during the ~~elevated levels~~first quarter of ~~demand for our connected electronic security products. Labor availability also continues to impact our operational efficiency. Additionally,~~2023, we ~~have experienced a further softening of demand throughout many of the Eurozone economies, impacting several of our businesses in our Allegion International segment.~~

~~We remain focused on providing exceptional service and innovation to our customers. We are beginning~~continued to realize the benefits from ~~the~~our previous measures ~~we have~~ taken to ~~mitigate~~address these operational and ~~distribution inefficiencies,~~logistical challenges, such as re-engineering product designs and configurations to accept alternate electronic components and developing ~~alternate sources~~new and diverse supplier relationships to improve part and component availability. As a result, our ability to meet the strong demand for our electronic security products continued to improve in both our Allegion Americas and Allegion International segments.

Further, in response to the persistent, elevated levels of ~~supply. We continue to invest in business~~inflation, our pricing initiatives continued to drive ~~future~~revenue growth and ~~add value through seamless access and will continue to explore various options to control costs and enhance financial performance while minimizing disruption to customers and our overall business.~~

~~The on-going COVID-19 pandemic and~~mitigate the ~~macroeconomic uncertainties noted above will likely continue to affect us in numerous and evolving ways. The full impact of these uncertainties~~inflationary pressures on our business ~~will~~during the first quarter of 2023. We remain committed to monitoring the inflationary pressures to our businesses and addressing them through pricing initiatives, where appropriate. We expect pricing to continue to ~~depend on future developments that we may not be able to accurately predict. These uncertainties and their potential or heightened impact~~mitigate the inflationary pressures on our ~~business, results~~cost base throughout the remainder of operations, financial condition and cash flows, as well as other challenges and uncertainties that could affect our businesses are described further under Part I, Item 1A. "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2021.2023.

Acquisition of ~~the Access Technologies business~~plano

On ~~July 5, 2022,~~January 3, 2023, we completed ~~the~~an acquisition of the ~~Access Technologies~~assets of plano. group, a SaaS workforce management solution business based in Germany ("plano"), for ~~a closing purchase price~~initial cash consideration of ~~$923.1~~$36.6 million. ~~This acquisition was financed by~~Additional consideration may be payable in future periods in the ~~net proceeds from the issuance of our 5.411% Senior Notes, together with borrowings under our 2021 Revolving Facility and cash on hand. The Access Technologies business~~event plano achieves certain specified financial results. Plano has been ~~integrated~~incorporated into our Allegion ~~Americas~~International segment.

~~The Access Technologies business is a leading manufacturer, installer and service provider~~2023 Dividends

During the three months ended March 31, 2023, we paid dividends of automatic doors in North America, primarily in the U.S. and Canada. Its diversified customer base centers on non-residential settings, including retail, healthcare, education, commercial offices, hospitality and government. This acquisition helps us create a more comprehensive portfolio of access solutions, with the addition of automated entrances. Additionally, the Access Technologies business adds an expansive service and support network throughout the U.S. and Canada, broadening our solutions$0.45 per ordinary share to national, regional and local customers, and complementing our existing strengths in these non-residential markets. The Access Technologies business generated $88.7 million in Net revenues during the third quarter.shareholders.

1916

Table of Contents

~~Divestiture of Milre~~

~~In September 2022, we sold Milre Systek Co. Ltd. ("Milre") in South Korea for an immaterial amount. As a result of the sale, we recorded a net loss on divestiture of $7.6 million.~~

~~2022 Dividends and Share Repurchases~~

~~During the nine months ended September 30, 2022, we paid dividends of $1.23 per ordinary share to shareholders and repurchased approximately 0.5 million shares for $61.0 million.~~

Results of Operations – Three months ended ~~September 30~~March 31


In millions, except per share amounts	In millions, except per share amounts	2022		% of revenues		2021		% of revenues		In millions, except per share amounts	2023		% of revenues		2022		% of revenues
Net revenues	Net revenues	$	913.7			$	717.0			Net revenues	$	923.0			$	723.6
Cost of goods sold	Cost of goods sold	545.7		59.7	%	416.5		58.1	%	Cost of goods sold	532.0		57.6	%	434.9		60.1	%
Selling and administrative expenses	Selling and administrative expenses	205.1		22.4	%	162.1		22.6	%	Selling and administrative expenses	220.0		23.9	%	171.7		23.7	%

Operating income	Operating income	162.9		17.8	%	138.4		19.3	%	Operating income	171.0		18.5	%	117.0		16.2	%
Interest expense	Interest expense	23.1				12.3				Interest expense	23.6				11.9
Loss on divestitures		7.6				—

Other income, net	Other income, net	(1.5)				(14.7)				Other income, net	(0.3)				(2.2)
Earnings before income taxes	Earnings before income taxes	133.7				140.8				Earnings before income taxes	147.7				107.3
Provision for (benefit from) income taxes		19.1				(2.8)
Provision for income taxes										Provision for income taxes	24.1				14.2
Net earnings	Net earnings	114.6				143.6				Net earnings	123.6				93.1
Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	—				0.1				Less: Net earnings attributable to noncontrolling interests	0.1				0.1
Net earnings attributable to Allegion plc	Net earnings attributable to Allegion plc	$	114.6			$	143.5			Net earnings attributable to Allegion plc	$	123.5			$	93.0

Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders:	Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders:	$	1.30			$	1.59			Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders:	$	1.40			$	1.05

The discussions that follow describe the significant factors contributing to the changes in our results of operations for the periods presented and form the basis used by management to evaluate the financial performance of the business.

Net Revenues

Net revenues for the three months ended ~~September 30, 2022,~~March 31, 2023, increased by ~~27.4%~~27.6%, or ~~$196.7~~$199.4 million, compared with the same period in ~~2021,~~2022, due to the following:


Pricing	~~12.6~~10.6	%
Volume	~~6.0~~4.4	%
Acquisitions / divestitures	~~12.4~~14.1	%
Currency exchange rates	~~(3.6)~~(1.5)	%
Total	~~27.4~~27.6	%

The increase in Net revenues was driven by improved pricing across our major businesses ~~our recently acquired~~to address inflationary pressures, the acquisitions of the Access Technologies business and plano and higher volumes in our Allegion Americas segment. These increases were partially offset by unfavorable foreign currency exchange rate movements, ~~and~~ lower volumes in our Allegion International ~~segment.~~segment and a prior year divestiture.

Pricing includes increases or decreases of price, including discounts, surcharges and/or other sales deductions, on our existing products and services. As discussed above, the pricing initiatives ~~we have~~ implemented in response to the persistent, elevated levels of inflation continue to be a key driver in the overall increase in Net revenues. 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.

Operating Income/Margin

Operating income for the three months ended ~~September 30, 2022,~~March 31, 2023, increased ~~$24.5~~$54.0 million compared to the same period in ~~2021.~~2022. Operating margin, which we define as Operating income as a percentage of total Net revenues, for the three months ended ~~September 30, 2022, decreased~~March 31, 2023, increased to ~~17.8%~~18.5% from ~~19.3%~~16.2% for the same period in ~~2021,~~2022, due to the following:

~~Table of Contents~~


In millions	In millions	Operating Income		Operating Margin		In millions	Operating Income		Operating Margin
September 30, 2021		$	138.4	19.3	%
Pricing and productivity in excess of inflation		25.5		1.1	%
March 31, 2022						March 31, 2022	$	117.0	16.2	%
Pricing and productivity in excess of inflation and investment spending						Pricing and productivity in excess of inflation and investment spending	34.4		2.6	%
Volume / product mix	Volume / product mix	24.5		2.2	%	Volume / product mix	18.8		1.8	%
Restructuring / acquisition expenses	Restructuring / acquisition expenses	(23.8)		(3.2)	%	Restructuring / acquisition expenses	(9.0)		(1.3)	%
Currency exchange rates	Currency exchange rates	(6.5)		(0.1)	%	Currency exchange rates	(5.6)		(0.6)	%
Investment spending		(2.3)		(0.3)	%

Acquisitions / divestitures	Acquisitions / divestitures	7.1		(1.2)	%	Acquisitions / divestitures	15.4		(0.2)	%
September 30, 2022		$	162.9	17.8	%
March 31, 2023						March 31, 2023	$	171.0	18.5	%

The increase in Operating income was driven by pricing and productivity improvements in excess of inflation and ~~productivity,~~investment spending, favorable volume/product mix and the contribution to operating income from ~~our recently acquired Access Technologies business.~~recent acquisition and divestiture activity. These increases were partially offset by a year-over-year increase in restructuring and acquisition expenses and unfavorable foreign currency exchange rate movements.

Table of Contents

The increase in Operating margin was driven by pricing and productivity improvements in excess of inflation and investment spending and favorable volume/product mix. These increases were partially offset by a year-over-year increase in restructuring and acquisition expenses, unfavorable foreign currency exchange rate movements and ~~increased investment spending.~~

The decrease in Operating margin was primarily due to a year-over-year increase in restructuring and acquisition expenses, unfavorable foreign currency exchange rate movements, increased investment spending and the impact to operating margin from ~~our recently acquired Access Technologies business. These decreases were partially offset by pricing improvements in excess of inflation~~recent acquisition and ~~productivity and favorable volume/product mix.~~divestiture activity.

Pricing and productivity in excess of inflation and investment spending includes the impact to both Operating income and Operating margin from pricing, as defined above, in addition to productivity, inflation and ~~inflation.~~investment spending. Productivity represents improvements in unit costs of materials, cost reductions related to improvements to our manufacturing design and processes and reductions in selling and administrative expenses due to productivity projects. Inflation includes both unit costs for the current period compared to the average actual cost for the prior period, multiplied by current year volumes, and current period costs of ongoing selling and administrative functions compared to the same ongoing expenses in the prior period. Expenses related to increased head count for strategic initiatives, new facilities or other significant spending for strategic initiatives or new product and channel development, are captured in ~~Investment spending in the table above.~~investment spending.

Volume/product mix represents the impact to both Operating income and Operating margin 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.

Interest Expense

Interest expense for the three months ended ~~September 30, 2022,~~March 31, 2023, increased ~~$10.8~~$11.7 million compared with the same period in ~~2021,~~2022, primarily due to interest on our 5.411% Senior Notes issued during 2022 and ~~our~~the increase in borrowing under the 2021 Revolving ~~Facility. The recent rise in interest rates has also contributed to~~Facility, as well as a higher weighted-average interest rate on our variable rate outstanding indebtedness.

~~Loss on Divestiture~~

~~As discussed above, in September 2022, we sold Milre for an immaterial amount, resulting in a net loss of $7.6 million.~~

Other Income, Net

The components of Other income, net for the three months ended ~~September 30, 2022 and 2021,~~March 31 were as follows:

In millions 2022 2021
Interest income $ (0.4) $ (0.3)
Foreign currency exchange loss — 0.8
Earnings from equity method investments, net — (6.3)
Net periodic pension and postretirement benefit income, less service cost (2.1) (2.1)
Other 1.0 (6.8)
Other income, net $ (1.5) $ (14.7)

Other income, net for the three months ended September 30, 2022 decreased $13.2 million compared with the same period in 2021. This decrease is due to a prior year gain of $6.4 million from the sale of our interest in an equity method affiliate, as well as other investment gains and income of $6.8 million during the three months ended September 30, 2021, which did not recur in the current year.

~~Table of Contents~~


In millions	2023		2022
Interest income	$	(0.7)	$	(0.1)
Foreign currency exchange loss	1.4		1.0

Net periodic pension and postretirement benefit income, less service cost	—		(2.6)
Other	(1.0)		(0.5)
Other income, net	$	(0.3)	$	(2.2)

Provision for ~~(benefit from)~~ Income Taxes

~~Results of Operations – Nine months ended September 30~~

In millions, except per share amounts 2022 % of
revenues 2021 % of
revenues
Net revenues $ 2,410.4 $ 2,158.2
Cost of goods sold 1,438.7 59.7 % 1,239.8 57.4 %
Selling and administrative expenses 544.7 22.6 % 503.3 23.3 %
Operating income 427.0 17.7 % 415.1 19.2 %
Interest expense 52.2 37.0
Loss on divestitures 7.6 —
Other income, net (7.1) (21.4)
Earnings before income taxes 374.3 399.5
Provision for income taxes 51.4 28.9
Net earnings 322.9 370.6
Less: Net earnings attributable to noncontrolling interests 0.2 0.4
Net earnings attributable to Allegion plc $ 322.7 $ 370.2
Diluted net earnings per ordinary share attributable to Allegion plc ordinary shareholders: $ 3.65 $ 4.08

~~Net revenues~~

~~Net revenues for the nine months ended September 30, 2022, increased by 11.7%, or $252.2 million, compared with the same period in 2021, due to the following:~~


~~Pricing~~	~~9.0~~	%
~~Volume~~	~~1.5~~	%
~~Acquisitions / divestitures~~	~~4.1~~	%
~~Currency exchange rates~~	~~(2.9)~~	%
~~Total~~	~~11.7~~	%

The increase in Net revenues was driven by improved pricing across all our major businesses, our recently acquired Access Technologies business and higher volumes in our Allegion Americas segment. These increases were partially offset by unfavorable foreign currency exchange rate movements and lower volumes in our Allegion International segment.

~~Operating Income/Margin~~

Operating income for the nine months ended September 30, 2022, increased $11.9 million compared to the same period in 2021, and Operating margin for the nine months ended September 30, 2022, decreased to 17.7% from 19.2% for the same period in 2021, due to the following:

~~Table of Contents~~

In millions Operating Income Operating Margin
September 30, 2021 $ 415.1 19.2 %
Pricing and productivity in excess of inflation 38.8 0.1 %
Volume / product mix 24.3 0.8 %
Restructuring / acquisition expenses (33.6) (1.5) %
Currency exchange rates (14.5) (0.1) %
Investment spending (11.7) (0.5) %
Acquisitions / divestitures 8.6 (0.3) %
September 30, 2022 $ 427.0 17.7 %

The increase in Operating income was driven by pricing improvements in excess of inflation and productivity, favorable volume/product mix and the contribution to operating income from our recently acquired Access Technologies business and divestiture of QMI. These increases were partially offset by a year-over-year increase in restructuring and acquisition expenses, unfavorable foreign currency exchange rate movements and increased investment spending.

The decrease in Operating margin was primarily due to a year-over-year increase in restructuring and acquisition expenses, unfavorable foreign currency exchange rate movements, increased investment spending and the impact to operating margin from our recently acquired Access Technologies business and divestiture of QMI. These decreases were partially offset by pricing improvements in excess of inflation and productivity and favorable volume/product mix.

~~Interest Expense~~

Interest expense for the nine months ended September 30, 2022, increased $15.2 million compared with the same period in 2021, primarily due to interest on our 5.411% Senior Notes and our 2021 Revolving Facility, as well as the $4.3 million of third party costs related to the financing of the recently acquired Access Technologies business. The recent rise in interest rates has also contributed to a higher weighted-average interest rate on our variable rate outstanding indebtedness.

~~Loss on Divestiture~~

~~As discussed above, in September 2022, we sold Milre for an immaterial amount, resulting in a net loss of $7.6 million.~~

~~Other Income, Net~~

~~The components of Other income, net for the nine months ended September 30, 2022 and 2021, were as follows:~~

In millions 2022 2021
Interest income $ (0.6) $ (0.4)
Foreign currency exchange loss 1.9 2.0
Earnings from equity method investments, net (0.6) (6.0)
Net periodic pension and postretirement benefit income, less service cost (7.1) (6.0)
Other (0.7) (11.0)
Other income, net $ (7.1) $ (21.4)

Other income, net for the nine months ended September 30, 2022 decreased $14.3 million compared with the same period in 2021, due to decreased investment gains and income, and the gain of $6.4 million from the sale of our interest in an equity method affiliate during the prior year, which did not recur in the current year.

~~Provision for Income Taxes~~

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 reviews our financial performance and makes operating decisions.

Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these

~~Table of Contents~~

reasons, we believe that Segment operating income represents the most relevant measure of Segment profit and loss. Our chief operating decision maker 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. Due to a reporting change effective January 1, 2023, results for our Global Portable Security brands (inclusive of the AXA, Kryptonite and Trelock businesses) are now fully reflected within the Allegion International segment. Accordingly, the summary of operations by reportable segment below for the three months ended March 31, 2022, has been recast to conform with the current year presentation. The impact of this recast was to re-align approximately $6.3 million and $1.3 million of Net revenues and Segment operating income, respectively, from our Allegion Americas segment to our Allegion International segment.

Table of Contents

Segment Results of Operations - For the three ~~and nine~~ months ended ~~September 30~~March 31:


		Three months ended								Nine months ended
In millions	In millions	2022			2021			% Change		2022			2021			% Change		In millions	2023			2022			% Change
Net revenues	Net revenues																	Net revenues
Allegion Americas	Allegion Americas	$	747.2		$	524.4		42.5	%	$	1,867.7		$	1,572.7		18.8	%	Allegion Americas	$	740.9		$	521.9		42.0	%
Allegion International	Allegion International	166.5			192.6			(13.6)	%	542.7			585.5			(7.3)	%	Allegion International	182.1			201.7			(9.7)	%
Total	Total	$	913.7		$	717.0				$	2,410.4		$	2,158.2				Total	$	923.0		$	723.6

Segment operating income	Segment operating income																	Segment operating income
Allegion Americas	Allegion Americas	$	178.4		$	133.7		33.4	%	$	455.9		$	419.5		8.7	%	Allegion Americas	$	186.6		$	122.6		52.2	%
Allegion International	Allegion International	14.9			20.5			(27.3)	%	45.9			54.0			(15.0)	%	Allegion International	10.6			20.9			(49.3)	%
Total	Total	$	193.3		$	154.2				$	501.8		$	473.5				Total	$	197.2		$	143.5

Segment operating margin	Segment operating margin																	Segment operating margin
Allegion Americas	Allegion Americas	23.9		%	25.5		%			24.4		%	26.7		%			Allegion Americas	25.2		%	23.5		%
Allegion International	Allegion International	8.9		%	10.6		%			8.5		%	9.2		%			Allegion International	5.8		%	10.4		%

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 ~~closers,~~controls and systems, exit devices, doors, ~~door systems,~~accessories, electronic security products, access control systems and ~~entrance~~software and service solutions ~~(with our recent acquisition of the Access Technologies business)~~ 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, ~~Steelcraft, Technical Glass Products~~Von Duprin and Stanley Access Technologies, which we utilize with permission in accordance with the terms of the Access Technologies acquisition agreement ("~~TGP"~~Stanley" is the property of Stanley Logistics L.L.C.) ~~and Von Duprin.~~.

Net Revenues

Net revenues for the three months ended ~~September 30, 2022,~~March 31, 2023, increased by ~~42.5%~~42.0%, or ~~$222.8~~$219.0 million, compared to the same period in ~~2021,~~2022, due to the following:


Pricing	~~14.7~~12.8	%
Volume	~~11.1~~9.8	%
Acquisitions	~~16.9~~19.8	%
Currency exchange rates	~~(0.2)~~(0.4)	%
Total	~~42.5~~42.0	%

The increase in Net revenues was driven by significantly improved pricing to address inflationary pressures, higher volumes for ~~both~~ our ~~residential and~~ non-residential products and services and the impact of our ~~recently acquired~~ Access Technologies ~~business.~~business acquisition. These increases were partially offset by unfavorable foreign currency exchange rate movements.

Net revenues from non-residential products (excluding Net revenues from our ~~recently acquired~~ Access Technologies ~~business)~~business, the impact of which is shown in the Acquisitions line above) for the three months ended ~~September 30, 2022,~~March 31, 2023, increased by nearly thirty percent compared to the same period in the prior year, driven by substantially improved pricing to address inflationary pressures and higher volumes. ~~Continued strong demand and~~Demand for our non-residential products remained elevated, which along with improvements around the availability of materials and components, ~~driven in part by our previous actions~~contributed to ~~mitigate these supply-chain challenges, helped drive~~ the increase in volumes compared to the same period in the prior year. We currently anticipate demand for our non-residential products to remain solid through the remainder of 2023.

Net revenues from residential products for the three months ended ~~September 30, 2022,~~March 31, 2023, increased by a ~~mid-teens~~mid-single digits percent compared to the same period in the prior ~~year. This increase was~~year, driven by ~~substantially~~ improved pricing to address inflationary pressures, which was partially offset by lower volumes. Given current market conditions around new residential construction and ~~higher volumes. Although~~consumer sentiment, we ~~continue to face challenges~~expect continued softness in demand for our mechanical residential products until market conditions improve. However, continued improvements around the supply of electronic parts and components ~~and~~ have ~~also seen a softening~~resulted in strong growth in sales of our residential electronic products, which in part, have helped to offset these temporary market ~~demand for residential products, we expect our pricing initiative to continue contributing to revenue growth for the remainder of the year.~~

~~Table of Contents~~

related challenges.

Growth in electronic security products and solutions is a metric that is actively monitored by management and a focus of our investors. Electronic products encompass both residential and non-residential solutions 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 ~~electrified~~systems and exit ~~devices and door controls.~~devices. For the three months ended ~~September 30, 2022,~~March 31, 2023, Net revenues from the sale of electronic products in the Allegion Americas segment ~~(excluding Net revenues from our recently acquired Access Technologies business)~~ increased by ~~nearly~~greater than thirty percent compared to the same period in the prior year. While we ~~continue~~continued to experience delays and shortages of electronic components from key suppliers during the

Table of Contents

three months ended March 31, 2023, we expect continued growth in Net revenues from the sale of electronic products for the remainder of ~~the year,~~2023, given ~~the combination of our~~high demand, pricing initiatives and ~~the comparable impact~~improved component availability relative to ~~the fourth quarter of 2021, when the supply chain challenges and shortages of materials and components negatively impacted revenue.~~

~~Net revenues for the nine months ended September 30, 2022, increased by 18.8%, or $295.0 million, compared to the same period in 2021, due to the following:~~


~~Pricing~~	~~10.3~~	%
~~Volume~~	~~3.0~~	%
~~Acquisitions~~	~~5.6~~	%
~~Currency exchange rates~~	~~(0.1)~~	%
~~Total~~	~~18.8~~	%

The increase in Net revenues was driven by significantly improved pricing and higher volumes for our non-residential products, as well as the impact of our recently acquired Access Technologies business. These increases were partially offset by unfavorable foreign currency exchange rate movements and lower volumes for our residential products.

Net revenues from non-residential products (excluding Net revenues from our recently acquired Access Technologies business) for the nine months ended September 30, 2022, increased by approximately twenty percent compared to the same period in the prior year, driven by improved pricing and higher volumes. Net revenues from residential products for the nine months ended September 30, 2022, decreased by a low single digits percent compared to the same period in the prior year, driven by lower volumes, which were partially offset by increased pricing. Net revenues from the sale of electronic products for the nine months ended September 30, 2022, were up by a high single digits percent compared to the same period in the prior year.2022.

Operating income/margin

Segment operating income for the three months ended ~~September 30, 2022,~~March 31, 2023, increased ~~$44.7~~$64.0 million compared to the same period in ~~2021,~~2022, and Segment operating margin for the three months ended ~~September 30, 2022, decreased~~March 31, 2023, increased to ~~23.9%~~25.2% from ~~25.5%~~23.5%, due to the following:


In millions	In millions	Operating Income		Operating Margin		In millions	Operating Income		Operating Margin
September 30, 2021		$	133.7	25.5	%
Pricing and productivity in excess of inflation		24.2		1.0	%
March 31, 2022						March 31, 2022	$	122.6	23.5	%
Pricing and productivity in excess of inflation and investment spending						Pricing and productivity in excess of inflation and investment spending	37.9		3.5	%
Volume / product mix	Volume / product mix	30.8		2.9	%	Volume / product mix	25.2		2.3	%
Currency exchange rates	Currency exchange rates	(0.6)		—	%	Currency exchange rates	(3.9)		(0.7)	%
Investment spending		(0.7)		(0.1)	%

Acquisitions	Acquisitions	6.8		(2.5)	%	Acquisitions	14.7		(1.5)	%
Acquisition expenses	Acquisition expenses	(15.8)		(2.9)	%	Acquisition expenses	(9.9)		(1.9)	%
September 30, 2022		$	178.4	23.9	%
March 31, 2023						March 31, 2023	$	186.6	25.2	%

The increase in Segment operating income was primarily driven by pricing and productivity improvements in excess of inflation and ~~productivity,~~investment spending, favorable volume/product mix and the contribution to Segment operating income from our ~~recently acquired~~ Access Technologies ~~business.~~business acquisition. These increases were partially offset by a year-over-year increase in acquisition and integration expenses and unfavorable foreign currency exchange rate movements.

The increase in Segment operating margin was primarily due to pricing and productivity improvements in excess of inflation and investment spending and favorable volume/product mix. These increases were partially offset by a year-over-year increase in acquisition and integration expenses, unfavorable foreign currency exchange rate movements and ~~increased investment spending.~~

~~The decrease in Segment operating margin was primarily due to a year-over-year increase in acquisition and integration expenses,~~ the impact to Segment operating margin from our ~~recently acquired~~ Access Technologies business ~~and increased investment spending. These decreases were partially offset by pricing improvements in excess of inflation and productivity and favorable volume/product mix.~~

Segment operating income for the nine months ended September 30, 2022, increased $36.4 million compared to the same period in 2021, and Segment operating margin for the nine months ended September 30, 2022, decreased to 24.4% from 26.7%, due to the following:

~~Table of Contents~~

In millions Operating Income Operating Margin
September 30, 2021 $ 419.5 26.7 %
Pricing and productivity in excess of inflation 22.7 (1.1) %
Volume / product mix 31.4 1.2 %
Currency exchange rates (1.4) — %
Investment spending (7.5) (0.4) %
Acquisitions 6.8 (1.0) %
Restructuring / acquisition expenses (15.6) (1.0) %
September 30, 2022 $ 455.9 24.4 %

The increase in Segment operating income was primarily driven by pricing improvements in excess of inflation and productivity, favorable volume/product mix and the contribution to operating income from our recently acquired Access Technologies business. These increases were partially offset by a year-over-year increase in restructuring and acquisition expenses, unfavorable foreign currency exchange rate movements and increased investment spending.

The decrease in Segment operating margin was primarily due to a year-over-year increase in restructuring and acquisition expenses, the impact to operating margin from our recently acquired Access Technologies business, increased investment spending and the dilutive impact to operating margin from inflation and productivity exceeding the benefit to operating margin from pricing improvements. These decreases were partially offset by favorable volume/product mix.acquisition.

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 closers and systems, exit devices, doors, ~~and door systems,~~ electronic security products, ~~and~~ access control systems, ~~as well as~~ time and attendance and workforce productivity solutions, among other software and service solutions. This segment’s primary brands are AXA, Bricard, Briton, CISA, Gainsborough, Interflex, Kryptonite and SimonsVoss.

Net Revenues

Net revenues for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased by ~~13.6%~~9.7%, or ~~$26.1~~$19.6 million, compared to the same period in ~~2021,~~2022, due to the following:


Pricing	~~6.9~~5.0	%
Volume	~~(7.7)~~	%

~~Currency exchange rates~~	~~(12.8)~~	%
~~Total~~	~~(13.6)~~	%

The decrease in Net revenues was driven by lower volumes and unfavorable foreign currency exchange rate movements due to the significant strengthening of the U.S. dollar relative to most of the currencies in which we do business throughout our Allegion International segment. Also, as discussed above, softening demand throughout much of the Eurozone has impacted several of our businesses in the segment, resulting in lower volumes. These decreases were partially offset by improved pricing.

~~Net revenues for the nine months ended September 30, 2022, decreased by 7.3%, or $42.8 million, compared to the same period in 2021, due to the following:~~


~~Pricing~~	~~5.6~~	%
~~Volume~~	~~(2.7)~~(9.8)	%
Acquisitions / divestitures	~~(0.1)~~(0.5)	%
Currency exchange rates	~~(10.1)~~(4.4)	%
Total	~~(7.3)~~(9.7)	%

The decrease in Net revenues was primarily driven by ~~unfavorable~~lower volumes, particularly within our Global Portable Security businesses, as the market environment for these products continues to stabilize following a surge in demand during COVID that extended into early 2022. Unfavorable foreign currency exchange rate movements ~~lower volumes~~ and the ~~divestitures~~impact from a prior year divestiture, which exceeded the favorable impact from the current year acquisition of ~~QMI and Milre.~~plano, also contributed to the decrease in Net revenues. These decreases were partially offset by improved ~~pricing.~~

~~Table of Contents~~

pricing across our major businesses throughout the segment.

Operating income/margin

Segment operating income for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased ~~$5.6~~$10.3 million compared to the same period in ~~2021,~~2022, and Segment operating margin for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased to ~~8.9%~~5.8% from ~~10.6%~~10.4%, due to the following:

In millions Operating Income Operating Margin
September 30, 2021 $ 20.5 10.6 %
Pricing and productivity in excess of inflation 7.5 3.0 %
Volume / product mix (6.3) (2.6) %
Currency exchange rates (5.8) (1.8) %
Investment spending (1.5) (0.7) %
Acquisitions / divestitures 0.3 0.2 %
Restructuring / acquisition expenses 0.2 0.2 %
September 30, 2022 $ 14.9 8.9 %

Table of Contents


In millions	Operating Income		Operating Margin
March 31, 2022	$	20.9	10.4	%
Pricing and productivity in excess of inflation and investment spending	0.2		(0.4)	%
Volume / product mix	(6.4)		(2.4)	%
Currency exchange rates	(1.7)		(0.5)	%

Acquisitions / divestitures	0.7		0.3	%
Restructuring / acquisition expenses	(3.1)		(1.6)	%

March 31, 2023	$	10.6	5.8	%

The ~~decreases~~decrease in Segment operating income ~~and Segment operating margin were~~was primarily driven by unfavorable volume/product mix, unfavorable foreign currency exchange rate movements and increased investment spending. These decreases were partially offset by pricing and productivity improvements in excess of inflation, a year-over-year decrease in restructuring and acquisition expenses and the beneficial impact of a prior year acquisition and the divestiture of Milre.

Segment operating income for the nine months ended September 30, 2022, decreased $8.1 million compared to the same period in 2021, and Segment operating margin for the nine months ended September 30, 2022, decreased to 8.5% from 9.2%, due to the following:

In millions Operating Income Operating Margin
September 30, 2021 $ 54.0 9.2 %
Pricing and productivity in excess of inflation 15.9 2.1 %
Volume / product mix (7.1) (0.9) %
Currency exchange rates (13.1) (1.4) %
Investment spending (4.2) (0.6) %
Acquisitions / divestitures 1.8 0.3 %
Restructuring / acquisition expenses (1.4) (0.2) %
September 30, 2022 $ 45.9 8.5 %

The decreases in Segment operating income and Segment operating margin were primarily driven by unfavorable volume/product mix, unfavorable foreign currency exchange rate movements, increased investment spending and a year-over-year increase in restructuring and acquisition expenses. These decreases were partially offset by pricing and productivity improvements in excess of inflation and investment spending and the ~~beneficial~~favorable impact ~~of a prior year~~to Segment operating income from recent acquisition and divestiture activity.

The decrease in Segment operating margin was primarily driven by unfavorable volume/product mix, unfavorable foreign currency exchange rate movements, a year-over-year increase in restructuring and acquisition expenses and the ~~divestitures of QMI~~impact to Segment operating margin from inflation and ~~Milre.~~investment spending, which exceeded the impact to Segment operating margin from pricing and productivity improvements. These decreases were partially offset by the favorable impact to Segment operating margin from recent acquisition and divestiture activity.

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~~borrowing capacity under ~~our~~the 2021 Revolving Facility and our access to the capital and credit markets enable us to fund these capital needs, execute our long-term growth strategies and return value to our shareholders. Further, our business operates with strong operating cash flows, low leverage and low capital intensity, providing financial flexibility, including sufficient access to credit markets.

While the financing of our acquisition of the Access Technologies business has increased our leverage, we remain comfortably within all our financial covenants. Further, we do not believe this acquisition or the related financing will diminish our sound financial position or our ability to meet ourOur short-term ~~financing needs. Short-term~~ financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, dividend payments and principal and interest payments on our long-term debt. 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. ~~Further, of~~Of our total outstanding indebtedness ~~at September 30, 2022,~~as of March 31, 2023, approximately ~~80%~~85% incurs fixed-rate interest and is therefore not exposed to the risk of rising variable interest rates.

~~Table of Contents~~

Based upon our operations, existing cash balances and unused ~~availability~~borrowing capacity under ~~our~~the 2021 Revolving Facility, as of ~~September 30, 2022,~~March 31, 2023, we expect our cash flows from operations towill be sufficient to maintain a sound financial position and liquidity and to meet our current financing needs for at least the next 12 months. Further, we do not anticipate any covenant compliance challenges with any of our outstanding indebtedness for at least the next 12 months. We also believe ~~the availability~~existing borrowing capacity under ~~our~~the 2021 Credit Facilities, ~~and access~~together with financing we believe would be accessible to us in the 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 ~~nine~~three months ended ~~September 30.~~March 31. For additional details, see the Condensed and Consolidated Statements of Cash Flows in the Condensed and Consolidated Financial Statements.


In millions	In millions	2022		2021		In millions	2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	267.1	$	356.4	Net cash provided by operating activities	$	69.0	$	20.5
Net cash used in investing activities	Net cash used in investing activities	(965.9)		(14.9)		Net cash used in investing activities	(51.4)		(6.3)
Net cash provided by (used) in financing activities		606.1		(309.3)
Net cash used in financing activities						Net cash used in financing activities	(15.4)		(104.9)

Operating Activities: Net cash provided by operating activities during the ~~nine~~three months ended ~~September 30, 2022, decreased $89.3~~March 31, 2023, increased $48.5 million compared to the same period in ~~2021,~~2022, primarily driven by increased Net earnings and changes in working ~~capital and decreased Net earnings.~~capital.

Investing Activities: Net cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, increased ~~$951.0~~$45.1 million compared to the same period in ~~2021,~~2022, primarily due to ~~$923.1~~$36.6 million of cash paid for the plano acquisition ~~of the Access Technologies business.~~and increased capital expenditures related to a new manufacturing facility.

Financing Activities: Net cash ~~provided by (used in)~~used in financing activities during the ~~nine~~three months ended ~~September 30, 2022, fluctuated $915.4~~March 31, 2023, decreased $89.5 million compared to the same period in ~~2021,~~2022, primarily due to ~~the issuance~~a reduction of ~~our 5.411% Senior Notes and draw on our 2021 Revolving Facility to finance the acquisition of the Access Technologies business. Additionally,~~$61.0 million in cash used to repurchase ordinary shares ~~was $151.7~~and a $30.0 million ~~lower in 2022 compared to~~draw on the ~~same period in 2021.~~2021 Revolving Facility during the three months ended March 31, 2023.

Table of Contents

Capitalization

Long-term debt and other borrowings consisted of the following:


In millions	In millions	September 30, 2022		December 31, 2021		In millions	March 31, 2023		December 31, 2022
2021 Term Facility	2021 Term Facility	$	240.6	$	250.0	2021 Term Facility	$	234.4	$	237.5
2021 Revolving Facility	2021 Revolving Facility	199.0		—		2021 Revolving Facility	99.0		69.0
3.200% Senior Notes due 2024	3.200% Senior Notes due 2024	400.0		400.0		3.200% Senior Notes due 2024	400.0		400.0
3.550% Senior Notes due 2027	3.550% Senior Notes due 2027	400.0		400.0		3.550% Senior Notes due 2027	400.0		400.0
3.500% Senior Notes due 2029	3.500% Senior Notes due 2029	400.0		400.0		3.500% Senior Notes due 2029	400.0		400.0
5.411% Senior Notes due 2032	5.411% Senior Notes due 2032	600.0		—		5.411% Senior Notes due 2032	600.0		600.0
Other debt	Other debt	0.2		0.3		Other debt	0.2		0.2
Total borrowings outstanding	Total borrowings outstanding	2,239.8		1,450.3		Total borrowings outstanding	2,133.6		2,106.7
Discounts and debt issuance costs, net	Discounts and debt issuance costs, net	(12.7)		(8.2)		Discounts and debt issuance costs, net	(11.7)		(12.2)
Total debt	Total debt	2,227.1		1,442.1		Total debt	2,121.9		2,094.5
Less current portion of long-term debt	Less current portion of long-term debt	12.6		12.6		Less current portion of long-term debt	12.6		12.6
Total long-term debt	Total long-term debt	$	2,214.5	$	1,429.5	Total long-term debt	$	2,109.3	$	2,081.9

~~As of September 30, 2022, we have~~We are party to an unsecured ~~Credit Agreement in place,~~credit agreement consisting of a $250.0 million term loan facility (the “2021 Term Facility”), of which ~~$240.6~~$234.4 million iswas outstanding at ~~September 30, 2022,~~March 31, 2023, and a $500.0 million revolving credit facility (the “2021 Revolving Facility” and, together with the 2021 Term Facility, the “2021 Credit Facilities”)., of which $99.0 million was outstanding at March 31, 2023. The 2021 Credit Facilities mature on November 18, 2026.

The 2021 Term Facility ~~will amortize~~amortizes in quarterly installments at the following rates: 1.25% per quarter starting March 31, 2022 through March 31, 2025, 2.5% per quarter starting June 30, 2025 through September 30, 2026, with the balance due on November 18, 2026. We repaid $3.1 million of principal on the 2021 Term Facility during the three months ended March 31, 2023. Principal amounts repaid on the 2021 Term Facility may not be reborrowed.

The 2021 Revolving Facility provides aggregate commitments of up to $500.0 million, ~~which includes~~including up to $100.0 million for the issuance of letters of credit. ~~On July 1, 2022, we borrowed $340.0 million on the 2021 Revolving Facility to partially fund the acquisition of the Access Technologies business.~~ We ~~subsequently made $141.0 million in repayments, resulting in $199.0 million borrowings outstanding as of September 30, 2022, and we~~ had ~~$7.6~~$13.4 million of letters of credit ~~outstanding. Commitments~~outstanding at March 31, 2023. Borrowings under the 2021 Revolving Facility may be ~~reduced~~repaid at any time without premium or penalty, and amounts repaid may be reborrowed.

~~Table of Contents~~

Outstanding borrowings under the 2021 Credit Facilities accrue interest, at ~~our~~the option ofequal to either: (i) a Bloomberg Short-Term Bank Yield Index ("BSBY") rate plus ~~the~~an applicable margin or (ii) a base rate plus the applicable margin. The applicable margin ranges from 0.875% to 1.375% depending on our credit ratings. At ~~September 30, 2022,~~March 31, 2023, outstanding borrowings under the 2021 Credit Facilities ~~accrue~~accrued interest at BSBY plus a margin of 1.125%, resulting in an interest rate of ~~4.241%~~6.019%. The 2021 Credit Facilities also contain negative and affirmative covenants and events of default that, among other things, limit or restrict our ability to enter into certain transactions. In addition, the 2021 Credit Facilities require us to comply with a maximum leverage ratio as defined within the credit agreement. As of ~~September 30, 2022,~~March 31, 2023, we were in compliance with all ~~covenants.~~applicable covenants under the credit agreement.

~~On June 22, 2022,~~As of March 31, 2023, Allegion US Hold Co issued $600.0 million aggregate principal amount of its 5.411% Senior Notes due 2032 (the “5.411% Senior Notes”). The 5.411% Senior Notes require semi-annual interest payments on January 1 and July 1, beginning January 1, 2023, and will mature on July 1, 2032. We incurred and deferred $5.9 million of discounts and financing costs associated with the 5.411% Senior Notes, which will be amortized to Interest expense over their 10-year term, as well as $4.3 million of third party financing costs that were recorded within Interest expense on the Condensed and Consolidated Statement of Income for the nine months ended September 30, 2022.

~~As of September 30, 2022, Allegion US Hold Co also~~ has $400.0 million outstanding of its 3.200% Senior Notes due 2024 (the “3.200% Senior Notes”) ~~and~~, $400.0 million outstanding of its 3.550% Senior Notes due 2027 (the “3.550% Senior Notes”) and $600.0 million outstanding of its 5.411% Senior Notes due 2032 (the "5.411% Senior Notes"), while 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 3.200% Senior Notes, 3.550% Senior Notes and 3.500% Senior Notes all require semi-annual interest payments on April 1 and October 1 of each year and will mature on October 1, 2024, 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, beginning January 1, 2023, and will mature on July 1, 2032.

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 ~~September 30, 2022,~~March 31, 2023, we analyzed our working capital requirements and the potential tax liabilities that would be incurred if certain subsidiaries made distributions and concluded that no material changes to our historic permanent reinvestment assertions are required.

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 better matching the characteristics of the plan assets to that of the plan liabilities. Global asset allocation decisions are based on a dynamic approach whereby a plan’s allocation to fixed income assets increases as the funded status increases. We monitor plan funded status, asset allocation and the impact of market conditions on our defined benefit plans regularly in

Table of Contents

addition to investment manager performance. For further details on pension plan activity, see Note 109 to the Condensed and Consolidated Financial Statements.

For a further discussion of Liquidity and Capital Resources, refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Guarantor Financial Information

Allegion US Hold Co is the issuer of the 3.200% Senior Notes, 3.550% Senior Notes, and 5.411% Senior Notes and is the guarantor of the 3.500% Senior Notes. Allegion plc (the “Parent”) is the issuer of the 3.500% Senior Notes and is the guarantor of the 3.200% Senior Notes, 3.550% Senior Notes, and 5.411% Senior Notes. 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 3.200% Senior Notes, 3.550% Senior Notes, and 5.411% Senior Notes are senior unsecured obligations of Allegion US Hold Co and rank equally with all of Allegion US Hold Co’s existing and future senior unsecured and unsubordinated indebtedness. The guarantee of the 3.200% Senior Notes, 3.550% Senior Notes, and 5.411% Senior Notes is the senior unsecured obligation of the Parent and ranks equally with all of the Parent’s existing and future senior unsecured and unsubordinated indebtedness. The 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 Guarantor could guarantee without such Guarantee constituting a fraudulent conveyance; this

~~Table of Contents~~

limitation, however, may not be effective to prevent such Guarantee from constituting a fraudulent 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 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 Guarantor.

For further details, terms and conditions of the Senior Notes refer to the Company’s Forms 8-K filed October 2, 2017, September 27, 2019, and June 22, 2022.

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


		Nine months ended September 30, 2022				Year ended December 31, 2021					Three months ended March 31, 2023				Year ended December 31, 2022
In millions	In millions	Allegion plc		Allegion US Hold Co		Allegion plc		Allegion US Hold Co		In millions	Allegion plc		Allegion US Hold Co		Allegion plc		Allegion US Hold Co
Net revenues	Net revenues	$	—	$	—	$	—	$	—	Net revenues	$	—	$	—	$	—	$	—
Gross profit	Gross profit	—		—		—		—		Gross profit	—		—		—		—
Operating loss	Operating loss	(5.2)		(14.4)		(6.6)		(0.5)		Operating loss	(1.6)		(0.1)		(6.7)		(14.4)
Equity earnings in affiliates, net of tax	Equity earnings in affiliates, net of tax	353.8		126.9		521.6		173.6		Equity earnings in affiliates, net of tax	137.2		62.1		505.9		195.5
Transactions with related parties and subsidiaries(a)	Transactions with related parties and subsidiaries(a)	(10.5)		(61.3)		(12.5)		(85.0)		Transactions with related parties and subsidiaries(a)	(4.9)		(18.9)		(21.1)		(79.6)
Net earnings	Net earnings	322.7		43.1		483.0		87.1		Net earnings	123.5		35.3		458.0		85.0
Net earnings attributable to the entity	Net earnings attributable to the entity	322.7		43.1		483.0		87.1		Net earnings attributable to the entity	123.5		35.3		458.0		85.0

(a) Transactions with related parties and subsidiaries include intercompany interest and fees.

~~Selected Condensed Balance Sheet Information~~
September 30, 2022 December 31, 2021
In millions Allegion plc Allegion US
Hold Co Allegion plc Allegion US
Hold Co
Current assets:
Amounts due from related parties and subsidiaries $ — $ 314.0 $ 0.6 $ 753.7
Total current assets 10.2 344.2 60.8 785.5
Noncurrent assets:
Amounts due from related parties and subsidiaries — 1,647.8 — 1,240.9
Total noncurrent assets 1,792.6 1,710.3 1,793.1 1,292.7
Current liabilities:
Amounts due to related parties and subsidiaries $ 75.2 $ 273.0 $ 62.8 $ 233.9
Total current liabilities 98.1 296.7 82.6 241.3
Noncurrent liabilities:
Amounts due to related parties and subsidiaries 576.4 2,694.5 761.8 2,660.5
Total noncurrent liabilities 1,201.8 4,260.9 1,396.5 3,466.9

3023

Table of Contents

Selected Condensed Balance Sheet Information


	March 31, 2023				December 31, 2022
In millions	Allegion plc		Allegion US Hold Co		Allegion plc		Allegion US Hold Co
Current assets:
Amounts due from related parties and subsidiaries	$	—	$	382.9	$	—	$	380.2
Total current assets	11.2		403.7		3.3		417.4
Noncurrent assets:
Amounts due from related parties and subsidiaries	—		1,543.8		—		1,523.9
Total noncurrent assets	1,792.5		1,623.6		1,792.6		1,596.6
Current liabilities:
Amounts due to related parties and subsidiaries	$	44.8	$	546.0	$	45.9	$	278.8
Total current liabilities	67.9		568.6		65.3		303.5
Noncurrent liabilities:
Amounts due to related parties and subsidiaries	720.5		2,465.9		659.5		2,694.5
Total noncurrent liabilities	1,340.0		3,968.0		1,282.0		4,166.1

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Condensed and Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with those accounting principles requires management to use judgments 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, revenue 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.

Management believes there have been no significant changes during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, to the items we disclosed as our critical accounting policies in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Recent Accounting Pronouncements

~~See Note 2~~There have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our ~~Condensed and Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements.~~consolidated financial statements.

Forward-Looking Statements

Certain statements in this report, other than purely historical information, are ~~“forward-looking statements”~~"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.~~1934, as amended (the "Exchange Act"). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will"believe," "project," "expect," "anticipate," "estimate," "forecast," "outlook," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be,~~” “will~~" "will continue,~~” “will~~" "will likely result,”" or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements.

Forward-looking statements may relate to such matters as: statements regarding the continued impacts of the global COVID-19 pandemic, supply chain constraints, electronic component and labor shortages, inflation, rising freight and material costs, impacts of Russia's invasion of Ukraine, including further supply chain disruptions and the increased risk of cyber-attacks in connection with such invasion, projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. 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. ~~You are advised to review any further disclosures we make on related subjects in materials we file with or furnish to the SEC.~~ 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. We do not undertake to update any forward-looking statements.~~

~~Factors that might affect our forward-looking statements include,~~projections including, among other things:

•~~adverse impacts to our business operations due to the global COVID-19 pandemic~~ongoing macroeconomic challenges and ~~our ability to predict the full extent of such impacts;~~continued economic instability;

•~~competitive factors in the industry in which we compete, including technological developments~~increased prices and ~~increased competition from private label brands;~~inflation;

•~~the development, commercialization~~volatility and ~~acceptance of new products and services that meet the varied and evolving needs of our customers;~~

•~~the demand for our products and services, including changes in customer and consumer preferences, and our ability to maintain beneficial relationships with large customers;~~

•~~our products or solutions fail to meet certification and specification requirements, are defective or otherwise fall short of customers’ needs and expectations;~~

•~~the ability to complete and integrate any acquisitions and/or losses related to our investments in external companies;~~

~~Table of Contents~~

•~~business opportunities that diverge from our core business;~~

•~~our ability to operate efficiently and productively;~~

•~~our ability to effectively manage and implement restructuring initiatives or other organizational changes;~~

•~~the effects of global climate change or other unexpected events, including global health crises, that may disrupt our operations;~~

•our ability to manage risks related to our information technology and operational technology systems and cybersecurity, including implementation of new processes that may cause disruptions and be more difficult, costly or time consuming than expected;

•our reliance on third-party vendors for many of the critical elements of our global information and operational technology infrastructure and their failure to provide effective support for such infrastructure;

•~~disruption and breaches of our information systems;~~

•~~ability to recruit and retain a highly qualified and diverse workforce;~~

•disruptions in our global supply chain, including supply chain constraints, electronic component and labor shortages and product manufacturing and logistical services provided by our supplier partners;

•~~availability of and increased inflation impacting the prices of raw materials, parts and components, freight, packaging, labor and energy;~~

•~~economic, political and business conditions~~uncertainty in the ~~markets~~political, economic and regulatory environments in which we operate, including changes to trade agreements, sanctions, import and export regulations, custom duties and ~~custom duties;~~applicable tax regulations and interpretations, social and political unrest, instability, national and international conflict, terrorist acts and other geographical disputes and uncertainties;

•~~conditions~~the strength and stability of the institutional, commercial and residential construction and remodeling ~~markets, including the impact~~markets;

Table of ~~work-from-home trends;~~Contents

•fluctuations in currency exchange rates;

•potential impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets;

•~~interest rate fluctuations~~instability in the U.S. and ~~other changes in borrowing costs, in addition~~global capital and credit markets;

•our ability to ~~risks associated with~~make scheduled debt payments or to refinance our ~~outstanding and future indebtedness;~~debt obligations;

•increased competition, including from technological developments;

•the ~~impact our outstanding indebtedness may have on our business~~development, commercialization and ~~operations~~acceptance of new products and ~~other capital market conditions, including availability of funding sources and currency exchange rate fluctuations;~~services;

•~~risks~~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, such as COVID-19;

•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;

•~~the~~our ability to protect our brand reputation and trademarks;

•~~the outcome~~legal judgments, fines, penalties or settlements imposed against us or our assets as a result of ~~any litigation, governmental investigations or proceedings;~~legal proceedings, claims and disputes;

•claims of infringement of intellectual property rights by third parties;

•~~adverse publicity or~~ 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;~~regulations in the countries in which we operate;

•changes in tax ~~requirements, including tax rate changes,~~rates, the adoption of new tax legislation or exposure to additional tax ~~liabilities and revised tax law interpretations;~~liabilities; and

•risks related to our incorporation in Ireland, including the possible effects on us of future legislation or ~~interpretations in the U.S.~~adverse determinations by taxing authorities that ~~may limit or eliminate potential U.S.~~could increase our tax ~~benefits resulting from our incorporation in a non-U.S. jurisdiction, such as Ireland, or deny U.S. government contracts to us based upon our incorporation in such non-U.S. jurisdiction.~~burden.

~~Some of the significant~~These events, risks and uncertainties ~~that could cause actual results to differ materially from our expectations and projections~~ are described more fully in the “Risk Factors” section of ~~this Quarterly Report on Form 10-Q and~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. There may also be other factors that have not been anticipated or that are not described in our periodic filings with the SEC, generally because we did not believe them to be significant at the time, which could cause actual results to differ materially from our projections and expectations. We do not undertake to update any forward-looking statements.

~~Table of Contents~~

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our exposure to market risk during the ~~third~~first quarter of ~~2022.~~2023. For a discussion of the Company’s exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 4 – Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities Exchange Act of 1934, as amended (the~~ Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of ~~September 30, 2022,~~March 31, 2023, that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this Quarterly Report on Form 10-Q has been recorded,

Table of Contents

processed, summarized and reported when required and the information is 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.

There have not been any changes in the Company’s internal control over financial reporting that occurred during the ~~third~~first quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

3326

Table of Contents

PART II – OTHER INFORMATION

Item 1 – 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, labor and employment matters, product liability claims, environmental liabilities, antitrust and trade regulation matters, 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.

Item 1A – Risk Factors

There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the period ended December 31, ~~2021.~~2022. For a further discussion of our Risk Factors, refer to the “Risk Factors” discussion contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

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 2020 Share Repurchase Authorization (000s)	Approximate dollar value of shares still available to be purchased under the 2020 Share Repurchase Authorization (000s)
January 1 - January 31	—	$	—	—	$	140,454
February 1 - February 28	—	—		—	140,454
March 1 - March 31	—	—		—	140,454






~~July 1 - July 31~~	—	$	—	—	$	~~140,454~~
~~August 1 - August 31~~	—	—		—	~~140,454~~
~~September 1 - September 30~~	—	—		—	~~140,454~~
Total	—	$	—	—	$	140,454

On February 6, 2020, our Board of Directors approved a share repurchase authorization of up to, and including, $800 million of the Company’s ordinary shares (the "2020 Share Repurchase Authorization"). The 2020 Share Repurchase Authorization does not have a prescribed expiration date. Based on market conditions, share repurchases are made from time to time in the open market at the discretion of management.

3427

Table of Contents

Item 6 – Exhibits

(a) Exhibits

Exhibit No.

Description

Method of Filing

3.1

Amended and restated Memorandum and Articles of Association of Allegion plc.

Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on June 13, 2016 (File No. 001-35971).

~~10.1~~

John H. Stone Restricted Stock Unit Award Agreement dated August 1, 2022.*

~~Filed herewith.~~

~~10.2~~

John H. Stone Stock Option Award Agreement dated August 1, 2022.*

~~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 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith.

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.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith.

101.LAB

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.

* Compensatory plan or arrangement.

3528

Table of Contents

ALLEGION PLC

SIGNATURES

Pursuant to the requirements 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)

Date:	~~October 27, 2022~~April 26, 2023	/s/ Michael J. Wagnes
		Michael J. Wagnes, Senior Vice President and Chief Financial Officer Principal Financial Officer

Date:	~~October 27, 2022~~April 26, 2023	/s/ Nickolas A. Musial
		Nickolas A. Musial, Vice President, Controller and Chief Accounting Officer Principal Accounting Officer

3629


In millions	Cash flow hedges		Pension and OPEB items		Foreign currency items		Total
December 31, 2021	$	0.9	$	(96.0)	$	(99.3)	$	(194.4)
Other comprehensive income (loss) before reclassifications	8.8		10.0		(159.8)		(141.0)
Amounts reclassified from accumulated other comprehensive loss(a)	(0.1)		1.3		1.6		2.8
Tax (expense) benefit	(0.6)		0.7		—		0.1
September 30, 2022	$	9.0	$	(84.0)	$	(257.5)	$	(332.5)


	Three months ended September 30, 2022						Nine months ended September 30, 2022
In millions	Allegion Americas		Allegion International		Total		Allegion Americas		Allegion International		Total
Net revenues
Products	$	714.6	$	156.8	$	871.4	$	1,834.0	$	519.5	$	2,353.5
Services	32.6		9.7		42.3		33.7		23.2		56.9
Total Net revenues	$	747.2	$	166.5	$	913.7	$	1,867.7	$	542.7	$	2,410.4


	Three months ended September 30, 2021						Nine months ended September 30, 2021
In millions	Allegion Americas		Allegion International		Total		Allegion Americas		Allegion International		Total
Net revenues
Products	$	524.1	$	185.5	$	709.6	$	1,571.2	$	563.9	$	2,135.1
Services	0.3		7.1		7.4		1.5		21.6		23.1
Total Net revenues	$	524.4	$	192.6	$	717.0	$	1,572.7	$	585.5	$	2,158.2