Dear Allegion Shareholders,

One year ago, I shared with you a sharpened company strategy centered on seamless access and supported by five strategic pillars:

  • Expand in core markets.
  • Deliver new value in access.
  • Be the partner of choice.
  • Enterprise excellence.
  • Capital allocation. 

Today, I can assure you these priorities have never been more important – or more understood by the Allegion team.

In 2019, we made many long-term moves to align our business for a new decade of success. The work we completed in just 12 months reflects both difficult and strategic decisions as well as reinvestment in our company – from manufacturing equipment and facility upgrades, to new product development and digital transformation of both systems and mindsets. We exited operations in Turkey and transferred more production to Poland. We consolidated in Australia. We upgraded multiple legacy ERP systems. All of this and more was critical for Allegion’s future growth and strength – and the timing was right.  

Just as important, we recommitted to driving employee engagement and saw significant progress as a result. When we compare ourselves against peer manufacturers, we’ve moved from the 11th percentile to the 55th percentile of engaged workforces in five years’ time. In tandem, we’re investing to upskill and reskill our manufacturing workforce. Industrial IoT solutions, along with advancements in automation and technology, have put a new emphasis on programming, problem solving and data analysis on the shop floor. Through unique apprenticeship programs and efforts to attract young talent to our industry, we are positioning our team well for the future. While we still have work to do, I couldn’t be prouder of Allegion for embracing our values and having a passion for excellence when it comes to workforce development. Employee engagement and strong talent are defining factors in the future success of our business. Investing in the skills of our people is the right thing to do. 

I’m also proud to say we drove results for our shareholders. In 2019, Allegion’s global organic revenue growth of 4.6 percent was at the top in our industry. Our Americas region achieved 10 percent electronics growth. As we navigated the global economy, strong pricing, volume leverage and productivity led to a fullyear adjusted operating margin increase of 70 basis points. Our 2019 adjusted net earnings per share (EPS) of $4.89 reflected an 8.7 percent increase compared to 2018. What’s more, the pulse of our business – our cash flow – remained strong at $422.6 million for 2019, a $13.9 million increase. In 2019 alone, our total shareholder return grew by 58 percent, surpassing both our industry and the S&P 500 average. We are laserfocused on the financial strength of our business and on delivering on our promises to you.  

Additionally, I’m pleased to share the improvements Allegion has made to our environmental, health, safety and sustainability impacts as a responsible global company. We are a values-driven organization, and our people truly care about the way we work and how it affects the well-being of our communities. There’s no better way to demonstrate that than through this fact: In 2019, Allegion had no environmental violations and 

no safety violations. We realized year-over-year improvements in sustainability metrics*, like greenhouse gas emissions (6-percent reduction) and water usage (4-percent reduction). We saw a 21-percent reduction in our Total Recordable Incident Rate (TRIR) and a 46-percent improvement in the number of losttime days. Allegion also has one of the safest workforces in the world – a powerful reflection of our be safe, be healthy value – with an incident rate that’s 85 percent below the 2018 U.S. industry average.** 

At the same time, we raised our awareness of, and attentiveness to, customer satisfaction in 2019. We created a new chief customer and digital officer role to further advance Allegion’s focus on customer advocacy and bring us closer to our customers, while also continuing to improve our digital business capabilities and execution. We leaned into customer excellence, working to take the pulse of our customers, ask the right questions and, importantly, listen to the answers. We used customer needs to guide our digital transformation and innovation. As a result, we’ve blended our mechanical capabilities and expertise with edge devices. We launched products like the Schlage Encode™ Smart Wifi Deadbolt, which was a first-of-its-kind in our industry. We scaled our popular digital specification tool, Overtur™, globally. We also established a chief innovation and design officer role and built new partnerships through Allegion Ventures and our company’s other innovation engines, creating new value in access.  

As I look ahead, I can’t help but see opportunity on the horizon for Allegion: Opportunity to continue driving industry-leading performance and shareholder value. Opportunity to delight our customers through best-in-class experiences. Opportunity to sharpen our focus on our values and engagement. Opportunity to create a safer world through seamless access.

Yes, there will be challenges ahead. The start of 2020 has made that clear. But you can take on great challenges with an engaged workforce, financial strength, legacy brands that have stood the test of time and a steady focus. Our vision of seamless access and a safer world will continue to be our lighthouse – and we’re energized by the endless opportunities it brings.

Our best days are ahead of us, at Allegion.

Sincerely,

David Petratis

Chairman, President & Chief Executive Officer

Allegion plc

5.4%

CAGR, organic growth (6-year) 

$11.57

Billion market cap  
(as of Dec. 31, 2019)

203%

Total shareholder return since spin 
(as of Dec. 31, 2019)

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Media:
Whitney Moorman - Reputation Management Leader
+1.317.810.3241
Whitney.Moorman@allegion.com

Analysts:
Tom Martineau  - Vice President, Treasury and Investor Relations
+1.317.810.3759
Tom.Martineau@allegion.com