- First-quarter 2017 net earnings per
share (EPS) of $0.71, compared with 2016 EPS of $0.60; Adjusted
2017 EPS of $0.73, up 19.7 percent compared with 2016 adjusted EPS
of $0.61, attributable to strong operational performance
- First-quarter 2017 revenue of $548.8
million, up 9.3 percent compared to 2016, up 8 percent on an
organic basis
- First-quarter 2017 operating margin
of 18 percent, compared with 2016 operating margin of 16.4 percent;
Adjusted operating margin of 18.3 percent, improved 150 basis
points compared with 2016 adjusted operating margin of 16.8
percent
- Affirming prior guidance for 2017
full-year revenue and raising full-year EPS outlook; Full-year 2017
reported and organic revenue growth of 5.5 to 6.5 percent;
Full-year 2017 EPS guidance of $3.57 to $3.72 and $3.60 to $3.75
per share on an adjusted basis
Allegion plc (NYSE: ALLE), a
leading global provider of security products and solutions, today
reported first-quarter 2017 net revenues of $548.8 million and net
earnings of $68.4 million, or $0.71 per share. Excluding charges
related to restructuring and acquisitions, adjusted net earnings
were $69.7 million, or $0.73 per share, up 19.7 percent when
compared with first-quarter 2016 adjusted EPS of $0.61.
First-quarter net revenues increased 9.3 percent, when compared
to the prior year period (up 8 percent on an organic basis).
Reported revenues reflect strong organic growth and contribution
from acquisitions that were partially offset by foreign
currency.
The Americas segment revenue increased 12.3 percent (up 10.3
percent on an organic basis). The robust growth was driven by
low-double digit organic growth in non-residential markets, solid
performance of strategic initiatives and delayed shipments in prior
year related to an ERP implementation. The newly acquired Republic
Door business and favorable foreign currency also added to overall
growth. In the residential business, revenues grew mid-single
digits driven by solid markets and improved pricing.
“Allegion continues to perform at a superior level as
demonstrated by our strong start in 2017,” said David D. Petratis,
Allegion chairman, president and CEO. “In the first quarter, the
Americas led that success through our channel initiatives,
electronics growth and strong market demand in both non-residential
and residential businesses.”
The EMEIA segment revenues were down 0.1 percent (up 1.3 percent
on an organic basis), reflecting unfavorable foreign currency
predominantly offset by organic growth and contribution from
acquisitions. The organic growth was primarily driven by improved
price realization and solid growth in the SimonsVoss business.
The Asia Pacific segment revenues increased 9.6 percent, when
compared to the prior year period (up 4.8 percent on an organic
basis). The strong growth in Australia and New Zealand added to
favorable contributions from acquisitions and favorable foreign
currency.
First-quarter 2017 operating income was $98.8 million, an
increase of $16.3 million or 19.8 percent over 2016. Adjusted
operating income in first-quarter 2017 was $100.7 million,
representing an increase of $16.1 million or 19 percent compared to
2016.
First-quarter 2017 operating margin was 18 percent, compared
with 16.4 percent in 2016. The adjusted operating margin in
first-quarter 2017 was 18.3 percent, compared with 16.8 percent in
2016. The 150-basis-point improvement in adjusted operating margin
was driven by strong volume leverage along with favorable price,
productivity and product mix that more than offset increased
investments and inflation. All regions delivered adjusted operating
margin improvement in the quarter.
“We continue to deliver profitable growth by remaining laser
focused on the execution of our strategy. The strong returns that
we see from our organic investments are key to driving above-market
growth and increasing shareholder value,” Petratis added.
Additional Items
Interest expense for first-quarter 2017 was $15.9 million, down
slightly from the $16.3 million for first-quarter 2016.
Other expense net for first-quarter 2017 was $0.6 million. This
compares to other income net for first-quarter 2016 of $8.8
million, which included contributions from the sale of
non-strategic marketable securities.
The company’s effective tax rate for first-quarter 2017 was 16.5
percent, compared with 21.6 percent in 2016. The company’s adjusted
effective tax rate for first-quarter 2017 was 16.9 percent,
compared with 21.8 percent in 2016. The decrease in the adjusted
effective tax rate is primarily due to favorable discrete tax items
partially offset by mix of income earned in higher tax rate
jurisdictions.
Cash Flow and Liquidity
Year-to-date 2017 available cash flow was negative $48.7
million, down $40.5 million versus the prior year. The
year-over-year decrease in available cash flow is
primarily due to a previously announced $50 million discretionary
pension funding payment partially offset by increased earnings.
The company ended first-quarter 2017 with cash of $189.6 million
and total debt of $1,451.9 million. The company did not have any
borrowings outstanding under its $500 million revolving credit
facility at March 31, 2017.
Share Repurchase
During the first quarter of 2017, the company repurchased
approximately 0.4 million shares for approximately $30 million
related to the $500 million share repurchase authorization approved
by the company's board of directors in February 2017.
2017 Outlook
The company affirms full-year 2017 revenue guidance reflecting
total growth and organic growth of 5.5 to 6.5 percent compared to
2016.
The company updated the full-year 2017 reported EPS with a range
of $3.57 to $3.72, or $3.60 to $3.75 per share on an adjusted
basis. Adjustments to 2017 EPS include estimated impacts for
restructuring and acquisition activities. The guidance assumes a
full-year adjusted effective tax rate of approximately 18.5 to 19.5
percent, as well as an average diluted share count for the full
year of approximately 96 million shares.
The company continues to target full-year available cash
flow of approximately $300 to $320 million (inclusive of the $50
million discretionary pension funding payment).
Conference Call Information
On Thursday, April 27, 2017, David D. Petratis,
chairman, president and CEO, and Patrick Shannon, senior vice
president and chief financial officer, will conduct a conference
call for analysts and investors, beginning at 8 a.m. ET,
to review the company's results.
A real-time, listen-only webcast of the conference call will be
broadcast live online. Individuals wishing to listen may access the
call through the company's website
at http://investor.allegion.com.
About Allegion™
Allegion (NYSE: ALLE) is a global pioneer in safety and
security, with leading brands like CISA®, Interflex®, LCN®,
Schlage®, SimonsVoss® and Von Duprin®. Focusing on security
around the door and adjacent areas, Allegion produces a range of
solutions for homes, businesses, schools and other institutions.
Allegion is a $2 billion company, with products sold in
approximately 130 countries.
For more, visit www.allegion.com.
Non-GAAP Measures
This news release also includes adjusted non-GAAP financial
information which should be considered supplemental to, not a
substitute for, or superior to, the financial measure calculated in
accordance with GAAP. Further information about the adjusted
non-GAAP financial tables is attached to this news release.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding the Company's 2017 financial
performance, the Company’s growth strategy, the Company’s capital
allocation strategy, the Company’s tax planning strategies, and the
performance of the markets in which the Company operates. These
forward-looking statements are based on the Company's current
available information and its current assumptions, expectations and
projections about future events. They are subject to future
events, risks and uncertainties - many of which are
beyond the Company’s control - as well as potentially
inaccurate assumptions, that could cause actual results to differ
materially from those in the forward-looking
statements. Further information on these factors and other
risks that may affect the Company's business is included in filings
it makes with the Securities and Exchange Commission from time to
time, including its Form 10-K for the year ended Dec. 31, 2016,
Form 10-Q for the quarter ended March 31, 2017, and in its other
SEC filings. The Company assumes no obligations to update
these forward-looking statements.
ALLEGION PLC Condensed and Consolidated
Income Statements (in millions, except per share data)
UNAUDITED
Three Months Ended March 31, 2017
2016 Net revenues $ 548.8 $ 502.3 Cost of goods sold
308.0 286.0 Gross profit 240.8 216.3 Selling
and administrative expenses 142.0 133.8 Operating
income 98.8 82.5 Interest expense 15.9 16.3 Other (income)
expense, net 0.6 (8.8 ) Earnings before income taxes 82.3
75.0 Provision for income taxes 13.6 16.2
Net earnings 68.7 58.8 Less: Net earnings
attributable to noncontrolling interests 0.3 1.1
Net earnings attributable to Allegion plc $ 68.4 $
57.7
Basic earnings per ordinary share
attributable to Allegion plc shareholders:
Net earnings $ 0.72 $ 0.60
Diluted earnings per ordinary share
attributable to Allegion plc shareholders:
Net earnings $ 0.71 $ 0.60 Shares outstanding
- basic 95.3 95.9 Shares outstanding - diluted 96.1 96.9
ALLEGION PLC Condensed and
Consolidated Balance Sheets (in millions)
UNAUDITED
March 31, 2017 December 31, 2016 ASSETS
Cash and cash equivalents $ 189.6 $ 312.4 Accounts and notes
receivables, net 268.9 260.0 Inventory 238.0 220.6 Other current
assets 45.7 36.3 Total current assets 742.2 829.3 Property,
plant and equipment, net 232.1 226.6 Goodwill 724.6 716.8
Intangible assets, net 368.2 357.4 Other noncurrent assets 118.3
117.3 Total assets $ 2,185.4 $ 2,247.4
LIABILITIES AND EQUITY Accounts payable $ 173.1 $ 179.9
Accrued expenses and other current liabilities 178.3 201.5
Short-term borrowings and current
maturities of long-term debt
47.1 48.2 Total current liabilities 398.5 429.6 Long-term
debt 1,404.8 1,415.6 Other noncurrent liabilities 227.1
285.8 Equity 155.0 116.4 Total liabilities and equity $
2,185.4 $ 2,247.4
ALLEGION PLC
Condensed and Consolidated Cash Flows (in millions)
UNAUDITED
Three Months Ended March 31, 2017
2016 Operating Activities Net earnings $ 68.7
$ 58.8 Depreciation and amortization 16.5 16.4 Discretionary
pension plan contribution (50.0 ) — Changes in assets and
liabilities and other non-cash items (76.1 ) (76.0 ) Net cash used
in operating activities (40.9 ) (0.8 )
Investing
Activities Capital expenditures (7.8 ) (7.4 ) Acquisition of
and equity investments in businesses, net of cash acquired (20.8 )
— Other investing activities, net 0.8 4.6 Net cash
used in investing activities (27.8 ) (2.8 )
Financing
Activities Net debt proceeds (repayments) (12.9 ) (28.3 )
Dividends paid to ordinary shareholders (15.2 ) (11.4 ) Repurchase
of ordinary shares (30.0 ) (30.0 ) Other financing activities, net
2.1 (5.1 ) Net cash used in financing activities (56.0 )
(74.8 ) Effect of exchange rate changes on cash and cash
equivalents 1.9 4.2 Net decrease in cash and cash
equivalents (122.8 ) (74.2 ) Cash and cash equivalents - beginning
of period 312.4 199.7 Cash and cash equivalents - end
of period $ 189.6 $ 125.5
SUPPLEMENTAL
SCHEDULES
ALLEGION PLC
SCHEDULE 1
SELECTED OPERATING SEGMENT INFORMATION (in
millions)
Three months ended March 31, 2017
2016 Net revenues Americas $ 407.6 $
363.0 EMEIA 118.4 118.5 Asia Pacific 22.8 20.8 Total
net revenues $ 548.8 $ 502.3
Operating
income (loss) Americas $ 107.6 $ 90.2 EMEIA 6.9 8.0 Asia
Pacific 0.6 (0.1 ) Corporate unallocated (16.3 ) (15.6 ) Total
operating income $ 98.8 $ 82.5
ALLEGION PLC SCHEDULE 2
The Company presents operating income, operating margin, net
earnings, diluted earnings per share (EPS), on both a U.S. GAAP
basis and on an adjusted basis, organic revenue growth on a U.S.
GAAP basis, and also presents adjusted EBITDA and adjusted EBITDA
margin. The Company presents these measures because management
believes they provide useful perspective of the Company’s
underlying business results, trends and a more comparable measure
of period-over-period results. These measures are also used to
evaluate senior management and are a factor in determining at-risk
compensation. Investors should not consider non-GAAP measures as
alternatives to the related GAAP measures.
The Company defines the presented non-GAAP measures as
follows:
- Adjustments to revenue, operating
income, operating margin, net earnings, EPS, and EBITDA include
items that are considered to be unusual or infrequent in nature
such as goodwill impairment charges, restructuring charges, asset
impairments, merger and acquisitions costs, and charges related to
the divestiture of businesses
- Organic revenue growth is defined as
U.S. GAAP revenue growth excluding the impact of divestitures,
acquisitions and currency effects
- Available cash flow is defined as U.S.
GAAP net cash operating activities less capital expenditures.
These non-GAAP measures may not be defined and calculated the
same as similar measures used by other companies.
RECONCILIATION OF GAAP TO NON-GAAP NET
EARNINGS (in millions, except per share data)
Three months ended March 31, 2017 Three months
ended March 31, 2016 Adjusted Adjusted (non-
(non- Reported Adjustments GAAP) Reported Adjustments GAAP) Net
revenues $ 548.8 $ — $ 548.8 $ 502.3 $ — $ 502.3 Operating
income 98.8 1.9
(1)
100.7 82.5 2.1
(1)
84.6 Operating margin 18.0 % 18.3 % 16.4 % 16.8 % Earnings
before income taxes 82.3 1.9
(2)
84.2 75.0 2.1
(2)
77.1 Provision for income taxes 13.6 0.6
(3)
14.2 16.2 0.6
(3)
16.8 Effective income tax rate 16.5 % 16.9 % 21.6 %
21.8 % Net earnings 68.7 1.3 70.0 58.8 1.5 60.3
Non-controlling interest 0.3 — 0.3 1.1
— 1.1 Net earnings attributable to Allegion
plc $ 68.4 $ 1.3 $ 69.7 $ 57.7 $ 1.5
$ 59.2
Diluted earnings per ordinary share
attributable to Allegion plc shareholders:
$ 0.71 $ 0.02 $ 0.73 $ 0.60 $ 0.01
$ 0.61
(1)
Adjustments to operating income for the three months ended March
31, 2017 and March 31, 2016 consist of $1.9 million and $2.1
million, respectively, of restructuring charges and merger and
acquisition expenses.
(2)
Adjustments to earnings before income taxes for the three months
ended March 31, 2017 and March 31, 2016 consist of the adjustments
to operating income discussed above.
(3)
Adjustments to the provision for income taxes for the three months
ended March 31, 2017 and March 31, 2016 consist of $0.6 million and
$0.6 million, respectively, of tax expense related to the excluded
items discussed above.
ALLEGION PLC
SCHEDULE 3
RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING
INCOME BY REGION (in millions) Three months
ended March 31, 2017 Three months ended March 31, 2016
As Reported Margin As Reported Margin
Americas Net revenues (GAAP) $ 407.6 $ 363.0
Operating income (GAAP) $ 107.6 26.4 % $ 90.2 24.8 % Restructuring
charges 0.2 — % 1.3 0.4 % Merger and acquisition costs — — %
0.1 — % Adjusted operating income 107.8 26.4 % 91.6 25.2 %
Depreciation and amortization 6.6 1.6 % 6.6 1.8 %
Adjusted EBITDA $ 114.4 28.0 % $ 98.2 27.0 %
EMEIA Net revenues (GAAP) $ 118.4 $ 118.5 Operating
income (GAAP) $ 6.9 5.8 % $ 8.0 6.8 % Restructuring charges 1.6 1.4
% 0.2 0.2 % Other charges — — % 0.1 — % Adjusted
operating income 8.5 7.2 % 8.3 7.0 % Depreciation and amortization
6.9 5.8 % 6.8 5.7 % Adjusted EBITDA $ 15.4
13.0 % $ 15.1 12.7 %
Asia Pacific Net revenues
(GAAP) $ 22.8 $ 20.8 Operating income (loss) (GAAP) 0.6 2.6
% (0.1 ) (0.5 )% Merger and acquisition costs — — % 0.1
0.5 % Adjusted operating income 0.6 2.6 % — — % Depreciation
and amortization 0.6 2.6 % 0.6 2.9 % Adjusted EBITDA
$ 1.2 5.2 % $ 0.6 2.9 %
Corporate
Operating loss (GAAP) $ (16.3 ) $ (15.6 ) Merger and acquisition
costs 0.1 0.3 Adjusted operating loss (16.2 ) (15.3 )
Depreciation and amortization 1.0 1.1 Adjusted EBITDA
$ (15.2 ) $ (14.2 )
Total Net revenues $ 548.8 $
502.3 Adjusted operating income 100.7 18.3 % 84.6 16.8 %
Depreciation and amortization 15.1 2.8 % 15.1 3.0 %
Adjusted EBITDA $ 115.8 21.1 % $ 99.7 19.8 %
ALLEGION PLC
SCHEDULE 4
RECONCILIATION OF CASH PROVIDED BY
OPERATING ACTIVITIES TO AVAILABLE CASH FLOW AND NET EARNINGS TO
ADJUSTED EBITDA
(in millions)
Three months ended March 31, 2017 2016
Net cash used in operating activities $ (40.9 )
(1)
$ (0.8 ) Capital expenditures (7.8 ) (7.4 ) Available cash flow $
(48.7 ) $ (8.2 )
(1) includes a $50.0 million discretionary
pension plan contribution
Three months ended March 31, 2017
2016
Net earnings (GAAP) $ 68.7 $ 58.8 Provision for income taxes 13.6
16.2 Interest expense 15.9 16.3 Depreciation and amortization 15.1
15.1 EBITDA 113.3 106.4 Other (income)
expense, net 0.6 (8.8 ) Merger and acquisition costs and
restructuring charges 1.9 2.1 Adjusted EBITDA $ 115.8
$ 99.7
ALLEGION
PLC
SCHEDULE 5
RECONCILIATION OF GAAP REVENUE GROWTH TO NON-GAAP ORGANIC
REVENUE GROWTH BY REGION Three Months Ended
March 31, 2017 2016
Americas Revenue growth (GAAP) 12.3 % 2.5 % Acquisitions and
Divestitures (1.7
)%
0.1 % Currency translation effects (0.3 )% 0.8 % Organic growth
(non-GAAP) 10.3 % 3.4 %
EMEIA Revenue growth (GAAP)
(0.1 )% 45.0 % Acquisitions and Divestitures (3.0 )% (44.4 )%
Currency translation effects 4.4 % 2.7 % Organic growth (non-GAAP)
1.3 % 3.3 %
Asia Pacific Revenue growth (GAAP) 9.6 %
(8.4 )% Acquisitions and Divestitures (1.9 )% 12.5 % Currency
translation effects (2.9 )% 3.9 % Organic growth (non-GAAP) 4.8 %
8.0 %
Total Revenue growth (GAAP) 9.3 % 9.5 %
Acquisitions and Divestitures (2.0 )% (7.2 )% Currency translation
effects 0.7 % 1.3 % Organic growth (non-GAAP) 8.0 % 3.6 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170427005355/en/
Allegion plcMediaMaria Pia Tamburri, 317-810-3399Director,
Public AffairsMaria.Tamburri@allegion.comorAnalystsMichael Wagnes,
317-810-3494Vice President, Investor
RelationsMichael.Wagnes@allegion.com
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