DUBLIN (Apr. 25, 2019):
Allegion plc (NYSE: ALLE), a leading global provider of security products and solutions, today reported first-quarter 2019 net revenues of $655 million and net earnings of $80.2 million, or $0.84 per share. Excluding charges related to restructuring and acquisitions, adjusted net earnings were $83.5 million, or $0.88 per share, up 10 percent when compared with first-quarter 2018 adjusted EPS of $0.80.
First-quarter net revenues increased 6.8 percent when compared to the prior-year period (up 5.8 percent on an organic basis). Reported revenues reflect solid organic growth, particularly in the Americas, as well as benefits from acquisitions that more than offset foreign currency impacts.
First-quarter 2019 operating income was $108 million, an increase of $9.3 million or 9.4 percent compared to 2018. Adjusted operating income in first-quarter 2019 was $112.1 million, representing an increase of $7.9 million or 7.6 percent compared to 2018.
First-quarter 2019 operating margin was 16.5 percent, compared with 16.1 percent in 2018. The adjusted operating margin in first-quarter 2019 was 17.1 percent, compared with 17 percent in 2018. The 10-basis-point increase in adjusted operating margin is attributable to strong price and volume leverage offsetting a combination of inflation, investment spending and regional mix driven by acquisitions.
“Allegion had a good start to 2019,” said David D. Petratis, Allegion chairman, president and CEO. “I am pleased with the solid top-line growth in the first quarter led by the Americas non-residential business, which continues to see strong end markets.
“I am also pleased with the 10-percent increase in adjusted EPS, as we drove margin expansion in all regions, even with significant carryover inflationary pressures. The team did a nice job of driving price realization and productivity actions globally to propel the increase in year-over-year margins,” Petratis added.
The Americas segment revenues increased 8.2 percent (up 7.6 percent on an organic basis). The revenue growth was driven by strong pricing and volume, particularly in the non-residential business, which saw low double-digit growth. The Americas residential business growth was flat in the quarter.
The EMEIA segment revenues were down 4.9 percent (up 1.7 percent on an organic basis), reflecting unfavorable foreign currency effects, partially offset by modest organic growth and contributions from acquisitions.
The Asia-Pacific segment revenues increased 55.3 percent (down 2.2 percent on an organic basis). The revenue growth in the quarter was driven by the 2018 acquisition of the Gainsborough business and was partially offset by organic revenue decline as well as unfavorable currency effects. The organic revenue decline was the result of a $1.5 million transfer of revenue previously managed in Asia Pacific that’s now managed in the Americas and EMEIA regions.
Interest expense for first-quarter 2019 was $13.7 million, up from $12.9 million for first-quarter 2018.
Other income net for first-quarter 2019 was $1.1 million, compared to $0.4 million in the same period of 2018.
The company’s effective tax rate for first-quarter 2019 was 15.8 percent, compared with 16 percent in 2018. The company’s adjusted effective tax rate for first-quarter 2019 was 16 percent, compared with 16.2 percent in 2018.
Cash Flow and Liquidity
Year-to-date 2019 available cash flow was negative $24.9 million, a decrease of $6.1 million versus the prior year. The year-over-year decrease in available cash flow is primarily due to higher working capital and increased capital expenditures, which were partially offset by increased earnings.
The company ended first-quarter 2019 with cash and cash equivalents of $153.8 million as well as total debt of $1,436.4 million.
During first-quarter 2019, the company repurchased approximately 0.7 million shares for approximately $63.8 million under its previously authorized share-repurchase program approved by the company's board of directors in February 2017.
The company is affirming its full-year 2019 revenue outlook of total and organic growth of 5 to 6 percent compared to 2018.
The company is affirming its full-year 2019 outlook for reported EPS in the range of $4.60 to $4.75, and adjusted EPS in the range of $4.75 to $4.90. Adjustments to 2019 EPS include estimated impacts for restructuring, along with acquisition and integration activities. The outlook assumes no change to investment spend, which continues to be approximately $0.15 per share; no change to the full-year adjusted effective tax rate of approximately 16 percent; and an average diluted share count for the full year of approximately 95 million shares.
The company also affirms its full-year available cash flow outlook of approximately $430 to $450 million.
Conference Call Information
On Thursday, April 25, 2019, 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.
Allegion (NYSE: ALLE) is a global pioneer in seamless access, with leading brands like CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®. Focusing on security around the door and adjacent areas, Allegion secures people and assets with a range of solutions for homes, businesses, schools and other institutions. Allegion had $2.7 billion in revenue in 2018, and sells products in almost 130 countries.
For more, visit www.allegion.com.
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. The company presents operating income, operating margin, net earnings and diluted earnings per share (EPS) on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis, revenue growth on a U.S. GAAP basis and organic revenue growth on a non-GAAP basis, and adjusted EBITDA and adjusted EBITDA margin (both non-GAAP measures). The company presents these non-GAAP 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. Further information about the adjusted non-GAAP financial tables is attached to this news release.
This press release contains "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, including statements regarding the company's 2019 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 generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Forward-looking statements are based on the company's currently available information and our 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, 2018, Form 10-Q for the quarter ended March 31, 2019, and in its other SEC filings. The company undertakes no obligation to update these forward-looking statements.
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