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Allegion (ALLE) Beats Q2 Earnings & Revenues, Updates View

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Allegion plc’s (ALLE - Free Report) second-quarter 2017 adjusted earnings came in at $1.11 per share, surpassing the Zacks Consensus Estimate of $1.00 by 11%. Adjusted earnings were up 12.1% from the prior-year quarter.

Quarterly net revenue of $627 million beat the consensus mark of $613.4 million by 2.2%. The figure increased 7.2% on a year-over-year basis on the back of strong organic growth and benefits from acquisitions that were slightly offset by foreign currency impact. Revenues were also up 6.2% on an organic basis.

Segment Details

Revenues at the Americas segment rose 7.4% year over year to $468.6 million, driven by acquisitions, favorable price, low double-digit organic growth in residential markets, and stellar performance in non-residential markets. Organic revenues also increased 6.1% year over year.

The EMEIA (Europe, Middle East, India and Africa) segment was up 6.3% to $129.2 million, driven by strong performance of the portable security business and solid pricing. Organically, revenues were up 6.3% on a year-over-year basis.

Revenues at the Asia-Pacific segment rose 9% year over year to $29.2 million driven by acquisitions and solid electronic lock sales. Organically, revenues were up 7.8%.

Allegion PLC Price, Consensus and EPS Surprise

 

Margins

Adjusted operating margin was 21.7%, up 20 basis points (bps) year over year owing to solid price performance, volume leverage and productivity. Adjusted EBITDA margin was down 10 bps to 24.1%.

Financials

Allegion ended the quarter with cash and cash equivalents of $245.5 million, as of Jun 30, 2017, compared with $312.4 million as of Dec 31, 2016.

Available cash flow as of Jun 30, 2016 was $42.6 million, lower than $84.7 million in the second quarter of 2016, due to a discretionary pension funding payment of $50 million in the first quarter.

Capital expenditures totaled $21.4 million in the first half of 2017, compared with $16.5 million a year ago.

During second-quarter 2017, Allegion repurchased 0.4 million shares for approximately $30 million under its previously authorized repurchase program of $500 million.

2017 Guidance Updated

Adjusted earnings per share are now expected in the range of $3.65–$3.80 versus the prior expectation of $3.60–$3.70.

The company expects full-year 2017 revenue growth of 6.5% to 7.5% on a year-over-year basis, higher than 5.5% to 6.5% expected earlier. Organically, revenues are expected in the 6% to 7% range, compared to 6.5% to 7.5% expected earlier.

Full-year adjusted effective tax rate is anticipated in the 18.5% to 19% range.

Available cash flow is targeted in the $300 to $320 million band (including $50 million in discretionary pension funding payment).

Zacks Rank & Other Key Picks

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the industry are Lakeland Industries, Inc. (LAKE - Free Report) , Ituran Location and Control Ltd. (ITRN - Free Report) and MSA Safety Incorporporated (MSA - Free Report) .

Lakeland sports a Zacks Rank #1. Fiscal 2018 earnings for Lakeland are expected to increase 56.6%.

Ituran, a Zacks Rank #2 stock, is expected to witness 32.7% growth in 2017 earnings.

MSA Safety, also a Zacks Rank #2 stock, is expected to see a 17.5% rise in 2017 earnings.

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