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Allegion (ALLE) Q2 Earnings Surpass Estimates, Revenues Miss
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Allegion plc (ALLE - Free Report) has reported mixed results for second-quarter 2020, wherein its adjusted earnings surpassed the Zacks Consensus Estimate, while revenues missed the same.
Earnings & Revenues Declines
Quarterly adjusted earnings were 92 cents per share, beating the Zacks Consensus Estimate of 79 cents. Notably, the bottom line was 27% lower than the year-ago figure of $1.26. The decline can be primarily attributed to lower sales.
Revenues totaled $589.5 million, down 19.4% year over year. Also, the top line missed the consensus estimate of $600 million. Revenues fell 18.5% on an organic basis. The top-line performance was adversely impacted by operational shutdowns across all regions, owing to the coronavirus outbreak-related issues.
Revenues in the Americas fell 18.5% year over year to $444.3 million, owing to softness in non-residential, residential and electronics businesses.
EMEIA (Europe, Middle East, India and Africa) revenues declined 21.9% to $111 million on soft end markets amid the pandemic, adverse impacts of divestitures, and unfavorable foreign exchange movements.
Revenues in the Asia Pacific fell 22.1% to $34.2 million in the quarter, reflecting weak end markets in Australia and the residential market in China as well as adverse impacts of unfavorable foreign exchange movements.
Costs & Margins Details
In the second quarter, Allegion’s cost of sales decreased 16.5% year over year to $342.9 million. Gross profit fell 23.1% to $246.6 million, while gross margin contracted 210 basis points (bps) to 41.8%.
Selling and administrative expenses decreased 14.2% year over year to $150.1 million.
Adjusted operating margin contracted 260 bps to 18.9%.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Allegion had cash and cash equivalents of $302.4 million, down from $355.3 recorded on Dec 31, 2019. Long-term debt was $1,428.5 million, up from $1,427.6 million recorded at the end of 2019.
In the first six months of 2020, the company generated net cash of $128 million from operating activities compared with $107 million generated in the year-ago comparable period. Capital expenditure totaled $24.4 million compared with $29.3 million in the year-ago period.
2020 Guidance
Allegion re-issued outlooks for 2020, assuming no further disruptions associated with the COVID-19 outbreak.
Adjusted earnings per share are expected to be $4.15 to $4.30, suggesting a year-over-year decline of 13.6% at the mid-point.
The company expects 2020 revenues to decline 9-10% on a reported basis, and 8-9% on an organic basis.
Adjusted effective tax rate is anticipated to be 13.5-14.5% for the year.
Available cash flow is expected to be $350-$370 million.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Altra Industrial delivered an earnings surprise of 9.78%, on average, in the trailing four quarters.
Berry Global delivered an earnings surprise of 6.63%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 7.13%, on average, in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Allegion (ALLE) Q2 Earnings Surpass Estimates, Revenues Miss
Allegion plc (ALLE - Free Report) has reported mixed results for second-quarter 2020, wherein its adjusted earnings surpassed the Zacks Consensus Estimate, while revenues missed the same.
Earnings & Revenues Declines
Quarterly adjusted earnings were 92 cents per share, beating the Zacks Consensus Estimate of 79 cents. Notably, the bottom line was 27% lower than the year-ago figure of $1.26. The decline can be primarily attributed to lower sales.
Revenues totaled $589.5 million, down 19.4% year over year. Also, the top line missed the consensus estimate of $600 million. Revenues fell 18.5% on an organic basis. The top-line performance was adversely impacted by operational shutdowns across all regions, owing to the coronavirus outbreak-related issues.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Segmental Breakup
Revenues in the Americas fell 18.5% year over year to $444.3 million, owing to softness in non-residential, residential and electronics businesses.
EMEIA (Europe, Middle East, India and Africa) revenues declined 21.9% to $111 million on soft end markets amid the pandemic, adverse impacts of divestitures, and unfavorable foreign exchange movements.
Revenues in the Asia Pacific fell 22.1% to $34.2 million in the quarter, reflecting weak end markets in Australia and the residential market in China as well as adverse impacts of unfavorable foreign exchange movements.
Costs & Margins Details
In the second quarter, Allegion’s cost of sales decreased 16.5% year over year to $342.9 million. Gross profit fell 23.1% to $246.6 million, while gross margin contracted 210 basis points (bps) to 41.8%.
Selling and administrative expenses decreased 14.2% year over year to $150.1 million.
Adjusted operating margin contracted 260 bps to 18.9%.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Allegion had cash and cash equivalents of $302.4 million, down from $355.3 recorded on Dec 31, 2019. Long-term debt was $1,428.5 million, up from $1,427.6 million recorded at the end of 2019.
In the first six months of 2020, the company generated net cash of $128 million from operating activities compared with $107 million generated in the year-ago comparable period. Capital expenditure totaled $24.4 million compared with $29.3 million in the year-ago period.
2020 Guidance
Allegion re-issued outlooks for 2020, assuming no further disruptions associated with the COVID-19 outbreak.
Adjusted earnings per share are expected to be $4.15 to $4.30, suggesting a year-over-year decline of 13.6% at the mid-point.
The company expects 2020 revenues to decline 9-10% on a reported basis, and 8-9% on an organic basis.
Adjusted effective tax rate is anticipated to be 13.5-14.5% for the year.
Available cash flow is expected to be $350-$370 million.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks are Altra Industrial Motion Corp. , Berry Global Group, Inc. (BERY - Free Report) and Dover Corporation (DOV - Free Report) . All the companies presently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Altra Industrial delivered an earnings surprise of 9.78%, on average, in the trailing four quarters.
Berry Global delivered an earnings surprise of 6.63%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 7.13%, on average, in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>