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Allegion plc (ALLE - Free Report) reported impressive first-quarter 2021 results, with earnings surpassing estimates by 17.7%. This marks the fifth consecutive quarter of better-than-expected bottom-line results. Also, sales surpassed estimates by 4.6%.
The company’s adjusted earnings for the quarter were $1.20 per share, surpassing the Zacks Consensus Estimate of $1.02. On a year-over-year basis, the bottom line jumped 15.4%.
Revenue Details
For the reported quarter, Allegion’s net revenues were $694.3 million, up 2.9% year over year. The results were positively impacted by a 0.5% increase in organic sales and 0.4% impact from divestitures, partially offset by a 2.8% positive impact of foreign currency translation.
Also, the company’s top line surpassed the Zacks Consensus Estimate of $664 million.
The company reported revenues under two segments. A brief discussion of the quarterly results is provided below:
Revenues in the Allegion Americas segment fell 2.6% year over year to $498.9 million owing to softness in the non-residential business, partially offset by gains in the residential business.
Organic sales fell 2.9% year over year. However, foreign currency translation had a positive impact of 0.3% on the same.
Revenues in the Allegion International segment increased 20.2% year over year to $195.4 million for the quarter, reflecting growth across all major geographies and businesses.
Organic sales increased 11% year over year. Divestitures had a negative impact of 1.5% and foreign currency translation had a positive impact of 10.7% on sales.
Margin Profile
For the reported quarter, Allegion’s cost of sales grew 4% year over year to $396.9 million. Cost of sales was 57.2% of the quarter’s net sales. Gross profit increased 1.5% year over year to $297.4 million, while gross margin fell 60 basis points (bps) to 42.8%.
Selling and administrative expenses decreased 1.1% year over year to $166.1 million. It represented 23.9% of net sales for the reported quarter versus 24.9% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $154 million, reflecting an increase of 4.7% from the prior-year quarter. Margin increased 40 bps year over year to 22.2%.
Adjusted operating income for the quarter increased 4.5% year over year to $134 million. Also, adjusted margin was 19.3%, up from 19% a year ago. Interest expense was $12.3 million, down 4.7% from the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Allegion had cash and cash equivalents of $394.3 million, down 17.9% from $480.4 million recorded in the last reported quarter. Long-term debt was relatively flat sequentially at $1,429.8 million.
It generated net cash of $111.8 million from operating activities in the first three months of 2021 compared with $30.8 million in the prior-year comparable period. Capital expenditure totaled $6.3 million compared with $11.8 million invested in the year-ago period. Free cash flow increased 455.3% from the prior-year figure to $105.5 million.
During the quarter, the company rewarded shareholders with a dividend payout of $32.5 million. The amount represents growth of 12.1% year over year. Amount spent on buying back shares totaled $149.7 million, up 59.1% from the year-ago figure.
Guidance
For 2021, the company predicts revenues to grow 3-4% year over year. The metric was predicted to decline 0.5-1.5% year over year earlier. Organic sales are expected to rise 2-3% from a year ago. On a segmental basis, organic sales in the residential business in Allegion Americas and Allegion International are likely to increase from the prior year. However, organic sales in the non-residential business of Allegion Americas are likely to decline on a year-over-year basis.
Adjusted earnings are now expected in the range of $5.00-$5.15 per share, higher than $4.70-$4.85 guided earlier. Free cash flow for the year is expected within $430-$450 million.
The company currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the same space include Astec Industries, Inc. (ASTE - Free Report) , Dover Corporation (DOV - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While Astec Industries currently sports a Zacks Rank #1 (Strong Buy), Dover and Applied Industrial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Astec Industries delivered an earnings surprise of 172.7%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 21.4%, on average, in the trailing four quarters.
Applied Industrial delivered an earnings surprise of 21.9%, on average, in the trailing four quarters.
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Allegion (ALLE) Q1 Earnings & Revenues Surpass Estimates
Allegion plc (ALLE - Free Report) reported impressive first-quarter 2021 results, with earnings surpassing estimates by 17.7%. This marks the fifth consecutive quarter of better-than-expected bottom-line results. Also, sales surpassed estimates by 4.6%.
The company’s adjusted earnings for the quarter were $1.20 per share, surpassing the Zacks Consensus Estimate of $1.02. On a year-over-year basis, the bottom line jumped 15.4%.
Revenue Details
For the reported quarter, Allegion’s net revenues were $694.3 million, up 2.9% year over year. The results were positively impacted by a 0.5% increase in organic sales and 0.4% impact from divestitures, partially offset by a 2.8% positive impact of foreign currency translation.
Also, the company’s top line surpassed the Zacks Consensus Estimate of $664 million.
The company reported revenues under two segments. A brief discussion of the quarterly results is provided below:
Revenues in the Allegion Americas segment fell 2.6% year over year to $498.9 million owing to softness in the non-residential business, partially offset by gains in the residential business.
Organic sales fell 2.9% year over year. However, foreign currency translation had a positive impact of 0.3% on the same.
Revenues in the Allegion International segment increased 20.2% year over year to $195.4 million for the quarter, reflecting growth across all major geographies and businesses.
Organic sales increased 11% year over year. Divestitures had a negative impact of 1.5% and foreign currency translation had a positive impact of 10.7% on sales.
Margin Profile
For the reported quarter, Allegion’s cost of sales grew 4% year over year to $396.9 million. Cost of sales was 57.2% of the quarter’s net sales. Gross profit increased 1.5% year over year to $297.4 million, while gross margin fell 60 basis points (bps) to 42.8%.
Selling and administrative expenses decreased 1.1% year over year to $166.1 million. It represented 23.9% of net sales for the reported quarter versus 24.9% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $154 million, reflecting an increase of 4.7% from the prior-year quarter. Margin increased 40 bps year over year to 22.2%.
Adjusted operating income for the quarter increased 4.5% year over year to $134 million. Also, adjusted margin was 19.3%, up from 19% a year ago. Interest expense was $12.3 million, down 4.7% from the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Allegion had cash and cash equivalents of $394.3 million, down 17.9% from $480.4 million recorded in the last reported quarter. Long-term debt was relatively flat sequentially at $1,429.8 million.
It generated net cash of $111.8 million from operating activities in the first three months of 2021 compared with $30.8 million in the prior-year comparable period. Capital expenditure totaled $6.3 million compared with $11.8 million invested in the year-ago period. Free cash flow increased 455.3% from the prior-year figure to $105.5 million.
During the quarter, the company rewarded shareholders with a dividend payout of $32.5 million. The amount represents growth of 12.1% year over year. Amount spent on buying back shares totaled $149.7 million, up 59.1% from the year-ago figure.
Guidance
For 2021, the company predicts revenues to grow 3-4% year over year. The metric was predicted to decline 0.5-1.5% year over year earlier. Organic sales are expected to rise 2-3% from a year ago. On a segmental basis, organic sales in the residential business in Allegion Americas and Allegion International are likely to increase from the prior year. However, organic sales in the non-residential business of Allegion Americas are likely to decline on a year-over-year basis.
Adjusted earnings are now expected in the range of $5.00-$5.15 per share, higher than $4.70-$4.85 guided earlier. Free cash flow for the year is expected within $430-$450 million.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the same space include Astec Industries, Inc. (ASTE - Free Report) , Dover Corporation (DOV - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While Astec Industries currently sports a Zacks Rank #1 (Strong Buy), Dover and Applied Industrial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Astec Industries delivered an earnings surprise of 172.7%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 21.4%, on average, in the trailing four quarters.
Applied Industrial delivered an earnings surprise of 21.9%, on average, in the trailing four quarters.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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