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Allegion (ALLE) Q4 Earnings Top Estimates, Revenues Up Y/Y
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Allegion plc’s (ALLE - Free Report) fourth-quarter 2023 adjusted earnings of $1.68 per share beat the Zacks Consensus Estimate of $1.57. The bottom line improved 5% year over year.
Revenue Details
In the quarter under review, Allegion’s revenues were $897.4 million, increasing 4.2% from the year-ago quarter. Organic sales in the quarter increased 2.6% due to solid growth in the company’s non-residential business. However, Allegion’s revenues missed the Zacks Consensus Estimate of $913 million.
Acquired assets boosted sales by 0.6%. Forex woes left a positive impact of 1% on revenues.
ALLE reports revenues under two segments. A brief discussion of the quarterly results is provided below:
Revenues from Allegion Americas increased 3.7% year over year to $704.6 million. The figure accounted for 78.5% of the quarter’s sales. Our estimate for segmental revenues was $716.9 million.
Operating income was $175.0 million for the quarter, up 11.6% year over year. Our estimate for the quarter was $174.5 million.
Revenues from Allegion International were $192.8 million in the quarter, up 5.9% year over year. The metric accounted for 21.5% of the quarter’s sales. Our estimate for segmental revenues was $195.3 million.
Organic sales decreased 1.3% year over year while foreign currency translation had a positive impact of 4.4% on sales. Operating income was $17.9 million for the quarter, down 22.3% year over year. Our estimate for the quarter was $21.2 million.
In the reported quarter, Allegion’s cost of sales increased 0.3% year over year to $512.1 million. The gross profit increased 9.9% year over year to $385.3 million while the gross margin jumped 220 basis points (bps) to 42.9%.
Selling and administrative expenses increased 14% year over year to $218.1 million. Adjusted EBITDA was $197.3 million, reflecting a year-over-year increase of 10.7%. The margin grew 190 bps year over year to 28%.
The adjusted operating income in the quarter increased 10.8% year over year to $188.4 million. The adjusted margin was 26.7%, up 170 bps.
Interest expenses were $22.9 million, down 3.4% year over year. The effective tax rate in the quarter was 13.4%, up from 3.4% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the fourth quarter of 2023, Allegion had cash and cash equivalents of $468.1 million compared with $288.0 million at the end of fourth-quarter 2022. Long-term debt was $1.6 billion compared with $2.1 billion reported at the end of fourth-quarter 2022.
In 2023, ALLE generated net cash of $600.6 million from operating activities, increasing 30.7% from the previous year’s level. Capital expenditure was $84.2 million, increasing 31.6% year over year. The free cash flow was $516.4 million for 2023.
In the same period, Allegion repurchased shares for $59.9 million, down 1.8% year over year. Dividends paid out totaled $158.7 million, reflecting an increase of 10.3% from the previous year’s level.
2024 Outlook
ALLE, currently carrying a Zacks Rank #4 (Sell), expects revenues to increase 1.5-3.5% year over year in 2024. The company anticipates organic sales of 1-3%.
Earnings are predicted to be $6.45-$6.60 per share for 2024. Adjusted earnings are expected to be $7.00-$7.15 per share. The Zacks Consensus Estimate for the same is $6.69 per share.
The company expects a free cash flow of $540-$570 million. The tax rate in the year is expected to be 18-19%.
Performance of Other Industrial Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, reflecting a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.
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Allegion (ALLE) Q4 Earnings Top Estimates, Revenues Up Y/Y
Allegion plc’s (ALLE - Free Report) fourth-quarter 2023 adjusted earnings of $1.68 per share beat the Zacks Consensus Estimate of $1.57. The bottom line improved 5% year over year.
Revenue Details
In the quarter under review, Allegion’s revenues were $897.4 million, increasing 4.2% from the year-ago quarter. Organic sales in the quarter increased 2.6% due to solid growth in the company’s non-residential business. However, Allegion’s revenues missed the Zacks Consensus Estimate of $913 million.
Acquired assets boosted sales by 0.6%. Forex woes left a positive impact of 1% on revenues.
ALLE reports revenues under two segments. A brief discussion of the quarterly results is provided below:
Revenues from Allegion Americas increased 3.7% year over year to $704.6 million. The figure accounted for 78.5% of the quarter’s sales. Our estimate for segmental revenues was $716.9 million.
Operating income was $175.0 million for the quarter, up 11.6% year over year. Our estimate for the quarter was $174.5 million.
Revenues from Allegion International were $192.8 million in the quarter, up 5.9% year over year. The metric accounted for 21.5% of the quarter’s sales. Our estimate for segmental revenues was $195.3 million.
Organic sales decreased 1.3% year over year while foreign currency translation had a positive impact of 4.4% on sales. Operating income was $17.9 million for the quarter, down 22.3% year over year. Our estimate for the quarter was $21.2 million.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Margin Profile
In the reported quarter, Allegion’s cost of sales increased 0.3% year over year to $512.1 million. The gross profit increased 9.9% year over year to $385.3 million while the gross margin jumped 220 basis points (bps) to 42.9%.
Selling and administrative expenses increased 14% year over year to $218.1 million. Adjusted EBITDA was $197.3 million, reflecting a year-over-year increase of 10.7%. The margin grew 190 bps year over year to 28%.
The adjusted operating income in the quarter increased 10.8% year over year to $188.4 million. The adjusted margin was 26.7%, up 170 bps.
Interest expenses were $22.9 million, down 3.4% year over year. The effective tax rate in the quarter was 13.4%, up from 3.4% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the fourth quarter of 2023, Allegion had cash and cash equivalents of $468.1 million compared with $288.0 million at the end of fourth-quarter 2022. Long-term debt was $1.6 billion compared with $2.1 billion reported at the end of fourth-quarter 2022.
In 2023, ALLE generated net cash of $600.6 million from operating activities, increasing 30.7% from the previous year’s level. Capital expenditure was $84.2 million, increasing 31.6% year over year. The free cash flow was $516.4 million for 2023.
In the same period, Allegion repurchased shares for $59.9 million, down 1.8% year over year. Dividends paid out totaled $158.7 million, reflecting an increase of 10.3% from the previous year’s level.
2024 Outlook
ALLE, currently carrying a Zacks Rank #4 (Sell), expects revenues to increase 1.5-3.5% year over year in 2024. The company anticipates organic sales of 1-3%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings are predicted to be $6.45-$6.60 per share for 2024. Adjusted earnings are expected to be $7.00-$7.15 per share. The Zacks Consensus Estimate for the same is $6.69 per share.
The company expects a free cash flow of $540-$570 million. The tax rate in the year is expected to be 18-19%.
Performance of Other Industrial Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, reflecting a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.