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Allegion (ALLE) Q1 Earnings Top Estimates, Sales Down Y/Y
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Allegion plc’s (ALLE - Free Report) first-quarter 2024 adjusted earnings of $1.55 per share beat the Zacks Consensus Estimate of $1.41. However, the bottom line fell 1.9% year over year.
Revenue Details
In the quarter under review, Allegion’s revenues were $893.9 million, declining 3.2% year over year. Organic sales in the quarter decreased 3.6% due to softness in the company’s residential and non-residential businesses. Allegion’s revenues missed the Zacks Consensus Estimate of $915 million.
Acquired assets boosted sales by 0.3%. Forex woes left a positive impact of 0.1% on revenues.
ALLE reports revenues under two segments. A brief discussion of quarterly result is provided below:
Revenues from Allegion Americas decreased 4.3% year over year to $709.3 million. The figure accounted for 79.3% of the quarter’s sales. Our estimate for segmental revenues was $734.9 million.
Operating income for the segment was $187 million, inching up 0.2% year over year. Our estimate was $186.1 million.
Revenues from Allegion International were $184.6 million, up 1.4% year over year. The metric accounted for 20.7% of the quarter’s sales. Our estimate for segmental revenues was $180.3 million.
Organic sales decreased 0.8% year over year, while acquisitions and foreign currency translation had a positive impact on sales. Segmental operating income was $13 million, up 22.6% year over year. Our estimate was $10.5 million.
In the reported quarter, Allegion’s cost of sales decreased 5.5% year over year to $502.5 million. Gross profit remained relatively stable year over year at $391.4 million, while the gross margin jumped 140 basis points (bps) to 43.8%.
Selling and administrative expenses inched down 0.3% year over year to $219.3 million. Adjusted EBITDA was $203.3 million, reflecting a year-over-year decrease of 1.3%. The margin grew 50 bps year over year to 22.8%.
Adjusted operating income decreased 1.6% year over year to $189.3 million. However, the adjusted margin was 21.2%, up 40 bps.
Interest expenses were $22.9 million, down 2.9% year over year. The effective tax rate was 19.5%, up from 17.4% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the first quarter of 2024, Allegion had cash and cash equivalents of $391.8 million compared with $468.1 million at the end of fourth-quarter 2023. Long-term debt was $1.6 billion, relatively stable from the end of fourth-quarter 2023.
In the first three months of 2024, ALLE generated net cash of $51.1 million from operating activities, decreasing 25.9% year over year. Capital expenditure was $27.2 million, increasing 22% year over year. The available cash flow was $23.9 million.
Allegion repurchased shares for $40 million. Dividends paid out totaled $42.1 million, reflecting an increase of 6.9% year over year.
2024 Outlook
ALLE expects revenues to increase 1.5-3.5% from the year-ago levels. The company anticipates organic sales in the range of 1-3%.
Management projects earnings of $6.45-$6.60 per share on a reported basis, while adjusted earnings are projected in the range of $7.00-$7.15.
It estimates available cash flow of $540-$570 million. The adjusted effective tax rate is estimated in the 18-19% band.
Zacks Rank & Stocks to Consider
ALLE currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies from the Industrial Products sector are discussed below:
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 0.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Luxfer Holdings (LXFR - Free Report) presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 82.7%.
In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.4%.
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Allegion (ALLE) Q1 Earnings Top Estimates, Sales Down Y/Y
Allegion plc’s (ALLE - Free Report) first-quarter 2024 adjusted earnings of $1.55 per share beat the Zacks Consensus Estimate of $1.41. However, the bottom line fell 1.9% year over year.
Revenue Details
In the quarter under review, Allegion’s revenues were $893.9 million, declining 3.2% year over year. Organic sales in the quarter decreased 3.6% due to softness in the company’s residential and non-residential businesses. Allegion’s revenues missed the Zacks Consensus Estimate of $915 million.
Acquired assets boosted sales by 0.3%. Forex woes left a positive impact of 0.1% on revenues.
ALLE reports revenues under two segments. A brief discussion of quarterly result is provided below:
Revenues from Allegion Americas decreased 4.3% year over year to $709.3 million. The figure accounted for 79.3% of the quarter’s sales. Our estimate for segmental revenues was $734.9 million.
Operating income for the segment was $187 million, inching up 0.2% year over year. Our estimate was $186.1 million.
Revenues from Allegion International were $184.6 million, up 1.4% year over year. The metric accounted for 20.7% of the quarter’s sales. Our estimate for segmental revenues was $180.3 million.
Organic sales decreased 0.8% year over year, while acquisitions and foreign currency translation had a positive impact on sales. Segmental operating income was $13 million, up 22.6% year over year. Our estimate was $10.5 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 decreased 5.5% year over year to $502.5 million. Gross profit remained relatively stable year over year at $391.4 million, while the gross margin jumped 140 basis points (bps) to 43.8%.
Selling and administrative expenses inched down 0.3% year over year to $219.3 million. Adjusted EBITDA was $203.3 million, reflecting a year-over-year decrease of 1.3%. The margin grew 50 bps year over year to 22.8%.
Adjusted operating income decreased 1.6% year over year to $189.3 million. However, the adjusted margin was 21.2%, up 40 bps.
Interest expenses were $22.9 million, down 2.9% year over year. The effective tax rate was 19.5%, up from 17.4% in the year-ago quarter.
Balance Sheet and Cash Flow
While exiting the first quarter of 2024, Allegion had cash and cash equivalents of $391.8 million compared with $468.1 million at the end of fourth-quarter 2023. Long-term debt was $1.6 billion, relatively stable from the end of fourth-quarter 2023.
In the first three months of 2024, ALLE generated net cash of $51.1 million from operating activities, decreasing 25.9% year over year. Capital expenditure was $27.2 million, increasing 22% year over year. The available cash flow was $23.9 million.
Allegion repurchased shares for $40 million. Dividends paid out totaled $42.1 million, reflecting an increase of 6.9% year over year.
2024 Outlook
ALLE expects revenues to increase 1.5-3.5% from the year-ago levels. The company anticipates organic sales in the range of 1-3%.
Management projects earnings of $6.45-$6.60 per share on a reported basis, while adjusted earnings are projected in the range of $7.00-$7.15.
It estimates available cash flow of $540-$570 million. The adjusted effective tax rate is estimated in the 18-19% band.
Zacks Rank & Stocks to Consider
ALLE currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 10.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 0.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Luxfer Holdings (LXFR - Free Report) presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 82.7%.
In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.4%.