Allegion plc’s (ALLE Quick QuoteALLE - 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.

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 Quick QuoteAIT - 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 Quick QuoteIR - 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 Quick QuoteLXFR - 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%.