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Allegion (ALLE) Q4 Earnings & Revenues Miss, Margins Down
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Allegion plc’s (ALLE - Free Report) fourth-quarter 2016 adjusted earnings came in at 81 cents per share, missing the Zacks Consensus Estimate of 87 cents by 6.9%. Adjusted earnings were down 9% from the prior-year quarter.
Quarterly net revenue of $569.7 million missed the consensus mark of $572.3 million by 0.5%. The figure, however, increased 4.4% on a year-over-year basis on organic growth that was slightly offset by foreign currency impact.
Revenues were also up 5.2% on an organic basis driven by strong performance in the Americas segment, reflecting continued strength in the region’s channel initiatives, improving end markets and synergies from new product introductions.
The company’s adjusted effective tax rate for the fourth quarter of 2016 was 9.6%, compared with 9% in 2015. Also, Allegion declared a quarterly dividend of 16 cents per ordinary share, reflecting an increase of 33% over the prior dividend, payable on Mar 31, 2017, to shareholders of record as on Mar 15, 2017.
Segment Details
Revenues at the Americas segment rose 7% year over year to $410 million, driven by strong growth in both mechanical and electronic product categories.
Organic revenues also increased 7% on the back of high-single digit non-residential and mid-single digit residential growth.
The EMEIA (Europe, Middle East, India and Africa) segment was up 0.2% to $129.4 million, owing to continued pricing performance offset by unfavorable foreign currency.
Organically revenues grew 1.4% driven by solid growth in portable security and steady improvement in the SimonsVoss business.
Revenues at the Asia-Pacific segment were down 8% year over year to $30.3 million, due to the divestiture of the system integration business.
Organically, revenues were down 0.7% primarily due to timing of orders as well as large non-recurring projects in the fourth quarter of 2015. Margins
Adjusted operating margin was 17.9%, down 110 basis points (bps) year over year due to a $15 million-environmental remediation charge levied on the Americas segment.
Financials
Allegion ended the quarter with cash and cash equivalents of $312.4 million, as of Dec 31, 2016, compared with $199.7 million as of Dec 31, 2015.
The company generated $377.5 million in cash from operating activities in 2016 compared with $257 million in 2015. Available cash flow for 2016 was $335 million, an increase of 50.8% from the prior year, primarily driven by an increase in net earnings.
Capital expenditures totaled $42.5 million in 2016 compared with $35.2 million in 2015.
During fourth-quarter 2016, Allegion repurchased 850,000 shares under its previously authorized repurchase program of $55 million.
2016 Results
The company’s 2016 adjusted earnings of $3.34 per share missed the Zacks Consensus Estimate of $3.40 by 1.8% but were up 10% from the prior-year figure of $3.03. Adjusted earnings were below the expected range of $3.38 to $3.43.
Net sales of $2.24 billion in the year were in line with the Zacks Consensus Estimate. Net sales increased 8.2% year over year on positive organic growth and contribution from acquisitions that were slightly offset by divestitures. Revenues were within the projected range of 8% to 9%.
Organically revenues were up 5.8% in 2016. Full-year organic revenues (excluding currency and acquisitions) were also within the projected range of 5% to 6%.
2017 Guidance
Reported and adjusted EPS for full-year 2017 is projected in the range of $3.55 to $3.70, an increase of 6.3% to 10.8% from the 2016 level.
The company expects full-year 2017 reported and organic revenues growth of 5.5% to 6.5% when compared to 2016.
Full-year effective tax rate from continuing operations is anticipated in the 19% to 20% range.
The company currently carries a Zacks Rank #2 (Buy).
Other key picks in this industrial products sector include Assa Abloy AB (ASAZY - Free Report) , Lakeland Industries, Inc. (LAKE - Free Report) and ABB Ltd .
ABB Ltd surpassed earnings estimates in all of the trailing four quarters, with an average beat of 23.5%.
Assa Abloy and Lakeland carry a Zacks Rank #2. Lakeland’s earnings estimates for 2016 earnings moved up by 1.7%.
Zacks' Top 10 Stocks for 2017
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Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Allegion (ALLE) Q4 Earnings & Revenues Miss, Margins Down
Allegion plc’s (ALLE - Free Report) fourth-quarter 2016 adjusted earnings came in at 81 cents per share, missing the Zacks Consensus Estimate of 87 cents by 6.9%. Adjusted earnings were down 9% from the prior-year quarter.
Quarterly net revenue of $569.7 million missed the consensus mark of $572.3 million by 0.5%. The figure, however, increased 4.4% on a year-over-year basis on organic growth that was slightly offset by foreign currency impact.
Revenues were also up 5.2% on an organic basis driven by strong performance in the Americas segment, reflecting continued strength in the region’s channel initiatives, improving end markets and synergies from new product introductions.
The company’s adjusted effective tax rate for the fourth quarter of 2016 was 9.6%, compared with 9% in 2015. Also, Allegion declared a quarterly dividend of 16 cents per ordinary share, reflecting an increase of 33% over the prior dividend, payable on Mar 31, 2017, to shareholders of record as on Mar 15, 2017.
Segment Details
Revenues at the Americas segment rose 7% year over year to $410 million, driven by strong growth in both mechanical and electronic product categories.
Organic revenues also increased 7% on the back of high-single digit non-residential and mid-single digit residential growth.
The EMEIA (Europe, Middle East, India and Africa) segment was up 0.2% to $129.4 million, owing to continued pricing performance offset by unfavorable foreign currency.
Organically revenues grew 1.4% driven by solid growth in portable security and steady improvement in the SimonsVoss business.
Revenues at the Asia-Pacific segment were down 8% year over year to $30.3 million, due to the divestiture of the system integration business.
Organically, revenues were down 0.7% primarily due to timing of orders as well as large non-recurring projects in the fourth quarter of 2015.
Margins
Adjusted operating margin was 17.9%, down 110 basis points (bps) year over year due to a $15 million-environmental remediation charge levied on the Americas segment.
Financials
Allegion ended the quarter with cash and cash equivalents of $312.4 million, as of Dec 31, 2016, compared with $199.7 million as of Dec 31, 2015.
The company generated $377.5 million in cash from operating activities in 2016 compared with $257 million in 2015. Available cash flow for 2016 was $335 million, an increase of 50.8% from the prior year, primarily driven by an increase in net earnings.
Capital expenditures totaled $42.5 million in 2016 compared with $35.2 million in 2015.
During fourth-quarter 2016, Allegion repurchased 850,000 shares under its previously authorized repurchase program of $55 million.
2016 Results
The company’s 2016 adjusted earnings of $3.34 per share missed the Zacks Consensus Estimate of $3.40 by 1.8% but were up 10% from the prior-year figure of $3.03. Adjusted earnings were below the expected range of $3.38 to $3.43.
Net sales of $2.24 billion in the year were in line with the Zacks Consensus Estimate. Net sales increased 8.2% year over year on positive organic growth and contribution from acquisitions that were slightly offset by divestitures. Revenues were within the projected range of 8% to 9%.
Organically revenues were up 5.8% in 2016. Full-year organic revenues (excluding currency and acquisitions) were also within the projected range of 5% to 6%.
2017 Guidance
Reported and adjusted EPS for full-year 2017 is projected in the range of $3.55 to $3.70, an increase of 6.3% to 10.8% from the 2016 level.
The company expects full-year 2017 reported and organic revenues growth of 5.5% to 6.5% when compared to 2016.
Full-year effective tax rate from continuing operations is anticipated in the 19% to 20% range.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC Price, Consensus and EPS Surprise | Allegion PLC Quote
Zacks Rank & Other Key Picks
The company currently carries a Zacks Rank #2 (Buy).
Other key picks in this industrial products sector include Assa Abloy AB (ASAZY - Free Report) , Lakeland Industries, Inc. (LAKE - Free Report) and ABB Ltd .
ABB Ltd sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ABB Ltd surpassed earnings estimates in all of the trailing four quarters, with an average beat of 23.5%.
Assa Abloy and Lakeland carry a Zacks Rank #2. Lakeland’s earnings estimates for 2016 earnings moved up by 1.7%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>