Back to top

Image: Bigstock

Allegion (ALLE) Q1 Earnings Miss, Operating Margin Down

Read MoreHide Full Article

Allegion plc’s (ALLE - Free Report) first-quarter 2018 earnings missed the Zacks Consensus Estimate while revenues surpassed the same. The company recorded double-digit growth in revenues in the quarter, courtesy of synergies from acquisitions and favorable foreign currency impact. However, operating margins declined primarily due to inflationary pressures.

Quarterly Highlights

Allegion’s first-quarter adjusted earnings came in at 80 cents per share, missing the Zacks Consensus Estimate of 84 cents. Adjusted earnings were up 9.6% from the prior-year quarter.
 
Quarterly net revenues of $613.1 million surpassed the consensus mark of $606.9 million. The figure increased 11.7% on a year-over-year basis on the back of modest organic growth, synergies from acquisitions and favorable foreign currency impact. Revenues were up 3.3% on an organic basis, but lower than 6.1% growth registered in the last reported quarter.

Segment Details

Revenues in the Americas segment rose 7.7% year over year to $439.1 million, primarily driven by favorable price and continued strength in electronic product categories.  Organic revenues improved 2.7% from the prior-year quarter.

The EMEIA (Europe, Middle East, India and Africa) segment was up 26.9% to $150.3 million, driven by favorable pricing in the quarter, solid volume, favorable foreign currency and contributions from the Qatar Metal acquisition. Organically, revenues were up 5.9% on a year-over-year basis.

Revenues in the Asia-Pacific segment rose 3.9% from the year-ago quarter to $23.7 million on the back of favorable currency impact. Organically, revenues inched up 0.2%.

Margins

Adjusted operating margin was 17%, down 150 basis points (bps) year over year due to increased investments, dilution related to acquisitions, inflation and unfavorable mix.



Allegion PLC Price, Consensus and EPS Surprise

 

 

Financials

Allegion exited the quarter with cash and cash equivalents of $151.8 million, as of Mar 31, compared with $466.2 million as of Dec 31, 2017.

Available cash flow, as of Mar 31, was negative $18.8 million, a $29.9-million improvement compared with the prior-year quarter. This was due to a discretionary pension funding payment of $50 million in the prior year, partially offset by an increase in earnings.

Capital expenditures totaled $8.7 million as of Mar 31, compared with $7.8 million in the prior- year quarter.

During the first quarter of 2018, the company repurchased approximately 0.4 million shares for approximately $30 million.

2018 Guidance Reaffirmed

Adjusted earnings per share are now expected in the range of $4.35-$4.50, reflecting an increase of 9.8-13.6% from adjusted 2017 EPS.

The company expects 2018 revenue growth in the band of 10.5-11.5% on a year-over-year basis. Organically, revenues are expected in the 4-5% range.

Full-year adjusted effective tax rate is anticipated at 16%.

Available cash flow is targeted at approximately $380-$400 million.

Zacks Rank & Key Picks

The company carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Industrial Products sector are Alarm.Com Holdings, Inc. (ALRM - Free Report) , Axon Enterprise, Inc and MSA Safety Incorporated (MSA - Free Report) . All three companies sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

2018 earnings for Alarm.Com are expected to increase 22.8%.

Axon Enterprise surpassed earnings in three of the past four quarters with an average beat 188.3%.

MSA Safety is expected to witness 16.4% earnings growth in 2018.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Allegion PLC (ALLE) - free report >>

MSA Safety Incorporporated (MSA) - free report >>

Alarm.com Holdings, Inc. (ALRM) - free report >>

Published in