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Allegion (ALLE) Q1 Earnings & Revenues Surpass Estimates

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Allegion plc (ALLE - Free Report) reported better-than-expected results for first-quarter 2020, wherein both adjusted earnings and revenues surpassed the Zacks Consensus Estimate.

Earnings & Revenues Rise

Quarterly adjusted earnings were $1.04 per share, beating the Zacks Consensus Estimate of 91 cents. Notably, the bottom line was 18.2% higher than the year-ago figure of 88 cents. The upside can be primarily attributed to solid sales growth.

Revenues totaled $674.7 million, up 3% year over year. Moreover, the top line surpassed the consensus estimate of $670 million. Revenues rose 4.3% on an organic basis. The rise was backed by strength in businesses in the Americas region, partially offset by weakness in end markets in the EMEIA and Asia Pacific regions as well as the initial impact of coronavirus-led issues.

Allegion PLC Price, Consensus and EPS Surprise

 

Allegion PLC Price, Consensus and EPS Surprise

Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote

Segmental Breakup

Revenues in the Americas rose 7.7% year over year to $512.1 million, driven by growth in non-residential and residential businesses as well as strength in the electronics business. EMEIA (Europe, Middle East, India and Africa) revenues declined 9.1% to $129.9 million on account of soft end markets, coronavirus related issues, adverse impacts of divestitures, and unfavorable foreign exchange movements. Revenues in the Asia Pacific fell 11.1% to $32.7 million in the quarter, reflecting weak end markets in Australia and adverse impacts of unfavorable foreign exchange movements.

Costs Increase, Margins Improve

In the first quarter, Allegion’s cost of sales increased 0.9% year over year to $381.6 million. Gross profit grew 5.9% to $293.1 million, while gross margin improved 110 basis points (bps) to 43.4%.

Selling and administrative expenses decreased 0.6% year over year to $167.9 million.

Adjusted operating margin expanded 190 bps to 19%.

Balance Sheet & Cash Flow

As of Mar 31, 2020, Allegion had cash and cash equivalents of $245.3 million, down from $355.3 recorded on Dec 31, 2019.  Long-term debt was $1,428 million, slightly up from $1,427.6 million recorded at the end of 2019.

In the first three months of 2020, the company generated net cash of $30.8 million from operating activities compared with $12.6 million used in the year-ago comparable period. Capital expenditure totaled $11.8 million compared with $12.3 million in the year-ago comparable period.

2020 Guidance

On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, Allegion has now withdrawn its revenue and earnings guidance for 2020.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Industrial Products sector are Acco Brands Corporation (ACCO - Free Report) , Alarm.com Holdings, Inc. (ALRM - Free Report) and Berry Global Group, Inc. (BERY - Free Report) . All the companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.

Alarm.com delivered a positive earnings surprise of 19.30%, on average, in the trailing four quarters.

Berry Global delivered a positive earnings surprise of 0.26%, on average, in the trailing four quarters.

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