- First-quarter 2022 net earnings per share (EPS) of $1.05,
compared with 2021 EPS of $1.18; First-quarter 2022 adjusted EPS of
$1.07, down 10.8 percent compared with 2021 adjusted EPS of
$1.20
- First-quarter 2022 revenues of $723.6 million, up 4.2
percent on a reported basis and up 6.4 percent on an organic
basis
- First-quarter 2022 operating margin of 16.2 percent,
compared with 2021 operating margin of 18.9 percent; Adjusted
operating margin of 16.9 percent, down 240 basis points compared
with 2021 adjusted operating margin of 19.3 percent
- Raising 2022 full-year revenue growth outlook to a range of
7.5 to 9 percent on a reported basis and 8.5 to 10 percent
organically
- Reaffirming full-year 2022 EPS outlook range of $5.50 to
$5.70 and adjusted EPS outlook range of $5.55 to $5.75
Allegion plc (NYSE: ALLE), a leading global provider of security
products and solutions, today reported first-quarter 2022 net
revenues of $723.6 million and net earnings of $93 million, or
$1.05 per share. Excluding charges related to restructuring,
acquisition and integration expenses, as well as a non-operating
investment gain, adjusted net earnings were $95.2 million, or $1.07
per share, down 10.8 percent when compared with first-quarter 2021
adjusted EPS of $1.20.
First-quarter 2022 net revenues increased 4.2 percent when
compared to the prior-year period (up 6.4 percent on an organic
basis). The organic revenue increase was driven by improving price
realization across the portfolio. Volume was essentially flat.
Reported revenues reflect impacts from foreign currency and
divestitures that offset the impact of acquisitions.
“The continued strength in demand is encouraging,” said David D.
Petratis, Allegion chairman, president and CEO. “Americas
non-residential and International markets are driving strong
organic growth, and we were able to deliver significant improvement
in price realization. Still, inflationary pressures persist, and
supply chain, labor and electronic component challenges continue.
We remain committed to driving price to offset inflationary
pressures and expand margins.”
The Allegion Americas segment revenues increased 5.9 percent (up
5.9 percent on an organic basis). The organic increase was driven
by improving price realization that was slightly offset by lower
volume as a result of continued supply chain constraints,
electronics and other parts shortages as well as a tough prior-year
comparable. The non-residential business was up low-double digits
percent driven by strong price realization and a modest volume
increase. The residential business was down mid-single digit
percent against a large channel load-in during the prior year.
The Allegion International segment revenues were flat (up 7.6
percent on an organic basis). The organic increase was driven by
solid price realization and volume growth primarily in the
SimonsVoss, Interflex and Global Portable Security businesses.
First-quarter 2022 operating income was $117 million, a decrease
of $14.3 million or 10.9 percent compared to 2021. Adjusted
operating income in first-quarter 2022 was $122.5 million, a
decrease of $11.5 million or 8.6 percent compared to 2021.
First-quarter 2022 operating margin was 16.2 percent, compared
with 18.9 percent in 2021. The adjusted operating margin in
first-quarter 2022 was 16.9 percent, compared with 19.3 percent in
2021. The 240-basis-point decrease in adjusted operating margin is
attributable to higher material and freight costs, productivity
challenges caused by supply chain pressures and incremental
investments that more than offset volume leverage.
Additional Items
Interest expense for first-quarter 2022 was $11.9 million, down
from $12.3 million for first-quarter 2021.
Other income net for first-quarter 2022 was $2.2 million,
compared to other income net of $3.5 million in the same period of
2021.
The company’s effective tax rate for first-quarter 2022 was 13.2
percent, compared with 11.7 percent in 2021. The company’s adjusted
effective tax rate for first-quarter 2022 was 14 percent, compared
with 12.3 percent in 2021.
Cash Flow and Liquidity
Year-to-date available cash flow for 2022 was $11.8 million, a
decrease of $93.7 million versus the prior year. The year-over-year
decrease in available cash flow is due to lower year-to-date net
earnings and seasonal timing of net working capital changes.
Available cash flow is consistent with historical trends in the
first quarter. The company ended first-quarter 2022 with cash and
cash equivalents of $305.1 million, as well as total debt of
$1,439.4 million.
Share Repurchases
During first-quarter 2022, the company repurchased approximately
0.5 million shares for $61 million under its previously authorized
share repurchase program, which was approved by the company's board
of directors in February 2020.
Acquisition of Stanley Access Technologies Business
On Friday, April 22, 2022, Allegion announced the acquisition of
Stanley Access Technologies LLC (“Access Technologies”) and assets
related to the automatic entrance solutions business from Stanley
Black & Decker, Inc. (NYSE: SWK). The transaction is expected
to close in the third quarter of 2022, subject to regulatory
approval and customary closing conditions. Following the close of
the transaction, Allegion expects to operate the Access
Technologies business as part of the Allegion Americas segment.
“I’d like to reiterate how excited we are to welcome the Access
Technologies business into the Allegion family,” said Petratis.
“This acquisition adds a category market leader with high-quality
products, an expansive service footprint and a strong financial
profile to our portfolio. With a track record of innovation, the
business and team are extremely complementary to Allegion."
2022 Standalone Outlook
The company is raising its full-year 2022 revenue outlook and
now expects reported revenue growth of 7.5 to 9 percent and organic
revenue growth of 8.5 to 10 percent, when compared with 2021, after
excluding the expected impacts of acquisitions, divestitures and
foreign currency movements.
The company is reaffirming full-year 2022 reported EPS to be in
the $5.50 to $5.70 range, with adjusted EPS between $5.55 to $5.75.
Adjustments to 2022 EPS of $0.05 per share include expected charges
for restructuring, acquisition and integration expenses, as well as
non-operating investment gains and losses.
The outlook includes incremental investment of approximately
$0.15 to $0.20 per share; assumes a full-year adjusted effective
tax rate of approximately 13 percent; and assumes an average
diluted share count for the full year of approximately 88.5 million
shares.
The company expects full-year 2022 available cash flow of
approximately $470 to $490 million.
The standalone outlook information included above does not
include Access Technologies or anticipated costs related to the
transaction. The company will provide an updated outlook, which
will include the impacts of the acquisition, after the transaction
closes.
Conference Call Information
On Tuesday, April 26, 2022, David D. Petratis, chairman,
president and CEO, and Mike Wagnes, senior vice president and chief
financial officer, will conduct a conference call for analysts and
investors, beginning at 8 a.m. ET, to review the company's
results.
A real-time, listen-only webcast of the conference call will be
broadcast live online. Individuals wishing to listen may access the
call through the company's website at
https://investor.allegion.com.
About Allegion
Allegion (NYSE: ALLE) is a global pioneer in seamless access,
with leading brands like CISA®, Interflex®, LCN®, Schlage®,
SimonsVoss® and Von Duprin®. Focusing on security around the door
and adjacent areas, Allegion secures people and assets with a range
of solutions for homes, businesses, schools and institutions.
Allegion had $2.9 billion in revenue in 2021, and its security
products are sold around the world.
For more, visit www.allegion.com.
Non-GAAP Measures
This news release also includes adjusted non-GAAP financial
information which should be considered supplemental to, not a
substitute for or superior to, the financial measure calculated in
accordance with GAAP. The company presents operating income,
operating margin, net earnings and diluted earnings per share (EPS)
on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis,
revenue growth on a U.S. GAAP basis and organic revenue growth on a
non-GAAP basis, and adjusted EBITDA and adjusted EBITDA margin
(both non-GAAP measures). The company presents these non-GAAP
measures because management believes they provide useful
perspective of the company’s underlying business results, trends
and a more comparable measure of period-over-period results. These
measures are also used to evaluate senior management and are a
factor in determining at-risk compensation. Investors should not
consider non-GAAP measures as alternatives to the related GAAP
measures. Further information about the adjusted non-GAAP financial
tables is attached to this news release.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934, including statements regarding
the continued impacts of the global COVID-19 pandemic, supply chain
constraints, electronic component and labor shortages, inflation,
rising freight and material costs, impacts of Russia’s invasion of
Ukraine including further supply chain disruptions and the
increased risk of cyber-attacks in connection with such invasion,
the company's 2022 financial performance, the company’s business
plans and strategy, the company’s growth strategy, the company’s
capital allocation strategy, the company’s tax planning strategies,
and the performance of the markets in which the company operates.
These forward-looking statements generally are identified by the
words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“forecast,” “outlook,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result” or the negative thereof or
variations thereon or similar expressions generally intended to
identify forward-looking statements. Forward-looking statements may
relate to such matters as projections of revenue, margins,
expenses, tax provisions, earnings, cash flows, benefit
obligations, dividends, share purchases or other financial items;
any statements of the plans, strategies and objectives of
management for future operations, including those relating to any
statements concerning expected development, performance or market
share relating to our products and services; any statements
regarding future economic conditions or our performance; any
statements regarding pending investigations, claims or disputes;
any statements of expectation or belief; and any statements of
assumptions underlying any of the foregoing. These statements are
based on the company's currently available information and our
current assumptions, expectations and projections about future
events. They are subject to future events, risks and uncertainties
- many of which are beyond the company’s control - as well as
potentially inaccurate assumptions, that could cause actual results
to differ materially from those in the forward-looking statements.
Further information on these factors and other risks that may
affect the company's business is included in filings it makes with
the Securities and Exchange Commission from time to time, including
its Form 10-K for the year ended Dec. 31, 2021, Form 10-Q for the
quarters ended March 31, 2022, and in its other SEC filings. The
company undertakes no obligation to update these forward-looking
statements.
ALLEGION PLC
Condensed and Consolidated Income
Statements
(In millions, except per share
data)
UNAUDITED
Three months ended March
31,
2022
2021
Net revenues
$
723.6
$
694.3
Cost of goods sold
434.9
396.9
Gross profit
288.7
297.4
Selling and administrative expenses
171.7
166.1
Operating income
117.0
131.3
Interest expense
11.9
12.3
Other income, net
(2.2
)
(3.5
)
Earnings before income taxes
107.3
122.5
Provision for income taxes
14.2
14.3
Net earnings
93.1
108.2
Less: Net earnings attributable to
noncontrolling interests
0.1
0.2
Net earnings attributable to Allegion
plc
$
93.0
$
108.0
Basic earnings per ordinary
share
attributable to Allegion plc
shareholders:
$
1.05
$
1.19
Diluted earnings per ordinary
share
attributable to Allegion plc
shareholders:
$
1.05
$
1.18
Shares outstanding - basic
88.2
90.7
Shares outstanding - diluted
88.6
91.2
ALLEGION PLC
Condensed and Consolidated Balance
Sheets
(In millions)
UNAUDITED
March 31, 2022
December 31, 2021
ASSETS
Cash and cash equivalents
$
305.1
$
397.9
Accounts and notes receivables, net
324.3
283.3
Inventories
402.9
380.4
Other current assets
45.0
56.0
Total current assets
1,077.3
1,117.6
Property, plant and equipment, net
280.8
283.7
Goodwill
796.4
803.8
Intangible assets, net
434.0
447.5
Other noncurrent assets
419.1
398.4
Total assets
$
3,007.6
$
3,051.0
LIABILITIES AND EQUITY
Accounts payable
$
258.4
$
259.1
Accrued expenses and other current
liabilities
310.5
329.5
Short-term borrowings and current
maturities of long-term debt
12.6
12.6
Total current liabilities
581.5
601.2
Long-term debt
1,426.8
1,429.5
Other noncurrent liabilities
254.3
257.9
Equity
745.0
762.4
Total liabilities and equity
$
3,007.6
$
3,051.0
ALLEGION PLC
Condensed and Consolidated Statements
of Cash Flows
(In millions)
UNAUDITED
Three months ended March
31,
2022
2021
Operating Activities
Net earnings
$
93.1
$
108.2
Depreciation and amortization
20.4
21.4
Changes in assets and liabilities and
other non-cash items
(93.0
)
(17.8
)
Net cash provided by operating
activities
20.5
111.8
Investing Activities
Capital expenditures
(8.7
)
(6.3
)
Other investing activities, net
2.4
1.7
Net cash used in investing activities
(6.3
)
(4.6
)
Financing Activities
Debt repayments, net
(3.1
)
—
Dividends paid to ordinary
shareholders
(35.8
)
(32.5
)
Repurchase of ordinary shares
(61.0
)
(149.7
)
Other financing activities, net
(5.0
)
(5.0
)
Net cash used in financing activities
(104.9
)
(187.2
)
Effect of exchange rate changes on cash
and cash equivalents
(2.1
)
(6.1
)
Net decrease in cash and cash
equivalents
(92.8
)
(86.1
)
Cash and cash equivalents - beginning of
period
397.9
480.4
Cash and cash equivalents - end of
period
$
305.1
$
394.3
SUPPLEMENTAL
SCHEDULES
ALLEGION PLC
SCHEDULE 1
SELECTED OPERATING SEGMENT
INFORMATION
(In millions)
Three months ended March
31,
2022
2021
Net revenues
Allegion Americas
$
528.2
$
498.9
Allegion International
195.4
195.4
Total net revenues
$
723.6
$
694.3
Operating income (loss)
Allegion Americas
$
123.9
$
135.4
Allegion International
19.6
15.4
Corporate unallocated
(26.5
)
(19.5
)
Total operating income
$
117.0
$
131.3
ALLEGION PLC
SCHEDULE 2
The Company presents operating income,
operating margin, net earnings and diluted earnings per share (EPS)
on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis,
revenue growth on a U.S. GAAP basis and organic revenue growth on a
non-GAAP basis, and adjusted EBITDA and adjusted EBITDA margin
(both non-GAAP measures). The Company presents these non-GAAP
measures because management believes they provide useful
perspective of the Company’s underlying business results and trends
and a more comparable measure of period-over-period results. These
measures are also used to evaluate senior management and are a
factor in determining at-risk compensation. Investors should not
consider non-GAAP measures as alternatives to the related U.S. GAAP
measures.
The Company defines the presented non-GAAP
measures as follows:
(1)
Adjustments to operating income, operating
margin, net earnings, EPS and EBITDA include items such as
goodwill, indefinite-lived trade name and other asset impairment
charges, restructuring charges, acquisition and integration costs,
debt refinancing costs, gains or losses related to the divestiture
of businesses or equity method investments and non-operating
investment gains or losses;
(2)
Organic revenue growth is defined as U.S.
GAAP revenue growth excluding the impact of divestitures,
acquisitions and currency effects; and
(3)
Available cash flow is defined as U.S.
GAAP net cash from operating activities less capital
expenditures.
These non-GAAP measures may not be defined
and calculated the same as similar measures used by other
companies.
RECONCILIATION OF GAAP TO NON-GAAP NET EARNINGS
(In millions, except per share
data)
Three months ended March 31,
2022
Three months ended March 31,
2021
Reported
Adjustments
Adjusted (non-GAAP)
Reported
Adjustments
Adjusted (non-GAAP)
Net revenues
$
723.6
$
—
$
723.6
$
694.3
$
—
$
694.3
Operating income
117.0
5.5
(1)
122.5
131.3
2.7
(1)
134.0
Operating margin
16.2
%
16.9
%
18.9
%
19.3
%
Earnings before income taxes
107.3
3.5
(2)
110.8
122.5
2.7
(2)
125.2
Provision for income taxes
14.2
1.3
(3)
15.5
14.3
1.1
(3)
15.4
Effective income tax rate
13.2
%
14.0
%
11.7
%
12.3
%
Net earnings
93.1
2.2
95.3
108.2
1.6
109.8
Noncontrolling interests
0.1
—
0.1
0.2
—
0.2
Net earnings attributable to Allegion
plc
$
93.0
$
2.2
$
95.2
$
108.0
$
1.6
$
109.6
Diluted earnings per ordinary share
attributable to
Allegion plc shareholders:
$
1.05
$
0.02
$
1.07
$
1.18
$
0.02
$
1.20
(1)
Adjustments to operating income for the
three months ended March 31, 2022, consist of $5.5 million of
restructuring charges and acquisition and integration expenses.
Adjustments to operating income for the three months ended March
31, 2021, consist of $2.7 million of restructuring charges.
(2)
Adjustments to earnings before income
taxes for the three months ended March 31, 2022 consist of the
adjustments to operating income discussed above and a non-operating
investment gain of $2.0 million. Adjustments to operating income
for the three months ended March 31, 2021, consist of the
adjustments to operating income discussed above.
(3)
Adjustments to the provision for income
taxes for the three months ended March 31, 2022 and 2021, consist
of $1.3 million and $1.1 million, respectively, of tax expense
related to the excluded items discussed above.
ALLEGION PLC
SCHEDULE 3
RECONCILIATION OF GAAP TO NON-GAAP
REVENUE AND OPERATING INCOME BY REGION
(In millions)
Three months ended March 31,
2022
Three months ended March 31,
2021
As Reported
Margin
As Reported
Margin
Allegion Americas
Net revenues (GAAP)
$
528.2
$
498.9
Operating income (GAAP)
$
123.9
23.5
%
$
135.4
27.1
%
Restructuring charges
—
—
%
0.1
0.1
%
Adjusted operating income
123.9
23.5
%
135.5
27.2
%
Depreciation and amortization
8.9
1.6
%
8.8
1.7
%
Adjusted EBITDA
$
132.8
25.1
%
$
144.3
28.9
%
Allegion International
Net revenues (GAAP)
$
195.4
$
195.4
Operating income (GAAP)
$
19.6
10.0
%
$
15.4
7.9
%
Restructuring charges
0.7
0.3
%
2.6
1.3
%
Acquisition and integration costs
0.1
0.1
%
—
—
%
Adjusted operating income
20.4
10.4
%
18.0
9.2
%
Depreciation and amortization
9.7
5.0
%
10.1
5.2
%
Adjusted EBITDA
$
30.1
15.4
%
$
28.1
14.4
%
Corporate
Operating loss (GAAP)
$
(26.5
)
$
(19.5
)
Acquisition and integration costs
4.7
—
Adjusted operating loss
(21.8
)
(19.5
)
Depreciation and amortization
0.8
1.1
Adjusted EBITDA
$
(21.0
)
$
(18.4
)
Total
Net revenues
$
723.6
$
694.3
Adjusted operating income
$
122.5
16.9
%
$
134.0
19.3
%
Depreciation and amortization
19.4
2.7
%
20.0
2.9
%
Adjusted EBITDA
$
141.9
19.6
%
$
154.0
22.2
%
ALLEGION PLC
SCHEDULE 4
RECONCILIATION OF CASH PROVIDED BY
OPERATING ACTIVITIES TO AVAILABLE CASH FLOW AND NET EARNINGS TO
ADJUSTED EBITDA
(In millions)
Three months ended March
31,
2022
2021
Net cash provided by operating
activities
$
20.5
$
111.8
Capital expenditures
(8.7
)
(6.3
)
Available cash flow
$
11.8
$
105.5
Three months ended March
31,
2022
2021
Net earnings (GAAP)
$
93.1
$
108.2
Provision for income taxes
14.2
14.3
Interest expense
11.9
12.3
Depreciation and amortization
19.4
20.0
EBITDA
138.6
154.8
Other income, net
(2.2
)
(3.5
)
Acquisition and integration costs and
restructuring charges
5.5
2.7
Adjusted EBITDA
$
141.9
$
154.0
ALLEGION PLC
SCHEDULE 5
RECONCILIATION OF GAAP REVENUE GROWTH
TO NON-GAAP ORGANIC REVENUE GROWTH BY REGION
Three months ended March
31,
2022
2021
Allegion Americas
Revenue growth (GAAP)
5.9
%
(2.6
)%
Currency translation effects
—
%
(0.3
)%
Organic growth (non-GAAP)
5.9
%
(2.9
)%
Allegion International
Revenue growth (GAAP)
—
%
20.2
%
Acquisitions and divestitures
0.8
%
1.5
%
Currency translation effects
6.8
%
(10.7
)%
Organic growth (non-GAAP)
7.6
%
11.0
%
Total
Revenue growth (GAAP)
4.2
%
2.9
%
Acquisitions and divestitures
0.3
%
0.4
%
Currency translation effects
1.9
%
(2.8
)%
Organic growth (non-GAAP)
6.4
%
0.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220426005284/en/
Media Contact: Whitney Moorman – Reputation Management Leader
317-810-3241 Whitney.Moorman@allegion.com Analyst Contact:
Tom Martineau – Vice President, Investor Relations, and Treasurer
317-810-3759 Tom.Martineau@allegion.com
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