Allegion plc ALLE reported impressive first-quarter 2021 results, with earnings surpassing estimates by 17.7%. This marks the fifth consecutive quarter of better-than-expected bottom-line results. Also, sales surpassed estimates by 4.6%.
The company’s adjusted earnings for the quarter were $1.20 per share, surpassing the Zacks Consensus Estimate of $1.02. On a year-over-year basis, the bottom line jumped 15.4%.
For the reported quarter, Allegion’s net revenues were $694.3 million, up 2.9% year over year. The results were positively impacted by a 0.5% increase in organic sales and 0.4% impact from divestitures, partially offset by a 2.8% positive impact of foreign currency translation.
Also, the company’s top line surpassed the Zacks Consensus Estimate of $664 million.
The company reported revenues under two segments. A brief discussion of the quarterly results is provided below:
Revenues in the Allegion Americas segment fell 2.6% year over year to $498.9 million owing to softness in the non-residential business, partially offset by gains in the residential business.
Organic sales fell 2.9% year over year. However, foreign currency translation had a positive impact of 0.3% on the same.
Revenues in the Allegion International segment increased 20.2% year over year to $195.4 million for the quarter, reflecting growth across all major geographies and businesses.
Organic sales increased 11% year over year. Divestitures had a negative impact of 1.5% and foreign currency translation had a positive impact of 10.7% on sales.
For the reported quarter, Allegion’s cost of sales grew 4% year over year to $396.9 million. Cost of sales was 57.2% of the quarter’s net sales. Gross profit increased 1.5% year over year to $297.4 million, while gross margin fell 60 basis points (bps) to 42.8%.
Selling and administrative expenses decreased 1.1% year over year to $166.1 million. It represented 23.9% of net sales for the reported quarter versus 24.9% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $154 million, reflecting an increase of 4.7% from the prior-year quarter. Margin increased 40 bps year over year to 22.2%.
Adjusted operating income for the quarter increased 4.5% year over year to $134 million. Also, adjusted margin was 19.3%, up from 19% a year ago. Interest expense was $12.3 million, down 4.7% from the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Allegion had cash and cash equivalents of $394.3 million, down 17.9% from $480.4 million recorded in the last reported quarter. Long-term debt was relatively flat sequentially at $1,429.8 million.
It generated net cash of $111.8 million from operating activities in the first three months of 2021 compared with $30.8 million in the prior-year comparable period. Capital expenditure totaled $6.3 million compared with $11.8 million invested in the year-ago period. Free cash flow increased 455.3% from the prior-year figure to $105.5 million.
During the quarter, the company rewarded shareholders with a dividend payout of $32.5 million. The amount represents growth of 12.1% year over year. Amount spent on buying back shares totaled $149.7 million, up 59.1% from the year-ago figure.
For 2021, the company predicts revenues to grow 3-4% year over year. The metric was predicted to decline 0.5-1.5% year over year earlier. Organic sales are expected to rise 2-3% from a year ago. On a segmental basis, organic sales in the residential business in Allegion Americas and Allegion International are likely to increase from the prior year. However, organic sales in the non-residential business of Allegion Americas are likely to decline on a year-over-year basis.
Adjusted earnings are now expected in the range of $5.00-$5.15 per share, higher than $4.70-$4.85 guided earlier. Free cash flow for the year is expected within $430-$450 million.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks from the same space include Astec Industries, Inc. ASTE, Dover Corporation DOV and Applied Industrial Technologies, Inc. AIT. While Astec Industries currently sports a Zacks Rank #1 (Strong Buy), Dover and Applied Industrial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Astec Industries delivered an earnings surprise of 172.7%, on average, in the trailing four quarters.
Dover delivered an earnings surprise of 21.4%, on average, in the trailing four quarters.
Applied Industrial delivered an earnings surprise of 21.9%, on average, in the trailing four quarters.
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