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Allegion (ALLE) Q2 Earnings and Revenues Beat Estimates

Allegion plc ALLE reported impressive second-quarter 2021 results, with earnings surpassing estimates by 2.3%. This marks the sixth consecutive quarter of better-than-expected bottom-line results. Sales surpassed estimates by 10.6%.

The company’s adjusted earnings in the quarter were $1.32 per share, surpassing the Zacks Consensus Estimate of $1.29. On a year-over-year basis, the bottom line jumped 43.5%.

Revenue Details

In the reported quarter, Allegion’s net revenues were $746.9 million, up 26.7% year over year. Increase in organic sales and foreign currency translation positively impacted results by 23.8% and 3.7%, respectively, partially offset by 0.8% impact from divestitures.

Also, the company’s top line surpassed the Zacks Consensus Estimate of $675 million.

The company reported revenues under two segments. A brief discussion of the quarterly results is provided below:

Revenues from Allegion Americas increased 23.7% year over year to $549.4 million, driven by strength in residential business and higher spending on non-residential discretionary projects.

Organic sales increased 22.9% year over year and foreign currency translation had a positive impact of 0.8% on the same.

Revenues from Allegion International increased 36% year over year to $197.5 million in the quarter, reflecting strong improvement across all major regions and businesses.

Organic sales increased 26.6% year over year. Divestitures had a negative impact of 3.2% and foreign currency translation had a positive impact of 12.6% on sales.

Margin Profile

In the reported quarter, Allegion’s cost of sales grew 24.4% year over year to $426.4 million. Cost of sales was 57.1% of the quarter’s net sales. Gross profit increased 30% year over year to $320.5 million, while gross margin expanded 110 basis points (bps) to 42.9%.

Selling and administrative expenses increased 16.7% year over year to $175.1 million. It represented 23.4% of net sales in the reported quarter versus 25.5% in the year-ago period. Adjusted earnings before interest, tax, depreciation and amortization were $165.8 million, reflecting an increase of 27.2%. Margin increased 10 bps year over year to 22.2%.

Adjusted operating income in the quarter increased 31.5% year over year to $146.2 million. Adjusted margin was 19.6%, up from 18.9% a year ago. Interest expense was $12.4 million, down 4.6%.

Balance Sheet & Cash Flow

Exiting the second quarter, Allegion had cash and cash equivalents of $460.2 million, up 16.7% from $394.3 million recorded in the last reported quarter. Long-term debt was $1,430.3 million, up from $1,429.8 million sequentially.

It generated net cash of $267.5 million from operating activities in the first six months of 2021 compared with $128 million in the prior-year period. Capital expenditure totaled $17.9 million against $24.4 million invested in the year-ago period. Free cash flow increased 140.9% to $249.6 million.

In the first six months of 2021, the company rewarded shareholders with a dividend payout of $64.6 million. The amount represents growth of 10.1% year over year. Amount spent on buying back shares totaled $199.8 million, up 112.3%.


For 2021, the company predicts revenues to grow 7-7.5% year over year. The metric was predicted to increase 3-4% earlier. Organic sales are expected to rise 5.5-6% from a year ago. On a segmental basis, organic sales in Allegion Americas segment are expected to grow 4-4.5% year over year, while the same for Allegion International are likely to increase 8.5-9.5%.

Adjusted earnings are expected in the range of $5.25-$5.40 per share, higher than $5.00-$5.15 guided earlier. Free cash flow for the year is expected within $490-$510 million, higher than $430-$450 million predicted earlier.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks are AZZ Inc. AZZ, A. O. Smith Corporation AOS and Eaton Corporation, plc ETN. While AZZ currently sports a Zacks Rank #1 (Strong Buy), A. O. Smith and Eaton carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AZZ delivered an earnings surprise of 21.24%, on average, in the trailing four quarters.

A. O. Smith delivered an earnings surprise of 14.84%, on average, in the trailing four quarters.

Eaton delivered an earnings surprise of 16.78%, on average, in the trailing four quarters.

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