Allegion (ALLE) Q4 Earnings Beat Estimates, Revenues In Line

Allegion plc (NYSE:ALLE) reported impressive results for fourth-quarter 2018, wherein its adjusted earnings beat the Zacks Consensus Estimate and revenues matched the same.

Earnings/Revenues

Quarterly adjusted earnings came in at $1.22 per share, outpacing the Zacks Consensus Estimate of $1.21. The bottom line was also 9.9% higher than the year-ago figure. The upside can be primarily attributed to impressive sales growth and improved operating income.

For full-year 2018, Allegion’s adjusted earnings came in at $4.50 per share, up 13.6% on a year-over-year basis.

Revenues for the reported quarter came in at $702.4 million, up 12.7% year over year. Notably, the top line matched the consensus estimate. Revenues improved 6.7% on an organic basis. The stellar performance was backed by solid end-market sales and acquisition benefits in the reported quarter, partially offset by adverse impacts of unfavorable foreign exchange movements.

For 2018, Allegion reported revenues of $2,731.7 million, up 13.4% on a year-over-year basis.

Segmental Break-Up

Revenues in the Americas segment rose 13% year over year to $492.7 million. The EMEIA (Europe, Middle East, India and Africa) segment’s revenues increased 4.4% to $157.4 million. Revenues in the Asia-Pacific segment surged 44.9% to $52.3 million in the reported quarter.

Costs/Margins

In the fourth quarter, Allegion’s cost of sales escalated 15.8% year over year to $401.9 million. Gross profit grew 8.9% while gross margin shrunk 150 basis points (bps) to 42.8%.

Selling and administrative expenses jumped 9.6% year over year to $159.1 million.

Adjusted operating margin contracted 90 bps to 20.1%.

Balance Sheet/Cash Flow

As of Dec 31, 2018, Allegion had cash and cash equivalents of $283.8 million, down from $466.2 recorded as of Dec 31 2017. Long-term debt was $1,409.5 million, down from $1,442.3 million recorded in 2017-end.

In 2018, the company generated net cash of $457.8 million from its operating activities, surging 31.9% from the previous year. Capital expenditures totaled $49.1 million against $49.3 million used in the last year.

2019 Guidance

Adjusted earnings per share are now expected in the range of $4.75 to $4.90, reflecting an increase of 6% to 9% year over year.

The company expects full-year 2019 revenue growth on both reported and organic basis in the band of 5-6%.

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

Available cash flow is targeted to be approximately $430-$450 million.

Zacks Rank & Key Picks

Allegion currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Axon Enterprise, Inc (NASDAQ:AAXN) , Alarm.com Holdings, Inc. (NASDAQ:ALRM) and Brady Corporation (NYSE:BRC) . While Axon Enterprise and Alarm.com Holdings sport a Zacks Rank #1 (Strong Buy), Brady carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise delivered average earnings surprise of 391.67% in the trailing four quarters.

Alarm.com Holdings pulled off average positive earnings surprise of 27.26% in the trailing four quarters.

Brady outpaced estimates in the last reported quarter by 7.04%.

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