Allegion (ALLE) Q1 Earnings & Revenues Beat, Margins Grow

Allegion plc’s (NYSE:ALLE) first-quarter 2017 adjusted earnings came in at 73 cents per share, surpassing the Zacks Consensus Estimate of 69 cents by 5.8%. Adjusted earnings were up 19.7% from the prior-year quarter.

Quarterly net revenue of $548.8 million beat the consensus mark of $536.9 million by 2.2%. The figure increased 9.3% on a year-over-year basis on the back of strong organic growth that was slightly offset by foreign currency impact.

Revenues were also up 8% on an organic basis. The growth was driven by strong performance in the Americas segment, reflecting continued strength in the region’s channel initiatives, synergies from new product introductions, electronics growth and strong market demand in both non-residential and residential businesses.

Segment Details

Revenues at the Americas segment rose 12.3% year over year to $407.6 million, driven by positive contribution from strategic initiatives and delayed shipments in the prior year related to an ERP implementation. The newly acquired Republic Door business and favorable foreign currency added to the growth.

Organic revenues also increased 10.3% on the back of low double-digit non-residential and mid single-digit residential growth.

The EMEIA (Europe, Middle East, India and Africa) segment was down 0.1% to $118.4 million, as the unfavorable foreign currency impact was partly offset by contribution from acquisitions and organic growth.

Organically, revenues grew 1.3% driven by solid growth in the SimonsVoss business and price gains.

Revenues at the Asia-Pacific segment were up 9.6% year over year to $22.8 million. Solid contribution from Australia and New Zealand as well as favorable foreign currency drove the results.

Organically, revenues were up 4.8%.

Margins

Adjusted operating margin was 18.3%, up 150 basis points (bps) year over year. Adjusted EBITDA margin improved 130 bps to 21.1%.

Financials

Allegion ended the quarter with cash and cash equivalents of $189.6 million, as of Mar 31, 2017, compared with $312.4 million as of Dec 31, 2016.

The cash used in operating activities during the quarter was $40.9 million compared with $0.8 million a year ago. Available cash flow in the quarter was $48.7 million versus $8.2 million in the first quarter of 2016.

Capital expenditures totaled $7.8 million in the quarter compared with $7.4 million a year ago.

During first-quarter 2017, Allegion repurchased 0.4 million shares for $30 million under its previously authorized repurchase program of $500 million.

2017 Guidance

The company updated its full-year earnings guidance. Adjusted earnings per share is now expected in the range of $3.60-$3.70 versus the prior expectation of $3.55 to $3.70.

The company expects full-year 2017 reported and organic revenues growth of 5.5% to 6.5% from 2016.

Full-year adjusted effective tax rate is anticipated in the 18.5% to 19.5% range.

Zacks Rank & Other Key Picks

The company currently carries a Zacks Rank #2 (Buy).

Other key picks in this industrial products sector include Ituran Location and Control Ltd. (NASDAQ:ITRN) , Alarm.Com Holdings, Inc. (NASDAQ:ALRM) and Hyster-Yale Materials Handling, Inc. (NYSE:HY) .

Ituran Location and Control sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ituran’s full-year earnings are expected to grow 28.8%.

Alarm.Com surpassed earnings estimates in each of the trailing four quarters, with an average beat of 40.56%.

Full-year earnings for Hyster-Yale Materials are expected to increase 23.8%.

Both Alarm.Com and Hyster-Yale Materials carry a Zacks Rank #2.

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