Allegion Reports Second-Quarter 2021 Financial Results, Raises Full-Year 2021 Outlook
Allegion plc (“Allegion” or the “company”), a leading global provider of security products and solutions, today reported second-quarter 2021 net revenues of $746.9 million and net earnings of $118.7 million, or $1.31 per share. Excluding charges related to restructuring and acquisition and integration, adjusted net earnings were $119.3 million, or $1.32 per share, up 43.5 percent when compared with second-quarter 2020 adjusted EPS of $0.92.
Second-quarter 2021 net revenues increased 26.7 percent when compared to the prior-year period (up 23.8 percent on an organic basis). The organic revenue increase was driven by strength in both the Allegion Americas and Allegion International businesses, buoyed by strong demand and the favorable comparable from last year’s COVID-related shutdowns. Reported revenues also reflect benefits from foreign currency that more than offset the impact of divestitures.
The Allegion Americas segment revenues increased 23.7 percent (up 22.9 percent on an organic basis). The non-residential business was up high-single digits percent and the residential business experienced growth in excess of 70 percent. The organic growth was driven by strong demand for residential do-it-yourself and new construction products, as well as an increase in spending on non-residential discretionary projects. It also reflects the comparative impact of lower volumes, in the same quarter in 2020, caused by COVID-related shutdowns.
The Allegion International segment revenues increased 36 percent (up 26.6 percent on an organic basis), reflecting strong growth across all its major geographies and businesses. The organic growth was driven by continued recovery in end markets and includes the impact of comparing against last year’s COVID-related shutdowns.
Second-quarter 2021 operating income was $145.4 million, an increase of $48.9 million or 50.7 percent compared to 2020. Adjusted operating income in second-quarter 2021 was $146.2 million, an increase of $35 million or 31.5 percent compared to 2020.
Second-quarter 2021 operating margin was 19.5 percent, compared with 16.4 percent in 2020. The adjusted operating margin in second-quarter 2021 was 19.6 percent, compared with 18.9 percent in 2020. The 70-basis-point increase in adjusted operating margin is attributable to volume leverage, cost control measures and continued benefits of restructuring actions in the Allegion International segment that offset higher inflation, increased investment spend, mix and the impacts from certain benefits and cost reductions realized in the prior year due to the COVID-19 pandemic that either did not recur or are returning to more normalized levels.
“I’m encouraged by the robust customer demand and solid results delivered by our business in the second quarter,” said David D. Petratis, Allegion chairman, president and CEO. “We continue to see the benefits of the newly formed Allegion International reporting segment, including Q2 growth in the core business, strong execution and focus. Our Allegion Americas business experienced continued strength in residential, and non-residential returned to growth, driven by retrofit, repair and small projects. I’m also pleased with the growth in electronics and the margin expansion our company delivered against macroeconomic challenges like increased commodity, freight and labor inflation, as well as shortages in parts and labor.”
Interest expense for second-quarter 2021 was $12.4 million, down from $13 million for second-quarter 2020.
Other income net for second-quarter 2021 was $3.2 million, compared to other income net of $4.4 million in the same period of 2020.
The company’s effective tax rate for second-quarter 2021 was 12.8 percent, compared with 16.2 percent in 2020. The company’s adjusted effective tax rate for second-quarter 2021 was 12.8 percent, compared with 17.1 percent in 2020.
Cash Flow and Liquidity
Year-to-date available cash flow for 2021 was $249.6 million, an increase of $146 million versus the prior year. The year-over-year increase in available cash flow is due to higher net earnings, improvements in net working capital and lower capital expenditures. The company ended second-quarter 2021 with cash and cash equivalents of $460.2 million, as well as total debt of $1,430.4 million.
During second-quarter 2021, the company repurchased approximately 0.4 million shares for approximately $50.1 million under its previously authorized share-repurchase program approved by the company’s board of directors in February 2020.
The company is raising its full-year 2021 revenue outlook and now expects reported revenue growth of 7 to 7.5 percent and organic revenue growth of 5.5 to 6 percent, when compared with 2020, after excluding the expected impacts of divestitures and foreign currency movements.
The company is raising its full-year 2021 outlook for reported EPS to a range of $5.15 to $5.30 and raising adjusted EPS to a range of $5.25 to $5.40. Adjustments to 2021 EPS include estimated impacts of $0.10 per share for restructuring and acquisition and integration expenses. The outlook includes incremental investment of approximately $0.20 per share; assumes a full-year adjusted effective tax rate of approximately 12 percent; and assumes an average diluted share count for the full year of approximately 91 million shares.
The company is also raising its outlook for full-year available cash flow to approximately $490 to $510 million.
“Global macroeconomic indicators and construction indices continue to be positive, and demand has rebounded faster than anticipated,” Petratis added. “This heightened demand has led to global supply chain pressures that will temper the pace of recovery for the remainder of the year. We have stepped up our strategic investments and partnerships and believe those actions, paired with our demonstrated abilities in supply chain management, position us well to emerge from the pandemic strong as the market migrates to seamless access solutions.”
For the full second quarter results, click here.
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 $2.7 billion in revenue in 2020, and its security products are sold around the world.
Whitney Moorman – Reputation Management Leader – Whitney.Moorman@allegion.com – (317) 810-3241
Source: Allegion plc