Allegion Reports First-Quarter 2022 Financial Results, Raises Full-Year 2022 Revenue Outlook, Reaffirms Full-Year 2022 EPS Outlook
- First-quarter 2022 net earnings per share (EPS) of $1.05, compared with 2021 EPS of $1.18; First-quarter 2022 adjusted EPS of $1.07, down 10.8 percent compared with 2021 adjusted EPS of $1.20
- First-quarter 2022 revenues of $723.6 million, up 4.2 percent on a reported basis and up 6.4 percent on an organic basis
- First-quarter 2022 operating margin of 16.2 percent, compared with 2021 operating margin of 18.9 percent; Adjusted operating margin of 16.9 percent, down 240 basis points compared with 2021 adjusted operating margin of 19.3 percent
- Raising 2022 full-year revenue growth outlook to a range of 7.5 to 9 percent on a reported basis and 8.5 to 10 percent organically
- Reaffirming full-year 2022 EPS outlook range of $5.50 to $5.70 and adjusted EPS outlook range of $5.55 to $5.75
Allegion plc, a leading global provider of security products and solutions, today reported first-quarter 2022 net revenues of $723.6 million and net earnings of $93 million, or $1.05 per share. Excluding charges related to restructuring, acquisition and integration expenses, as well as a non-operating investment gain, adjusted net earnings were $95.2 million, or $1.07 per share, down 10.8 percent when compared with first-quarter 2021 adjusted EPS of $1.20.
First-quarter 2022 net revenues increased 4.2 percent when compared to the prior-year period (up 6.4 percent on an organic basis). The organic revenue increase was driven by improving price realization across the portfolio. Volume was essentially flat. Reported revenues reflect impacts from foreign currency and divestitures that offset the impact of acquisitions.
“The continued strength in demand is encouraging,” said David D. Petratis, Allegion chairman, president and CEO. “Americas non-residential and International markets are driving strong organic growth, and we were able to deliver significant improvement in price realization. Still, inflationary pressures persist, and supply chain, labor and electronic component challenges continue. We remain committed to driving price to offset inflationary pressures and expand margins.”
The Allegion Americas segment revenues increased 5.9 percent (up 5.9 percent on an organic basis). The organic increase was driven by improving price realization that was slightly offset by lower volume as a result of continued supply chain constraints, electronics and other parts shortages as well as a tough prior-year comparable. The non-residential business was up low-double digits percent driven by strong price realization and a modest volume increase. The residential business was down mid-single digit percent against a large channel load-in during the prior year.
The Allegion International segment revenues were flat (up 7.6 percent on an organic basis). The organic increase was driven by solid price realization and volume growth primarily in the SimonsVoss, Interflex and Global Portable Security businesses.
First-quarter 2022 operating income was $117 million, a decrease of $14.3 million or 10.9 percent compared to 2021. Adjusted operating income in first-quarter 2022 was $122.5 million, a decrease of $11.5 million or 8.6 percent compared to 2021.
First-quarter 2022 operating margin was 16.2 percent, compared with 18.9 percent in 2021. The adjusted operating margin in first-quarter 2022 was 16.9 percent, compared with 19.3 percent in 2021. The 240-basis-point decrease in adjusted operating margin is attributable to higher material and freight costs, productivity challenges caused by supply chain pressures and incremental investments that more than offset volume leverage.
Interest expense for first-quarter 2022 was $11.9 million, down from $12.3 million for first-quarter 2021.
Other income net for first-quarter 2022 was $2.2 million, compared to other income net of $3.5 million in the same period of 2021.
The company’s effective tax rate for first-quarter 2022 was 13.2 percent, compared with 11.7 percent in 2021. The company’s adjusted effective tax rate for first-quarter 2022 was 14 percent, compared with 12.3 percent in 2021.
Cash Flow and Liquidity
Year-to-date available cash flow for 2022 was $11.8 million, a decrease of $93.7 million versus the prior year. The year-over-year decrease in available cash flow is due to lower year-to-date net earnings and seasonal timing of net working capital changes. Available cash flow is consistent with historical trends in the first quarter. The company ended first-quarter 2022 with cash and cash equivalents of $305.1 million, as well as total debt of $1,439.4 million.
During first-quarter 2022, the company repurchased approximately 0.5 million shares for $61 million under its previously authorized share repurchase program, which was approved by the company’s board of directors in February 2020.
Acquisition of Stanley Access Technologies Business
On Friday, April 22, 2022, Allegion announced the acquisition of Stanley Access Technologies LLC (“Access Technologies”) and assets related to the automatic entrance solutions business from Stanley Black & Decker, Inc. (NYSE: SWK). The transaction is expected to close in the third quarter of 2022, subject to regulatory approval and customary closing conditions. Following the close of the transaction, Allegion expects to operate the Access Technologies business as part of the Allegion Americas segment.
“I’d like to reiterate how excited we are to welcome the Access Technologies business into the Allegion family,” said Petratis. “This acquisition adds a category market leader with high-quality products, an expansive service footprint and a strong financial profile to our portfolio. With a track record of innovation, the business and team are extremely complementary to Allegion.”
2022 Standalone Outlook
The company is raising its full-year 2022 revenue outlook and now expects reported revenue growth of 7.5 to 9 percent and organic revenue growth of 8.5 to 10 percent, when compared with 2021, after excluding the expected impacts of acquisitions, divestitures and foreign currency movements.
The company is reaffirming full-year 2022 reported EPS to be in the $5.50 to $5.70 range, with adjusted EPS between $5.55 to $5.75. Adjustments to 2022 EPS of $0.05 per share include expected charges for restructuring, acquisition and integration expenses, as well as non-operating investment gains and losses.
The outlook includes incremental investment of approximately $0.15 to $0.20 per share; assumes a full-year adjusted effective tax rate of approximately 13 percent; and assumes an average diluted share count for the full year of approximately 88.5 million shares.
The company expects full-year 2022 available cash flow of approximately $470 to $490 million.
The standalone outlook information included above does not include Access Technologies or anticipated costs related to the transaction. The company will provide an updated outlook, which will include the impacts of the acquisition, after the transaction closes.
For the complete press release, click here.
Allegion 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 $2.9 billion in revenue in 2021, and its security products are sold around the world. For more, visit www.allegion.com.
Tom Martineau – Vice President, Investor Relations, and Treasurer – Tom.Martineau@allegion.com – (317) 810-3759
Source: Allegion plc