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Allegion Reports Second-Quarter 2022 Financial Results, Revises Full-Year 2022 Outlook

General News
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  • Second-quarter 2022 net earnings per share (EPS) of $1.30, compared with 2021 EPS of $1.31; Second-quarter 2022 adjusted EPS of $1.37, up 3.8 percent compared with 2021 adjusted EPS of $1.32
  • Second-quarter 2022 revenues of $773.1 million, up 3.5 percent on a reported basis and up 6.4 percent on an organic basis
  • Second-quarter 2022 operating margin of 19 percent, compared with 2021 operating margin of 19.5 percent; Adjusted operating margin of 20 percent, up 40 basis points compared with 2021 adjusted operating margin of 19.6 percent
  • Revising 2022 full-year revenue growth outlook to a range of 13 to 14 percent on a reported basis and 9 to 10 percent organically, inclusive of recently closed Stanley Access Technologies LLC (“Access Technologies”) acquisition
  • Revising full-year 2022 EPS outlook to a range of $5.05 to $5.15 and adjusted EPS outlook to a range of $5.35 to $5.45, inclusive of recently closed Access Technologies acquisition

Allegion plc , a leading global provider of security products and solutions, today reported second-quarter 2022 net revenues of $773.1 million and net earnings of $115.1 million, or $1.30 per share. Excluding charges related to restructuring, acquisition and integration expenses, debt financing, as well as non-operating investment gains, adjusted net earnings were $121.1 million, or $1.37 per share, up 3.8 percent when compared with second-quarter 2021 adjusted EPS of $1.32.

Second-quarter 2022 net revenues increased 3.5 percent when compared to the prior-year period (up 6.4 percent on an organic basis). The organic revenue increase was driven by significant and improving price realization across the portfolio along with strong volume in the Allegion Americas non-residential business offsetting weakness experienced in Allegion Americas residential and Allegion International businesses. Reported revenues reflect over $22 million in foreign currency exchange rate headwinds.

“Allegion continues to deliver sequential improvements with the second-quarter results in the face of tough macroeconomic conditions,” said Allegion Executive Chairman David D. Petratis, who served as Allegion president and CEO through second-quarter 2022. “Americas non-residential markets were strong, and we were able to deliver significant price realization in all regions. While electronic components challenges continue, our supply chain actions, over the last year, are resulting in improving components availability.”

The Allegion Americas segment revenues increased 7.8 percent (up 8 percent on an organic basis). The organic increase was driven by strong price realization that was slightly offset by lower volumes in the residential business. The non-residential business grew high-teens percent, driven by price realization and volume. The residential business declined mid-teens percent, driven by continued electronic parts shortages and a prior-year catch-up on COVID-related backlogs that built during 2020, both of which more than offset price.

The Allegion International segment revenues declined 8.5 percent (up 1.9 percent on an organic basis). The organic increase was driven by price realization in the region offsetting softening volumes that were driven by COVID-19 lockdowns in China and geopolitical challenges. The reported revenue reflects the negative impact of currency movements in the region.

Second-quarter 2022 operating income was $147.1 million, an increase of $1.7 million or 1.2 percent compared to 2021. Adjusted operating income in second-quarter 2022 was $154.9 million, an increase of $8.7 million or 6 percent compared to 2021.

Second-quarter 2022 operating margin was 19 percent, compared with 19.5 percent in 2021. The adjusted operating margin in second-quarter 2022 was 20 percent, compared with 19.6 percent in 2021. The 40-basis-point increase in adjusted operating margin is attributable to price and productivity exceeding inflation and positive business mix offsetting pressure from incremental investments.

Additional Items

Interest expense for second-quarter 2022 was $17.2 million, an increase from $12.4 million for second-quarter 2021. The increase was driven by $4.3 million of debt financing fees related to the previously announced Access Technologies business acquisition, which are excluded from adjusted EPS.

Other income net for second-quarter 2022 was $3.4 million, compared to other income net of $3.2 million in the same period of 2021. The 2022 figure includes $4 million of non-operating investment gains that are excluded from adjusted EPS.

The company’s effective tax rate for second-quarter 2022 was 13.6 percent, compared with 12.8 percent in 2021. The company’s adjusted effective tax rate for second-quarter 2022 was 14.3 percent, compared with 12.8 percent in 2021.

Cash Flow and Liquidity

Year-to-date available cash flow for 2022 was $84.5 million, a decrease of $165.1 million versus the prior year. The year-over-year decrease in available cash flow is due to increases in net working capital and lower year-to-date net earnings. Available cash flow is consistent with historical year-to-date trends, excluding 2021.

The company ended second-quarter 2022 with cash and cash equivalents of $919.6 million, as well as total debt of $2,030.7 million. These amounts are inclusive of the issuance of $600 million of senior notes in June, which the company issued to help finance its acquisition of the Access Technologies business in July, together with an additional $340 million drawn in July on its 2021 revolving facility.

While the financing of this acquisition has increased its leverage, Allegion remains comfortably within all of its financial covenants. Further, the company does not believe this acquisition, or the related financing, will diminish Allegion’s sound financial position or ability to meet short-term financing needs.

Closing of the Access Technologies Business Acquisition

On Tuesday, July 5, 2022, Allegion completed the acquisition of the Access Technologies business and assets related to the automatic entrance solutions business from Stanley Black & Decker, Inc. (NYSE: SWK). This business is operating as part of the Allegion Americas segment.

For additional information on this acquisition, review the company’s July 5, 2022, press release.

President and CEO Transition

On Monday, July 11, 2022, John H. Stone assumed the role of Allegion president and CEO, succeeding Petratis, who announced his retirement on May 31, 2022.

Most recently, Stone served as president of Deere & Company’s Worldwide Construction, Forestry and Power Systems business, where he was responsible for the sustainable, profitable growth of the company’s construction and forestry equipment business as well as the continued success of the Wirtgen Group. Stone previously headed Deere’s Intelligent Solutions Group, the company’s precision-ag technology arm, where he led the acquisition of tech startup Blue River Technology, the establishment of the San Francisco John Deere Labs office and the precision-ag headquarters in Urbandale, Iowa. He holds a bachelor’s degree in mechanical engineering from the United States Military Academy and an MBA from Harvard Business School.

“Allegion is entering a new chapter, where we will build on our powerful legacy of great products and operational excellence, as well as layer in new technology and innovations that will benefit those we serve,” Stone said. “I am grateful and excited to be a part of the Allegion story and work with this strong team of experts, who are delivering on our vision of seamless access and a safer world.”

Updated 2022 Outlook

The company is raising its full-year 2022 revenue outlook and now expects reported revenue growth of 13 to 14 percent and organic revenue growth of 9 to 10 percent, when compared with 2021, after excluding the expected impacts of acquisitions, divestitures and foreign currency movements. The increase in the organic outlook is driven primarily by additional pricing actions to mitigate inflationary pressures.

The company is revising its full-year 2022 reported EPS to be in the $5.05 to $5.15 range, with adjusted EPS between $5.35 to $5.45. The revised outlook includes an additional $0.09 per share pressure related to currency movements from the prior outlook. The revised outlook also assumes approximately negative $0.10 adjusted EPS impact for the balance of the year related to the Access Technologies business and costs related to the acquisition, broken down as approximately $0.20 per share from operations, approximately negative $0.13 per share for intangible asset amortization and approximately negative $0.17 per share for interest expense.

Adjustments to 2022 EPS of approximately $0.30 per share include expected charges for restructuring, acquisition and integration expenses and debt financing costs, as well as non-operating investment gains and losses.

The outlook includes incremental investment of approximately $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 $420 to $440 million. The decrease from the prior outlook is primarily driven by investing in inventory to build supply chain resiliency.

For the complete press release, click here.

About Allegion

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 $2.9 billion in revenue in 2021, and its security products are sold around the world.


Tom Martineau – Vice President, Investor Relations, and Treasurer  – – (317) 810-3759

Source: Allegion plc