Allegion Reports Q2-2024 Financial Results

Strong execution drives second-quarter performance; Company raises full-year outlook

Allegion plc, a leading global security products and solutions provider, reported financial results for its second quarter (ended June 30, 2024).

Quarterly Financial Highlights

(All comparisons against the second quarter of 2023, unless otherwise noted)

• Net earnings per share (EPS) of $1.77, up 9.9% compared with $1.61; Adjusted EPS of $1.96, up 11.4% compared with $1.76
• Revenues of $965.6 million, up 5.8% on a reported basis and up 5.2% on an organic basis
• Operating margin of 21.6%, compared with 20.2%; Adjusted operating margin of 23.7%, up 150 basis points compared with 22.2%

Full-Year Outlook Highlights

• Raising full-year reported revenue growth to a range of 2.5% to 3.5%
• Raising full-year adjusted EPS outlook to a range of $7.15 to $7.30
• Affirming available cash flow outlook

“Strong execution by the entire Allegion team drove record Q2 revenue and adjusted EPS,” said Allegion President and CEO John H. Stone.

“Q2 revenue growth and margin expansion demonstrate the resilience of Allegion’s business model. We see stability in demand given our broad end-market exposure and specification expertise. We are accelerating capital deployment, consistently returning cash to shareholders and investing in accretive acquisitions like Krieger Specialty Products and Unicel Architectural.”

“We’re raising our full-year guidance for reported revenue and adjusted EPS, and we’re affirming our available cash flow outlook. I’m proud of how the Allegion team lives our values while driving results for our customers and shareholders.”

Company Results

(All comparisons against the second quarter of 2023, unless otherwise noted)

Allegion reported second-quarter 2024 net revenues of $965.6 million and net earnings of $155.4 million, or $1.77 per share. Adjusted net earnings were $171.7 million, or $1.96 per share, up 11.4%, excluding charges related to restructuring, acquisition and integration costs, a non-cash impairment charge, as well as amortization expense related to acquired intangible assets.

Second-quarter 2024 net revenues increased 5.8%. Net revenues increased 5.2% on an organic basis, excluding impacts of acquisitions, divestitures and foreign currency movements. The organic revenue increase was driven by price realization and volume growth. Reported revenue reflects a 0.9% positive impact from acquisitions and a modest headwind from foreign currency.

Second-quarter 2024 operating income was $209.0 million, an increase of $24.4 million or 13.2%. Adjusted operating income in second-quarter 2024 was $228.6 million, an increase of $26.0 million or 12.8%.

Second-quarter 2024 operating margin was 21.6%, compared with 20.2%. The adjusted operating margin in second-quarter 2024 was 23.7%, compared with 22.2%. The 150-basis-point increase in adjusted operating margin is attributable to positive price and productivity net of inflation and investments as well as favorable volume leverage.

Segment Results

(All comparisons against the second quarter of 2023, unless otherwise noted)

The Americas segment revenues were up 6.0% (up 5.7% on an organic basis). The organic revenue increase was driven by price realization as well as volume growth. The non-residential business was up mid-single digits, and the residential business grew low-single digits. The reported revenue reflects a positive impact from acquisitions.

The International segment revenues increased 5.2% (up 3.1% on an organic basis). The organic revenue increase was driven by price realization and volume growth. Reported revenue reflects a positive impact from acquisitions of 3.2%, partially offset by a 1.1% headwind in foreign currency.

Additional Items

(All comparisons against the second quarter of 2023, unless otherwise noted)

Interest expense for second-quarter 2024 was $25.1 million, an increase of $1.4 million.

Other income, net for second-quarter 2024 was $5.1 million, compared to other income, net of $1.6 million.

The company’s effective tax rate for second-quarter 2024 was 17.8%, compared with 12.6%. The company’s adjusted effective tax rate for second-quarter 2024 was 18.2%, compared with 13.9%.

Cash Flow and Liquidity

Year-to-date available cash flow for 2024 was $176.0 million, a decrease of $14.1 million versus the prior-year period. The company ended second-quarter 2024 with cash and cash equivalents of $747.5 million, as well as total debt of $2,404.6 million.

Cash and debt balances include proceeds of $400.0 million from the May 2024 issuance of new 2034 senior notes, which will be used to repay the $400.0 million senior note maturity in the second half of 2024.

Share Repurchase and Dividends

In the second quarter of 2024, the company repurchased approximately 0.3 million shares for approximately $40 million and paid quarterly dividends of $0.48 per ordinary share or $41.8 million.

Updated Full-Year Outlook

(All comparisons against full-year 2023, unless otherwise noted)

The company is raising its revenue growth for full-year 2024, which is expected to be 2.5% to 3.5%, and tightening its organic revenue growth to be 1.5% to 2.5%, excluding the impacts of acquisition, divestitures and foreign currency movements.

The company is raising the outlook for full-year 2024 EPS and expects it to be in the range of $6.50 to $6.65, or $7.15 to $7.30 on an adjusted basis. The outlook assumes a headwind of approximately $0.37 based on a full-year adjusted effective tax rate of 18.0% to 19.0%, inclusive of the estimated impacts of global minimum tax.

Adjustments to 2024 EPS include estimated impacts of approximately $0.52 per share for acquisition-related amortization, as well as $0.13 per share for M&A, restructuring and other.

The outlook assumes an average diluted share count for the full year of approximately 87.7 million shares.

The company affirms expected full-year available cash flow of approximately $540 to $570 million.

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 $3.7 billion in revenue in 2023, and its security products are sold around the world. For more, visit www.allegion.com.

Contact:

Whitney Moorman – Director, Global Communications – Whitney.Moorman@allegion.com – (317) 810-3241

Source: Allegion plc