Allegion Reports Q3-2024 Financial Results

Revenue growth and margin expansion mark strong third-quarter performance

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

Quarterly Financial Highlights

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

• Net earnings per share (EPS) of $1.99, up 12.4% compared with $1.77; Adjusted EPS of $2.16, up 11.3% compared with $1.94
• Revenues of $967.1 million, up 5.4% on a reported basis and up 3.3% on an organic basis
• Operating margin of 22.2%, compared with 21.0%; Adjusted operating margin of 24.2%, up 100 basis points compared with 23.2%

Full-Year Outlook Highlights

• Affirming full-year reported revenue growth range of 2.5% to 3.5%
• Raising full-year adjusted EPS outlook to a range of $7.35 to $7.45
• Affirming available cash flow outlook

“Q3 marks another quarter of strong results for Allegion. Our team continued to perform at a high level, driving revenue growth and margin expansion that demonstrate the resilience of our business model,” said Allegion President and CEO John H. Stone.

“Heading into the last few months of 2024, we are focused on meeting customer needs and delivering on our commitments to shareholders. We’re raising our full-year guidance for adjusted EPS, and we’re affirming our total revenue and available cash flow outlook.”

Company Results

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

Allegion reported third-quarter 2024 net revenues of $967.1 million and net earnings of $174.2 million, or $1.99 per share. Adjusted net earnings were $189.3 million, or $2.16 per share, up 11.3%, which excludes charges related to restructuring, acquisition and integration costs, a non-cash impairment charge, as well as amortization expense related to acquired intangible assets.

Third-quarter 2024 net revenues increased 5.4%. Net revenues increased 3.3% on an organic basis, which excludes impacts of acquisitions, divestitures and foreign currency movements. The organic revenue increase was driven by price realization and volume growth. Reported revenue reflects a 1.9% positive impact from acquisitions and a modest tailwind from foreign currency.

Third-quarter 2024 operating income was $215.0 million, an increase of $21.9 million or 11.3%. Adjusted operating income in third-quarter 2024 was $233.7 million, an increase of $20.3 million or 9.5%.

Third-quarter 2024 operating margin was 22.2%, compared with 21.0%. The adjusted operating margin in third-quarter 2024 was 24.2%, compared with 23.2%. The 100-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 third quarter of 2023, unless otherwise noted)

The Americas segment revenues were up 5.6% (up 4.1% 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 1.6% positive impact from acquisitions and a modest headwind from foreign currency.

The International segment revenues increased 4.4% (up 0.2% on an organic basis). The organic revenue increase was driven by price realization offset partially by volume decline. Reported revenue reflects a positive impact from acquisitions of 2.9% and a 1.3% tailwind from foreign currency.

Additional Items

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

Interest expense for third-quarter 2024 was $28.8 million, an increase of $5.9 million.

Other income, net for third-quarter 2024 was $8.4 million, compared to other expense, net of $0.1 million.

The company’s effective tax rate for third-quarter 2024 was 10.5%, compared with 8.1%. The company’s adjusted effective tax rate for third-quarter 2024 was 12.0%, compared with 9.9%.

Cash Flow and Liquidity

Year-to-date available cash flow for 2024 was $388.0 million, an increase of $67.6 million versus the prior-year period. The company ended third-quarter 2024 with cash and cash equivalents of $878.9 million, as well as total debt of $2,402.1 million.

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

Share Repurchase and Dividends

In the third 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 affirming its reported revenue growth for full-year 2024, which is expected to be 2.5% to 3.5%. The company is also affirming expected organic revenue growth of 1.5% to 2.5%, which excludes the impacts of acquisitions, 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 $6.70 to $6.80, or $7.35 to $7.45 on an adjusted basis. The outlook assumes a headwind of approximately $0.25 based on a full-year adjusted effective tax rate of 16.5% to 17.5%, 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 87.6 million shares.

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

For full results 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 $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