Allegion Reports Mixed Q3 Results, Notes Margin Pressure, Reaffirms FY21 Outlook

  • Allegion PLC ALLE reported a third-quarter FY21 revenue decline of 1.6% year-over-year to $717 million, missing the consensus of $717.89 million.
  • Allegion Americas segment revenues decreased 2.7% Y/Y to $524.4 million, down 3% on an organic basis; and Allegion International segment revenues increased 1.7% Y/Y to $192.6 million, up 2.5% on an organic basis.
  • Adjusted EPS decreased to $1.56 compared to $1.67 in 3Q20, beating the consensus of $1.30.
  • The gross margin contracted by 190 bps to 41.9%.
  • The operating income decreased by 13.7% Y/Y to $138.4million, and the margin contracted by 270 bps to 19.3%. Adjusted operating margin declined by 330 bps to 20%.
  • Adjusted EBITDA was down 14.2% Y/Y to $162.3 million, and margin contracted by 340 bps to 22.6%.
  • Allegion generated cash from operating activities year-to-date of $356.4 million, compared to $289.4 million a year ago. It held cash and cash equivalents of $503.9 million and total debt of $1.43 billion.
  • FY21 Outlook: Allegion reaffirmed its 2021 revenue, EPS, and available cash flow outlooks. It expects revenue growth of 4% - 4.5% on a reported basis and 3% - 3.5% organically, representing $2.829 billion - $2.842 billion versus the consensus of $2.86 billion.
  • Allegion expects EPS of $4.95 - $5.05 and adjusted EPS of $5.00 - $5.10 versus the consensus of $5.13. 
  • Price Action: ALLE shares closed higher by 1.58% at $136.85 on Wednesday.
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