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Allegion (ALLE) Q2 Earnings and Revenues Miss Estimates

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Allegion plc (ALLE - Free Report) reported disappointing results for second-quarter 2019, wherein adjusted earnings and revenues lagged the Zacks Consensus Estimate.

Earnings/Revenues

Quarterly adjusted earnings came in at $1.26 per share, missing the Zacks Consensus Estimate of $1.31. However, the bottom line was 0.8% higher than the year-ago figure. The upside can be primarily attributed to solid sales growth and improved operating income.

Revenues came in at $731.2 million, up 3.8% year over year. However, the top line missed the consensus estimate of $743.7 million. Revenues improved 3% on an organic basis. The rise was backed by strength in Americas non-residential business, strong pricing and acquisition benefits, partially offset by adverse impacts of unfavorable foreign exchange movements.

Allegion PLC Price, Consensus and EPS Surprise

Allegion PLC Price, Consensus and EPS Surprise

Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote

Revenues in the Americas rose 3.5% year over year to $545.1 million. EMEIA (Europe, Middle East, India and Africa) revenues declined 3.8% to $142.2 million. Revenues in the Asia-Pacific surged 45.8% to $43.9 million in the reported quarter.

Costs/Margins

In the second quarter, Allegion’s cost of sales escalated 2.9% year over year to $410.5 million. Gross profit grew 4.9% to $320.7 million while gross margin improved 50 basis points (bps) to 43.9%.

Selling and administrative expenses jumped 7.9% year over year to $175 million.

Adjusted operating margin expanded 20 bps to 21.5%.

Balance Sheet/Cash Flow

As of Jun 30, 2019, Allegion had cash and cash equivalents of $157.8 million, down from $283.8 recorded on Dec 31, 2018.  Long-term debt was $1,393.1 million, down from $1,409.5 million recorded at the end of 2018.

In the first six months of 2019, the company generated net cash of $107 million from operating activities, down 9.9% from the year-ago period. Capital expenditures totaled $29.3 million compared with $20.9 million a year ago.

2019 Guidance

Adjusted earnings per share are now expected in the range of $4.80 to $4.90 compared with $4.75 to $4.90 guided earlier.

The company expects full-year 2019 revenue growth on both reported and organic basis in the band of 4.5-5.5%.

Full-year adjusted effective tax rate is anticipated to be 16%.

Available cash flow is targeted to be approximately $410-$430 million.

Zacks Rank & Other Key Picks

Allegion currently carries a Zacks Rank #2(Buy).

Some other top-ranked stocks in the same space are DXP Enterprises, Inc. (DXPE - Free Report) , AptarGroup, Inc. (ATR - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), AptarGroup and Avery Dennison carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DXP Enterprises delivered average earnings surprise of 48.47% in the trailing four quarters.

AptarGroup pulled off average positive earnings surprise of 8.27% in the trailing four quarters.

Avery Dennison outpaced estimates in the last reported quarter by 1.10%.

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