Ireland | 001-35971 | 98-1108930 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
Exhibit No. | Description | ||
Press Release of Allegion plc dated April 25, 2019 |
ALLEGION PLC (Registrant) | ||
Date: | April 25, 2019 | /s/ Patrick S. Shannon |
Patrick S. Shannon Senior Vice President and Chief Financial Officer |
• | First-quarter 2019 net earnings per share (EPS) of $0.84, compared with 2018 EPS of $0.75; Adjusted 2019 EPS of $0.88, up 10 percent compared with 2018 adjusted EPS of $0.80 |
• | First-quarter 2019 revenues of $655 million, up 6.8 percent compared to 2018, up 5.8 percent on an organic basis |
• | First-quarter 2019 operating margin of 16.5 percent, compared with 2018 operating margin of 16.1 percent; Adjusted operating margin of 17.1 percent, increased 10 basis points compared with 2018 adjusted operating margin of 17 percent |
• | Affirming outlook for 2019 full-year revenue and full-year EPS; Full-year 2019 reported and organic revenue growth of 5 to 6 percent; Full-year 2019 EPS outlook of $4.60 to $4.75, and $4.75 to $4.90 on an adjusted basis |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net revenues | $ | 655.0 | $ | 613.1 | ||||
Cost of goods sold | 378.1 | 355.3 | ||||||
Gross profit | 276.9 | 257.8 | ||||||
Selling and administrative expenses | 168.9 | 159.1 | ||||||
Operating income | 108.0 | 98.7 | ||||||
Interest expense | 13.7 | 12.9 | ||||||
Other income, net | (1.1 | ) | (0.4 | ) | ||||
Earnings before income taxes | 95.4 | 86.2 | ||||||
Provision for income taxes | 15.1 | 13.8 | ||||||
Net earnings | 80.3 | 72.4 | ||||||
Less: Net earnings attributable to noncontrolling interests | 0.1 | 0.2 | ||||||
Net earnings attributable to Allegion plc | $ | 80.2 | $ | 72.2 | ||||
Basic earnings per ordinary share | ||||||||
attributable to Allegion plc shareholders: | ||||||||
Net earnings | $ | 0.85 | $ | 0.76 | ||||
Diluted earnings per ordinary share | ||||||||
attributable to Allegion plc shareholders: | ||||||||
Net earnings | $ | 0.84 | $ | 0.75 | ||||
Shares outstanding - basic | 94.5 | 95.1 | ||||||
Shares outstanding - diluted | 95.1 | 95.8 |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 153.8 | $ | 283.8 | |||
Restricted cash | 6.8 | 6.8 | |||||
Accounts and notes receivables, net | 359.6 | 324.9 | |||||
Inventories | 296.8 | 280.3 | |||||
Other current assets | 33.2 | 35.8 | |||||
Total current assets | 850.2 | 931.6 | |||||
Property, plant and equipment, net | 275.1 | 276.7 | |||||
Goodwill | 878.7 | 883.0 | |||||
Intangible assets, net | 536.3 | 547.1 | |||||
Other noncurrent assets | 260.5 | 171.8 | |||||
Total assets | $ | 2,800.8 | $ | 2,810.2 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 198.3 | $ | 235.0 | |||
Accrued expenses and other current liabilities | 252.0 | 250.5 | |||||
Short-term borrowings and current maturities of long-term debt | 35.1 | 35.3 | |||||
Total current liabilities | 485.4 | 520.8 | |||||
Long-term debt | 1,401.3 | 1,409.5 | |||||
Other noncurrent liabilities | 276.7 | 225.9 | |||||
Equity | 637.4 | 654.0 | |||||
Total liabilities and equity | $ | 2,800.8 | $ | 2,810.2 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net earnings | $ | 80.3 | $ | 72.4 | |||
Depreciation and amortization | 20.7 | 22.5 | |||||
Changes in assets and liabilities and other non-cash items | (113.6 | ) | (105.0 | ) | |||
Net cash used in operating activities | (12.6 | ) | (10.1 | ) | |||
Investing Activities | |||||||
Capital expenditures | (12.3 | ) | (8.7 | ) | |||
Acquisition of and equity investments in businesses, net of cash acquired | (4.6 | ) | (276.3 | ) | |||
Other investing activities, net | (0.8 | ) | 0.1 | ||||
Net cash used in investing activities | (17.7 | ) | (284.9 | ) | |||
Financing Activities | |||||||
Net debt (repayments) proceeds | (9.0 | ) | 31.2 | ||||
Dividends paid to ordinary shareholders | (25.2 | ) | (19.7 | ) | |||
Repurchase of ordinary shares | (63.8 | ) | (30.0 | ) | |||
Other financing activities, net | (1.2 | ) | (2.4 | ) | |||
Net cash used in financing activities | (99.2 | ) | (20.9 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (0.5 | ) | 1.5 | ||||
Net decrease in cash, cash equivalents and restricted cash | (130.0 | ) | (314.4 | ) | |||
Cash, cash equivalents and restricted cash - beginning of period | 290.6 | 466.2 | |||||
Cash, cash equivalents and restricted cash - end of period | $ | 160.6 | $ | 151.8 |
ALLEGION PLC | SCHEDULE 1 |
Three months ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Net revenues | |||||||
Americas | $ | 475.3 | $ | 439.1 | |||
EMEIA | 142.9 | 150.3 | |||||
Asia Pacific | 36.8 | 23.7 | |||||
Total net revenues | $ | 655.0 | $ | 613.1 | |||
Operating income (loss) | |||||||
Americas | $ | 120.9 | $ | 109.7 | |||
EMEIA | 10.8 | 8.5 | |||||
Asia Pacific | (1.5 | ) | (1.5 | ) | |||
Corporate unallocated | (22.2 | ) | (18.0 | ) | |||
Total operating income | $ | 108.0 | $ | 98.7 |
ALLEGION PLC | SCHEDULE 2 |
• | Adjustments to operating income, operating margin, net earnings, EPS and EBITDA include items such as goodwill impairment charges, restructuring charges, asset impairments, acquisition and integration costs, debt refinancing costs, amounts related to U.S. Tax Reform (2018 only) and charges related to the divestiture of businesses; |
• | Organic revenue growth is defined as U.S. GAAP revenue growth excluding the impact of divestitures, acquisitions and currency effects; and |
• | Available cash flow is defined as U.S. GAAP net cash from operating activities less capital expenditures. |
Three months ended March 31, 2019 | Three months ended March 31, 2018 | ||||||||||||||||||||||
Reported | Adjustments | Adjusted (non-GAAP) | Reported | Adjustments | Adjusted (non-GAAP) | ||||||||||||||||||
Net revenues | $ | 655.0 | $ | — | $ | 655.0 | $ | 613.1 | $ | — | $ | 613.1 | |||||||||||
Operating income | 108.0 | 4.1 | (1) | 112.1 | 98.7 | 5.5 | (1) | 104.2 | |||||||||||||||
Operating margin | 16.5 | % | 17.1 | % | 16.1 | % | 17.0 | % | |||||||||||||||
Earnings before income taxes | 95.4 | 4.1 | (2) | 99.5 | 86.2 | 5.5 | (2) | 91.7 | |||||||||||||||
Provision for income taxes | 15.1 | 0.8 | (3) | 15.9 | 13.8 | 1.1 | (3) | 14.9 | |||||||||||||||
Effective income tax rate | 15.8 | % | 16.0 | % | 16.0 | % | 16.2 | % | |||||||||||||||
Net earnings | 80.3 | 3.3 | 83.6 | 72.4 | 4.4 | 76.8 | |||||||||||||||||
Non-controlling interest | 0.1 | — | 0.1 | 0.2 | — | 0.2 | |||||||||||||||||
Net earnings attributable to Allegion plc | $ | 80.2 | $ | 3.3 | $ | 83.5 | $ | 72.2 | $ | 4.4 | $ | 76.6 | |||||||||||
Diluted earnings per ordinary | |||||||||||||||||||||||
share attributable to Allegion plc | |||||||||||||||||||||||
shareholders: | $ | 0.84 | $ | 0.04 | $ | 0.88 | $ | 0.75 | $ | 0.05 | $ | 0.80 |
(1) | Adjustments to operating income for the three months ended March 31, 2019 consist of $4.1 million of restructuring charges and acquisition and integration expenses. Adjustments to operating income for the three months ended March 31, 2018 consist of $5.5 million of restructuring charges, acquisition and integration expenses and backlog amortization related to an acquisition. |
(2) | Adjustments to earnings before income taxes for the three months ended March 31, 2019 and 2018 consist of the adjustments to operating income discussed above. |
(3) | Adjustments to the provision for income taxes for the three months ended March 31, 2019 and 2018 consist of $0.8 million and $1.1 million, respectively, of tax expense related to the excluded items discussed above. |
ALLEGION PLC | SCHEDULE 3 |
Three months ended March 31, 2019 | Three months ended March 31, 2018 | ||||||||||||
As Reported | Margin | As Reported | Margin | ||||||||||
Americas | |||||||||||||
Net revenues (GAAP) | $ | 475.3 | $ | 439.1 | |||||||||
Operating income (GAAP) | $ | 120.9 | 25.4 | % | $ | 109.7 | 25.0 | % | |||||
Restructuring charges | 1.8 | 0.4 | % | — | — | % | |||||||
Acquisition and integration costs | 0.4 | 0.1 | % | 0.9 | 0.2 | % | |||||||
Backlog amortization | — | — | % | 2.9 | 0.6 | % | |||||||
Adjusted operating income | 123.1 | 25.9 | % | 113.5 | 25.8 | % | |||||||
Depreciation and amortization | 9.1 | 1.9 | % | 8.6 | 2.0 | % | |||||||
Adjusted EBITDA | $ | 132.2 | 27.8 | % | $ | 122.1 | 27.8 | % | |||||
EMEIA | |||||||||||||
Net revenues (GAAP) | $ | 142.9 | $ | 150.3 | |||||||||
Operating income (GAAP) | $ | 10.8 | 7.6 | % | $ | 8.5 | 5.7 | % | |||||
Restructuring charges | 0.8 | 0.5 | % | 0.2 | 0.1 | % | |||||||
Acquisition and integration costs | 0.1 | 0.1 | % | 0.3 | 0.2 | % | |||||||
Adjusted operating income | 11.7 | 8.2 | % | 9.0 | 6.0 | % | |||||||
Depreciation and amortization | 8.3 | 5.8 | % | 8.4 | 5.6 | % | |||||||
Adjusted EBITDA | $ | 20.0 | 14.0 | % | $ | 17.4 | 11.6 | % | |||||
Asia Pacific | |||||||||||||
Net revenues (GAAP) | $ | 36.8 | $ | 23.7 | |||||||||
Operating loss (GAAP) | (1.5 | ) | (4.1 | )% | (1.5 | ) | (6.3 | )% | |||||
Restructuring charges | 0.5 | 1.4 | % | 0.5 | 2.1 | % | |||||||
Acquisition and integration costs | 0.3 | 0.8 | % | — | — | % | |||||||
Adjusted operating loss | (0.7 | ) | (1.9 | )% | (1.0 | ) | (4.2 | )% | |||||
Depreciation and amortization | 1.2 | 3.3 | % | 0.7 | 3.0 | % | |||||||
Adjusted EBITDA | $ | 0.5 | 1.4 | % | $ | (0.3 | ) | (1.2 | )% | ||||
Corporate | |||||||||||||
Operating loss (GAAP) | $ | (22.2 | ) | $ | (18.0 | ) | |||||||
Acquisition and integration costs | 0.2 | 0.7 | |||||||||||
Adjusted operating loss | (22.0 | ) | (17.3 | ) | |||||||||
Depreciation and amortization | 1.1 | 1.0 | |||||||||||
Adjusted EBITDA | $ | (20.9 | ) | $ | (16.3 | ) | |||||||
Total | |||||||||||||
Net revenues | $ | 655.0 | $ | 613.1 | |||||||||
Adjusted operating income | 112.1 | 17.1 | % | 104.2 | 17.0 | % | |||||||
Depreciation and amortization | 19.7 | 3.0 | % | 18.7 | 3.0 | % | |||||||
Adjusted EBITDA | $ | 131.8 | 20.1 | % | $ | 122.9 | 20.0 | % |
ALLEGION PLC | SCHEDULE 4 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Net cash used in operating activities | $ | (12.6 | ) | $ | (10.1 | ) | |
Capital expenditures | (12.3 | ) | (8.7 | ) | |||
Available cash flow | $ | (24.9 | ) | $ | (18.8 | ) |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Net earnings (GAAP) | $ | 80.3 | $ | 72.4 | |||
Provision for income taxes | 15.1 | 13.8 | |||||
Interest expense | 13.7 | 12.9 | |||||
Depreciation and amortization | 19.7 | 18.7 | |||||
Backlog amortization | — | 2.9 | |||||
EBITDA | 128.8 | 120.7 | |||||
Other income, net | (1.1 | ) | (0.4 | ) | |||
Acquisition and integration costs and restructuring charges | 4.1 | 2.6 | |||||
Adjusted EBITDA | $ | 131.8 | $ | 122.9 |
ALLEGION PLC | SCHEDULE 5 | |||||
RECONCILIATION OF GAAP REVENUE GROWTH TO NON-GAAP ORGANIC REVENUE GROWTH BY REGION | ||||||
Three Months Ended | ||||||
March 31, | ||||||
2019 | 2018 | |||||
Americas | ||||||
Revenue growth (GAAP) | 8.2 | % | 7.7 | % | ||
Acquisitions and divestitures | (0.9 | )% | (4.7 | )% | ||
Currency translation effects | 0.3 | % | (0.3 | )% | ||
Organic growth (non-GAAP) | 7.6 | % | 2.7 | % | ||
EMEIA | ||||||
Revenue growth (GAAP) | (4.9 | )% | 26.9 | % | ||
Acquisitions and divestitures | (0.9 | )% | (5.6 | )% | ||
Currency translation effects | 7.5 | % | (15.4 | )% | ||
Organic growth (non-GAAP) | 1.7 | % | 5.9 | % | ||
Asia Pacific | ||||||
Revenue growth (GAAP) | 55.3 | % | 3.9 | % | ||
Acquisitions and divestitures | (63.2 | )% | — | % | ||
Currency translation effects | 5.7 | % | (3.7 | )% | ||
Organic growth (non-GAAP) | (2.2 | )% | 0.2 | % | ||
Total | ||||||
Revenue growth (GAAP) | 6.8 | % | 11.7 | % | ||
Acquisitions and divestitures | (3.3 | )% | (4.7 | )% | ||
Currency translation effects | 2.3 | % | (3.7 | )% | ||
Organic growth (non-GAAP) | 5.8 | % | 3.3 | % |