• Media
  • Supplier Portal
  • Locations
  • Contact Us

Allegion Reports Q3-2023 Financial Results

Allegion NYSE

Strong execution drives third-quarter results, company raises full-year adjusted EPS outlook


Quarterly Financial Highlights

(All comparisons against the third quarter of 2022, unless otherwise noted)

  • Net earnings per share (EPS) of $1.77, up 36.2% compared with $1.30; Adjusted EPS of $1.94, up 12.1% compared with $1.73
  • Revenues of $917.9 million, up 0.5% on a reported basis and down 0.6% on an organic basis
  • Operating margin of 21.0%, compared with 17.8%; Adjusted operating margin of 23.2%, up 110 basis points compared with 22.1%
  • Mid-teens organic growth for electronics and software solutions


Full-Year Outlook Highlights

  • Raising full-year adjusted EPS outlook to a range of $6.80 to $6.90
  • Affirming full-year 2023 revenue, reported EPS and available cash flow outlook


DUBLIN (Oct. 31, 2023) Allegion plc (NYSE: ALLE), a leading global security products and solutions provider, today reported financial results for its third quarter (ended Sept. 30, 2023).

“Allegion’s third-quarter results were driven by our team’s outstanding operational execution. We continued to expand margins, strengthened our balance sheet and significantly increased our year-to-date cash flow,” said President and CEO John H. Stone.

“Demand for our electronics solutions remains strong. We delivered mid-teens organic growth in electronics and software solutions in the quarter, and we continue to see a long runway for further adoption.”  

“Overall, Allegion is on track for a record year of revenue, adjusted operating income and adjusted EPS results. We are raising our full-year adjusted EPS outlook, while affirming our full-year revenue and available cash flow guidance.” 


Company Results

(All comparisons against the third quarter of 2022, unless otherwise noted)

Allegion reported third-quarter 2023 net revenues of $917.9 million and net earnings of $156.3 million, or $1.77 per share. Excluding charges related to restructuring, acquisition and integration costs, as well as amortization expense related to acquired intangible assets, adjusted net earnings were $171.5 million, or $1.94 per share, up 12.1%.

Third-quarter 2023 net revenues increased 0.5%. Excluding impacts of acquisitions, divestitures and foreign currency movements, net revenues decreased 0.6% on an organic basis against a tough comparable of 18.6% organic revenue growth in the prior-year quarter. Favorable price was more than offset by lower volumes experienced in the mechanical portfolio. The company had mid-teens global organic growth in electronics and software solutions in the quarter. The reported revenue reflects the positive impact of foreign currency of approximately $8 million.

Third-quarter 2023 operating income was $193.1 million, an increase of $30.2 million or 18.5%. Adjusted operating income in third-quarter 2023 was $213.4 million, an increase of $11.1 million or 5.5%.

Third-quarter 2023 operating margin was 21.0%, compared with 17.8%. The adjusted operating margin in third-quarter 2023 was 23.2%, compared with 22.1%. The 110-basis-point increase in adjusted operating margin is attributable to positive price and productivity net of inflation and investments. These increases were partially offset by lower volumes.

The company’s sustained focus on improving operational execution has yielded the highest year-to-date adjusted operating margins in its history.


Segment Results

(All comparisons against the third quarter of 2022, unless otherwise noted)

The Americas segment revenues were down 0.1% (flat on an organic basis). Favorable price was more than offset by lower volumes experienced in the mechanical portfolio. The segment had high-teens organic growth in electronics in the third quarter. The America’s non-residential business grew low-single digits, and the Access Technologies business was up mid-teens. The residential business continues to be soft and experienced a low-teens decline. The segment’s results are up against a tough prior-year comparison, as the non-residential business had organic growth of approximately 30% in the third quarter last year.

The International segment revenues increased 3.0% (down 2.8% on an organic basis). Soft end markets, especially in the Global Portable Security business and China, more than offset strength in electronics and software solutions and positive price realization. The reported revenue reflects a positive impact from foreign currency of approximately $9 million.


Additional Items

(All comparisons against the third quarter of 2022, unless otherwise noted)

Interest expense for third-quarter 2023 was $22.9 million, a decrease of $0.2 million.

Other expense net for third-quarter 2023 was $0.1 million, compared to other income net of $1.5 million.  In addition, the prior year included a $7.6 million loss related to a divestiture, which was excluded from adjusted EPS.

The company’s effective tax rate for third-quarter 2023 was 8.1%, compared with 14.3%. The company’s adjusted effective tax rate for third-quarter 2023 was 9.9%, compared with 15.4%, driven by timing of discrete items.


Cash Flow and Liquidity

Year-to-date available cash flow for 2023 was $320.4 million, an increase of $94.8 million versus the prior-year period. The year-over-year increase in available cash flow is due to increased year-to-date net earnings, partially offset by higher capital expenditures. The company ended third-quarter 2023 with cash and cash equivalents of $364.3 million, as well as total debt of $2,017.7 million. The company repaid the remaining $39.0 million of borrowings on its revolving credit facility in July of 2023.


Updated Full-Year Outlook

The company affirms its revenue growth for full-year 2023, which is expected to be 11.5% to 12.5%, with organic revenue growth expected to be 5.5% to 6.5%, excluding the expected impacts of acquisitions, divestitures and foreign currency movements.

The company is raising the outlook for full-year 2023 adjusted EPS and expects it to be in the $6.80 to $6.90 range. Reported EPS is expected to be within the previously stated range of $6.10 to $6.20.

Adjustments to 2023 EPS include estimated impacts of approximately $0.40 per share for acquisition-related amortization, as well as $0.30 per share for restructuring, M&A and amortization expense related to acquired backlog (approximately $9 million pre-tax).

The outlook assumes a headwind of approximately $0.29 for interest and other income, a full-year adjusted effective tax rate of approximately 15% and an average diluted share count for the full year of approximately 88.3 million shares.

The company affirms its full-year 2023 available cash flow outlook, which is expected to be approximately $500 to $520 million.


Conference Call Information

On Tuesday, Oct. 31, 2023, President and CEO John H. Stone and Senior Vice President and Chief Financial Officer Mike Wagnes will conduct a conference call for analysts and investors, beginning at 8 a.m. ET, to review the company's results. 

A real-time, listen-only webcast of the conference call will be broadcast live online. Individuals wishing to listen may access the call through the company's website at https://investor.allegion.com.



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 $3.3 billion in revenue in 2022, and its security products are sold around the world.

For more, visit www.allegion.com.


Non-GAAP Measures

This news release includes adjusted non-GAAP financial information which should be considered supplemental to, not a substitute for or superior to, the financial measure calculated in accordance with GAAP. The company presents operating income, operating margin, net earnings and diluted earnings per share (EPS) on both a U.S. GAAP basis and on an adjusted (non-GAAP) basis, revenue growth on a U.S. GAAP basis and organic revenue growth on a non-GAAP basis, EBITDA, adjusted EBITDA and adjusted EBITDA margin (all non-GAAP measures) and Available Cash Flow (“ACF”, a non-GAAP measure). The company presents these non-GAAP measures because management believes these non-GAAP measures provide management and investors useful perspective of the company’s underlying business results and trends and a more comparable measure of period-over-period results. These measures are also used to evaluate senior management and are a factor in determining at-risk compensation. Investors should not consider non-GAAP measures as alternatives to the related U.S. GAAP measures. Further information about the adjusted non-GAAP financial tables is attached to this news release.


Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, statements under the headings “Full-Year Outlook Highlights,” “Updated Full Year Outlook” and statements regarding the company's 2023 and future financial performance, the company’s business plans and strategy, the company’s growth strategy, the company’s capital allocation strategy, the company’s ability to successfully complete and integrate acquisitions and achieve anticipated strategic and financial benefits and the performance of the markets in which the company operates. These forward-looking statements generally are identified by the words “believe,” “aim,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax rate and provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Undue reliance should not be placed on any forward-looking statements, as these statements are based on the company's currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties - many of which are beyond the company’s control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Important factors and other risks that may affect the company's business or that could cause actual results to differ materially are included in filings the company makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q and in its other SEC filings. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. The company undertakes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


Media Contact:
Whitney Moorman – Director, Global Communications


Analyst Contact:
Jobi Coyle – Director, Investor Relations

Josh Pokrzywinski – Vice President, Investor Relations

Source: Allegion plc

Recommended News