Allegion Reports Third-Quarter 2018 Financial Results
- Third-quarter 2018 net earnings per share (EPS) of $1.21, compared
with 2017 EPS of $0.94; Adjusted 2018 EPS of $1.23, up 20.6 percent
compared with 2017 adjusted EPS of $1.02
- Third-quarter 2018 revenue of $711.5 million, up 16.8 percent
compared to 2017, up 8.5 percent on an organic basis
- Third-quarter 2018 operating margin of 20 percent, compared with
2017 operating margin of 20.9 percent; Adjusted operating margin of
20.9 percent, declined 140 basis points compared with 2017 adjusted
operating margin of 22.3 percent due to dilution from acquisitions;
2018 acquisitions were dilutive to adjusted operating margins by 140
basis points
- Updating outlook for 2018 full-year revenue and full-year EPS;
Full-year 2018 reported revenue growth of 13 to 13.5 percent and
organic revenue growth of 5 to 5.5 percent; Full-year 2018 EPS outlook
of $4.23 to $4.35 and $4.43 to $4.50 per share on an adjusted basis
DUBLIN--(BUSINESS WIRE)--
Allegion
plc (NYSE: ALLE), a leading global provider of security products and
solutions, today reported third-quarter 2018 net revenues of $711.5
million and net earnings of $116 million, or $1.21 per share. Excluding
charges related to restructuring, acquisitions and adjustments to
provisional amounts related to the enactment of tax reform, adjusted net
earnings were $117.9 million, or $1.23 per share, up 20.6 percent when
compared with third-quarter 2017 adjusted EPS of $1.02.
Third-quarter net revenues increased 16.8 percent when compared to the
prior year period (up 8.5 percent on an organic basis). Reported
revenues reflect strong organic growth across all regions, as well as
benefits from acquisitions offsetting foreign currency impacts.
Third-quarter 2018 operating income was $142.3 million, an increase of
$15.2 million or 12 percent compared to 2017. Adjusted operating income
in third-quarter 2018 was $149 million, representing an increase of
$13.4 million or 9.9 percent compared to 2017.
Third-quarter 2018 operating margin was 20 percent, compared with 20.9
percent in 2017. The adjusted operating margin in third-quarter 2018 was
20.9 percent, compared with 22.3 percent in 2017. The 140-basis-point
decline in adjusted operating margin is attributable to dilution from
the 2018 acquisitions.
“I am pleased with our performance as we delivered another quarter of
double-digit top-line revenue growth, with organic growth rates in the
high-single digits,” said David D. Petratis, Allegion chairman,
president and CEO. “Robust electronics growth as well as solid top-line
performance across all three regions drove that strong organic growth,
and end-market fundamentals remain healthy.
“I am also very pleased with the more than 20-percent increase in
adjusted EPS as inflationary pressures continued to challenge operating
margins. Excluding acquisitions, the base business margins were flat
year over year, as the global team continues to drive price realization,
productivity and other cost savings to mitigate significant inflationary
pressures,” Petratis added.
The Americas segment revenue increased 16.5 percent (up 10.1 percent on
an organic basis). The revenue growth was driven by robust growth in
electronics (nearly 30 percent), very strong pricing and solid volume in
both the non-residential and residential businesses. Acquisitions
contributed 6.6 percent to the overall growth.
The EMEIA segment revenues were up 7.4 percent (up 3.4 percent on an
organic basis), reflecting solid pricing, modest volume and
contributions from acquisitions partially offset by unfavorable foreign
currency.
The Asia-Pacific segment revenues increased 61.5 percent (up 5.9 percent
on an organic basis). The revenue growth in the quarter was driven by
the recently acquired Gainsborough Hardware and API Locksmiths business
as well as solid volume partially offset by unfavorable currency.
Additional Items
Interest expense for third-quarter 2018 was $14 million, down from the
$17.8 million for third-quarter 2017. The decrease is driven by the
refinancing of the company’s debt completed in 2017.
Other income net for third-quarter 2018 was $1.9 million. This compares
to other income net for third-quarter 2017 of $2.7 million.
The company’s effective tax rate for third-quarter 2018 was 10.8
percent, compared with 19.6 percent in 2017. The company’s adjusted
effective tax rate for third-quarter 2018 was 13.8 percent, compared
with 20 percent in 2017. The decrease in the adjusted effective tax rate
is primarily due to decreased tax rates related to U.S. tax reform.
Cash Flow and Liquidity
Year-to-date 2018 available cash flow was $228.6 million, up $92.3
million versus the prior year. The year-over-year improvement
in available cash flow is primarily due to the non-recurring $50 million
discretionary pension funding payment in the prior year along with
higher earnings and favorable working capital.
The company ended third-quarter 2018 with cash of $189.7 million and
total debt of $1,452.7 million.
2018 Outlook
The company is updating the full-year 2018 revenue outlook to reflect
total growth of 13 to 13.5 percent and organic growth of 5 to 5.5
percent compared to 2017.
The company is updating full-year 2018 reported EPS to a range of $4.23
to $4.35, and adjusted EPS to a range of $4.43 to $4.50 per share.
Adjustments to 2018 EPS include estimated impacts for restructuring and
acquisition activities as well as adjustments to provisional amounts
related to the enactment of tax reform. The outlook assumes no change to
investment spend, which continues to be approximately $0.15 per share; a
full-year adjusted effective tax rate of approximately 14.5 percent; and
an average diluted share count for the full year of approximately 96
million shares.
The company continues to target full-year available cash flow of
approximately $380 to $400 million.
Conference Call Information
On Thursday, Oct. 25, 2018, David D. Petratis, chairman, president and
CEO, and Patrick Shannon, senior vice president and chief financial
officer, 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 http://investor.allegion.com.
About Allegion™
Allegion (NYSE: ALLE) is a global pioneer in safety and security, with
leading brands like CISA®, Interflex®, LCN®,
Schlage®, SimonsVoss® and Von Duprin®. Focusing
on security around the door and adjacent areas, Allegion produces a
range of solutions for homes, businesses, schools and other
institutions. Allegion is a $2.4 billion company, with products sold in
approximately 130 countries.
For more, visit www.allegion.com.
Adoption of New Accounting Standard
During the first quarter, the company adopted ASU 2017-07, “Compensation
– Retirement Benefits (Topic 715): Improving the Presentation of Net
Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU
2017-07 requires that an employer report the service cost component in
the same line item or items as other compensation costs arising from
services rendered by the pertinent employees during the period. The
other components of net benefit cost are required to be presented in the
statement of comprehensive income separately from the service cost
component and outside of a subtotal of operating income. The company has
applied ASU 2017-07 retrospectively for the presentation of the service
cost component and the other components of net periodic pension cost and
net periodic postretirement benefit cost and prospectively for the
capitalization of the service cost component of net periodic pension
cost and net periodic postretirement benefit in assets. As a result of
adopting the new accounting standard, there is a minor restatement
within the prior year P&L with no impact on revenue, net earnings or
earnings per share. Schedule 6, accompanying this press release,
summarizes the impact to prior periods.
Non-GAAP Measures
This news release also 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,
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 (non-GAAP), and also presents adjusted (non-GAAP)
EBITDA and EBITDA margin. The company presents these non-GAAP measures
because management believes they provide useful perspective of the
company’s underlying business results, 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 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 statements regarding the company's 2018
financial performance, the company’s growth strategy, the company’s
capital allocation strategy, the company’s tax planning strategies, and
the performance of the markets in which the company operates. These
forward-looking statements generally are identified by the words
“believe,” “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 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. Further information on these factors and other risks that
may affect the company's business is included in filings it makes with
the Securities and Exchange Commission from time to time, including its
Form 10-K for the year ended Dec. 31, 2017, Form 10-Q for the quarters
ended March 31, 2018, June 30, 2018, and Sept. 30, 2018, and in its
other SEC filings. The company undertakes no obligation to update these
forward-looking statements.
|
| |
| |
| ALLEGION PLC |
| Condensed and Consolidated Income Statements |
| (in millions, except per share data) |
|
UNAUDITED |
| | | |
|
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| | | | | | | |
|
|
Net revenues
| |
$
|
711.5
| | |
$
|
609.4
| | |
$
|
2,029.3
| | |
$
|
1,785.1
| |
|
Cost of goods sold
| |
402.1
|
| |
335.0
|
| |
1,156.5
|
| |
988.2
|
|
|
Gross profit
| |
309.4
| | |
274.4
| | |
872.8
| | |
796.9
| |
| | | | | | | |
|
|
Selling and administrative expenses
| |
167.1
|
| |
147.3
|
| |
488.4
|
| |
435.3
|
|
|
Operating income
| |
142.3
| | |
127.1
| | |
384.4
| | |
361.6
| |
| | | | | | | |
|
|
Interest expense
| |
14.0
| | |
17.8
| | |
40.3
| | |
49.7
| |
|
Other income, net
| |
(1.9
|
)
| |
(2.7
|
)
| |
(3.9
|
)
| |
(5.6
|
)
|
|
Earnings before income taxes
| |
130.2
| | |
112.0
| | |
348.0
| | |
317.5
| |
| | | | | | | |
|
|
Provision for income taxes
| |
14.1
|
| |
21.9
|
| |
45.5
|
| |
52.9
|
|
| | | | | | | |
|
|
Net earnings
| |
116.1
| | |
90.1
| | |
302.5
| | |
264.6
| |
| | | | | | | |
|
|
Less: Net earnings attributable to noncontrolling interests
| |
0.1
|
| |
0.3
|
| |
0.4
|
| |
0.9
|
|
| | | | | | | |
|
|
Net earnings attributable to Allegion plc
| |
$
|
116.0
|
| |
$
|
89.8
|
| |
$
|
302.1
|
| |
$
|
263.7
|
|
| | | | | | | |
|
| Basic earnings per ordinary share | | | | | | | | |
attributable to Allegion plc shareholders:
| | | | | | | | |
|
Net earnings
| |
$
|
1.22
|
| |
$
|
0.95
|
| |
$
|
3.18
|
| |
$
|
2.77
|
|
| | | | | | | |
|
| Diluted earnings per ordinary share | | | | | | | | |
|
attributable to Allegion plc shareholders:
| |
| |
| |
| |
|
|
Net earnings
| |
$
|
1.21
|
| |
$
|
0.94
|
| |
$
|
3.15
|
| |
$
|
2.75
|
|
| | | | | | | |
|
|
Shares outstanding - basic
| |
95.1
| | |
95.0
| | |
95.1
| | |
95.2
| |
|
Shares outstanding - diluted
| |
95.8
| | |
95.8
| | |
95.8
| | |
96.0
| |
| | | | | | | | | | | |
|
|
| |
| |
| ALLEGION PLC |
| Condensed and Consolidated Balance Sheets |
| (in millions) |
|
UNAUDITED |
| | | |
|
| | September 30, 2018 | | December 31, 2017 |
|
ASSETS
| | | | |
|
Cash and cash equivalents
| |
$
|
189.7
| |
$
|
466.2
|
|
Restricted cash
| |
6.8
| |
—
|
|
Accounts and notes receivables, net
| |
361.4
| |
296.6
|
|
Inventory
| |
278.3
| |
239.8
|
|
Other current assets
| |
37.1
| |
30.1
|
|
Total current assets
| |
873.3
| |
1,032.7
|
|
Property, plant and equipment, net
| |
273.3
| |
252.2
|
|
Goodwill
| |
878.0
| |
761.2
|
|
Intangible assets, net
| |
558.4
| |
394.3
|
|
Other noncurrent assets
| |
147.1
| |
101.6
|
|
Total assets
| |
$
|
2,730.1
| |
$
|
2,542.0
|
| | | |
|
|
LIABILITIES AND EQUITY
| | | | |
|
Accounts payable
| |
$
|
208.0
| |
$
|
188.3
|
|
Accrued expenses and other current liabilities
| |
243.9
| |
237.5
|
Short-term borrowings and current maturities of long-term debt
| |
35.0
| |
35.0
|
|
Total current liabilities
| |
486.9
| |
460.8
|
|
Long-term debt
| |
1,417.7
| |
1,442.3
|
|
Other noncurrent liabilities
| |
226.5
| |
233.4
|
|
Equity
| |
599.0
| |
405.5
|
|
Total liabilities and equity
| |
$
|
2,730.1
| |
$
|
2,542.0
|
| | | | | |
|
|
| |
| ALLEGION PLC |
| Condensed and Consolidated Cash Flows |
| (in millions) |
|
UNAUDITED |
| |
|
| | Nine Months Ended September 30, |
| | 2018 |
| 2017 |
|
Operating Activities
| | | | |
|
Net earnings
| |
$
|
302.5
| | |
$
|
264.6
| |
|
Depreciation and amortization
| |
65.8
| | |
49.9
| |
|
Discretionary pension plan contribution
| |
—
| | |
(50.0
|
)
|
|
Changes in assets and liabilities and other non-cash items
| |
(107.9
|
)
| |
(94.5
|
)
|
|
Net cash provided by operating activities
| |
260.4
| | |
170.0
| |
| | | |
|
|
Investing Activities
| | | | |
|
Capital expenditures
| |
(31.8
|
)
| |
(33.7
|
)
|
|
Acquisition of and equity investments in businesses, net of cash
acquired
| |
(375.8
|
)
| |
(20.8
|
)
|
|
Other investing activities, net
| |
(1.1
|
)
| |
18.4
|
|
|
Net cash used in investing activities
| |
(408.7
|
)
| |
(36.1
|
)
|
| | | |
|
|
Financing Activities
| | | | |
|
Net debt repayments
| |
(27.4
|
)
| |
(16.1
|
)
|
|
Debt issuance costs
| |
—
| | |
(3.0
|
)
|
|
Dividends paid to ordinary shareholders
| |
(59.6
|
)
| |
(45.6
|
)
|
|
Repurchase of ordinary shares
| |
(30.0
|
)
| |
(60.0
|
)
|
|
Other financing activities, net
| |
0.1
|
| |
6.0
|
|
|
Net cash used in financing activities
| |
(116.9
|
)
| |
(118.7
|
)
|
| | | |
|
|
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
| |
(4.5
|
)
| |
7.3
|
|
|
Net (decrease) increase in cash, cash equivalents, and restricted
cash
| |
(269.7
|
)
| |
22.5
| |
|
Cash, cash equivalents, and restricted cash - beginning of period
| |
466.2
|
| |
312.4
|
|
|
Cash, cash equivalents, and restricted cash - end of period
| |
$
|
196.5
|
| |
$
|
334.9
|
|
| | | | | | | |
|
SUPPLEMENTAL SCHEDULES
|
| |
ALLEGION PLC | | SCHEDULE 1 |
| |
|
| SELECTED OPERATING SEGMENT INFORMATION |
| (in millions) |
| | |
| |
| | Three months ended | | Nine months ended |
| | September 30, | | September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Net revenues
| | | | | | | | |
| Americas | |
$
|
530.1
| | |
$
|
455.2
| | |
$
|
1,495.9
| | |
$
|
1,331.4
| |
|
EMEIA
| |
134.4
| | |
125.1
| | |
432.5
| | |
372.7
| |
| Asia Pacific | |
47.0
|
| |
29.1
|
| |
100.9
|
| |
81.0
|
|
|
Total net revenues
| |
$
|
711.5
|
| |
$
|
609.4
|
| |
$
|
2,029.3
|
| |
$
|
1,785.1
|
|
| | | | | | | |
|
|
Operating income (loss)
| | | | | | | | |
| Americas | |
$
|
153.8
| | |
$
|
133.2
| | |
$
|
415.5
| | |
$
|
383.6
| |
|
EMEIA
| |
7.6
| | |
8.6
| | |
27.3
| | |
23.1
| |
| Asia Pacific | |
1.5
| | |
2.2
| | |
0.8
| | |
5.1
| |
|
Corporate unallocated
| |
(20.6
|
)
| |
(16.9
|
)
| |
(59.2
|
)
| |
(50.2
|
)
|
|
Total operating income
| |
$
|
142.3
|
| |
$
|
127.1
|
| |
$
|
384.4
|
| |
$
|
361.6
|
|
| | | | | | | | | | | | | | | |
|
The Company presents operating income, operating margin, net earnings,
diluted earnings per share (EPS), on both a U.S. GAAP basis and on an
adjusted basis, revenue growth on a U.S. GAAP basis and organic revenue
growth (non-GAAP), and also presents adjusted EBITDA and adjusted EBITDA
margin. The Company presents these measures because management believes
they provide useful perspective of the Company’s underlying business
results, 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.
The Company defines the presented non-GAAP measures as follows:
-
Adjustments to operating income, operating margin, net earnings, EPS
and EBITDA include items such as goodwill impairment charges,
restructuring charges, asset impairments, merger and acquisitions
costs, debt refinancing costs, adjustments to provisional amounts
related to the enactment of tax reform, 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
-
Available cash flow is defined as U.S. GAAP net cash provided by
operating activities less capital expenditures.
These non-GAAP measures may not be defined and calculated the same as
similar measures used by other companies.
|
| |
| |
| RECONCILIATION OF GAAP TO NON-GAAP NET EARNINGS |
|
|
| (in millions, except per share data) |
| | | |
|
| | Three months ended September 30, 2018 | | Three months ended September 30, 2017 |
| | |
| | |
Adjusted
| | |
| | |
Adjusted
|
| |
Reported
| |
Adjustments
| |
(non-GAAP)
| |
Reported
| |
Adjustments
| |
(non-GAAP)
|
|
Net revenues
| |
$
|
711.5
| | |
$
|
—
| | |
$
|
711.5
| | |
$
|
609.4
| | |
$
|
—
| | |
$
|
609.4
| |
| | | | | | | | | | | |
|
|
Operating income
| |
142.3
| | |
6.7
| | (1) |
149.0
| | |
127.1
| | |
8.5
| | (1) |
135.6
| |
|
Operating margin
| | 20.0 | % | | | | 20.9 | % | | 20.9 | % | | | | 22.3 | % |
| | | | | | | | | | | |
|
|
Earnings before income taxes
| |
130.2
| | |
6.7
| | (2) |
136.9
| | |
112.0
| | |
10.1
| | (2) |
122.1
| |
|
Provision for income taxes
| |
14.1
| | |
4.8
| | (3) |
18.9
| | |
21.9
| | |
2.5
| | (3) |
24.4
| |
|
Effective income tax rate
| | 10.8 | % | |
| | 13.8 | % | | 19.6 | % | |
| | 20.0 | % |
|
Net earnings
| |
116.1
| | |
1.9
| | |
118.0
| | |
90.1
| | |
7.6
| | |
97.7
| |
| | | | | | | | | | | |
|
|
Non-controlling interest
| |
0.1
|
| |
—
|
| |
0.1
|
| |
0.3
|
| |
—
|
| |
0.3
|
|
| | | | | | | | | | | |
|
|
Net earnings attributable to Allegion plc
| |
$
|
116.0
|
| |
$
|
1.9
|
| |
$
|
117.9
|
| |
$
|
89.8
|
| |
$
|
7.6
|
| |
$
|
97.4
|
|
| | | | | | | | | | | |
|
| |
| |
| |
| |
| |
| |
|
Diluted earnings per ordinary share attributable to Allegion plc
shareholders:
| |
$
|
1.21
|
| |
$
|
0.02
|
| |
$
|
1.23
|
| |
$
|
0.94
|
| |
$
|
0.08
|
| |
$
|
1.02
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
(1)
|
|
Adjustments to operating income for the three months ended September
30, 2018 and September 30, 2017 consist of $6.7 million and $8.5
million of restructuring charges and merger and acquisition
expenses, respectively.
|
|
(2)
| |
Adjustments to earnings before income taxes for the three months
ended September 30, 2018 consist of the adjustments to operating
income discussed above. Adjustments to earnings before income taxes
for the three months ended September 30, 2017 consist of the
adjustments to operating income discussed above and $1.6 million of
charges related to the refinance of the Company's Credit Facility.
|
|
(3)
| |
Adjustments to the provision for income taxes for the three months
ended September 30, 2018 consist of $1.5 million of tax expense
related to the excluded items discussed above and $3.3 million tax
benefit related to an adjustment to the provisional amounts
previously recognized related to the enactment of tax reform.
Adjustments to the provision for income taxes for the three months
ended September 30, 2017 consist of $2.5 million of tax expense
related to the excluded items discussed above.
|
| |
|
|
| |
| |
| | Nine months ended September 30, 2018 | | Nine months ended September 30, 2017 |
| | |
| | |
Adjusted
| | |
| | |
Adjusted
|
| |
Reported
| |
Adjustments
| |
(non-GAAP)
| |
Reported
| |
Adjustments
| |
(non-GAAP)
|
|
Net revenues
| |
$
|
2,029.3
| | |
$
|
—
| | |
$
|
2,029.3
| | |
$
|
1,785.1
| | |
$
|
—
| | |
$
|
1,785.1
| |
| | | | | | | | | | | |
|
|
Operating income
| |
384.4
| | |
18.9
| | (1) |
403.3
| | |
361.6
| | |
12.3
| | (1) |
373.9
| |
| Operating margin | | 18.9 | % | | | | 19.9 | % | | 20.3 | % | | | | 20.9 | % |
| | | | | | | | | | | |
|
|
Earnings before income taxes
| |
348.0
| | |
18.9
| | (2) |
366.9
| | |
317.5
| | |
13.9
| | (2) |
331.4
| |
|
Provision for income taxes
| |
45.5
| | |
7.2
| | (3) |
52.7
| | |
52.9
| | |
3.8
| | (3) |
56.7
| |
| Effective income tax rate | | 13.1 | % | |
| | 14.4 | % | | 16.7 | % | |
| | 17.1 | % |
|
Net earnings
| |
302.5
| | |
11.7
| | |
314.2
| | |
264.6
| | |
10.1
| | |
274.7
| |
| | | | | | | | | | | |
|
|
Non-controlling interest
| |
0.4
|
| |
—
|
| |
0.4
|
| |
0.9
|
| |
| |
0.9
|
|
| | | | | | | | | | | |
|
|
Net earnings attributable to Allegion plc
| |
$
|
302.1
|
| |
$
|
11.7
|
| |
$
|
313.8
|
| |
$
|
263.7
|
| |
$
|
10.1
|
| |
$
|
273.8
|
|
| | | | | | | | | | | |
|
| |
| |
| |
| |
| |
| |
|
Diluted earnings per ordinary share attributable to Allegion plc
shareholders:
| |
$
|
3.15
|
| |
$
|
0.13
|
| |
$
|
3.28
|
| |
$
|
2.75
|
| |
$
|
0.10
|
| |
$
|
2.85
|
|
|
(1)
|
|
Adjustments to operating income for the nine months ended September
30, 2018 consist of $18.9 million of restructuring charges, merger
and acquisition expenses, and backlog amortization related to an
acquisition. Adjustments to operating income for the nine months
ended September 30, 2017 consist of $12.3 million of restructuring
charges and merger and acquisition expenses.
|
|
(2)
| |
Adjustments to earnings before income taxes for the nine months
ended September 30, 2018 consist of the adjustments to operating
income discussed above. Adjustments to earnings before income taxes
for the nine months ended September 30, 2017 consist of the
adjustments to operating income discussed above and $1.6 million of
charges related to the refinance of the Company's Credit Facility.
|
|
(3)
| |
Adjustments to the provision for income taxes for the nine months
ended September 30, 2018 consist of $3.9 million of tax expense
related to the excluded items discussed above and $3.3 million tax
benefit related to an adjustment to the provisional amounts
previously recognized related to the enactment of tax reform.
Adjustments to the provision for income taxes for the nine months
ended September 30, 2017 consist of $3.8 million of tax expense
related to the excluded items discussed above.
|
| |
|
|
| |
ALLEGION PLC | | SCHEDULE 3 |
|
|
| RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING INCOME
BY REGION |
| (in millions) |
| | |
| |
| | Three months ended September 30, 2018 | | Three months ended September 30, 2017 |
| |
As Reported
|
|
Margin
| |
As Reported
|
|
Margin
|
| Americas | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
530.1
| | | | |
$
|
455.2
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
$
|
153.8
| | |
29.0
|
%
| |
$
|
133.2
| | |
29.3
|
%
|
|
Restructuring charges
| |
—
| | |
—
|
%
| |
5.3
| | |
1.1
|
%
|
|
Merger and acquisition costs
| |
0.5
|
| |
0.1
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
154.3
| | |
29.1
|
%
| |
138.5
| | |
30.4
|
%
|
|
Depreciation and amortization
| |
9.0
|
| |
1.7
|
%
| |
6.4
|
| |
1.4
|
%
|
|
Adjusted EBITDA
| |
$
|
163.3
|
| |
30.8
|
%
| |
$
|
144.9
|
| |
31.8
|
%
|
| | | | | | | |
|
| EMEIA | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
134.4
| | | | |
$
|
125.1
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
$
|
7.6
| | |
5.7
|
%
| |
$
|
8.6
| | |
6.9
|
%
|
|
Restructuring charges
| |
2.2
| | |
1.6
|
%
| |
1.5
| | |
1.2
|
%
|
|
Merger and acquisition costs
| |
0.4
|
| |
0.3
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
10.2
| | |
7.6
|
%
| |
10.1
| | |
8.1
|
%
|
|
Depreciation and amortization
| |
8.0
|
| |
6.0
|
%
| |
7.5
|
| |
6.0
|
%
|
|
Adjusted EBITDA
| |
$
|
18.2
|
| |
13.6
|
%
| |
$
|
17.6
|
| |
14.1
|
%
|
| | | | | | | |
|
| Asia Pacific | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
47.0
| | | | |
$
|
29.1
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
1.5
| | |
3.2
|
%
| |
2.2
| | |
7.6
|
%
|
|
Restructuring charges
| |
0.5
| | |
1.1
|
%
| |
—
| | |
—
|
%
|
|
Merger and acquisition costs
| |
1.2
|
| |
2.5
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
3.2
| | |
6.8
|
%
| |
2.2
| | |
7.6
|
%
|
|
Depreciation and amortization
| |
1.3
|
| |
2.8
|
%
| |
0.6
|
| |
2.0
|
%
|
|
Adjusted EBITDA
| |
$
|
4.5
|
| |
9.6
|
%
| |
$
|
2.8
|
| |
9.6
|
%
|
| | | | | | | |
|
| Corporate | | | | | | | | |
|
Operating loss (GAAP)
| |
$
|
(20.6
|
)
| | | |
$
|
(16.9
|
)
| | |
|
Restructuring charges
| |
—
| | | | |
0.5
| | | |
|
Merger and acquisition costs
| |
1.9
|
| | | |
1.2
|
| | |
|
Adjusted operating loss
| |
(18.7
|
)
| | | |
(15.2
|
)
| | |
|
Depreciation and amortization
| |
1.0
|
| | | |
1.0
|
| | |
|
Adjusted EBITDA
| |
$
|
(17.7
|
)
| | | |
$
|
(14.2
|
)
| | |
| | | | | | | |
|
| Total | | | | | | | | |
|
Net revenues
| |
$
|
711.5
| | | | |
$
|
609.4
| | | |
| | | | | | | |
|
|
Adjusted operating income
| |
149.0
| | |
20.9
|
%
| |
135.6
| | |
22.3
|
%
|
|
Depreciation and amortization
| |
19.3
|
| |
2.7
|
%
| |
15.5
|
| |
2.5
|
%
|
|
Adjusted EBITDA
| |
$
|
168.3
|
| |
23.6
|
%
| |
$
|
151.1
|
| |
24.8
|
%
|
| | | | | | | | | | | | | |
|
|
| Nine months ended September 30, 2018 |
| Nine months ended September 30, 2017 |
| |
As Reported
|
|
Margin
| |
As Reported
|
|
Margin
|
| Americas | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
1,495.9
| | | | |
$
|
1,331.4
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
$
|
415.5
| | |
27.8
|
%
| |
$
|
383.6
| | |
28.8
|
%
|
|
Restructuring charges
| |
(0.1
|
)
| |
—
|
%
| |
5.4
| | |
0.4
|
%
|
|
Merger and acquisition costs
| |
1.9
| | |
0.1
|
%
| |
0.3
| | |
—
|
%
|
|
Backlog amortization
| |
6.3
|
| |
0.4
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
423.6
| | |
28.3
|
%
| |
389.3
| | |
29.2
|
%
|
|
Depreciation and amortization
| |
26.8
|
| |
1.8
|
%
| |
19.6
|
| |
1.5
|
%
|
|
Adjusted EBITDA
| |
$
|
450.4
|
| |
30.1
|
%
| |
$
|
408.9
|
| |
30.7
|
%
|
| | | | | | | |
|
| EMEIA | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
432.5
| | | | |
$
|
372.7
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
$
|
27.3
| | |
6.3
|
%
| |
$
|
23.1
| | |
6.2
|
%
|
|
Restructuring charges
| |
3.2
| | |
0.7
|
%
| |
3.9
| | |
1.1
|
%
|
|
Merger and acquisition costs
| |
0.9
|
| |
0.2
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
31.4
| | |
7.2
|
%
| |
27.0
| | |
7.3
|
%
|
|
Depreciation and amortization
| |
24.1
|
| |
5.6
|
%
| |
21.0
|
| |
5.6
|
%
|
|
Adjusted EBITDA
| |
$
|
55.5
|
| |
12.8
|
%
| |
$
|
48.0
|
| |
12.9
|
%
|
| | | | | | | |
|
| Asia Pacific | | | | | | | | |
|
Net revenues (GAAP)
| |
$
|
100.9
| | | | |
$
|
81.0
| | | |
| | | | | | | |
|
|
Operating income (GAAP)
| |
$
|
0.8
| | |
0.8
|
%
| |
$
|
5.1
| | |
6.3
|
%
|
|
Restructuring charges
| |
1.0
| | |
1.0
|
%
| |
—
| | |
—
|
%
|
|
Merger and acquisition costs
| |
1.2
|
| |
1.2
|
%
| |
—
|
| |
—
|
%
|
|
Adjusted operating income
| |
3.0
| | |
3.0
|
%
| |
5.1
| | |
6.3
|
%
|
|
Depreciation and amortization
| |
2.7
|
| |
2.6
|
%
| |
1.8
|
| |
2.2
|
%
|
|
Adjusted EBITDA
| |
$
|
5.7
|
| |
5.6
|
%
| |
$
|
6.9
|
| |
8.5
|
%
|
| | | | | | | |
|
| Corporate | | | | | | | | |
|
Operating loss (GAAP)
| |
$
|
(59.2
|
)
| | | |
$
|
(50.2
|
)
| | |
|
Restructuring charges
| |
—
| | | | |
0.6
| | | |
|
Merger and acquisition costs
| |
4.5
|
| | | |
2.1
|
| | |
|
Adjusted operating loss
| |
(54.7
|
)
| | | |
(47.5
|
)
| | |
|
Depreciation and amortization
| |
3.1
|
| | | |
3.0
|
| | |
|
Adjusted EBITDA
| |
$
|
(51.6
|
)
| | | |
$
|
(44.5
|
)
| | |
| | | | | | | |
|
| Total | | | | | | | | |
|
Net revenues
| |
$
|
2,029.3
| | | | |
$
|
1,785.1
| | | |
| | | | | | | |
|
|
Adjusted operating income
| |
403.3
| | |
19.9
|
%
| |
373.9
| | |
21.0
|
%
|
|
Depreciation and amortization
| |
56.7
|
| |
2.8
|
%
| |
45.4
|
| |
2.5
|
%
|
|
Adjusted EBITDA
| |
$
|
460.0
|
| |
22.7
|
%
| |
$
|
419.3
|
| |
23.5
|
%
|
| | | | | | | | | | | | | |
|
|
| |
ALLEGION PLC | | SCHEDULE 4 |
| |
|
| RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO
AVAILABLE CASH FLOW AND NET EARNINGS TO ADJUSTED EBITDA |
| (in millions) |
| |
|
| | Nine months ended September 30, |
| | 2018 |
| 2017 (1) |
|
Net cash used in operating activities
| |
$
|
260.4
| | |
$
|
170.0
| |
|
Capital expenditures
| |
(31.8
|
)
| |
(33.7
|
)
|
|
Available cash flow
| |
$
|
228.6
|
| |
$
|
136.3
|
|
(1) includes a $50.0 million discretionary pension plan contribution
|
| |
| |
| | Three Months Ended September 30, | | Nine months ended September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Net earnings (GAAP)
| |
$
|
116.1
| | |
$
|
90.1
| | |
$
|
302.5
| | |
$
|
264.6
| |
|
Provision for income taxes
| |
14.1
| | |
21.9
| | |
45.5
| | |
52.9
| |
|
Interest expense
| |
14.0
| | |
17.8
| | |
40.3
| | |
49.7
| |
|
Backlog amortization
| |
—
| | |
—
| | |
6.3
| | |
—
| |
|
Depreciation and amortization
| |
19.3
|
| |
15.5
|
| |
56.7
|
| |
45.4
|
|
|
EBITDA
| |
163.5
| | |
145.3
| | |
451.3
| | |
412.6
| |
| | | | | | | |
|
|
Other income, net
| |
(1.9
|
)
| |
(2.7
|
)
| |
(3.9
|
)
| |
(5.6
|
)
|
|
Merger and acquisition costs and restructuring charges
| |
6.7
|
| |
8.5
|
| |
12.6
|
| |
12.3
|
|
|
Adjusted EBITDA
| |
$
|
168.3
|
| |
$
|
151.1
|
| |
$
|
460.0
|
| |
$
|
419.3
|
|
| | | | | | | | | | | | | | | |
|
|
|
| ALLEGION PLC |
| SCHEDULE 5 |
| RECONCILIATION OF GAAP REVENUE GROWTH TO NON-GAAP ORGANIC REVENUE
GROWTH BY REGION |
|
|
| | Three Months Ended |
| Nine Months Ended |
| | September 30, | | September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| Americas | | | | | | | | | | | | |
|
Revenue growth (GAAP)
| |
16.5
|
|
%
| |
4.4
|
|
%
| |
12.4
|
|
%
| |
7.7
|
|
%
|
|
Acquisitions and Divestitures
| |
(6.6
|
)
|
%
| |
(1.5
|
)
|
%
| |
(5.7
|
)
|
%
| |
(1.5
|
)
|
%
|
|
Currency translation effects
| |
0.2
|
|
%
| |
(0.1
|
)
|
%
| |
(0.1
|
)
|
%
| |
—
|
|
%
|
|
Organic growth (non-GAAP)
| |
10.1
|
|
%
| |
2.8
|
|
%
| |
6.6
|
|
%
| |
6.2
|
|
%
|
| | | | | | | | | | | |
|
| EMEIA | | | | | | | | | | | | |
|
Revenue growth (GAAP)
| |
7.4
|
|
%
| |
7.5
|
|
%
| |
16.0
|
|
%
| |
4.5
|
|
%
|
|
Acquisitions and Divestitures
| |
(5.5
|
)
|
%
| |
—
|
|
%
|
|
(5.6
|
)
|
%
| |
(2.2
|
)
|
%
|
|
Currency translation effects
| |
1.5
|
|
%
| |
(4.4
|
)
|
%
| |
(6.9
|
)
|
%
| |
1.3
|
|
%
|
|
Organic growth (non-GAAP)
| |
3.4
|
|
%
| |
3.1
|
|
%
| |
3.5
|
|
%
| |
3.6
|
|
%
|
| | | | | | | | | | | |
|
| Asia Pacific | | | | | | | | | | | | |
|
Revenue growth (GAAP)
| |
61.5
|
|
%
| |
2.1
|
|
%
| |
24.6
|
|
%
| |
6.4
|
|
%
|
|
Acquisitions and Divestitures
| |
(60.5
|
)
|
%
| |
—
|
|
%
| |
(21.7
|
)
|
%
| |
(1.0
|
)
|
%
|
|
Currency translation effects
| |
4.9
|
|
%
| |
(1.7
|
)
|
%
| |
(0.5
|
)
|
%
| |
(1.2
|
)
|
%
|
|
Organic growth (non-GAAP)
| |
5.9
|
|
%
| |
0.4
|
|
%
| |
2.4
|
|
%
| |
4.2
|
|
%
|
| | | | | | | | | | | |
|
| Total | | | | | | | | | | | | |
|
Revenue growth (GAAP)
| |
16.8
|
|
%
| |
4.9
|
|
%
| |
13.7
|
|
%
| |
7.0
|
|
%
|
|
Acquisitions and Divestitures
| |
(9.0
|
)
|
%
| |
(1.0
|
)
|
%
| |
(6.4
|
)
|
%
| |
(1.6
|
)
|
%
|
|
Currency translation effects
| |
0.7
|
|
%
| |
(1.2
|
)
|
%
| |
(1.5
|
)
|
%
| |
0.1
|
|
%
|
|
Organic growth (non-GAAP)
| |
8.5
|
|
%
| |
2.7
|
|
%
| |
5.8
|
|
%
| |
5.5
|
|
%
|
| | | | | | | | | | | | | | | |
|
|
| |
| ALLEGION PLC | | SCHEDULE 6 |
| RECONCILIATION OF 2017 PENSION RESTATEMENT BY QUARTER |
|
| |
| |
| |
| |
| |
| | | |
| |
| |
| |
| |
| |
| |
| |
| |
| Allegion plc |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
|
| | Q1'17 | | Q2'17 | | Q3'17 | | Q4'17 | | FY2017 |
| | As Reported |
| Adj |
| Restated | | As Reported |
| Adj |
| Restated | | As Reported |
| Adj |
| Restated | | As Reported |
| Adj |
| Restated | | As Reported |
| Adj |
| Restated |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Sales
| |
$
|
548.8
| | |
$
|
—
| | |
$
|
548.8
| | |
$
|
627.0
| | |
$
|
—
| | |
$
|
627.0
| | |
$
|
609.4
| | |
$
|
—
| | |
$
|
609.4
| | |
$
|
623.0
| | |
$
|
—
| | |
$
|
623.0
| | |
$
|
2,408.2
| | |
$
|
—
| | |
$
|
2,408.2
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Operating income (GAAP)
| |
98.8
| | |
0.7
| | |
99.5
| | |
134.1
| | |
0.9
| | |
135.0
| | |
126.1
| | |
$
|
1.0
| | |
127.1
| | |
129.2
| | |
1.8
| | |
$
|
131.0
| | |
488.2
| | |
4.4
| | |
492.6
| |
| % of Sales | | 18.0 | % | | | | 18.1 | % | | 21.4 | % | | | | 21.5 | % | | 20.7 | % | | | | 20.9 | % | | 20.7 | % | | | | 21.0 | % | | 20.3 | % | | | | 20.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Other income (expense), net
| |
(0.6
|
)
| |
(0.7
|
)
| |
(1.3
|
)
| |
5.2
| | |
(0.9
|
)
| |
4.3
| | |
3.7
| | |
(1.0
|
)
| |
2.7
| | |
5.0
| | |
(1.8
|
)
| |
3.2
| | |
13.2
| | |
(4.4
|
)
| |
8.8
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Earnings before tax (GAAP)
| |
$
|
82.3
| | |
$
|
—
| | |
$
|
82.3
| | |
$
|
123.2
| | |
$
|
—
| | |
$
|
123.2
| | |
$
|
112.0
| | |
$
|
—
| | |
$
|
112.0
| | |
$
|
78.2
| | |
$
|
—
| | |
$
|
78.2
| | |
$
|
395.7
| | |
$
|
—
| | |
$
|
395.7
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Q1'17
| |
Q2'17
| |
Q3'17
| |
Q4'17
| |
FY2017
|
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
|
| | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| |
|
Sales
| |
$
|
407.6
| | |
$
|
—
| | |
$
|
407.6
| | |
$
|
468.6
| | |
$
|
—
| | |
$
|
468.6
| | |
$
|
455.2
| | |
$
|
—
| | |
$
|
455.2
| | |
$
|
436.1
| | |
$
|
—
| | |
$
|
436.1
| | |
$
|
1,767.5
| | |
$
|
—
| | |
$
|
1,767.5
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Operating income (GAAP)
| |
107.6
| | |
1.2
| | |
108.8
| | |
140.3
| | |
1.3
| | |
141.6
| | |
131.8
| | |
1.4
| | |
133.2
| | |
123.6
| | |
1.2
| | |
124.8
| | |
503.3
| | |
5.1
| | |
508.4
| |
| % of Sales | | 26.4 | % | | | | 26.7 | % | | 29.9 | % | | | | 30.2 | % | | 29.0 | % | | | | 29.3 | % | | 28.3 | % | | | | 28.6 | % | | 28.5 | % | | | | 28.8 | % |
|
|
| EMEIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Q1'17
| |
Q2'17
| |
Q3'17
| |
Q4'17
| |
FY2017
|
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
| |
As Reported
|
|
Adj
|
|
Restated
|
| | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| |
|
Sales
| |
$
|
118.4
| | |
$
|
—
| | |
$
|
118.4
| | |
$
|
129.2
| | |
$
|
—
| | |
$
|
129.2
| | |
$
|
125.1
| | |
$
|
—
| | |
$
|
125.1
| | |
$
|
150.8
| | |
$
|
—
| | |
$
|
150.8
| | |
$
|
523.5
| | |
$
|
—
| | |
$
|
523.5
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Operating income (GAAP)
| |
6.9
| | |
(0.5
|
)
| |
6.4
| | |
8.5
| | |
(0.4
|
)
| |
8.1
| | |
9.1
| | |
(0.5
|
)
| |
8.6
| | |
20.7
| | |
0.3
| | |
21.0
| | |
45.2
| | |
(1.1
|
)
| |
44.1
| |
| % of Sales | | 5.8 | % | | | | 5.4 | % | | 6.6 | % | | | | 6.3 | % | | 7.3 | % | | | | 6.9 | % | | 13.7 | % | | | | 13.9 | % | | 8.6 | % | | | | 8.4 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20181025005188/en/
Allegion plc
Media:
Maria Pia Tamburri, 317-810-3399
Director,
Public Affairs
[email protected]
or
Analysts:
Mike
Wagnes, 317-810-3494
Vice President, Treasurer and Investor
Relations
[email protected]
Source: Allegion plc
