• | Third quarter 2014 revenue of $546.7 million, up 3.3 percent compared to 2013 (up 6.8 percent on an adjusted basis, up 6.4 percent on an adjusted organic basis) |
• | Third quarter 2014 earnings per share (EPS) from continuing operations of $0.64 compared with 2013 EPS of negative $0.81; adjusted EPS of $0.68, up 41.7 percent compared with 2013 adjusted EPS of $0.48. |
• | Third quarter 2014 operating margin of 19.3 percent compared with 2013 operating margin of negative 4.0 percent; 2014 adjusted operating margin of 20.2 percent, an increase of +150 basis points compared with 2013 adjusted operating margin of 18.7 percent. |
• | We are increasing full-year 2014 EPS outlook from continuing operations to $2.07 to $2.12 and $2.37 to $2.42 on an adjusted basis (previously $2.30 to $2.40 on an adjusted basis) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net revenues | $ | 546.7 | $ | 529.0 | $ | 1,544.8 | $ | 1,525.9 | ||||||||
Cost of goods sold | 310.6 | 290.6 | 890.6 | 883.0 | ||||||||||||
Gross profit | 236.1 | 238.4 | 654.2 | 642.9 | ||||||||||||
Selling and administrative expenses | 130.5 | 122.2 | 391.5 | 357.2 | ||||||||||||
Goodwill impairment charge | — | 137.6 | — | 137.6 | ||||||||||||
Operating income (loss) | 105.6 | (21.4 | ) | 262.7 | 148.1 | |||||||||||
Interest expense | 12.7 | 0.5 | 38.3 | 1.4 | ||||||||||||
Other, net | (2.0 | ) | 0.2 | (3.1 | ) | 6.9 | ||||||||||
Earnings (loss) before income taxes | 94.9 | (22.1 | ) | 227.5 | 139.8 | |||||||||||
Provision for income taxes | 27.2 | 45.5 | 66.6 | 102.4 | ||||||||||||
Earnings (loss) from continuing operations | 67.7 | (67.6 | ) | 160.9 | 37.4 | |||||||||||
Discontinued operations, net of tax | (2.1 | ) | (0.4 | ) | (10.9 | ) | (1.9 | ) | ||||||||
Net earnings (loss) | 65.6 | (68.0 | ) | 150.0 | 35.5 | |||||||||||
Less: Net earnings attributable to noncontrolling | ||||||||||||||||
interests | 5.3 | 10.1 | 10.6 | 13.9 | ||||||||||||
Net earnings (loss) attributable to Allegion plc | $ | 60.3 | $ | (78.1 | ) | $ | 139.4 | $ | 21.6 | |||||||
Amounts attributable to Allegion plc shareholders: | ||||||||||||||||
Continuing operations | $ | 62.4 | $ | (77.7 | ) | $ | 150.3 | $ | 23.5 | |||||||
Discontinued operations | (2.1 | ) | (0.4 | ) | (10.9 | ) | (1.9 | ) | ||||||||
Net earnings (loss) | $ | 60.3 | $ | (78.1 | ) | $ | 139.4 | $ | 21.6 | |||||||
Basic earnings (loss) per ordinary share | ||||||||||||||||
attributable to Allegion plc shareholders: | ||||||||||||||||
Continuing operations | $ | 0.65 | $ | (0.81 | ) | $ | 1.56 | $ | 0.24 | |||||||
Discontinued operations | (0.02 | ) | — | (0.11 | ) | (0.01 | ) | |||||||||
Net earnings (loss) | $ | 0.63 | $ | (0.81 | ) | $ | 1.45 | $ | 0.23 | |||||||
Diluted earnings (loss) per ordinary share | ||||||||||||||||
attributable to Allegion plc shareholders: | ||||||||||||||||
Continuing operations | $ | 0.64 | $ | (0.81 | ) | $ | 1.54 | $ | 0.24 | |||||||
Discontinued operations | (0.02 | ) | — | (0.11 | ) | (0.01 | ) | |||||||||
Net earnings (loss) | $ | 0.62 | $ | (0.81 | ) | $ | 1.43 | $ | 0.23 | |||||||
Shares outstanding - basic | 95.9 | 96.0 | 96.2 | 96.0 | ||||||||||||
Shares outstanding - diluted | 96.9 | 96.0 | 97.3 | 96.0 |
September 30, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 251.4 | $ | 227.4 | |||
Restricted cash | — | 40.2 | |||||
Accounts and notes receivables, net | 287.3 | 260.0 | |||||
Costs in excess of billings on uncompleted | |||||||
contracts | 153.6 | 158.8 | |||||
Inventory | 180.7 | 153.6 | |||||
Other current assets | 61.0 | 86.0 | |||||
Total current assets | 934.0 | 926.0 | |||||
Property, plant and equipment, net | 212.5 | 200.2 | |||||
Goodwill | 509.9 | 504.9 | |||||
Intangible assets, net | 133.1 | 146.1 | |||||
Other noncurrent assets | 202.7 | 202.7 | |||||
Total assets | $ | 1,992.2 | $ | 1,979.9 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 222.9 | $ | 211.3 | |||
Accrued expenses and other current liabilities | 211.0 | 207.3 | |||||
Short-term borrowings and current maturities | |||||||
of long-term debt | 30.3 | 71.9 | |||||
Total current liabilities | 464.2 | 490.5 | |||||
Long-term debt | 1,249.2 | 1,272.0 | |||||
Other noncurrent liabilities | 272.8 | 273.1 | |||||
Equity | 6.0 | (55.7 | ) | ||||
Total liabilities and equity | $ | 1,992.2 | $ | 1,979.9 |
Nine Months Ended September 30, | |||||||
2014 | 2013 | ||||||
Operating Activities | |||||||
Earnings from continuing operations | $ | 160.9 | $ | 37.4 | |||
Goodwill impairment charge | — | 137.6 | |||||
Depreciation and amortization | 36.5 | 34.2 | |||||
Changes in assets and liabilities and other non-cash items | (22.6 | ) | (52.5 | ) | |||
Net cash from (used in) operating activities of continuing operations | 174.8 | 156.7 | |||||
Net cash used in operating activities of discontinued operations | (2.8 | ) | 0.9 | ||||
Net cash from (used in) operating activities | 172.0 | 157.6 | |||||
Investing Activities | |||||||
Capital expenditures | (39.8 | ) | (12.0 | ) | |||
Acquisitions of businesses, net of cash acquired | (23.0 | ) | — | ||||
Other investing activities, net | 41.9 | 24.4 | |||||
Net cash used in investing activities | (20.9 | ) | 12.4 | ||||
Financing Activities | |||||||
Net debt proceeds (repayments) | (63.1 | ) | (0.2 | ) | |||
Dividends paid to ordinary shareholders | (22.6 | ) | — | ||||
Net transfers to Ingersoll-Rand | — | (118.5 | ) | ||||
Repurchase of ordinary shares | (50.3 | ) | — | ||||
Other financing activities, net | 15.4 | (5.2 | ) | ||||
Net cash from (used in) financing activities | (120.6 | ) | (123.9 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (6.5 | ) | 4.9 | ||||
Net increase (decrease) in cash and cash equivalents | 24.0 | 51.0 | |||||
Cash and cash equivalents - beginning of period | 227.4 | 317.5 | |||||
Cash and cash equivalents - end of period | $ | 251.4 | $ | 368.5 |
ALLEGION PLC | SCHEDULE 1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net revenues | ||||||||||||||||
Americas | $ | 423.1 | $ | 405.0 | $ | 1,169.2 | $ | 1,154.1 | ||||||||
EMEIA | 89.5 | 92.1 | 289.9 | 286.0 | ||||||||||||
Asia Pacific | 34.1 | 31.9 | 85.7 | 85.8 | ||||||||||||
Total net revenues | $ | 546.7 | $ | 529.0 | $ | 1,544.8 | $ | 1,525.9 | ||||||||
Operating income (loss) | ||||||||||||||||
Americas | $ | 122.8 | $ | 109.5 | $ | 320.1 | $ | 302.8 | ||||||||
EMEIA | 0.4 | (142.7 | ) | (4.3 | ) | (148.7 | ) | |||||||||
Asia Pacific | (0.5 | ) | 20.6 | (7.0 | ) | 18.7 | ||||||||||
Corporate unallocated | (17.1 | ) | (8.8 | ) | (46.1 | ) | (24.7 | ) | ||||||||
Total operating income (loss) | $ | 105.6 | $ | (21.4 | ) | $ | 262.7 | $ | 148.1 |
ALLEGION PLC | SCHEDULE 2 |
Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | |||||||||||||||||||||||
Reported | Spin-off related and other charges | Adjusted (non-GAAP) | Reported | Spin-off related and other charges | Adjusted (non-GAAP) | |||||||||||||||||||
Net revenues | $ | 546.7 | $ | — | $ | 546.7 | $ | 529.0 | $ | (16.9 | ) | (1) | $ | 512.1 | ||||||||||
Operating income | 105.6 | 4.8 | (2 | ) | 110.4 | (21.4 | ) | 117.1 | (2) | 95.7 | ||||||||||||||
Operating margin | 19.3 | % | 20.2 | % | (4.0 | )% | 18.7 | % | ||||||||||||||||
Earnings before income taxes | 94.9 | 4.8 | 99.7 | (22.1 | ) | 117.1 | 95.0 | |||||||||||||||||
Provision for income taxes | 27.2 | 1.7 | (3 | ) | 28.9 | 45.5 | 1.3 | (3) | 46.8 | |||||||||||||||
Effective income tax rate | 28.7 | % | 35.4 | % | 29.0 | % | (205.9 | )% | 1.1 | % | 49.3 | % | ||||||||||||
Earnings from continuing operations | 67.7 | 3.1 | 70.8 | (67.6 | ) | 115.8 | 48.2 | |||||||||||||||||
Non-controlling interest | 5.3 | — | 5.3 | 10.1 | (7.9 | ) | 2.2 | |||||||||||||||||
Net earnings from continuing operations | ||||||||||||||||||||||||
attributable to Allegion plc | $ | 62.4 | $ | 3.1 | $ | 65.5 | $ | (77.7 | ) | $ | 123.7 | $ | 46.0 | |||||||||||
Diluted earnings per ordinary share | ||||||||||||||||||||||||
attributable to Allegion plc | ||||||||||||||||||||||||
shareholders: | $ | 0.64 | $ | 0.04 | $ | 0.68 | $ | (0.81 | ) | $ | 1.29 | $ | 0.48 |
(1) | Adjustment to net revenue for the three months ended September 30, 2013 reflects the impact of a change in order flow through the Company's consolidated joint venture in Asia resulting from a revised joint venture operating agreement signed in late 2013. Previously, the joint venture acted as a pass-through to the end customer. Products are now shipped direct to the end customer with the joint venture receiving a royalty in an amount that approximates the lost margin. The consolidated joint venture no longer recognizes the revenue and cost of goods sold on these products. The change did not have a material impact on operating income or on cash flows for the three months ended September 30, 2014. |
(2) | Adjustments to operating income for the three months ended September 30, 2014 include $4.8 million of costs incurred as part of the spin-off from Ingersoll Rand and restructuring charges. Adjustments to operating income for the three months ended September 30, 2013 consist of $1.0 million of restructuring charges, a $137.6 million goodwill impairment charge and a $21.5 million gain on a property sale in China. |
(3) | Adjustments to the provision for income taxes for the three months ended September 30, 2014 and 2013 consist of $1.7 million and $1.3 million of tax expense related to the items excluded from operating income discussed above. |
Nine months ended September 30, 2014 | Nine months ended September 30, 2013 | |||||||||||||||||||||||
Reported | Spin-off related and other charges | Adjusted (non-GAAP) | Reported | Spin-off related and other charges | Adjusted (non-GAAP) | |||||||||||||||||||
Net revenues | $ | 1,544.8 | $ | — | $ | 1,544.8 | $ | 1,525.9 | $ | (52.0 | ) | (1) | $ | 1,473.9 | ||||||||||
Operating income | 262.7 | 26.1 | (2 | ) | 288.8 | 148.1 | 121.7 | (2) | 269.8 | |||||||||||||||
Operating margin | 17.0 | % | 18.7 | % | 9.7 | % | 18.3 | % | ||||||||||||||||
Earnings before income taxes | 227.5 | 26.1 | 253.6 | 139.8 | 121.7 | 261.5 | ||||||||||||||||||
Provision for income taxes | 66.6 | 8.2 | (3 | ) | 74.8 | 102.4 | 2.6 | (3) | 105.0 | |||||||||||||||
Effective income tax rate | 29.3 | % | 31.4 | % | 29.5 | % | 73.2 | % | 2.1 | % | 40.2 | % | ||||||||||||
Earnings from continuing operations | 160.9 | 17.9 | 178.8 | 37.4 | 119.1 | 156.5 | ||||||||||||||||||
Non-controlling interest | 10.6 | — | 10.6 | 13.9 | (7.9 | ) | 6.0 | |||||||||||||||||
Net earnings from continuing operations | ||||||||||||||||||||||||
attributable to Allegion plc | $ | 150.3 | $ | 17.9 | $ | 168.2 | $ | 23.5 | $ | 127.0 | $ | 150.5 | ||||||||||||
Diluted earnings per ordinary share | ||||||||||||||||||||||||
attributable to Allegion plc | ||||||||||||||||||||||||
shareholders: | $ | 1.54 | $ | 0.19 | $ | 1.73 | $ | 0.24 | $ | 1.33 | $ | 1.57 |
(1) | Adjustment to net revenue for the nine months ended September 30, 2013 reflects the impact of a change in order flow through the Company's consolidated joint venture in Asia resulting from a revised joint venture operating agreement signed in late 2013. Previously, the joint venture acted as a pass-through to the end customer. Products are now shipped direct to the end customer with the joint venture receiving a royalty in an amount that approximates the lost margin. The consolidated joint venture no longer recognizes the revenue and cost of goods sold on these products. The change did not have a material impact on operating income or on cash flows for the nine months ended September 30, 2014. |
(2) | Adjustments to operating income for the nine months ended September 30, 2014 include $26.1 million of costs incurred as part of the spin-off from Ingersoll Rand and restructuring charges. Adjustments to operating income for the nine months ended September 30, 2013 consist of $5.6 million of restructuring charges, a $137.6 million goodwill impairment charge and a $21.5 million gain on a property sale in China. |
(3) | Adjustments to the provision for income taxes for the three months ended September 30, 2014 and 2013 consist of $8.2 million and $2.6 million of tax expense related to the items excluded from operating income discussed above. |
ALLEGION PLC | SCHEDULE 3 |
Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | ||||||||||||
As Reported | Margin | As Reported | Margin | ||||||||||
Americas | |||||||||||||
Net revenues (GAAP) | $ | 423.1 | $ | 405.0 | |||||||||
Impact of Asia JV order flow change | — | (16.9 | ) | ||||||||||
Adjusted net revenues | $ | 423.1 | $ | 388.1 | |||||||||
Operating income (GAAP) | $ | 122.8 | 29.0 | % | $ | 109.5 | 28.2 | % | |||||
Restructuring charges | — | — | % | — | — | % | |||||||
Spin-off related charges | 0.1 | — | % | — | — | % | |||||||
Adjusted operating income | 122.9 | 29.0 | % | 109.5 | 28.2 | % | |||||||
Depreciation and amortization | 5.7 | 1.3 | % | 5.6 | 1.4 | % | |||||||
Adjusted EBITDA | $ | 128.6 | 30.3 | % | $ | 115.1 | 29.6 | % | |||||
EMEIA | |||||||||||||
Net revenues (GAAP) | $ | 89.5 | $ | 92.1 | |||||||||
Operating income (loss) (GAAP) | $ | 0.4 | 0.4 | % | $ | (142.7 | ) | (154.9 | )% | ||||
Restructuring charges | 0.2 | 0.2 | % | 1.0 | 1.1 | % | |||||||
Goodwill impairment charge | — | — | % | 137.6 | 149.4 | % | |||||||
Spin-off related and other charges | 0.6 | 0.7 | % | — | — | % | |||||||
Adjusted operating income (loss) | 1.2 | 1.3 | % | (4.1 | ) | (4.4 | )% | ||||||
Depreciation and amortization | 4.2 | 4.7 | % | 4.8 | 5.2 | % | |||||||
Adjusted EBITDA | $ | 5.4 | 6.0 | % | $ | 0.7 | 0.8 | % | |||||
Asia Pacific | |||||||||||||
Net revenues (GAAP) | $ | 34.1 | $ | 31.9 | |||||||||
Operating income (loss) (GAAP) | $ | (0.5 | ) | (1.5 | )% | $ | 20.6 | 64.6 | % | ||||
Gain on property sale | — | — | % | (21.5 | ) | (67.4 | )% | ||||||
Spin-off related charges | — | — | % | — | % | ||||||||
Adjusted operating income (loss) | (0.5 | ) | (1.5 | )% | (0.9 | ) | (2.8 | )% | |||||
Depreciation and amortization | 0.4 | 1.2 | % | 0.2 | 0.6 | % | |||||||
Adjusted EBITDA | $ | (0.1 | ) | (0.3 | )% | $ | (0.7 | ) | (2.2 | )% | |||
Corporate | |||||||||||||
Operating income (loss) (GAAP) | $ | (17.1 | ) | $ | (8.8 | ) | |||||||
Spin-off related charges | 3.9 | — | |||||||||||
Adjusted operating income | (13.2 | ) | (8.8 | ) | |||||||||
Depreciation and amortization | 0.7 | 0.7 | |||||||||||
Adjusted EBITDA | $ | (12.5 | ) | $ | (8.1 | ) | |||||||
Total | |||||||||||||
Adjusted net revenues | $ | 546.7 | $ | 512.1 | |||||||||
Adjusted operating income | $ | 110.4 | 20.2 | % | $ | 95.7 | 18.7 | % | |||||
Depreciation and amortization | 11.0 | 2.0 | % | 11.3 | 2.2 | % | |||||||
Adjusted EBITDA | $ | 121.4 | 22.2 | % | $ | 107.0 | 20.9 | % |
Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2013 | ||||||||||||
As Reported | Margin | As Reported | Margin | ||||||||||
Americas | |||||||||||||
Net revenues | $ | 1,169.2 | $ | 1,154.1 | |||||||||
Impact of Asia JV order | |||||||||||||
flow change | — | (52.0 | ) | ||||||||||
Adjusted net revenues | $ | 1,169.2 | $ | 1,102.1 | |||||||||
Operating income (GAAP) | $ | 320.1 | 27.4 | % | $ | 302.8 | 27.5 | % | |||||
Restructuring charges | — | — | % | 0.1 | — | % | |||||||
Spin-off related charges | 0.4 | — | % | — | — | % | |||||||
Adjusted operating income | 320.5 | 27.4 | % | 302.9 | 27.5 | % | |||||||
Depreciation and amortization | 18.2 | 1.6 | % | 19.5 | 1.8 | % | |||||||
Adjusted EBITDA | $ | 338.7 | 29.0 | % | $ | 322.4 | 29.3 | % | |||||
EMEIA | |||||||||||||
Net revenues | $ | 289.9 | $ | 286.0 | |||||||||
Operating income (GAAP) | (4.3 | ) | (1.5 | )% | (148.7 | ) | (52.0 | )% | |||||
Goodwill impairment charge | — | — | % | 137.6 | 48.1 | % | |||||||
Restructuring charges | 5.4 | 1.9 | % | 5.5 | 1.9 | % | |||||||
Spin-off related and other | |||||||||||||
charges | 3.4 | 1.2 | % | — | — | % | |||||||
Adjusted operating income | 4.5 | 1.6 | % | (5.6 | ) | (2.0 | )% | ||||||
Depreciation and amortization | 13.0 | 4.5 | % | 13.7 | 4.8 | % | |||||||
Adjusted EBITDA | $ | 17.5 | 6.1 | % | $ | 8.1 | 2.8 | % | |||||
Asia Pacific | |||||||||||||
Net revenues | $ | 85.7 | $ | 85.8 | |||||||||
Operating income (GAAP) | $ | (7.0 | ) | (8.2 | )% | $ | 18.7 | 21.8 | % | ||||
Gain on property sale | — | — | % | (21.5 | ) | (25.1 | )% | ||||||
Spin-off related charges | 0.4 | 0.5 | % | — | — | % | |||||||
Adjusted operating income | (6.6 | ) | (7.7 | )% | (2.8 | ) | (3.3 | )% | |||||
Depreciation and amortization | 0.8 | 0.9 | % | 1.0 | 1.2 | % | |||||||
Adjusted EBITDA | $ | (5.8 | ) | (6.8 | )% | $ | (1.8 | ) | (2.1 | )% | |||
Corporate | |||||||||||||
Operating income (GAAP) | $ | (46.1 | ) | $ | (24.7 | ) | |||||||
Spin-off related charges | 16.5 | — | |||||||||||
Adjusted operating income | (29.6 | ) | (24.7 | ) | |||||||||
Depreciation and amortization | 1.1 | — | |||||||||||
Adjusted EBITDA | $ | (28.5 | ) | $ | (24.7 | ) | |||||||
Total | |||||||||||||
Adjusted net revenues | $ | 1,544.8 | $ | 1,473.9 | |||||||||
Adjusted operating income | $ | 288.8 | 18.7 | % | $ | 269.8 | 18.3 | % | |||||
Depreciation and amortization | 33.1 | 2.1 | % | 34.2 | 2.3 | % | |||||||
Adjusted EBITDA | $ | 321.9 | 20.8 | % | $ | 304.0 | 20.6 | % |
ALLEGION PLC | SCHEDULE 4 |
Nine Months Ended September, 30 | |||||||
2014 | 2013 | ||||||
Net cash from (used in) operating activities of | $ | 174.8 | $ | 156.7 | |||
continuing operations | |||||||
Capital expenditures | (39.8 | ) | (12.0 | ) | |||
Available cash flow | $ | 135.0 | $ | 144.7 | |||
Nine Months Ended September, 30 | |||||||
2014 | 2013 | ||||||
Net earnings (GAAP) | 150.0 | 35.5 | |||||
Provision for income taxes | 66.6 | 102.4 | |||||
Interest expense | 38.3 | 1.4 | |||||
Depreciation and amortization | 33.1 | 34.2 | |||||
EBITDA | 288.0 | 173.5 | |||||
Discontinued operations | 10.9 | 1.9 | |||||
Other, net | (3.1 | ) | 6.9 | ||||
Goodwill impairment charge | — | 137.6 | |||||
Gain on property sale | — | (21.5 | ) | ||||
Restructuring charges, spin-off related costs | |||||||
and other expenses | 26.1 | 5.6 | |||||
Adjusted EBITDA | $ | 321.9 | $ | 304.0 | |||
Three Months Ended September 30, | |||||||
2014 | 2013 | ||||||
Net earnings (GAAP) | $ | 65.6 | $ | (68.0 | ) | ||
Provision for income taxes | 27.2 | 45.5 | |||||
Interest expense | 12.7 | 0.5 | |||||
Depreciation and amortization | 11.0 | 11.3 | |||||
EBITDA | 116.5 | (10.7 | ) | ||||
Discontinued operations | 2.1 | 0.4 | |||||
Other, net | (2.0 | ) | 0.2 | ||||
Goodwill impairment charge | — | 137.6 | |||||
Gain on property sale | — | (21.5 | ) | ||||
Restructuring charges, spin-off related costs | |||||||
and other expenses | 4.8 | 1.0 | |||||
Adjusted EBITDA | $ | 121.4 | $ | 107.0 |