[October 30, 2014] |
|
Allegion Reports Third Quarter 2014 Financial Results; Increases Full-Year 2014 EPS Outlook
DUBLIN --(Business Wire)--
Allegion plc (NYSE: ALLE), a leading global provider of security
products and solutions, today reported third quarter 2014 net revenues
of $546.7 million, up 3.3 percent compared to the prior year, and net
earnings of $62.4 million, or $0.64 per share from continuing
operations. This compares with net earnings of negative $77.7 million,
or negative $0.81 per share from continuing operations, for the
2013 third quarter.
Third quarter net revenues increased 6.8 percent on an adjusted basis
(up 6.4 percent on an adjusted organic basis). The increase in revenues
is due to strength in the Americas and Asia Pacific segments offsetting
lower EMEIA revenue. The Americas segment growth was driven by
mid-single digit volume increases in both the non-residential and
residential segments. The Asia
Pacific segment delivered modest volume growth and benefited from a
previously announced acquisition. The EMEIA segment revenues
were impacted by continued market softness, geopolitical uncertainty and
divested businesses in the current year.
Adjusted net earnings were $65.5 million, or $0.68 per
share from continuing operations, an increase of approximately
42 percent as compared to prior year. The increase in earnings reflect
strong demand in the Americas, continued margin improvement in EMEIA
and a reduction in the effective tax rate.
Third quarter operating margin was 19.3 percent compared
with negative 4.0 percent in 2013. Third quarter adjusted operating
margin was 20.2 percent compared with 18.7 percent in 2013, an increase
of +150 basis points. Adjusted operating margin was up year-over-year in
all regions as favorable price, volume leverage and productivity more
than offset increased investments and inflation.
"We grew revenue in uncertain markets, and continue to deliver industry
leading margin performance with year-over-year improvement in all
regions," said David D. Petratis, chairman, president and chief
executive officer. "I am pleased with the solid operational leverage of
our business as we continue to execute on our growth strategies
while making investments to position the company for the future."
The Company also reported negative $2.1 million or negative $0.02 per
share in the third quarter from discontinued operations. This compares
with 2013 discontinued operations of negative $0.4 million. The
discontinued operations are related
to the previously announced divestiture of the United Kingdom (UK) Door
businesses.
Additional Items
Interest expense for the third quarter of 2014 was $12.2 million higher
than the prior period due to the additional indebtedness incurred as a
result of the spin-off from Ingersoll Rand. The
Company's adjusted effective tax rate for the third quarter of 2014 was
29.0 percent. The comparable adjusted effective tax rate for
the third quarter of 2013 was 49.3 percent.
Cash Flow and Liquidity
Year-to-date 2014 available cash flow was $135 million, down
$9.7 million versus prior year. The year-over-year decrease in available
cash flow reflects increased capital expenditures related to new product
development, information systems and spin related projects. The Company
ended third quarter 2014 with cash of $251.4 million and total debt of
$1,279.5 million. The Company did not have any borrowings outstanding
under its $500 million revolving credit facility at September 30, 2014.
As previously announced, the Company has completed an amendment and
extension of its senior credit facility. Assuming LIBOR rates remain
constant, the refinancing would result in approximately $5 million of
annual interest expense savings.
Share Repurchase
During the third quarter of 2014, the Company repurchased approximately
0.4 million shares with an average price paid per share of $51.07 for
approximately $20 million under the Company's $200 million share
repurchase program.
Outlook
Allegion expects full-year revenues to increase approximately
4.5 percent versus prior year on an adjusted basis. For the remainder of
the year, the Company expects modest market growth in the Americas,
favorable timing of system integration revenues in Asia Pacific
offsetting weakness in the EMEIA region. The Company is raising adjusted
EPS guidance to a range of $2.37 to $2.42. Restructuring, spin costs and
the write-off of unamortized debt issuance costs are expected to
be approximately $0.30 per share. Including these costs, EPS for 2014
continuing operations are expected to be in the range of $2.07 to $2.12.
The outlook includes a full year effective tax rate of approximately
28 percent from continuing operations, reflecting the execution
of our tax planning strategies. The average diluted share count for the
full year is forecasted to be approximately 97 million shares.
The updated outlook assumes the official exchange rate for the
Venezuelan bolivar and does not take into consideration the impact of a
potential currency devaluation in Venezuela. The Company continues
to target available cash flow that approximates net earnings from
continuing operations.
Conference Call Information
On Thursday, October 30, David D. Petratis, chairman, president and
chief executive officer, and Patrick Shannon, senior vice president and
chief financial officer, will conduct a conference call for analysts and
investors, beginning at 8:30 a.m. E.T., to review the Company's results.
A real-time, listen-only webcast of the conference call will be
broadcast live over the Internet. Individuals wishing to listen can
access the call through the Company's website at http://investor.allegion.com.
About Allegion
Allegion (NYSE: ALLE) creates peace of mind by pioneering safety and
security. As a $2 billion provider of security solutions for homes and
businesses, Allegion employs more than 8,000 people and sells products
in more than 120 countries across the world. Allegion comprises
25 global brands, including strategic brands CISA®, Interflex®, LCN®,
Schlage® and Von Duprin®.
For more, visit www.allegion.com.
Non-GAAP Measures
The Company has presented revenue, operating income, operating
margin, EBITDA, EBITDA margin, earnings from continuing
operations, diluted earnings per share (EPS) from continuing
operations and effective tax rate on both a U.S. GAAP basis and on an
adjusted basis because the Company's management believes it may assist
investors in evaluating the Company's on-going operations as a
standalone company. The Company believes these non-GAAP disclosures
provide important supplemental information to management and investors
regarding financial and business trends relating to the Company's
financial condition and results of operations. Investors should not
consider these non-GAAP measures as alternatives to the related GAAP
measures. A reconciliation of the non-GAAP measures used to their most
directly comparable GAAP measure is presented as a supplemental schedule
to this earnings release.
Forward-Looking Statements
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the Company's 2014 financial performance,
the Company's growth strategy, the Company's capital allocation
strategy, the Company's tax rate strategies, the Company's Europe,
Middle East, India and Africa (EMEIA) strategy and the performance of
the markets in which the Company operates. These 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 our 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 December 31, 2013, Form 10-Q for the quarter ended March
31, 2014, and the Form 10-Qs for the quarters ended June 30, 2014 and
September 30, 2014. The Company assumes no obligations to update these
forward looking statements.
|
|
ALLEGION PLC
Condensed and Consolidated Income Statements
(in millions, except per share data)
UNAUDITED
|
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|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended September 30,
|
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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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Discontinued operations, net of tax
|
|
|
|
|
(2.1
|
)
|
|
(0.4
|
)
|
|
|
(10.9
|
)
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|
(1.9
|
)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
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|
|
|
65.6
|
|
|
(68.0
|
)
|
|
|
150.0
|
|
|
35.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Less: Net earnings attributable to noncontrolling interests
|
|
|
|
|
5.3
|
|
|
10.1
|
|
|
|
10.6
|
|
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net earnings (loss) attributable to Allegion plc
|
|
|
|
|
$
|
60.3
|
|
|
$
|
(78.1
|
)
|
|
|
$
|
139.4
|
|
|
$
|
21.6
|
|
|
|
|
|
|
|
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Amounts attributable to Allegion plc shareholders:
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|
|
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|
|
|
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|
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|
|
|
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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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
Condensed and Consolidated Balance Sheets
(in millions)
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
Condensed and Consolidated Cash Flows
(in millions)
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULES
|
|
|
|
|
|
|
|
ALLEGION PLC
|
|
|
SCHEDULE 1
|
|
|
|
|
SELECTED OPERATING SEGMENT INFORMATION
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS FROM CONTINUING
OPERATIONS
|
(in millions, except per share data)
|
|
The Company has presented revenue, operating income, operating
margin, earnings from continuing operations, diluted earnings per
share (EPS) from continuing operations, on both a U.S. GAAP basis
and on an adjusted basis and presented adjusted EBITDA and
adjusted EBITDA margin because the Company's management believes
it may assist investors in evaluating the Company's on-going
operations as a standalone public company. Adjustments to revenue,
operating income, operating margin, earnings and diluted EPS from
continuing operations and EBITDA include items that are considered
to be unusual or infrequent in nature such as goodwill impairment
charge, restructuring charges and one-time separation costs
related to the spin-off from Ingersoll Rand.
|
|
The Company considers these items unrelated to its core, on-going
operating performance, and believes the use of these non-GAAP
measures allows comparison of operating results that are
consistent over time. The Company believes these non-GAAP
disclosures provide important supplemental information to
management and investors regarding financial and business trends
relating to the Company's financial condition and results of
operations. Management uses these non-GAAP measures internally to
evaluate the performance of the business. Investors should not
consider these non-GAAP measures as alternatives to the related
GAAP measures.
|
|
|
|
|
|
|
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
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING INCOME
BY REGION
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO
AVAILABLE CASH FLOW AND NET INCOME TO ADJUSTED EBITDA
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September, 30
|
|
|
|
|
|
2014
|
|
2013
|
Net cash from (used in) operating activities of continuing
operations
|
|
|
|
|
$
|
174.8
|
|
|
$
|
156.7
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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