[October 29, 2015] |
|
Allegion Reports Third-Quarter 2015 Financial Results
Allegion
plc (NYSE: ALLE), a leading global provider of security products and
solutions, today reported third-quarter 2015 net revenues of $544.5
million and net loss of $27.1 million, or $0.28 loss per share from
continuing operations. Excluding charges related to restructuring,
acquisitions and divestitures, adjusted net earnings were $89.5 million,
or $0.92 per share, up 35.3 percent when compared with third-quarter
2014 adjusted EPS of $0.68.
Third-quarter net revenues decreased 0.4 percent, when compared to the
prior year period (up 5.1 percent on an organic basis). Electronic
product sales grew more than 30 percent in the quarter, reflecting the
benefit of increased innovation and new product introductions.
The Americas segment revenue decreased 1 percent (up 7 percent on an
organic basis). The organic growth was driven by strong non-residential
and residential performance. Overall revenue declined due to unfavorable
foreign currency and the divestiture of the company's Venezuelan
business, partially offset by the benefit of prior acquisitions.
The EMEIA segment revenues increased 2.2 percent (up 2.2 percent on an
organic basis), reflecting improved pricing, soft but stable markets and
acquisitions that more than offset unfavorable foreign currency.
The Asia Pacific segment revenues were flat, when compared to the prior
year period (down 10.2 percent on an organic basis). Strong growth in
the hardware business and favorable contribution from acquisitions
offset unfavorable foreign currency and a decline in the system
integration business, Bocom Wincent, that reflects softening local
economies as well as the delay and timing of large projects.
Third-quarter adjusted operating margin was 21.5 percent, compared with
20.3 percent in 2014. The 120-basis-point improvement in adjusted
operating margin was driven by favorable price, volume leverage,
acquisitions and productivity that more than offset increased
investments, inflation and unfavorable foreign exchange rates. All
regions delivered adjusted operating margin improvement in the quarter.
"We continue to execute at a very high level, delivering
industry-leading organic growth and margins," said David D. Petratis,
Allegion chairman, president and CEO. "We are achieving strong results
while executing on a significant number of initiatives. In the past few
months, we've finalized three acquisitions, completed one divestiture
and announced another, issued $300 million of senior notes, completed
the amendment of our credit facility and achieved ratification of our
restructuring plan for our Italian operations."
"Organic growth throughout the last 12 months has exceeded 6 percent for
the business, led by double-digit electronics growth," Petratis added.
"Our electronics portfolio continues to expand, now including the
addition of Schlage Sense - our most advanced residential lock yet with
Grade 1 security, built-in alarm technology and smart phone capability."
Additional Items
The company's adjusted effective tax rate for the third quarter of 2015
was 15.1 percent. The comparable adjusted effective tax rate for the
third quarter of 2014 was 28.9 percent. The decrease reflects the
favorable changes in the company's mix of income earned in lower-rate
jurisdictions and the benefit of discrete tax items recorded in the
quarter.
Divestitures
As previously announced in August 2015, the company divested its
majority ownership in its Venezuelan business. Consistent with that
announcement, reported results reflect a $26.1 million non-cash charge,
which primarily represents cumulative currency translation adjustments
that have been deferred in equity and reclassified to a loss in net
earnings from continuing operations.
Furthermore, as previously announced, the company has agreed to sell a
majority stake in its Bocom Wincent Technologies Co., Ltd. business.
Aligned with that communication, the company recorded a charge of $84.4
million in the third quarter as a result of the difference between the
anticipated net proceeds and net book value.
The charges related to the Venezuelan business and Bocom Wincent are
reflected as "loss on divestitures" in the attached income statement and
are included as adjustments to earnings in the attached non-GAAP
reconciliation.
Cash Flow and Liquidity
Year-to-date 2015 available cash flow was $98.7 million, down $36.3
million versus the prior year. The year-over-year decrease in available
cash flow primarily reflects increased operating cash requirements and
one-time cash tax payments, partially offset by a decrease in
capital expenditures.
The company ended third-quarter 2015 with cash of $175.2 million and
total debt of $1,634.9 million. In September, the company issued $300
million in 5.875 percent senior notes due 2023. The company has nearly
$400 million available under its $500 million revolving credit facility
as of Sept. 30, 2015.
Acquisitions
On July 31, 2015, the company completed the acquisition of Milre Systek
Co., Ltd. (Milre). Milre is a leading security solutions manufacturer in
South Korea, focused on producing high-quality and innovative electronic
door locks.
On Sept. 1, 2015, the company completed the acquisition of SimonsVoss
Technologies GmbH (SimonsVoss) for approximately $230 million.
SimonsVoss, headquartered in Munich, Germany, brings a legacy of global
experts, innovation and technical expertise in the European electronic
lock market segment. SimonsVoss generated sales of approximately $69.2
million in 2014.
On Sept. 1, 2015, the company completed the acquisition of AXA Stenman
Holding (AXA) for approximately $208 million. AXA is a European
residential and portable security provider headquartered in Veenendaal,
the Netherlands, with production facilities in the Netherlands, France
and Poland. AXA manufactures and sells a branded portfolio of portable
locks and lights as well as a wide variety of window and door hardware.
AXA generated sales of approximately $79.8 million in 2014.
2015 Outlook
The company is increasing its adjusted earnings per share to $2.85 to
$2.90 (previously $2.70 to $2.80). The company is updating its guidance
for reported EPS from continuing operations to a range of $1.46 to
$1.51. Adjustments to EPS include the impact of the Venezuelan
devaluation in the first quarter, acquisition expenses, expenses related
to the company's previously announced restructuring plan in Italy and
charges related to the disposal of the company's Venezuelan and Bocom
Wincent businesses.
The guidance assumes 2015 full-year organic revenue growth, which
excludes currency and acquisitions, in the range of 2.5 to 4 percent
compared with 2014 (previous guidance up 4 to 5 percent). The decrease
in organic growth versus prior guidance is driven by a reduction in
Bocom Wincent revenue estimates in the fourth quarter, partially offset
by stronger volume in the Americas. Full-year 2015 reported revenues are
forecasted to decline 1.5 to 2.5 percent compared to 2014 (previous
guidance down 2.5 to 3.5 percent). The improvement in total revenue
projections versus prior guidance reflects inclusion of closed
acquisitions.
The guidance assumes a full-year adjusted effective tax rate of
approximately 20 percent from continuing operations, as well as an
average diluted share count for the full year of approximately 97
million shares.
The company estimates full-year available cash flow of approximately
$200 million.
Subsequent Events
In October 2015, the company reached an agreement to provide severance
benefits to certain employees in Italy as part of its previously
announced 2015 Italian restructuring plan. As a result of the agreement,
the company will record additional severance charges of approximately
$8.4 million in the fourth quarter. The estimated charges are reflected
in the current reported EPS guidance and will result in cash
expenditures, primarily in 2016.
Conference Call Information
On Thursday, Oct. 29, 2015, 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 8:30 a.m. EDT, 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® 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 billion company, with products
sold in almost 130 countries.
For more, visit www.allegion.com.
Non-GAAP Measures
The Company has presented 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 2015 financial performance,
the Company's growth strategy, the Company's capital allocation
strategy, the Company's tax planning strategies, the Company's Italian
restructuring plan, the performance of the markets in which the Company
operates and the Company's announced divestiture of Bocom Wincent,
including the ability to timely close and the expected impact. 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, 2014, Form 10-Qs for the
quarters ended March 31, June 30 and September 30, 2015, and in our
other SEC filings. The Company assumes no obligations to update these
forward-looking statements.
|
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|
|
|
ALLEGION PLC
|
Condensed and Consolidated Income Statements
|
(in millions, except per share data)
|
|
UNAUDITED
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
544.5
|
|
|
$
|
546.7
|
|
|
$
|
1,522.7
|
|
|
$
|
1,544.8
|
|
Cost of goods sold
|
|
304.5
|
|
|
310.1
|
|
|
873.8
|
|
|
890.0
|
|
Gross profit
|
|
240.0
|
|
|
236.6
|
|
|
648.9
|
|
|
654.8
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses
|
|
129.6
|
|
|
130.5
|
|
|
371.8
|
|
|
391.6
|
|
Operating income
|
|
110.4
|
|
|
106.1
|
|
|
277.1
|
|
|
263.2
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
13.7
|
|
|
12.7
|
|
|
36.6
|
|
|
38.3
|
|
Loss on divestitures
|
|
106.7
|
|
|
-
|
|
|
106.7
|
|
|
-
|
|
Other (income) expense, net
|
|
(3.2
|
)
|
|
(2.0
|
)
|
|
0.3
|
|
|
(3.1
|
)
|
Earnings (loss) before income taxes
|
|
(6.8
|
)
|
|
95.4
|
|
|
133.5
|
|
|
228.0
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
19.4
|
|
|
27.3
|
|
|
50.8
|
|
|
66.8
|
|
Earnings (loss) from continuing operations
|
|
(26.2
|
)
|
|
68.1
|
|
|
82.7
|
|
|
161.2
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of tax
|
|
(0.2
|
)
|
|
(2.0
|
)
|
|
(0.4
|
)
|
|
(10.8
|
)
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
(26.4
|
)
|
|
66.1
|
|
|
82.3
|
|
|
150.4
|
|
|
|
|
|
|
|
|
|
|
Less: Net earnings (loss) attributable to noncontrolling interests
|
|
0.9
|
|
|
5.3
|
|
|
0.3
|
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Allegion plc
|
|
$
|
(27.3
|
)
|
|
$
|
60.8
|
|
|
$
|
82.0
|
|
|
$
|
139.8
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Allegion plc shareholders:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(27.1
|
)
|
|
$
|
62.8
|
|
|
$
|
82.4
|
|
|
$
|
150.6
|
|
Discontinued operations
|
|
(0.2
|
)
|
|
(2.0
|
)
|
|
(0.4
|
)
|
|
(10.8
|
)
|
Net earnings
|
|
$
|
(27.3
|
)
|
|
$
|
60.8
|
|
|
$
|
82.0
|
|
|
$
|
139.8
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per ordinary share
|
|
|
|
|
|
|
|
|
attributable to Allegion plc shareholders:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.28
|
)
|
|
$
|
0.65
|
|
|
$
|
0.86
|
|
|
$
|
1.57
|
|
Discontinued operations
|
|
-
|
|
|
(0.02
|
)
|
|
-
|
|
|
(0.12
|
)
|
Net earnings (loss)
|
|
(0.28
|
)
|
|
0.63
|
|
|
0.86
|
|
|
1.45
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per ordinary share
|
|
|
|
|
|
|
|
|
attributable to Allegion plc shareholders:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.28
|
)
|
|
$
|
0.65
|
|
|
$
|
0.85
|
|
|
$
|
1.55
|
|
Discontinued operations
|
|
-
|
|
|
(0.02
|
)
|
|
-
|
|
|
(0.11
|
)
|
Net earnings (loss)
|
|
$
|
(0.28
|
)
|
|
$
|
0.63
|
|
|
$
|
0.85
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding - basic
|
|
95.9
|
|
|
95.9
|
|
|
95.8
|
|
|
96.2
|
|
Shares outstanding - diluted
|
|
95.9
|
|
|
96.9
|
|
|
96.9
|
|
|
97.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
Condensed and Consolidated Balance Sheets
|
(in millions)
|
|
UNAUDITED
|
|
|
|
|
|
|
|
September 30, 2015
|
|
December 31, 2014
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
175.2
|
|
|
$
|
290.5
|
Accounts and notes receivables, net
|
|
273.1
|
|
|
230.4
|
Inventory
|
|
216.3
|
|
|
169.3
|
Other current assets
|
|
56.8
|
|
|
55.6
|
Assets held for sale
|
|
154.3
|
|
|
255.9
|
Total current assets
|
|
875.7
|
|
|
1,001.7
|
Property, plant and equipment, net
|
|
227.9
|
|
|
207.2
|
Goodwill
|
|
823.4
|
|
|
484.4
|
Intangible assets, net
|
|
260.3
|
|
|
125.4
|
Other noncurrent assets
|
|
221.7
|
|
|
197.2
|
Total assets
|
|
$
|
2,409.0
|
|
|
$
|
2,015.9
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Accounts payable
|
|
$
|
180.2
|
|
|
$
|
175.6
|
Accrued expenses and other current liabilities
|
|
196.3
|
|
|
203.8
|
Short-term borrowings and current maturities of long-term debt
|
|
59.0
|
|
|
49.6
|
Liabilities held for sale
|
|
81.7
|
|
|
103.5
|
Total current liabilities
|
|
517.2
|
|
|
532.5
|
Long-term debt
|
|
1,575.9
|
|
|
1,215.0
|
Other noncurrent liabilities
|
|
287.9
|
|
|
249.9
|
Equity
|
|
28.0
|
|
|
18.5
|
Total liabilities and equity
|
|
$
|
2,409.0
|
|
|
$
|
2,015.9
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
Condensed and Consolidated Cash Flows
|
(in millions)
|
|
UNAUDITED
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
Operating Activities
|
|
|
|
|
Earnings from continuing operations
|
|
$
|
82.7
|
|
|
$
|
161.2
|
|
Depreciation and amortization
|
|
37.5
|
|
|
36.5
|
|
Changes in assets and liabilities and other non-cash items
|
|
5.8
|
|
|
(22.9
|
)
|
Net cash from (used in) operating activities of continuing operations
|
|
126.0
|
|
|
174.8
|
|
Net cash used in operating activities of discontinued operations
|
|
(0.5
|
)
|
|
(2.8
|
)
|
Net cash from (used in) operating activities
|
|
125.5
|
|
|
172.0
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
Capital expenditures
|
|
(27.3
|
)
|
|
(39.8
|
)
|
Acquisition of and equity investments in businesses, net of cash
acquired
|
|
(511.4
|
)
|
|
(23.0
|
)
|
Other investing activities, net
|
|
4.3
|
|
|
41.9
|
|
Net cash used in investing activities
|
|
(534.4
|
)
|
|
(20.9
|
)
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
Net debt proceeds (repayments)
|
|
367.4
|
|
|
(63.1
|
)
|
Dividends paid to ordinary shareholders
|
|
(28.7
|
)
|
|
(22.6
|
)
|
Repurchase of ordinary shares
|
|
(30.0
|
)
|
|
(50.3
|
)
|
Other financing activities, net
|
|
(7.8
|
)
|
|
15.4
|
|
Net cash from (used in) financing activities
|
|
300.9
|
|
|
(120.6
|
)
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(7.3
|
)
|
|
(6.5
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
(115.3
|
)
|
|
24.0
|
|
Cash and cash equivalents - beginning of period
|
|
290.5
|
|
|
227.4
|
|
Cash and cash equivalents - end of period
|
|
$
|
175.2
|
|
|
$
|
251.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULES
|
|
|
|
ALLEGION PLC
|
|
SCHEDULE 1
|
|
|
|
|
|
SELECTED OPERATING SEGMENT INFORMATION
|
(in millions)
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net revenues
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
418.9
|
|
|
$
|
423.1
|
|
|
$
|
1,175.3
|
|
|
$
|
1,169.2
|
|
EMEIA
|
|
91.5
|
|
|
89.5
|
|
|
257.1
|
|
|
289.9
|
|
Asia Pacific
|
|
34.1
|
|
|
34.1
|
|
|
90.3
|
|
|
85.7
|
|
Total net revenues
|
|
$
|
544.5
|
|
|
$
|
546.7
|
|
|
$
|
1,522.7
|
|
|
$
|
1,544.8
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
121.7
|
|
|
$
|
123.3
|
|
|
$
|
317.8
|
|
|
$
|
320.6
|
|
EMEIA
|
|
5.0
|
|
|
0.4
|
|
|
8.1
|
|
|
(4.3
|
)
|
Asia Pacific
|
|
0.3
|
|
|
(0.5
|
)
|
|
(3.7
|
)
|
|
(7.0
|
)
|
Corporate unallocated
|
|
(16.6
|
)
|
|
(17.1
|
)
|
|
(45.1
|
)
|
|
(46.1
|
)
|
Total operating income (loss)
|
|
$
|
110.4
|
|
|
$
|
106.1
|
|
|
$
|
277.1
|
|
|
$
|
263.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, asset impairments, merger and
acquisition costs, one-time separation costs related to the
spin-off from Ingersoll Rand, charges related to the devaluation
of the Venezuelan bolivar and charges related to the divestitures
of businesses.
|
|
|
|
|
|
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, 2015
|
|
Three months ended September 30, 2014
|
|
|
Reported
|
|
Adjustments
|
|
|
|
Adjusted (non-GAAP)
|
|
Reported
|
|
Adjustments
|
|
|
|
Adjusted (non-GAAP)
|
Net revenues
|
|
$
|
544.5
|
|
|
$
|
-
|
|
|
|
|
$
|
544.5
|
|
|
$
|
546.7
|
|
|
$
|
-
|
|
|
|
|
$
|
546.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
110.4
|
|
|
6.4
|
|
|
(1)
|
|
116.8
|
|
|
106.1
|
|
|
$
|
4.8
|
|
|
(1)
|
|
110.9
|
|
Operating margin
|
|
20.3
|
%
|
|
|
|
|
|
21.5
|
%
|
|
19.4
|
%
|
|
|
|
|
|
20.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes
|
|
(6.8
|
)
|
|
113.1
|
|
|
(2)
|
|
106.3
|
|
|
95.4
|
|
|
4.8
|
|
|
|
|
100.2
|
|
Provision for income taxes
|
|
19.4
|
|
|
(3.4
|
)
|
|
(3)
|
|
16.0
|
|
|
27.3
|
|
|
1.7
|
|
|
(3)
|
|
29.0
|
|
Effective income tax rate
|
|
(285.3
|
)%
|
|
|
|
|
|
15.1
|
%
|
|
28.6
|
%
|
|
|
|
|
|
28.9
|
%
|
Earnings (loss) from continuing operations
|
|
(26.2
|
)
|
|
116.5
|
|
|
|
|
90.3
|
|
|
68.1
|
|
|
3.1
|
|
|
|
|
71.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
0.9
|
|
|
(0.1
|
)
|
|
(4)
|
|
0.8
|
|
|
5.3
|
|
|
-
|
|
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations attributable to
Allegion plc
|
|
$
|
(27.1
|
)
|
|
$
|
116.6
|
|
|
|
|
$
|
89.5
|
|
|
$
|
62.8
|
|
|
$
|
3.1
|
|
|
|
|
$
|
65.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per ordinary share attributable to
Allegion plc shareholders:
|
|
$
|
(0.28
|
)
|
|
$
|
1.20
|
|
|
|
|
$
|
0.92
|
|
|
$
|
0.65
|
|
|
$
|
0.03
|
|
|
|
|
$
|
0.68
|
|
(1)
|
|
Adjustments to operating income for the three months ended September
30, 2015 include $6.4 million of restructuring charges, merger and
acquisition expenses and other costs. 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.
|
(2)
|
|
Adjustments to earnings before income taxes for the three months
ended September 30, 2015 consist of the adjustments to operating
income discussed above and $106.7 million of losses related to the
divestiture of the Company's operations in Venezuela and the
anticipated divestiture of the Company's systems integration
business in China.
|
(3)
|
|
Adjustments to the provision for income taxes for the three months
ended September 30, 2015 consist of $3.4 million of tax benefit
related to the excluded items discussed above. Adjustments to the
provision for income taxes for the three months ended September 30,
2014 consist of $1.7 million of tax expense related to the excluded
items discussed above.
|
(4)
|
|
Adjustments to non-controlling interest for the three months ended
September 30, 2015 consist of the portions of adjustments (1)
through (3) that are not attributable to Allegion plc shareholders.
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2015
|
|
Nine months ended September 30, 2014
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted (non-GAAP)
|
|
Reported
|
|
Adjustments
|
|
Adjusted (non-GAAP)
|
Net revenues
|
|
$
|
1,522.7
|
|
|
$
|
-
|
|
|
$
|
1,522.7
|
|
|
$
|
1,544.8
|
|
|
$
|
-
|
|
|
$
|
1,544.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
277.1
|
|
|
16.1
|
|
(1)
|
293.2
|
|
|
263.2
|
|
|
$
|
26.1
|
|
(1)
|
289.3
|
|
Operating margin
|
|
18.2
|
%
|
|
|
|
19.3
|
%
|
|
17.0
|
%
|
|
|
|
18.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes
|
|
133.5
|
|
|
125.5
|
|
(2)
|
259.0
|
|
|
228.0
|
|
|
26.1
|
|
|
254.1
|
|
Provision for income taxes
|
|
50.8
|
|
|
(2.0
|
)
|
(3)
|
48.8
|
|
|
66.8
|
|
|
8.2
|
|
(3)
|
75.0
|
|
Effective income tax rate
|
|
38.1
|
%
|
|
|
|
18.8
|
%
|
|
29.3
|
%
|
|
|
|
29.5
|
%
|
Earnings (loss) from continuing operations
|
|
82.7
|
|
|
127.5
|
|
|
210.2
|
|
|
161.2
|
|
|
17.9
|
|
|
179.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
0.3
|
|
|
2.4
|
|
(4)
|
2.7
|
|
|
10.6
|
|
|
-
|
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations attributable to
Allegion plc
|
|
$
|
82.4
|
|
|
$
|
125.1
|
|
|
$
|
207.5
|
|
|
$
|
150.6
|
|
|
$
|
17.9
|
|
|
$
|
168.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per ordinary share attributable to
Allegion plc shareholders:
|
|
$
|
0.85
|
|
|
$
|
1.29
|
|
|
$
|
2.14
|
|
|
$
|
1.55
|
|
|
$
|
0.18
|
|
|
$
|
1.73
|
|
(1)
|
|
Adjustments to operating income for the nine months ended September
30, 2015, include a $4.2 million non-cash impairment charge to write
inventory in Venezuela down to the lower of cost or market and $11.9
million of restructuring charges, merger and acquisition expenses
and other expenses. 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.
|
(2)
|
|
Adjustments to earnings before taxes for the nine months ended
September 30, 2015, consist of the adjustments to operating income
discussed above, a $2.8 million charge to devalue the Company's
Venezuelan bolivar-denominated net monetary assets and $106.7
million of losses related to the divestiture of the Company's
operations in Venezuela and the anticipated divestiture of the
Company's systems integration business in China.
|
(3)
|
|
Adjustments to the provision for income taxes for the nine months
ended September 30, 2015, consist of $2.0 million of tax benefit
related to the excluded items discussed above. Adjustments to the
provision for income taxes for the nine months ended September 30,
2014, consist of $8.2 million of tax expense related to the excluded
items discussed above.
|
(4)
|
|
Adjustments to non-controlling interest for the nine months ended
September 30, 2015, consist of the portions of adjustments (1)
through (3) that are not attributable to Allegion plc shareholders.
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
|
|
|
SCHEDULE 3
|
|
RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING INCOME
BY REGION
|
(in millions)
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2015
|
|
Three Months Ended September 30, 2014
|
|
|
As Reported
|
|
Margin
|
|
As Reported
|
|
Margin
|
Americas
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
418.9
|
|
|
|
|
$
|
423.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
121.7
|
|
|
29.1
|
%
|
|
$
|
123.3
|
|
|
29.1
|
%
|
Merger and acquisition costs
|
|
0.5
|
|
|
0.1
|
%
|
|
|
|
-
|
%
|
Spin-off related charges
|
|
-
|
|
|
-
|
%
|
|
0.1
|
|
|
-
|
%
|
Adjusted operating income
|
|
122.2
|
|
|
29.2
|
%
|
|
123.4
|
|
|
29.1
|
%
|
Depreciation and amortization
|
|
6.5
|
|
|
1.6
|
%
|
|
5.7
|
|
|
1.3
|
%
|
Adjusted EBITDA
|
|
$
|
128.7
|
|
|
30.8
|
%
|
|
$
|
129.1
|
|
|
30.4
|
%
|
|
|
|
|
|
|
|
|
|
EMEIA
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
91.5
|
|
|
|
|
$
|
89.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
$
|
5.0
|
|
|
5.5
|
%
|
|
$
|
0.4
|
|
|
0.4
|
%
|
Restructuring charges
|
|
0.6
|
|
|
0.7
|
%
|
|
0.2
|
|
|
0.2
|
%
|
Spin-off related and other charges
|
|
0.3
|
|
|
0.2
|
%
|
|
0.6
|
|
|
0.7
|
%
|
Adjusted operating income (loss)
|
|
5.9
|
|
|
6.4
|
%
|
|
1.2
|
|
|
1.3
|
%
|
Depreciation and amortization
|
|
4.1
|
|
|
4.5
|
%
|
|
4.2
|
|
|
4.7
|
%
|
Adjusted EBITDA
|
|
$
|
10.0
|
|
|
10.9
|
%
|
|
$
|
5.4
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
34.1
|
|
|
|
|
$
|
34.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
0.3
|
|
|
0.9
|
%
|
|
(0.5
|
)
|
|
(1.5
|
)%
|
Merger and acquisition costs
|
|
0.2
|
|
|
0.6
|
%
|
|
-
|
|
|
-
|
%
|
Spin-off related and other charges
|
|
0.2
|
|
|
0.6
|
%
|
|
-
|
|
|
-
|
%
|
Adjusted operating income (loss)
|
|
0.7
|
|
|
2.1
|
%
|
|
(0.5
|
)
|
|
(1.5
|
)%
|
Depreciation and amortization
|
|
0.9
|
|
|
2.6
|
%
|
|
0.4
|
|
|
1.2
|
%
|
Adjusted EBITDA
|
|
$
|
1.6
|
|
|
4.7
|
%
|
|
$
|
(0.1
|
)
|
|
(0.3
|
)%
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
$
|
(16.6
|
)
|
|
|
|
$
|
(17.1
|
)
|
|
|
Merger and acquisition costs
|
|
4.5
|
|
|
|
|
-
|
|
|
|
Spin-off related and other charges
|
|
0.1
|
|
|
|
|
3.9
|
|
|
|
Adjusted operating income
|
|
(12.0
|
)
|
|
|
|
(13.2
|
)
|
|
|
Depreciation and amortization
|
|
0.7
|
|
|
|
|
1.8
|
|
|
|
Adjusted EBITDA
|
|
$
|
(11.3
|
)
|
|
|
|
$
|
(11.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Adjusted net revenues
|
|
$
|
544.5
|
|
|
|
|
$
|
546.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
116.8
|
|
|
21.5
|
%
|
|
110.9
|
|
|
20.3
|
%
|
Depreciation and amortization
|
|
12.2
|
|
|
2.2
|
%
|
|
12.1
|
|
|
2.2
|
%
|
Adjusted EBITDA
|
|
$
|
129.0
|
|
|
23.7
|
%
|
|
$
|
123.0
|
|
|
22.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
Nine Months Ended September 30, 2014
|
|
|
As Reported
|
|
Margin
|
|
As Reported
|
|
Margin
|
Americas
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
1,175.3
|
|
|
|
|
$
|
1,169.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
317.8
|
|
|
27.0
|
%
|
|
$
|
320.6
|
|
|
27.4
|
%
|
Venezuela devaluation
|
|
4.2
|
|
|
0.4
|
%
|
|
-
|
|
|
-
|
%
|
Merger and acquisition costs
|
|
0.5
|
|
|
-
|
%
|
|
|
|
-
|
%
|
Spin-off related and other charges
|
|
-
|
|
|
-
|
%
|
|
0.4
|
|
|
-
|
%
|
Adjusted operating income
|
|
322.5
|
|
|
27.4
|
%
|
|
321.0
|
|
|
27.4
|
%
|
Depreciation and amortization
|
|
19.8
|
|
|
1.7
|
%
|
|
18.2
|
|
|
1.6
|
%
|
Adjusted EBITDA
|
|
$
|
342.3
|
|
|
29.1
|
%
|
|
$
|
339.2
|
|
|
29.0
|
%
|
|
|
|
|
|
|
|
|
|
EMEIA
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
257.1
|
|
|
|
|
$
|
289.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
$
|
8.1
|
|
|
3.2
|
%
|
|
$
|
(4.3
|
)
|
|
(1.5
|
)%
|
Restructuring charges
|
|
4.4
|
|
|
1.7
|
%
|
|
5.4
|
|
|
1.9
|
%
|
Spin-off related and other charges
|
|
0.3
|
|
|
0.1
|
%
|
|
3.4
|
|
|
1.2
|
%
|
Adjusted operating income (loss)
|
|
12.8
|
|
|
5.0
|
%
|
|
4.5
|
|
|
1.6
|
%
|
Depreciation and amortization
|
|
10.7
|
|
|
4.2
|
%
|
|
13.0
|
|
|
4.5
|
%
|
Adjusted EBITDA
|
|
$
|
23.5
|
|
|
9.2
|
%
|
|
$
|
17.5
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
90.3
|
|
|
|
|
$
|
85.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
(3.7
|
)
|
|
(4.1
|
)%
|
|
(7.0
|
)
|
|
(8.2
|
)%
|
Merger and acquisition costs
|
|
0.2
|
|
|
0.2
|
%
|
|
-
|
|
|
-
|
%
|
Spin-off related and other charges
|
|
0.2
|
|
|
0.2
|
%
|
|
0.4
|
|
|
0.5
|
%
|
Adjusted operating income (loss)
|
|
(3.3
|
)
|
|
(3.7
|
)%
|
|
(6.6
|
)
|
|
(7.7
|
)%
|
Depreciation and amortization
|
|
1.5
|
|
|
1.7
|
%
|
|
0.8
|
|
|
0.9
|
%
|
Adjusted EBITDA
|
|
$
|
(1.8
|
)
|
|
(2.0
|
)%
|
|
$
|
(5.8
|
)
|
|
(6.8
|
)%
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
$
|
(45.1
|
)
|
|
|
|
$
|
(46.1
|
)
|
|
|
Merger and acquisition costs
|
|
6.2
|
|
|
|
|
-
|
|
|
|
Spin-off related and other charges
|
|
0.2
|
|
|
|
|
16.5
|
|
|
|
Adjusted operating income
|
|
(38.7
|
)
|
|
|
|
(29.6
|
)
|
|
|
Depreciation and amortization
|
|
2.3
|
|
|
|
|
4.5
|
|
|
|
Adjusted EBITDA
|
|
$
|
(36.4
|
)
|
|
|
|
$
|
(25.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Adjusted net revenues
|
|
$
|
1,522.7
|
|
|
|
|
$
|
1,544.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
293.3
|
|
|
19.3
|
%
|
|
289.3
|
|
|
18.7
|
%
|
Depreciation and amortization
|
|
34.3
|
|
|
2.2
|
%
|
|
36.5
|
|
|
2.4
|
%
|
Adjusted EBITDA
|
|
$
|
327.6
|
|
|
21.5
|
%
|
|
$
|
325.8
|
|
|
21.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2015
|
|
2014
|
|
|
Net cash from (used in) operating activities of continuing
operations
|
|
$
|
126.0
|
|
|
$
|
174.8
|
|
|
|
Capital expenditures
|
|
(27.3
|
)
|
|
(39.8
|
)
|
|
|
Available cash flow
|
|
$
|
98.7
|
|
|
$
|
135.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net earnings (loss) (GAAP)
|
|
$
|
(26.4
|
)
|
|
$
|
66.1
|
|
|
$
|
82.3
|
|
|
$
|
150.4
|
|
Provision for income taxes
|
|
19.4
|
|
|
27.3
|
|
|
50.8
|
|
|
66.8
|
|
Interest expense
|
|
13.7
|
|
|
12.7
|
|
|
36.6
|
|
|
38.3
|
|
Depreciation and amortization
|
|
12.2
|
|
|
12.1
|
|
|
34.3
|
|
|
36.5
|
|
EBITDA
|
|
18.9
|
|
|
118.2
|
|
|
204.0
|
|
|
292.0
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
0.2
|
|
|
2.0
|
|
|
0.4
|
|
|
10.8
|
|
Other (income) expense, net
|
|
(3.2
|
)
|
|
(2.0
|
)
|
|
0.3
|
|
|
(3.1
|
)
|
Loss on divestitures
|
|
106.7
|
|
|
|
|
106.7
|
|
|
|
Venezuela devaluation
|
|
-
|
|
|
-
|
|
|
4.2
|
|
|
-
|
|
Merger and acquisition costs, restructuring charges, spin-off
related costs and other expenses
|
|
6.4
|
|
|
4.8
|
|
|
12.0
|
|
|
26.1
|
|
Adjusted EBITDA
|
|
$
|
129.0
|
|
|
$
|
123.0
|
|
|
$
|
327.6
|
|
|
$
|
325.8
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151029005163/en/
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