| [February 20, 2018] |
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Allegion Reports Fourth-Quarter, Full-Year 2017 Financial Results, Provides 2018 Outlook
Allegion plc (NYSE: ALLE), a leading global
provider of security products and solutions, today reported
fourth-quarter 2017 net revenues of $623 million and net earnings of
$9.6 million, or $0.10 per share. Excluding charges related to
restructuring, acquisitions, tax reform and debt refinancing costs,
adjusted net earnings were $106.1 million or $1.11 per share, up 37
percent when compared with fourth-quarter 2016 adjusted EPS of $0.81.
Reported net earnings for fourth-quarter 2017 include a $53.5 million
charge or $0.56 per share related to U.S. tax reform, as well as a $43.2
million charge or $0.40 per share related to debt refinancing costs.
Reported and adjusted net earnings for fourth-quarter 2016 include a $15
million charge or $0.10 per share environmental remediation charge.
Fourth-quarter 2017 net revenues increased 9.4 percent, when compared to
the prior year period (up 6.1 percent on an organic basis). Reported
revenues reflect strong organic growth as well as benefits from foreign
currency and acquisitions. The organic growth was driven by strong
performance across all regions.
The Americas segment revenues increased 6.4 percent (up 4.8 percent on
an organic basis). The region had solid growth in mechanical products
and continued strength in electronic product categories in the fourth
quarter of 2017. The organic growth was driven by mid-single digit
growth in both non-residential and residential markets. Price
realization continued to be strong.
The EMEIA segment revenues increased 16.5 percent (up 7.7 percent on an
organic basis), reflecting solid growth across most business units and
geographies. Pricing was positive in the quarter, contributing to the
organic growth. Total revenue growth was supported by favorable currency
impacts.
The Asia-Pacific segment revenues increased 19.1 percent (up 16.4
percent on an organic basis). Organic revenue growth was driven
primarily by volume across most businesses and geographies. Favorable
currency contributed to total revenue growth.
Fourth-quarter 2017 operating margin was 20.7 percent, compared with
17.1 percent in 2016. The adjusted operating margin in fourth-quarter
2017 was 21.7 percent, compared with 17.9 percent in 2016. Both reported
and adjusted operating margin for fourth-quarter 2016 included a $15
million or 260-basis-point environmental remediation charge. Operating
margins expanded - both including and excluding the environmental charge
from the previous year - with the operational improvement reflecting
good leverage on incremental volume combined with productivity, which
more than offset inflation and incremental investments.
"Allegion's fourth-quarter results capped off a very strong year of
solid performance in all regions, both on the top-line growth and
operating performance," said David D. Petratis, Allegion chairman,
president and CEO. "With projected favorable market trends and continued
execution of our growth initiatives, we are poised for further success
in 2018. Additionally, our recently announced accretive acquisitions
demonstrate our commitment to deploy capital to drive shareholder value."
Full-year Results
Full-year 2017 net revenues of $2.41 billion increased 7.6 percent, when
compared to the prior year period (up 5.7 percent on an organic basis).
Reported revenues had positive organic growth along with contributions
from acquisitions and favorable currency. The organic growth reflects
the continued execution of the company's channel initiatives and the
introduction of new products, as well as strong growth in the
electronics portfolio.
Full-year 2017 operating margin was 20.3 percent, compared with 19
percent in 2016. The adjusted operating margin for full-year 2017 was 21
percent, compared with 19.6 percent in 2016 - an increase of 140 basis
points. Both reported and adjusted operating margin for 2016 included a
70-basis-point reduction from a $15 million environmental remediation
charge. All regions expanded adjusted operating margins in 2017, both
including and excluding the impact from the prior year environmental
charge. The adjusted operating margin improvement reflects strong
leverage on incremental volume, favorable pricing and productivity.
These benefits more than offset inflation and incremental investments.
Full-year 2017 net earnings were $273.3 million or $2.85 per share,
compared to $229.1 million or $2.36 per share for the prior year.
Full-year 2017 adjusted net earnings were $380 million or $3.96 per
share, compared to $323.9 million or $3.34 per share for the prior year
- an increase of 18.6 percent. Reported EPS for 2017 includes a $53.5
million charge or $0.56 per share related to U.S. tax reform, as well as
a $44.7 million charge or $0.41 per share related to debt refinancing
costs. Both reported and adjusted EPS for the prior year include a $15
million or $0.10 per share environmental remediation charge. Reported
EPS for the prior year includes an $84.4 million or $0.87 per share
impairment charge related to the previously divested system integration
business located in China. Adjusted net earnings and adjusted EPS were
better than prior year due to strong organic revenue growth, operating
margin improvements and a lower adjusted effective tax rate that offset
lower other income.
"Allegion's full-year results again reflect solid performance in
revenue, operating margins and EPS," said Petratis. "In 2017, we
continued making good progress on channel initiatives, sales of
electronic products and increasing our vitality index by delivering new
and innovative products, all while maintaining our exceptional safety
record."
Additional Items
Interest expense for fourth-quarter 2017 was $56 million, up from $15.9
million for fourth-quarter 2016. The fourth-quarter 2017 included a
charge of $43.2 million related to debt refinancing costs.
Other income net for fourth-quarter 2017 was $5 million. Other income
net for fourth-quarter 2016 was $1.2 million.
The company's effective tax rate for fourth-quarter 2017 was 84.5
percent, compared with 9.1 percent in 2016. The fourth-quarter 2017
included a charge of $53.5 million related to U.S. tax reform. The
company's adjusted effective tax rate for fourth-quarter 2017 was 14.9
percent. The adjusted effective tax rate for fourth-quarter 2016 was 9.6
percent.
Cash Flow and Liquidity
Available cash flow for 2017 was $297.9 million, a decrease of $37.1
million versus the prior year. The year-over-year decrease in available
cash flow is driven by a $50 million discretionary pension payment made
earlier in the year offset by an increase in net earnings.
The company ended 2017 with cash of $466.2 million and total debt of
$1,477.3 million.
Dividends
As previously announced, Allegion's board of directors declared a
quarterly dividend of $0.21 per ordinary share of the company, an
increase of 31 percent over the prior dividend. The dividend is
payable March 29, 2018, to shareholders of record on March 15, 2018.
Acquisitions
In January 2018, the company completed the acquisition of Technical
Glass Products (TGP). TGP is a leading U.S. manufacturer of advanced
fire-rated entrance and curtain walls for institutions and
non-residential buildings. TGP generated approximately $80 million in
net sales in 2017.
In February 2018, the company completed the acquisition of Qatar Metal
Industries (QMI). QMI is one of the Middle East's largest manufacturers
of commercial steel and wood doors and frames. QMI generated
approximately $25 million in net sales in 2017.
Also in February 2018, the company announced that it has agreed to
acquire Aurora Systems, Inc. (AD Systems). AD Systems designs and
manufactures high-performance interior and healthcare door systems,
specializing in sliding and acoustic solutions. The acquisition is
expected to close in the first quarter of this year, subject to
customary closing conditions. AD Systems generated approximately $18
million in net sales in 2017.
2018 Outlook
The company expects full-year 2018 revenues to increase 10.5 to 11.5
percent, as organic growth, acquisitions and favorable currency
contribute to growth. Full-year 2018 organic revenues, which exclude
currency and acquisitions, are forecasted to increase in the range of 4
to 5 percent, when compared to 2017.
Petratis added, "In the Americas, we anticipate solid non-residential
and residential growth as markets in both segments and the underlying
verticals continue to expand. We expect the electromechanical products
to continue to outpace mechanical. In EMEIA, we see positive trends in
our core markets. In Asia Pacific, we anticipate robust growth, with
particularly strong growth in our China business."
Full-year 2018 reported EPS is expected to be in the range of $4.20 to
$4.35 or $4.35 to $4.50 on an adjusted basis. This reflects an increase
of 9.8 to 13.6 percent versus adjusted 2017 EPS. The outlook includes
incremental investment of $0.10 per share; assumes a
full-year effective tax rate of approximately 16 percent; and assumes
an average diluted share count for the full year of approximately 96
million shares.
The company is targeting available cash flow of approximately $380 to
$400 million.
Conference Call Information
On Tuesday, Feb. 20, 2018, David D. Petratis, chairman, president and
CEO, and Patrick Shannon, senior vice president and CFO, 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
almost 130 countries.
For more, visit www.allegion.com.
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.
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,
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 are based on the company's current available information and
its 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 are 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, 2016, Form 10-Qs for the quarters
ended March 31, 2017, June 30, 2017, and Sept. 30, 2017, and in its
other SEC filings. The company assumes no obligations to update these
forward-looking statements.
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ALLEGION PLC
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Condensed and Consolidated Income Statements
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(in millions, except per share data)
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UNAUDITED
|
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Three months ended December 31,
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Year ended December 31,
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2017
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2016
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2017
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2016
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|
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|
|
|
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Net revenues
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$
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623.0
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|
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$
|
569.7
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$
|
2,408.2
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$
|
2,238.0
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|
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Cost of goods sold
|
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348.0
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|
331.6
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1,337.5
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|
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1,252.7
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|
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Gross profit
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275.0
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238.1
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1,070.7
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985.3
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|
|
|
|
|
|
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Selling and administrative expenses
|
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145.8
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|
|
140.9
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582.5
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|
|
559.8
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|
|
Operating income
|
|
129.2
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|
|
97.2
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|
|
488.2
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|
|
425.5
|
|
|
|
|
|
|
|
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Interest expense
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56.0
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15.9
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105.7
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64.3
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|
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Loss on divestitures
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-
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-
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-
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84.4
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Other income, net
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(5.0
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)
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(1.2
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)
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(13.2
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)
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(18.2
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)
|
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Earnings before income taxes
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78.2
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82.5
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395.7
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295.0
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Provision for income taxes
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66.1
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|
|
7.5
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|
|
119.0
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|
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63.8
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|
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Net earnings
|
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12.1
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|
|
75.0
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|
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276.7
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231.2
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Less: Net earnings attributable to noncontrolling interests
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2.5
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0.2
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|
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3.4
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2.1
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Net earnings attributable to Allegion plc
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$
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9.6
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$
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74.8
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$
|
273.3
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|
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$
|
229.1
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|
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Basic earnings per ordinary share attributable to Allegion plc
shareholders:
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Net earnings
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$
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0.10
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$
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0.78
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|
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$
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2.87
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|
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$
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2.39
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|
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Diluted earnings per ordinary share attributable to Allegion
plc shareholders:
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Net earnings
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$
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0.10
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|
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$
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0.77
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|
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$
|
2.85
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|
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$
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2.36
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|
|
|
|
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|
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Shares outstanding - basic
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|
95.1
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|
|
95.6
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|
|
95.1
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|
|
95.8
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Shares outstanding - diluted
|
|
95.9
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|
|
96.6
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|
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96.0
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|
|
96.9
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ALLEGION PLC
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Condensed and Consolidated Balance Sheets
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(in millions)
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UNAUDITED
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December 31, 2017
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December 31, 2016
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ASSETS
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Cash and cash equivalents
|
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$
|
466.2
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$
|
312.4
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Accounts and notes receivables, net
|
|
296.6
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|
|
260.0
|
|
Inventory
|
|
239.8
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|
|
220.6
|
|
Other current assets
|
|
30.1
|
|
|
36.3
|
|
Total current assets
|
|
1,032.7
|
|
|
829.3
|
|
Property, plant and equipment, net
|
|
252.2
|
|
|
226.6
|
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Goodwill
|
|
761.2
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|
|
716.8
|
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Intangible assets, net
|
|
394.3
|
|
|
357.4
|
|
Other noncurrent assets
|
|
101.6
|
|
|
117.3
|
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Total assets
|
|
$
|
2,542.0
|
|
|
$
|
2,247.4
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LIABILITIES AND EQUITY
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|
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Accounts payable
|
|
$
|
188.3
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|
|
$
|
179.9
|
|
Accrued expenses and other current liabilities
|
|
237.5
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|
|
201.5
|
|
Short-term borrowings and current maturities of long-term debt
|
|
35.0
|
|
|
48.2
|
|
Total current liabilities
|
|
460.8
|
|
|
429.6
|
|
Long-term debt
|
|
1,442.3
|
|
|
1,415.6
|
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Other noncurrent liabilities
|
|
233.4
|
|
|
285.8
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|
Equity
|
|
405.5
|
|
|
116.4
|
|
Total liabilities and equity
|
|
$
|
2,542.0
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|
|
$
|
2,247.4
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|
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|
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ALLEGION PLC
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Condensed and Consolidated Cash Flows
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(in millions)
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UNAUDITED
|
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Year Ended December 31,
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2017
|
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2016
|
|
Operating Activities
|
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|
|
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Net earnings
|
$
|
276.7
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|
|
$
|
231.2
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|
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Depreciation and amortization
|
66.9
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|
|
66.9
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|
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Discretionary pension plan contribution
|
(50.0
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)
|
|
-
|
|
|
Changes in assets and liabilities and other non-cash items
|
53.6
|
|
|
79.4
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|
|
Net cash from operating activities
|
347.2
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|
|
377.5
|
|
|
|
|
|
|
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Investing Activities
|
|
|
|
|
Capital expenditures
|
(49.3
|
)
|
|
(42.5
|
)
|
|
Acquisition of and equity investments in businesses, net of cash
acquired
|
(20.8
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)
|
|
(31.4
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)
|
|
Other investing activities, net
|
19.9
|
|
|
9.9
|
|
|
Net cash used in investing activities
|
(50.2
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)
|
|
(64.0
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)
|
|
|
|
|
|
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Financing Activities
|
|
|
|
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Net debt proceeds (repayments)
|
10.1
|
|
|
(64.4
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)
|
|
Debt issuance costs
|
(9.5
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)
|
|
(0.3
|
)
|
|
Dividends paid to ordinary shareholders
|
(60.9
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)
|
|
(46.0
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)
|
|
Repurchase of ordinary shares
|
(60.0
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)
|
|
(85.1
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)
|
|
Redemption premium
|
(33.2
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)
|
|
-
|
|
|
Other financing activities, net
|
2.6
|
|
|
(0.2
|
)
|
|
Net cash used in financing activities
|
(150.9
|
)
|
|
(196.0
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)
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
7.7
|
|
|
(4.8
|
)
|
|
Net increase in cash and cash equivalents
|
153.8
|
|
|
112.7
|
|
|
Cash and cash equivalents - beginning of period
|
312.4
|
|
|
199.7
|
|
|
Cash and cash equivalents - end of period
|
$
|
466.2
|
|
|
$
|
312.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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SUPPLEMENTAL SCHEDULES
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ALLEGION PLC
|
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SCHEDULE 1
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SELECTED OPERATING SEGMENT INFORMATION
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(in millions)
|
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Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
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December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net revenues
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
436.1
|
|
|
$
|
410.0
|
|
|
$
|
1,767.5
|
|
|
$
|
1,645.7
|
|
|
EMEIA
|
|
150.8
|
|
|
129.4
|
|
|
523.5
|
|
|
485.9
|
|
|
Asia Pacific
|
|
36.1
|
|
|
30.3
|
|
|
117.2
|
|
|
106.4
|
|
|
Total net revenues
|
|
$
|
623.0
|
|
|
$
|
569.7
|
|
|
$
|
2,408.2
|
|
|
$
|
2,238.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
123.6
|
|
|
$
|
96.4
|
|
|
$
|
503.3
|
|
|
$
|
448.1
|
|
|
EMEIA
|
|
20.7
|
|
|
15.6
|
|
|
45.2
|
|
|
35.9
|
|
|
Asia Pacific
|
|
4.4
|
|
|
2.3
|
|
|
9.5
|
|
|
6.1
|
|
|
Corporate unallocated
|
|
(19.5
|
)
|
|
(17.1
|
)
|
|
(69.8
|
)
|
|
(64.6
|
)
|
|
Total operating income
|
|
$
|
129.2
|
|
|
$
|
97.2
|
|
|
$
|
488.2
|
|
|
$
|
425.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
ALLEGION PLC
SCHEDULE
2
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, organic revenue growth on a U.S. GAAP basis, 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 revenue, operating income, operating margin, net
earnings, EPS, and EBITDA include items such as goodwill impairment
charges, restructuring charges, asset impairments, merger and
acquisitions costs, 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 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 December 31, 2017
|
|
Three Months Ended December 31, 2016
|
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
(non-GAAP)
|
|
Reported
|
|
Adjustments
|
|
Adjusted
(non-GAAP)
|
|
Net revenues
|
|
$
|
623.0
|
|
|
$
|
-
|
|
|
$
|
623.0
|
|
|
$
|
569.7
|
|
|
$
|
-
|
|
|
$
|
569.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
129.2
|
|
|
6.2
|
|
(1)
|
135.4
|
|
|
97.2
|
|
|
4.8
|
|
(1)
|
102.0
|
|
|
Operating margin
|
|
20.7
|
%
|
|
|
|
21.7
|
%
|
|
17.1
|
%
|
|
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
78.2
|
|
|
49.4
|
|
(2)
|
127.6
|
|
|
82.5
|
|
|
4.8
|
|
(2)
|
87.3
|
|
|
Provision for income taxes
|
|
66.1
|
|
|
(47.1
|
)
|
(3)
|
19.0
|
|
|
7.5
|
|
|
0.9
|
|
(3)
|
8.4
|
|
|
Effective income tax rate
|
|
84.5
|
%
|
|
(95.3
|
)%
|
|
14.9
|
%
|
|
9.1
|
%
|
|
18.8
|
%
|
|
9.6
|
%
|
|
Net earnings
|
|
12.1
|
|
|
96.5
|
|
|
108.6
|
|
|
75.0
|
|
|
3.9
|
|
|
78.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
2.5
|
|
|
-
|
|
|
2.5
|
|
|
0.2
|
|
|
-
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Allegion plc
|
|
$
|
9.6
|
|
|
$
|
96.5
|
|
|
$
|
106.1
|
|
|
$
|
74.8
|
|
|
$
|
3.9
|
|
|
$
|
78.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ordinary share attributable to Allegion plc
shareholders:
|
|
$
|
0.10
|
|
|
$
|
1.01
|
|
|
$
|
1.11
|
|
|
$
|
0.77
|
|
|
$
|
0.04
|
|
|
$
|
0.81
|
|
|
(1)
|
|
Adjustments to operating income for the three months ended December
31, 2017 consist of $6.2 million of restructuring charges and merger
and acquisition expenses. Adjustments to operating income for the
three months ended December 31, 2016 consist of $4.8 million of
restructuring charges, merger and acquisition expenses and other
costs.
|
|
(2)
|
|
Adjustments to earnings before income taxes for the three months
ended December 31, 2017 consist of the adjustments to operating
income discussed above and $43.2 million of charges related to the
redemption of it's 2021 and 2023 Senior Notes and issuance of it's
2024 and 2027 Senior Notes. Adjustments to earnings before income
taxes for the three months ended December 31, 2016 consist of the
adjustment to operating income discussed above.
|
|
(3)
|
|
Adjustments to the provision for income taxes for the three months
ended December 31, 2017 consist of $6.4 million of tax benefit
related to the excluded items within earnings before income taxes
and $53.5 million of tax expense related to US Tax Reform discussed
above. Adjustments to the provision for income taxes for the three
months ended December 31, 2016 consist of $0.9 million of tax
expense related to the excluded items discussed above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
Year ended December 31, 2016
|
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
(non-GAAP)
|
|
Reported
|
|
Adjustments
|
|
Adjusted
(non-GAAP)
|
|
Net revenues
|
|
$
|
2,408.2
|
|
|
$
|
-
|
|
|
$
|
2,408.2
|
|
|
$
|
2,238.0
|
|
|
$
|
-
|
|
|
$
|
2,238.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
488.2
|
|
|
18.5
|
|
(1)
|
506.7
|
|
|
425.5
|
|
|
13.5
|
|
(1)
|
439.0
|
|
|
Operating margin
|
|
20.3
|
%
|
|
|
|
21.0
|
%
|
|
19.0
|
%
|
|
|
|
19.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
395.7
|
|
|
63.2
|
|
(2)
|
458.9
|
|
|
295.0
|
|
|
97.9
|
|
(2)
|
392.9
|
|
|
Provision for income taxes
|
|
119.0
|
|
|
(43.5
|
)
|
(3)
|
75.5
|
|
|
63.8
|
|
|
3.1
|
|
(3)
|
66.9
|
|
|
Effective income tax rate
|
|
30.1
|
%
|
|
(68.8
|
)%
|
|
16.5
|
%
|
|
21.6
|
%
|
|
3.2
|
%
|
|
17.0
|
%
|
|
Net earnings
|
|
276.7
|
|
|
106.7
|
|
|
383.4
|
|
|
231.2
|
|
|
94.8
|
|
|
326.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
3.4
|
|
|
-
|
|
|
3.4
|
|
|
2.1
|
|
|
-
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to Allegion plc
|
|
$
|
273.3
|
|
|
$
|
106.7
|
|
|
$
|
380.0
|
|
|
$
|
229.1
|
|
|
$
|
94.8
|
|
|
$
|
323.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ordinary share attributable to Allegion plc
shareholders:
|
|
$
|
2.85
|
|
|
$
|
1.11
|
|
|
$
|
3.96
|
|
|
$
|
2.36
|
|
|
$
|
0.98
|
|
|
$
|
3.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjustments to operating income for the year ended December 31, 2017
consist of $18.5 million of restructuring charges and merger and
acquisition expenses. Adjustments to operating income for the year
ended December 31, 2016 consist of $13.5 million of restructuring
charges and merger and acquisition expenses.
|
|
(2)
|
|
Adjustments to earnings before taxes for the year ended December 31,
2017 consist of the adjustments to operating income discussed above
and $44.7 million of charges related to the refinance of the
Company's Credit Facility, redemption of it's 2021 and 2023 Senior
Notes, and issuance of it's 2024 and 2027 Senior Notes. Adjustments
to earnings before taxes for the year ended December 31, 2016
consist of the adjustments to operating income discussed above and
$84.4 million of losses related to the divestiture of the Company's
systems integration business in China.
|
|
(3)
|
|
Adjustments to the provision for income taxes for the year ended
December 31, 2017 consist of $10.0 million of tax benefit related to
the excluded items within earnings before income taxes and $53.5
million of tax expense related to US Tax Reform. Adjustments to the
provision for income taxes for the year ended December 31, 2016
consist of $3.1 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 December 31, 2017
|
|
Three Months Ended December 31, 2016
|
|
|
|
As Reported
|
|
Margin
|
|
As Reported
|
|
Margin
|
|
Americas
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
436.1
|
|
|
|
|
$
|
410.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
123.6
|
|
|
28.3
|
%
|
|
$
|
96.4
|
|
|
23.5
|
%
|
|
Restructuring charges
|
|
0.3
|
|
|
0.1
|
%
|
|
0.3
|
|
|
0.1
|
%
|
|
Adjusted operating income
|
|
123.9
|
|
|
28.4
|
%
|
|
96.7
|
|
|
23.6
|
%
|
|
Depreciation and amortization
|
|
6.8
|
|
|
1.6
|
%
|
|
6.6
|
|
|
1.6
|
%
|
|
Adjusted EBITDA
|
|
$
|
130.7
|
|
|
30.0
|
%
|
|
$
|
103.3
|
|
|
25.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
EMEIA
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
150.8
|
|
|
|
|
$
|
129.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
20.7
|
|
|
13.7
|
%
|
|
$
|
15.6
|
|
|
12.1
|
%
|
|
Restructuring charges
|
|
3.7
|
|
|
2.5
|
%
|
|
4.0
|
|
|
3.1
|
%
|
|
Merger and acquisition costs
|
|
0.4
|
|
|
0.2
|
%
|
|
0.3
|
|
|
0.2
|
%
|
|
Adjusted operating income
|
|
24.8
|
|
|
16.4
|
%
|
|
19.9
|
|
|
15.4
|
%
|
|
Depreciation and amortization
|
|
7.7
|
|
|
5.1
|
%
|
|
6.5
|
|
|
5.0
|
%
|
|
Adjusted EBITDA
|
|
$
|
32.5
|
|
|
21.5
|
%
|
|
$
|
26.4
|
|
|
20.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
36.1
|
|
|
|
|
$
|
30.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
4.4
|
|
|
12.2
|
%
|
|
$
|
2.3
|
|
|
7.6
|
%
|
|
Merger and acquisition costs
|
|
0.3
|
|
|
0.8
|
%
|
|
-
|
|
|
-
|
%
|
|
Adjusted operating income
|
|
4.7
|
|
|
13.0
|
%
|
|
2.3
|
|
|
7.6
|
%
|
|
Depreciation and amortization
|
|
0.7
|
|
|
1.9
|
%
|
|
0.6
|
|
|
2.0
|
%
|
|
Adjusted EBITDA
|
|
$
|
5.4
|
|
|
14.9
|
%
|
|
$
|
2.9
|
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
Operating loss (GAAP)
|
|
$
|
(19.5
|
)
|
|
|
|
$
|
(17.1
|
)
|
|
|
|
Merger and acquisition costs
|
|
1.5
|
|
|
|
|
0.2
|
|
|
|
|
Adjusted operating loss
|
|
(18.0
|
)
|
|
|
|
(16.9
|
)
|
|
|
|
Depreciation and amortization
|
|
1.0
|
|
|
|
|
1.1
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
(17.0
|
)
|
|
|
|
$
|
(15.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Adjusted net revenues
|
|
$
|
623.0
|
|
|
|
|
$
|
569.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
135.4
|
|
|
21.7
|
%
|
|
102.0
|
|
|
17.9
|
%
|
|
Depreciation and amortization
|
|
16.2
|
|
|
2.6
|
%
|
|
14.8
|
|
|
2.6
|
%
|
|
Adjusted EBITDA
|
|
$
|
151.6
|
|
|
24.3
|
%
|
|
$
|
116.8
|
|
|
20.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
Year ended December 31, 2016
|
|
|
|
As Reported
|
|
Margin
|
|
As Reported
|
|
Margin
|
|
Americas
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
1,767.5
|
|
|
|
|
$
|
1,645.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
503.3
|
|
|
28.5
|
%
|
|
$
|
448.1
|
|
|
27.2
|
%
|
|
Restructuring charges
|
|
5.7
|
|
|
0.3
|
%
|
|
2.3
|
|
|
0.1
|
%
|
|
Merger and acquisition costs
|
|
0.3
|
|
|
-
|
%
|
|
0.1
|
|
|
-
|
%
|
|
Adjusted operating income
|
|
509.3
|
|
|
28.8
|
%
|
|
450.5
|
|
|
27.3
|
%
|
|
Depreciation and amortization
|
|
26.4
|
|
|
1.5
|
%
|
|
26.4
|
|
|
1.6
|
%
|
|
Adjusted EBITDA
|
|
$
|
535.7
|
|
|
30.3
|
%
|
|
$
|
476.9
|
|
|
28.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
EMEIA
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
523.5
|
|
|
|
|
$
|
485.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (GAAP)
|
|
$
|
45.2
|
|
|
8.6
|
%
|
|
$
|
35.9
|
|
|
7.4
|
%
|
|
Restructuring charges
|
|
7.6
|
|
|
1.5
|
%
|
|
8.2
|
|
|
1.7
|
%
|
|
Merger and acquisition costs
|
|
0.4
|
|
|
0.1
|
%
|
|
0.8
|
|
|
0.2
|
%
|
|
Adjusted operating income
|
|
53.2
|
|
|
10.2
|
%
|
|
44.9
|
|
|
9.3
|
%
|
|
Depreciation and amortization
|
|
28.6
|
|
|
5.5
|
%
|
|
27.6
|
|
|
5.7
|
%
|
|
Adjusted EBITDA
|
|
$
|
81.8
|
|
|
15.7
|
%
|
|
$
|
72.5
|
|
|
15.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
Net revenues (GAAP)
|
|
$
|
117.2
|
|
|
|
|
$
|
106.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP)
|
|
$
|
9.5
|
|
|
8.1
|
%
|
|
$
|
6.1
|
|
|
5.7
|
%
|
|
Restructuring charges
|
|
-
|
|
|
-
|
%
|
|
0.3
|
|
|
0.3
|
%
|
|
Merger and acquisition costs
|
|
0.3
|
|
|
0.3
|
%
|
|
-
|
|
|
-
|
%
|
|
Adjusted operating income (loss)
|
|
9.8
|
|
|
8.4
|
%
|
|
6.4
|
|
|
6.0
|
%
|
|
Depreciation and amortization
|
|
2.5
|
|
|
2.1
|
%
|
|
2.4
|
|
|
2.3
|
%
|
|
Adjusted EBITDA
|
|
$
|
12.3
|
|
|
10.5
|
%
|
|
$
|
8.8
|
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
Operating loss (GAAP)
|
|
$
|
(69.8
|
)
|
|
|
|
$
|
(64.6
|
)
|
|
|
|
Merger and acquisition costs
|
|
3.6
|
|
|
|
|
1.8
|
|
|
|
|
Restructuring charges
|
|
0.6
|
|
|
|
|
-
|
|
|
|
|
Adjusted operating loss
|
|
(65.6
|
)
|
|
|
|
(62.8
|
)
|
|
|
|
Depreciation and amortization
|
|
4.1
|
|
|
|
|
5.0
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
(61.5
|
)
|
|
|
|
$
|
(57.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Adjusted net revenues
|
|
$
|
2,408.2
|
|
|
|
|
$
|
2,238.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
506.7
|
|
|
21.0
|
%
|
|
439.0
|
|
|
19.6
|
%
|
|
Depreciation and amortization
|
|
61.6
|
|
|
2.6
|
%
|
|
61.4
|
|
|
2.8
|
%
|
|
Adjusted EBITDA
|
|
$
|
568.3
|
|
|
23.6
|
%
|
|
$
|
500.4
|
|
|
22.4
|
%
|
|
|
|
|
|
ALLEGION PLC
|
|
SCHEDULE 4
|
|
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO
AVAILABLE CASH FLOW AND NET EARNINGS TO ADJUSTED EBITDA
|
|
(in millions)
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
$
|
347.2
|
|
|
$
|
377.5
|
|
|
Capital expenditures
|
|
(49.3
|
)
|
|
(42.5
|
)
|
|
Available cash flow
|
|
$
|
297.9
|
|
|
$
|
335.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net earnings (GAAP)
|
|
$
|
12.1
|
|
|
$
|
75.0
|
|
|
$
|
276.7
|
|
|
$
|
231.2
|
|
|
Provision for income taxes
|
|
66.1
|
|
|
7.5
|
|
|
119.0
|
|
|
63.8
|
|
|
Interest expense
|
|
56.0
|
|
|
15.9
|
|
|
105.7
|
|
|
64.3
|
|
|
Depreciation and amortization
|
|
16.2
|
|
|
14.8
|
|
|
61.6
|
|
|
61.4
|
|
|
EBITDA
|
|
150.4
|
|
|
113.2
|
|
|
563.0
|
|
|
420.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
(5.0
|
)
|
|
(1.2
|
)
|
|
(13.2
|
)
|
|
(18.2
|
)
|
|
Loss on divestitures
|
|
-
|
|
|
-
|
|
|
-
|
|
|
84.4
|
|
|
Merger and acquisition costs, restructuring charges, and other
charges
|
|
6.2
|
|
|
4.8
|
|
|
18.5
|
|
|
13.5
|
|
|
Adjusted EBITDA
|
|
$
|
151.6
|
|
|
$
|
116.8
|
|
|
$
|
568.3
|
|
|
$
|
500.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
|
|
|
|
|
|
|
|
SCHEDULE 5
|
|
|
|
RECONCILIATION OF GAAP REVENUE GROWTH TO NON-GAAP ORGANIC REVENUE
GROWTH BY REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
Americas
|
|
|
|
|
|
|
|
|
|
|
Revenue growth (GAAP)
|
|
6.4
|
%
|
|
7.0
|
%
|
|
7.4
|
%
|
|
5.6
|
%
|
|
|
Acquisitions and Divestitures
|
|
(1.3
|
)%
|
|
-
|
%
|
|
(1.4
|
)%
|
|
0.6
|
%
|
|
|
Currency translation effects
|
|
(0.3
|
)%
|
|
-
|
%
|
|
(0.2
|
)%
|
|
0.3
|
%
|
|
|
Organic growth (non-GAAP)
|
|
4.8
|
%
|
|
7.0
|
%
|
|
5.8
|
%
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEIA
|
|
|
|
|
|
|
|
|
|
|
Revenue growth (GAAP)
|
|
16.5
|
%
|
|
0.2
|
%
|
|
7.7
|
%
|
|
25.8
|
%
|
|
|
Acquisitions and Divestitures
|
|
-
|
%
|
|
(1.7
|
)%
|
|
(1.6
|
)%
|
|
(25.4
|
)%
|
|
|
Currency translation effects
|
|
(8.8
|
)%
|
|
2.9
|
%
|
|
(1.4
|
)%
|
|
1.8
|
%
|
|
|
Organic growth (non-GAAP)
|
|
7.7
|
%
|
|
1.4
|
%
|
|
4.7
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
Revenue growth (GAAP)
|
|
19.1
|
%
|
|
(8.5
|
)%
|
|
10.2
|
%
|
|
(13.8
|
)%
|
|
|
Acquisitions and Divestitures
|
|
-
|
%
|
|
7.8
|
%
|
|
(0.7
|
)%
|
|
19.7
|
%
|
|
|
Currency translation effects
|
|
(2.7
|
)%
|
|
-
|
%
|
|
(1.8
|
)%
|
|
1.6
|
%
|
|
|
Organic growth (non-GAAP)
|
|
16.4
|
%
|
|
(0.7
|
)%
|
|
7.7
|
%
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Revenue growth (GAAP)
|
|
9.4
|
%
|
|
4.4
|
%
|
|
7.6
|
%
|
|
8.2
|
%
|
|
|
Acquisitions and Divestitures
|
|
(0.9
|
)%
|
|
0.1
|
%
|
|
(1.4
|
)%
|
|
(3.0
|
)%
|
|
|
Currency translation effects
|
|
(2.4
|
)%
|
|
0.7
|
%
|
|
(0.5
|
)%
|
|
0.6
|
%
|
|
|
Organic growth (non-GAAP)
|
|
6.1
|
%
|
|
5.2
|
%
|
|
5.7
|
%
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
|
|
|
|
|
SCHEDULE 6
|
|
|
|
RECONCILIATION OF TRENDED GAAP REVENUE GROWTH TO NON-GAAP ORGANIC
REVENUE GROWTH
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2015
|
|
2016
|
|
2017
|
|
Revenue growth (GAAP)
|
|
(2.4
|
)%
|
|
8.2
|
%
|
|
7.6
|
%
|
|
Acquisitions and Divestitures
|
|
1.0
|
%
|
|
(3.0
|
)%
|
|
(1.4
|
)%
|
|
Currency translation effects
|
|
6.8
|
%
|
|
0.6
|
%
|
|
(0.5
|
)%
|
|
Organic growth (non-GAAP)
|
|
5.4
|
%
|
|
5.8
|
%
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLEGION PLC
|
|
|
|
|
|
|
|
SCHEDULE 7
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF TRENDED GAAP OPERATING INCOME TO NON-GAAP
OPERATING INCOME
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
|
|
Year Ended December
|
|
Year Ended December
|
|
Year Ended December
|
|
|
|
31, 2014
|
|
31, 2015
|
|
31, 2016
|
|
31, 2017
|
|
|
|
As
|
|
|
|
As
|
|
|
|
As
|
|
|
|
As
|
|
|
|
|
|
Reported
|
|
Margin
|
|
Reported
|
|
Margin
|
|
Reported
|
|
Margin
|
|
Reported
|
|
Margin
|
|
Operating income (GAAP)
|
|
$
|
326.3
|
|
|
15.4
|
%
|
|
$
|
358.6
|
|
|
17.3
|
%
|
|
$
|
425.5
|
|
|
19.0
|
%
|
|
$
|
488.2
|
|
|
20.3
|
%
|
|
Adjustments (1)
|
|
69.7
|
|
|
3.3
|
%
|
|
38.1
|
|
|
1.9
|
%
|
|
13.5
|
|
|
0.6
|
%
|
|
18.5
|
|
|
0.7
|
%
|
|
Adjusted operating income (non-GAAP)
|
|
$
|
396.0
|
|
|
18.7
|
%
|
|
$
|
396.7
|
|
|
19.2
|
%
|
|
$
|
439.0
|
|
|
19.6
|
%
|
|
$
|
506.7
|
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjustments to operating income and operating margin include items
such as goodwill impairment charges, restructuring charges, asset
impairments, merger and acquisitions costs, and charges related to the
divestiture of businesses.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180220005549/en/
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