Allegion Reports Third-Quarter 2019 Financial Results: Delivers Its Highest Quarterly Revenue, Operating Margin, Earnings Per Share

Allegion plc a leading global provider of security products and solutions, today reported third-quarter 2019 net revenues of $748.3 million and net earnings of $131.6 million, or $1.40 per share. Excluding charges related to restructuring, acquisitions and debt refinancing, adjusted net earnings were $138.3 million, or $1.47 per share, up 19.5 percent when compared with third-quarter 2018 adjusted EPS of $1.23.

Third-quarter 2019 net revenues increased 5.2 percent when compared to the prior-year period (up 6.4 percent on an organic basis). Reported revenues reflect strong pricing and volume that more than offset foreign currency impacts.

Third-quarter 2019 operating income was $168.1 million, an increase of $25.8 million or 18.1 percent compared to 2018. Adjusted operating income in third-quarter 2019 was $173 million, an increase of $24 million or 16.1 percent compared to 2018.

Third-quarter 2019 operating margin was 22.5 percent, compared with 20 percent in 2018. The adjusted operating margin in third-quarter 2019 was 23.1 percent, compared with 20.9 percent in 2018. The 23.1 percent margin represents the highest quarterly adjusted operating margin since the company’s spin. The 220-basis-point increase in adjusted operating margin is attributable to strong price realization, volume leverage and productivity, offsetting a combination of inflation, currency pressures and investment spending.

“I am extremely pleased with our third-quarter performance,” said David D. Petratis, Allegion chairman, president and CEO. “Allegion delivered its highest quarterly operating margin since spin, with a robust 220-basis-point margin expansion. Our ability to execute price and productivity actions, combined with solid volume leverage, drove the increase in year-over-year margins.

“Top-line organic growth was strong, particularly in the Americas and EMEIA regions.  In the Americas, we see healthy fundamentals, especially in non-residential end markets, while currency pressures continue to impact total growth in the EMEIA and Asia-Pacific regions.”

The Americas segment revenues increased 7.1 percent (up 7.2 percent on an organic basis). High-single-digit revenue growth in both the non-residential and residential businesses was driven by substantial volume and price realization.

The EMEIA segment revenues were up 2.5 percent (up 6.9 percent on an organic basis), reflecting strong volume and price increases partially offset by unfavorable currency effects.

The Asia-Pacific segment revenues declined 9.1 percent (down 4.8 percent on an organic basis). The revenue change in the quarter was the result of unfavorable currency impacts along with the organic revenue decline. The drop in organic revenue was driven by market weakness in Australia, particularly in residential end markets, along with a $1.5 million transfer of revenue previously managed in the Asia-Pacific region that’s now managed in the Americas and EMEIA regions.

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