Allegion Announces Q4/2014 Financial Results

Fourth-quarter net revenues increased 5.5 percent compared to the prior year period

Allegion plc, a leading global provider of security products and solutions, recently reported fourth-quarter 2014 net revenues of $573.5 million and net earnings of $35.6 million, or $0.37 per share from continuing operations. These results include charges related to Venezuela currency devaluation, restructuring and one-time separation costs. Excluding these items, adjusted net earnings were $73.2 million, or $0.76 per share, up 26.7 percent compared with 2013 adjusted EPS.

Fourth-quarter net revenues increased 5.5 percent compared to the prior year period (up 7.6 percent on an organic basis). The Americas segment increased total revenue by 8.4 percent, driven by low single-digit non-residential growth, mid-single-digit residential growth, Venezuela pricing actions and acquisition revenue offsetting Canadian dollar currency headwinds. The Asia Pacific segment grew revenue 17.0 percent, due to strength in the system integration and mechanical hardware businesses. The EMEIA segment revenues were down 10.3 percent, predominately driven by unfavorable currency exchange.

Fourth-quarter operating margin was 11.0 percent, compared with 16.9 percent in 2013. Fourth-quarter adjusted operating margin was 18.6 percent, compared with 18.0 percent in 2013 - an increase of 60 basis points. Adjusted operating margin was up year-over-year as favorable price, volume leverage and productivity more than offset increased investments and inflation.

Full-Year Results

Full-year 2014 net revenues were $2,118.3 million, an increase of 2.4 percent compared to the prior year (5.0 percent on an adjusted basis). Full-year 2014 operating margin was 15.4 percent, compared with 11.6 percent in 2013. Full-year 2014 adjusted operating margin was 18.7 percent, compared with 18.3 percent in 2013 - an increase of 40 basis points. The improvement in operating margin reflects operating leverage on revenue growth that offsets incremental investments predominately in new product development.

Net earnings from continuing operations for the full-year 2014 were $186.3 million, or $1.92 per share, compared to $35.9 million, or $0.37 per share, for the prior year. Adjusted net earnings from continuing operations were $241.8 million, or $2.49 per share for the year ended December 31, 2014, compared to adjusted net earnings from continuing operations of $209.0 million, or $2.18 per share for the prior year reflecting a 14.2 percent increase. Adjusted net earnings and adjusted EPS were better than the prior year, reflecting operational improvement net of investments and a lower effective tax rate offsetting share dilution and higher interest expense.

"In our first year of operation as a stand-alone public company, we made significant progress on new product introductions, improved EMEIA margin performance, realised a reduction in the effective tax rate, and continued to focus on providing a safe environment for our employees. I am proud of the Allegion team and the execution and results achieved in a challenging environment," said David D. Petratis, chairman, president and chief executive officer. "We are well-positioned to actively participate in the recovering commercial construction markets with our focus on products and solutions to better serve the customer."