Allegion plc, a global security products company, reported its financial results for the third quarter and nine months ended September 30, 2024. The company’s net sales increased by 4.5% to $1.34 billion for the quarter and 5.1% to $3.93 billion for the nine months, driven by growth in its Americas and EMEA regions. Net income for the quarter was $143.4 million, or $1.65 per diluted share, compared to $134.1 million, or $1.54 per diluted share, in the same period last year. For the nine months, net income was $394.1 million, or $4.53 per diluted share, compared to $364.1 million, or $4.14 per diluted share, in the same period last year. The company’s cash and cash equivalents increased to $1.23 billion as of September 30, 2024, from $1.14 billion as of December 31, 2023.
Allegion Delivers Solid Financial Performance in Q3 2024
Allegion plc, a leading global provider of security products and solutions, has reported its financial results for the third quarter of 2024. The company’s performance demonstrates its ability to navigate the evolving market landscape and deliver value to its shareholders.
Revenue Growth Driven by Pricing and Acquisitions
Allegion’s total net revenues for the third quarter of 2024 increased by 5.4% to $967.1 million, compared to $917.9 million in the same period of 2023. This growth was primarily driven by improved pricing across the company’s major businesses, higher sales volumes, and the positive impact of recent acquisitions.
The Allegion Americas segment, which accounts for the majority of the company’s revenues, saw a 5.6% increase in net revenues to $782.4 million. This was driven by a 2.0% increase in pricing, a 2.1% increase in volume, and a 1.6% contribution from acquisitions. The Allegion International segment also reported a 4.4% increase in net revenues to $184.7 million, benefiting from improved pricing, acquisitions, and favorable foreign currency exchange rates.
Profitability Improvements Across the Board
Allegion’s operating income for the third quarter of 2024 increased by 11.3% to $215.0 million, compared to $193.1 million in the same period of 2023. The company’s operating margin also improved, increasing from 21.0% in Q3 2023 to 22.2% in Q3 2024.
The improvement in profitability was driven by several factors:
Pricing and Productivity: Allegion was able to effectively pass through price increases to offset inflationary pressures, while also realizing productivity gains that exceeded the impact of increased investment spending.
Volume and Product Mix: Higher sales volumes, particularly in the Allegion Americas segment, and a favorable product mix contributed to the improved operating income and margins.
Acquisitions: The company’s recent acquisitions, such as Boss Door Controls, Dorcas, Krieger, and Unicel, added to the operating income and margin expansion.
Currency Impact: Favorable foreign currency exchange rate movements, particularly in the Allegion International segment, also contributed to the improved profitability.
Lower Acquisition and Integration Costs: Allegion reported lower expenses related to acquisition, integration, and restructuring activities compared to the prior-year period.
Segment Performance Highlights
The Allegion Americas segment continued to be the primary driver of the company’s overall performance, accounting for 80.9% of total net revenues in the third quarter of 2024. The segment’s operating income increased by 10.4% to $221.1 million, and its operating margin expanded from 27.0% in Q3 2023 to 28.3% in Q3 2024.
The Allegion International segment also delivered strong results, with a 14.0% increase in operating income to $17.9 million and an expansion in operating margin from 8.9% in Q3 2023 to 9.7% in Q3 2024. This performance was driven by improved pricing, favorable volume and product mix, the contribution from acquisitions, and the positive impact of foreign currency exchange rates.
Strengthening the Balance Sheet and Liquidity Position
Allegion’s balance sheet and liquidity position remain strong, supporting the company’s growth initiatives and shareholder returns. During the first nine months of 2024, the company generated $456.0 million in cash from operating activities, an increase of $74.9 million compared to the same period in 2023.
The company’s total debt stood at $2,402.1 million as of September 30, 2024, with a weighted-average interest rate of 4.8%. Allegion repaid the $400.0 million outstanding balance on its 3.200% Senior Notes on October 1, 2024, using the proceeds from the issuance of $400.0 million in 5.600% Senior Notes due 2034.
Allegion’s liquidity position remains robust, with $731.5 million in cash and cash equivalents and $731.5 million in available borrowing capacity under its revolving credit facility as of September 30, 2024. The company’s strong cash flow generation and access to capital markets provide ample financial flexibility to fund its growth initiatives, capital expenditures, and shareholder returns.
Outlook and Strategic Priorities
Looking ahead, Allegion remains cautiously optimistic about the market environment and its ability to deliver continued growth and profitability. The company expects to see low-to-mid single-digit revenue growth in the fourth quarter of 2024, driven by pricing, volume, and the contribution from recent acquisitions.
Allegion’s strategic priorities continue to focus on the following key areas:
Organic Growth: The company will continue to invest in new product development, expand its sales channels, and enhance its digital capabilities to drive organic growth in both the residential and non-residential markets.
Acquisitions: Allegion will selectively pursue strategic acquisitions that complement its existing product portfolio, expand its geographic reach, and strengthen its technological capabilities.
Operational Excellence: The company will maintain its focus on operational efficiency, cost management, and productivity improvements to enhance its profitability and cash flow generation.
Capital Allocation: Allegion will balance its capital allocation priorities, including investing in the business, pursuing strategic acquisitions, and returning capital to shareholders through dividends and share repurchases.
Conclusion
Allegion’s solid financial performance in the third quarter of 2024 demonstrates the company’s ability to navigate the evolving market landscape and deliver value to its shareholders. The company’s focus on pricing, productivity, and strategic acquisitions has enabled it to drive revenue growth and profitability improvements across its business segments.
Looking ahead, Allegion remains well-positioned to capitalize on the ongoing demand for security solutions and continue its trajectory of sustainable growth and shareholder value creation.