Slide 1: Allegion Fourth Quarter 2014 Results
Allegion Fourth Quarter 2014 Results February 18, 2015
Slide 2: Safe Harbor
Safe Harbor 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 Comp
Slide 3: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights Revenue of $573.5 million increased +5.5%, +7.6% on an organic basis1 Americas organic revenue growth +8.4% EMEIA organic revenue declined -0.3% Asia Pacific organic revenue growth +17.0% Adjusted2 operating income of $106.6 million increased +9.0%; adju
Slide 4: Allegion – Year 1 Scorecard
Allegion – Year 1 Scorecard 2014 Guidance (2/20/14) 2014 Actual $2.11 billion to $2.13 billion $2.12 billion Revenue1 Up 3.5% to 4.5% Up 5.1% Price of 1% in core markets Price of 2%; <0.5% in core markets Effective ~ 31% 28.6% Tax Rate2 Adjusted $2.49 $2.25 to $2.40 EPS2 $2.40
Slide 5: Allegion – 2014 Project Wins
Allegion – 2014 Project Wins 5 | Fourth-Quarter 2014 Results
Slide 6: Allegion – 2014 Product Launches
Allegion – 2014 Product Launches 6 | Fourth-Quarter 2014 Results
Slide 7: Schlage Sense launch
• Launched Schlage Sense at the 2015 Consumer Electronics Show and made several top ten lists for innovation • Schlage Sense is a smart deadbolt that allows consumers to “talk to unlock” their door or use a code • Schlage Sense has been announced as being part of Apple’s HomeKit initiative • The loc
Slide 8: 2014 Allegion Adjusted Revenue Results
2014 Allegion Adjusted Revenue Results 4Q14 FY14(1) Price (ex VZ) +0.4% +0.3% Price (VZ) +2.0% +2.0% Volume +5.2% +2.8% Organic +7.6% +5.1% Acquisitions +0.3% +0.4% Currency (2.4%) (0.5%) Total +5.5% +5.0% Strong organic growth in quarter; Currency headwinds increasing; Pricing improving sequentiall
Slide 9: Fourth Quarter 2014 Allegion Results
Fourth Quarter 2014 Allegion Results Revenue Adjusted Operating Income(1) ($millions) ($millions) Q4 Revenue Performance Q4 Adjusted Operating Margin +60bps Total growth +5.5%; organic growth +7.6% Favorable margin improvement in Solid Americas performance with volume Americas and Asia Pacific
Slide 10: Fourth Quarter 2014 Allegion EPS Performance
Fourth Quarter 2014 Allegion EPS Performance Q4 Price(1) $0.09 Volume/Mix $0.05 Productivity $0.11 Inflation(1) ($0.12) (2) (3) (1) Reflects price actions to compensate for higher inflation (Venezuela driven) (2) Discrete tax items $0.44; Spin/Restructure $0.04 (3) Spin/Restructure $0.08; VZ Devalua
Slide 11: Fourth Quarter 2014 Americas Results
Fourth Quarter 2014 Americas Results Revenue Adjusted Operating Income(1) ($millions) ($millions) Q4 Revenue Performance Q4 Adjusted Operating Margin +110bps Total growth +8.4%; organic growth +8.4% Price and productivity more than offset Low-single digit growth in non-residential led by infla
Slide 12: Fourth Quarter 2014 EMEIA Results
Fourth Quarter 2014 EMEIA Results Revenue Adjusted Operating Income(1) ($millions) ($millions) Q4 Revenue Performance Q4 Adjusted Operating Margin -40bps Total growth -10.3%; organic growth -0.3% Slightly lower margin due to unfavorable Currency headwind reflecting strengthening mix dollar ver
Slide 13: Fourth Quarter 2014 Asia Pacific Results
Fourth Quarter 2014 Asia Pacific Results Revenue Adjusted Operating Income(1) ($millions) ($millions) Q4 Revenue Performance Q4 Adjusted Operating Margin +220bps Total growth +17.0%; organic growth +17.0% Productivity more than offset inflation and investment Good growth in mechanical hardware
Slide 14: Full Year 2014 Allegion ACF
Full Year 2014 Allegion ACF Available Cash Flow 1 ($millions) 2014 FY ACF is $1.6 million lower than prior year ACF decrease due to higher capital expenditures of $31.3 million from new product development, information systems and spin related projects, mostly offset by improved working capital
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Leverage Management Target 2.75-3.25x of gross Debt/Adj. EBITDA Amendment of existing credit facility in October; lowers cost of capital, continues to End 2014: 2.9x of gross Debt/Adj. EBITDA provide liquidity and flexibility to grow business Organic Growth Sharehol
Slide 16: Effective Tax Rate Update
Effective Tax Rate1 Update 38.4% 28.6% ~22% Aspirational Goal <20% 2013 2014 2015 (fcst) 2016 (fcst) Accelerating reduction in effective tax rate (1) Effective tax rate adjusted for spin-off and other charges; Updated to reflect UK door business divestiture; See press release for non-GAAP reconcilia
Slide 17: Venezuela Exchange Rate Update
Venezuela Exchange Rate Update Adoption of SICAD II exchange rate effective December 31, 2014 Devaluation of net monetary assets Before tax and noncontrolling interest charge of $12.1 million, or ($0.09) EPS (recorded in other, net) Impairment charge of Venezuelan inventory balances Non-ca
Slide 18: Full-Year 2015 Revenue Guidance
Full-Year 2015 Revenue Guidance Region Revenue Change1 Markets Americas • U.S. non-residential markets growing low single-digit • Commercial new construction growth continues; Total: -3% to -2% institutional segment improving Organic: 4% to 5% • U.S. residential up mid single-digit driven by both bu
Slide 19: Full-Year 2015 EPS Guidance
Full-Year 2015 EPS Guidance 2014 Reported EPS from Continuing Operations $1.92 Adjustments (see press release for non-GAAP reconciliations) $0.57 2014 Adjusted EPS from Continuing Operations $2.49 Operational Improvements $0.25 to $0.40 Investment Focus Investments ($0.15) to ($0.20) New Products 50
Slide 20: Summary
Summary Executing strategy, delivering on commitments Delivering solid organic revenue growth Increasing operating margins High level of cash conversion performance Reduction in effective tax rate Continuing to invest in new products and channel development Driving EMEIA profitability
Slide 21: Appendix
ALLEGION’
Slide 22: Full Year 2014 Allegion EPS Performance
Full Year 2014 Allegion EPS Performance Full Year Price(1) $0.29 Volume/Mix $0.10 Productivity $0.21 Inflation(1) ($0.26) Asia Bad Debt ($0.02) (3) (2) (1) Reflects price actions to compensate for higher inflation (Venezuela driven) (2) Goodwill impairment $1.37; Discrete tax items $0.44; Spin/Restr
Slide 23: 2013 Quarterly Non-GAAP Reconciliation
2013 Quarterly Non-GAAP Reconciliation Three Months Ended Year Ended March 31, Septem ber Decem ber Decem ber 2013 June 30, 2013 30, 2013 31, 2013 31, 2013 Net revenues (GAAP) $ 468.2 $ 528.7 $ 529.0 $ 543.7 $ 2,069.6 Adjustments (17.7) (17.4) (16.9) - (52.0) Adjusted net revenues (non-GAAP) 450.5 5
Slide 24: 2014 Quarterly Non-GAAP Reconciliation
2014 Quarterly Non-GAAP Reconciliation Three Months Ended Nine Months Ended March 31, Septem ber 2014 June 30, 2014 30, 2014 Septem ber 30, 2014 Net revenues (GAAP) $ 466.6 $ 531.5 $ 546.7 $ 1,544.8 Adjustments - - - - Adjusted net revenues (non-GAAP) 466.6 531.5 546.7 1,544.8 Operating income (loss
Slide 25: Allegion
| i. ALLEGION