Allegion Cuts FY21 Outlook Citing Supply Chain Constraints

Allegion PLC ALLE lowered its FY21 outlook, citing supply chain constraints, electronic shortages, and rising freight and material costs.
Allegion expects revenue growth of 4% - 4.5% on a reported basis (prior 7% - 7.5%) and 3% - 3.5% organically, versus prior outlook of 5.5% - 6%.
The company expects the widespread supply chain, electronic component, and labor shortages to delay $80 million - $100 million in 2021 revenue and create inefficiencies that impact margin performance.
Allegion International organic revenue growth remains consistent with prior guidance, with primary delay related to the Allegion Americas reporting segment.
Allegion expects EPS of $4.95 - $5.05 (prior view $5.15 -$5.30). It sees an adjusted EPS of $5.00 - $5.10 (previous $5.25 - $5.40) versus the consensus of $5.40.
Full-year available cash flow is now estimated to be $460 million - $480 million ($490 million - $510 million).
The company says demand continued to accelerate in Q3. However, noted that supply chain constraints and electronics shortages slowed the revenue realization pace, causing backlogs to increase.
Allegion expects growth, profitability, and earnings to improve during 2022 with normalizing macroeconomic conditions.
Price Action: ALLE shares are trading higher by 0.54% at $132.9 on the last check Friday.

Overview Rating:

Speculative

0100