Allegion plc

Good morning and welcome to the Allegiant Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your touchtone phone. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Tom Martineau, Vice President of Investor Relations and Treasury. Please go ahead.

Thank you, Andrew. Good morning, everyone. Welcome and thank you for joining us for Allegiant's third quarter 2020 earnings call. With me today are Dave Petratis, Chairman, President, and Chief Executive Officer, and Patrick Shannon, Senior Vice President and Chief Financial Officer of Allegiant. Our earnings release, which was issued earlier this morning, and the presentation, which we will refer to in today's call, are available on our website at investor.allegiant.com. This call will be recorded and archived on our website. Please go to slides number two and three. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our most recent SEC filings for description of some of the factors that may cause actual results to differ materially from our projections. The company assumes no obligation to update these forward-looking statements. Today's presentation and commentary include non-GAAP financial measures. Please refer to the reconciliation in the financial tables of our press release for further details. Dave and Patrick will now discuss our third quarter 2020 results, which will be followed by a Q&A session. Please, for the Q&A, we would like to ask each caller to limit themselves to one question in one short follow-up, and then re-enter the queue. We would like to give everyone an opportunity, given the time allotted. Please go to slide four, and I'll turn the call over to Dave.

Thanks, Tom. Good morning and thank you for joining us today. I'll start by walking through the third quarter financial summary. Revenue for the third quarter was $728.4 million, a decrease of 2.7% or 3.4% organically, which shows sequential improvement from Q2 to Q3. The organic revenue decrease was driven by continued economic challenges stemming from the COVID-19 pandemic. Currency tailwinds provided a boost to total revenue and more than offset the impact of divestitures of our business in Colombia and Turkey. Patrick will share more detail on the regions in a moment. Adjusted operating margin increased by 20 basis points in the third quarter. I'm extremely proud of the resiliency shown by the Allegiant team. We executed extremely well and the cost management actions taken during the year helped mitigate the deleverage from volume declines. Positive price and muted inflation also helped deliver the operating margin increase. Adjusted earnings per share of $1.67 increased 20 cents or approximately 14% versus the prior year. The increase was driven primarily by favorable other income Tax rate and share count offset the lower operating income. Year-to-date available cash flow came in at $256.1 million, an increase of just over $26 million versus the prior year. Improvement in net working capital and reduced capital expenditures more than offset the lower net earnings. Please go to slide five. Access has been part of our company's heritage for more than 100 years, and our vision of seamless access and a safer world are providing a sound foundation for our future. In the realities of a post-COVID world, customers have new concerns and new needs for healthy environments. The importance of making home, work, and institutions safer has never been so important to our customers, and the need for touchless access is not going away. Our business is disciplined and focused, prioritizing investments in our seamless access strategy. As a result, Allegiant continues to deliver leadership and innovation across the portfolio. Our Schlage brand is a 100-year-old powerhouse that spans the globe. In the building channel, our mix of Schlage mechanical and electronic solutions continue to help us win projects, including a new development community in Florida with over 3,000 homes. Allegiant is further advancing seamless access for builders with electronic solutions that provide contactless home showings, and the Schlage Encode smart deadbolt continues to gain momentum in both residential, new construction, and retail markets. On university campuses, Among the first schools to adopt Schlage security solutions for Apple Wallet are the University of Tennessee, University of Vermont, and the University of San Francisco. Allegiant now supports contactless student IDs across Apple Wallet, Android, and Google Pay. For commercial and institutional markets, we have a full suite of mobile-enabled Schlage locks and readers. In a post-COVID environment, mobile technology, contactless hardware, and readers in combination with wave-to-open actuators now extend our touchless options for interior and perimeter security. Seamless access also gained ground outside the Americas in Q3. Simons Voss is celebrating its 25th year as an electronic access innovator. and was recently recognized in Germany as the number one electronic locking system manufacturer. In Australia, we just delivered the Gainsborough Freestyle Electronic Tri-Lock for single-family and short-term rentals, giving the owner full control of access from a mobile app. And in Australia and New Zealand, we introduced the Schlage OmniFire-rated Smart Lock for multifamily and office settings. In the quarter, we booked over 4 million in orders to support and provide seamless access to solutions to a global leader in social media to be delivered in 21. Our investments in seamless access are bolstered by global accelerators. Allegiance partner of choice and open credential strategy is an important accelerator. More than 45 physical access control software providers already integrate with Schlage electronic locks and devices. Many of them are moving to integrate to our mobile credential ecosystem as well. Our global accelerators include e-commerce, touchless access, and increased focus on visitor management and occupancy monitoring. Teamless access is providing to be a strong foundation for our future. Patrick will now walk you through the financial results, and I'll be back to later discuss our 2020 outlook and wrap up.