Allegion plc

Good day and welcome to the Allegiant fourth quarter and full year 2020 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Tom Martineau, Vice President, Investor Relations and Treasurer. Please go ahead.

Thank you, Alyssa. Good morning, everyone. Welcome and thank you for joining us for Allegiant's fourth quarter and full year 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 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 fourth quarter and full year 2020 results and provide an outlook for 2021, which will be followed by a Q&A session. For the Q&A, we would like to ask each caller to limit themselves to one question and one follow-up and then re-enter the queue. We would like to give everyone an opportunity given the time allotted. Now I'd like to turn the call over to Dave.

Thanks, Tom. Good morning and thank you for joining us today. 2020 was an extremely difficult year, perhaps the most challenging that I have encountered during my career. I want to take the time to acknowledge the sacrifice and hard work of our employees in helping Allegiant deliver strong results in the face of the obstacles presented by the COVID-19 pandemic. Thank you for your diligence, flexibility, and perseverance. Please go to slide four. Despite the pressures posed by the global pandemic, Allegiant experienced only a modest top-line revenue decline in 2020, and we saw pockets of strength during the year. The business, as you may remember, performed extremely well in the first quarter and in the second half of the year. The Americas residential business, the Simon's Voss business, Interflux, and global portable security businesses in Europe realized good growth. Although revenue was down modestly for the year, we expanded adjusted operating margins by 20 basis points, aided by quickly implementing restructuring and cost management actions to mitigate the volume related COVID-19 impacts. Allegiant produced record adjusted earnings per share and increased available cash flow by more than 20 million versus the prior year. We strengthened foundational elements of Allegiant's culture around safety, sustainability, inclusion, diversity, and engagement, which will help drive our continued success as a company. I'm very proud of our commitment to employee safety and customer excellence, which remain top priorities. In 2020, we made improvements in all of our employee safety metrics, which are already industry-leading. This has and will be our North Star. I believe that the time and resources we have invested in safety since SPIN paid us back in 2020. We were able to keep our essential employees working and took extra protections to keep people safe. whether they were on the sites or working remotely. And our dedication to customer excellence allowed us to better serve our customers. Today, Allegiant is greener and cleaner, reducing greenhouse gases and water usage throughout the year. We paid considerable attention to drive progress on inclusion and diversity, creating a strategic framework and leadership commitment to our action agenda. Our team is significantly more engaged, meaning our global employees are more committed to our vision and our workforce than ever before. All Allegiant employees are surveyed annually by Gallup in their native language. Our engagement has seen solid improvements since we have been a standalone company. Please go to slide five, and I'll walk you through the fourth quarter financial summary. Revenue for the fourth quarter was $727.3 million, an increase of 1.1%. Organic revenue declined six-tenths of a percent. Currency tailwinds more than offset the organic revenue decline and the impact of divestitures. Organic revenue in the quarter included America's residential, Simons Voss, Interflex, and global portable security in Europe. and Australia and New Zealand in the Asia Pacific. These gains were offset by expected headwinds experienced in our America's non-residential business. Patrick will share more detail on the regions in a moment. Adjusted operating margin increased by 150 basis point in the fourth quarter as we saw the benefits from restructuring and cost reduction actions mitigate deleverage from volume declines. Adjusted earnings per share of $1.49 increased 21 cents, more than 16 percent versus the prior year. High operating income, favorable share count, and year-over-year tax rate accounted for the increase. Available cash flow for the year came in at $443.2 million, an increase of over $20 million versus the prior year. Higher adjusted earnings and lower capital expenditures were the driving forces for the increase. I encourage all of you to review the body of work and execution of the Allegiant team globally versus our competitors and peers in 2020. Followed top line performance in a pandemic, margin expansion, and record cash flows. During the year, we leaned out our structure. increased our investment in technology, and retained our go-to-market resources, and strengthened the engagement of our worldwide team in a pandemic, positioning Allegiant to exit the COVID plague as a stronger company. Patrick will now walk you through the financial results, and I'll be back to discuss our strategic agenda and 2021 outlook.