Allegion plc

Good morning and welcome to the Allegiant first quarter 2021 earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. 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 two. 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, Andrew. Good morning, everyone. Welcome, and thank you for joining us for Allegiant's first quarter 2021 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 first quarter 2021 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 and 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'm pleased with the company's first quarter performance. We delivered revenue growth, margin expansion, double-digit earnings growth, and strong available cash flow against the tough prior year comparable. We continue to make progress on our seamless access strategy while maintaining a focus on keeping our employees safe and serving our customers efficiently. Let's begin by walking through the first quarter financial summary. Revenue for the first quarter was $694.3 million, an increase of 2.9% or 0.5% organically. The organic revenue increase was driven by strength in the Americas residential and Allegiant's international businesses, offsetting continued softness in America's non-residential. Currency tailwinds provided a boost to total revenue and more than offset the impact of divestitures. Patrick will share more detail on the regions in a moment. Adjusted operating margin increased by 30 basis points in the first quarter. We executed extremely well, and the restructuring and cost management actions taken during 2020, along with the volume leverage on the businesses that grew, offset the mixed headwinds we are experiencing. Adjusted earnings per share of $1.20 increased 16 cents or 15.4% versus the prior year. The increase was driven by expanded operating income along with favorable other income and share count. Year-to-date available cash flow came in at $105.5 million, an increase of more than $86 million versus the prior year. The increased cash flow was driven by improvement in net working capital, growth in net earnings, and reduced capital expenditures. Please go to slide five. As we discussed previously, reflecting on 2020, despite the ongoing pandemic, Allegiant continues to invest in our future, most notably through our innovation engines. From industrial design, engineering, and IT to ventures, partnerships, and acquisitions, we're building a build, borrow, buy approach to accelerate seamless access. Investing in our capabilities, partnering, and integration are all core to our innovation strategy. Let's review some of Allegiant's innovation and investments. Allegiant's Overture. Our cloud-based ecosystem where project teams collaborate on the specification design and construction of door security and openings expanded in multiple ways during the past year. Key and credential management was added. More functionality and integration for our billing information modeling customers and automation that helps hardware specification writers. Overture allows digital connectivity to our customers over the life of the structure. It's proving its value as a single source of truth for hardware requirements and decisions and to empower our partners to work more productively. Our Isonis brand also launched a significant upgrade of its software platform in Q1. The Pure Access Cloud 4.0 reader controllers are pre-configured to the cloud and only require a network connection on-site, making the Isonis system truly plug and play. The software upgrade includes new front-end technology with customized dashboards, gives a boost to cybersecurity, and anticipates added capabilities and future new devices. Our product innovation spans the world of Allegiant. Simons Voss recently released the Smart Locker, a retrofit no-drilling lock option for lockers and furnitures in schools, hospitals, and industrial facilities. This innovation was customer-inspired based on trends and needs in the market. Importantly, it integrates the existing Simons Voss digital ecosystem, and there's additional functionality to provide or open each lock remotely to display break-in attempts in the software and to send notifications. And just as our internal innovations continue to delight our customers, innovation is built through key partnerships, and our early leadership in the IoT market has established us as a go-to partner. In Q1 Homebase, announced that they're working with Allegiant and Walmart in-home to enable direct-to-fridge grocery delivery for apartment residents starting in the Kansas City metro. Home-based enabled communities come with pre-installed Schlage smart locks, meaning that the Walmart associate making the delivery gets secure, one-time access for entry during a designated time frame for delivery. This is a clear demonstration of seamless access adding value to people's everyday lives. Partnering with Seaboard, Apple and Android has rapidly expanded seamless access use cases on higher education campuses. By enabling mobile credential technologies, we are part of the ecosystem that supports contactless student IDs for iPhones, Apple Watches, and Google Pay. CBIRD also brings our Von Duprin exit devices into play, giving colleges new remote lockdown and monitoring capabilities. These integrations are good for campus security and help universities and colleges operate more efficiently and safely. Rounding out our Build, Borrow, Buy approach to innovation, Allegiant Ventures continues to invest in companies like Casa, Mint House, VergeSense, and OpenPath. We also acquired Unomi, a technology company and leader in IoT cloud platforms. Founded in 2013 by building automation and enterprise computing experts, Unomi was the first to create a smart home ecosystem, one that automatically discovers and coordinates devices. Allegiant was an early customer and investor. Today, UNOMI solutions are used in more than 150 countries connected to millions of IoT devices. UNOMI also holds unique intellectual property that matches well to Allegiant's strategic priorities for accelerating growth through seamless access, innovation, and meaningful partnership. Our goal is to be the provider of choice among IoT developers and integrators. You'll continue to see more examples of investments innovation through our build, borrow, and buy approach in 21, and we look forward to sharing more with you in the future. Patrick will now walk you through the financials, and I'll be back later to discuss our 21 outlook and wrap up.