Allegion plc

Good morning and welcome to the Allegian fourth quarter 2023 earnings call. All participants will be in 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 Josh Pokowinski, Vice President of Investor Relations. Please go ahead.

Thank you, Drew. Good morning, everyone. Thank you for joining us for Allegiant's fourth quarter and full year 2023 earnings call. With me today are John Stone, President and Chief Executive Officer, and Mike Wagness, 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 slide two. 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 a 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 and the financial tables of our press release for further details. Please go to slide three and I'll turn the call over to John.

Thanks, Josh. Good morning, everyone, and thanks for joining us. I'd like to start today by recognizing that 2023 was a year of strong execution by the entire Legion team. This performance reflects the value we add for our customers, the strength of our distribution partners, as well as the quality of our brands and the capabilities and expertise of our employees. Let's walk through some highlights of the quarter and the year. After celebrating our 10th anniversary as a standalone company in December, we closed the year with record revenue, adjusted operating income, and adjusted EPS. Reinforcing the thesis behind our seamless access strategy, electronics demand remains strong. We delivered approximately 20% organic growth in electronics for the year as supply chains normalized, and that's on top of mid-teens organic growth in the prior year. We sustained a high operating cadence and expanded our industry-leading margins in the quarter. And for the full year, our adjusted operating margin performance was 22.1%, up 160 basis points. Simply stated, the Allegiant team delivered on price and productivity, bringing margins back to pre-pandemic levels with room to expand further in 2024 and beyond. Our balance sheet and cash flow generation are strong. We ended the year under two times net debt to EBITDA, which sets up a 2024 return to the balanced capital deployment you've come to expect from Allegiant. When you look at our past decade, this team has delivered solid results and executed well through a variety of macroeconomic backdrops. We've built on the strength of 100-year-old brands, consistently meeting customer needs and meeting our commitments to shareholders. We've operated with excellence sustained the highest margins in the industry, and are still pioneering safety, better securing people and their property where they live, learn, work, and connect. Driven by our vision of enabling seamless access and a safer world, we're proud of this track record. We're proud of what we delivered in 2023, and we're excited about the momentum we're carrying into 2024. Please go to slide four, and let's talk about our capital allocation strategy in action. Reflecting on Allegiant's first 10 years, we've had a roughly even split between inorganic growth and the return of capital to shareholders through dividends and share repurchases. We remain committed to balanced, consistent capital allocation, and having quickly delivered from the Access Technologies acquisition, our balance sheet supports this strategy. As we move into 2024, we will continue investing for organic growth, prioritizing projects and solutions that drive seamless access forward. One recent example in new product development is Schlage's next generation of innovative electronic locks, the XC360. This is the latest wireless lock family from Schlage, designed with flexibility and interoperability in mind. With solutions for perimeter and interior doors, this series has the security and access features most looked for by multifamily and light commercial properties at attractive price points. It leads with open architecture, supports the latest credential technologies, and integrates with the Legion and our partner systems. In addition, SLAG's innovative Flex module allows the XE360 series to be easily upgraded in the field to allow migration from an offline to a network solution to adapt to emerging trends in security and connectivity down the road. Next, the Legion will continue to be a dividend-paying stock. You can expect our dividends to grow commensurate with earnings over the long term. and we've just announced our 10th consecutive annual increase. We also expect to grow through acquisitions. Bolton acquisitions that fill portfolio gaps in the hardware space and high margin recurring revenue business in the access solution space will remain priorities. Larger deals like access technologies may be more episodic, but we will be disciplined and have demonstrated the ability to quickly de-lever. Boss Door Controls, which we closed this month, is a classic bolt-on that both complements and expands how we go to market in the UK. This acquisition bolsters our local business with a strong architectural channel, flexible supply chain, and also positions us to increase our spec-driven business there in the future. Lastly, with regards to share repurchases, as we've said, at a minimum, we will continue to offset incentive compensation, and as you saw in the fourth quarter, we will make additional share repurchases as appropriate. Mike will now walk you through fourth quarter financial results, and I'll be back to discuss our full year 2024 outlook.