Allegion plc

Good morning, and welcome to the Allegiant second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the 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, Jason. Good morning, everyone. Thank you for joining us for Allegiant's second quarter 2024 earnings call. With me today are John Stone, President and Chief Executive Officer, and Mike Wagnus, Senior Vice President and Chief Financial Officer of Allegiant. Our earnings release, which was issued earlier this morning, and the presentations we will refer to in today's call are are available on our website at investor.alegion.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 in 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, everybody. Thanks for joining today. I can sum up this call in this quarter with four words. Stable markets, strong execution. And that strong execution was by the entire Allegiant team and our distribution channel partners. That's the team that drove these record Q2 results. I'll briefly walk through some of the highlights for our quarter and an updated full year outlook, and then we'll share more on each of these later in the presentation. Allegiant Q2 revenue growth and margin expansion demonstrate the resilience of our business model. We see stability in demand, given our broad end market exposure and specification expertise. Our team continues to see strength in areas like institutional markets and data centers, further helped by our own investments in electronics and new product development. And as expected, we saw a return to volume growth and a seasonal bump in the quarter sequentially over Q1. We are accelerating capital deployment, returning cash to shareholders, and investing in accretive acquisitions. We've announced four acquisitions already this year with Krieger Specialty Products and Unicell Architectural in Q2. Overall, heading into the second half, we're executing at a high level. We're raising our full year guidance for reported revenue and adjusted earnings per share, and we're affirming our available cash flow outlook. I am very proud of how the Allegiant team is living our values while driving results for our customers and our shareholders. Please go to slide four. Allegiant continues to pursue balanced, consistent capital allocation for the benefit of shareholders and to take advantage of the strong cash generation this business drives. We are investing for organic growth. In April, we introduced three new lines of Schlage Indication Solutions, a best-in-class lock portfolio with trends that allow users to more easily see the status of a door. Developed specifically with K-12 schools and higher education security needs in mind, our new locks have some of the largest indication windows on the market and differentiated 180-degree views. They offer unparalleled functionality and durability for grade one fire-rated applications, in addition to tamper resistance and colorblind-friendly backgrounds. Combined, these features allow for quick confirmation that doors are secured, providing teachers and administrators peace of mind and time, their most valuable resource when it matters most, when every second counts. Allegiant continues to be a dividend-paying stock. For the quarter, this amounted to approximately $42 million in cash returned to shareholders. We closed two bolt-on acquisitions in our Americas region in Q2, Krieger Specialty Products and Unicell Architectural. Krieger is a leading specialty door manufacturer with expertise in highly engineered, acoustical, high security, thermal, and radio frequency applications. Krieger products complement our hollow metal portfolio and are used in a wide range of facilities including government agencies, data centers, concert halls, and healthcare. Unicell is a leading manufacturer of advanced glass wall systems that support privacy, safety, energy efficiency, and sustainability across institutional markets. This business is a natural extension of our core door and window systems portfolio of TGP, AD systems, and Stanley Access technologies. Both Krieger and Unicell expand our portfolio with fast-growing niche products for key verticals that will benefit from the strength of our spec writing capability and nationwide sales footprint. On a combined basis, these businesses are accretive to overall Elysian growth rates and carry Allegiant like EBITDA margins in the low 20s. Total purchase price represents a valuation of approximately 10 times 2024 EBITDA. We're very pleased with the recent acquisitions we've made, strong management teams that have come on board and a great cultural fit with the employees that they bring to Allegiant. We're excited for the future. Lastly, in the quarter, we made additional share repurchases amounting to approximately $40 million. I'm happy with the balance and shareholder-friendly capital allocation that you see here on the slide, and Allegiant continues to invest in the core, grow the business, and return cash to shareholders. Mike will now walk you through the second quarter financial results, and I'll be back to provide an update on our outlook and some final thoughts.