Allegion plc

Good day and welcome to the Allegiant second quarter 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. 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.

Thanks, Jason. Good morning, everyone. Thank you for joining us for Allegiant's second quarter 2025 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 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. Q2 was a strong quarter, once again demonstrating the agility of our team, durability of our business, and execution of our capital allocation strategy. We also achieved an exciting milestone. This was Allegiant's first quarter of revenue in excess of a billion dollars, and we certainly don't think it'll be our last. I'm very proud of our team's performance. The high single-digit America's non-res organic growth and continued segment margin expansion speaks to the resiliency of our business model, our brought-in market exposure, and the depth of our relationships with channel partners and end users. We continue to take advantage of our business's strong cash generation, returning cash to shareholders, and growing our business through accretive acquisitions that complement our core and create long-term value. Midway through the year, our team's strong execution and continued demand momentum in our core non-res Americas market gives us confidence in our full-year performance. We're raising our 2025 full-year outlook for adjusted earnings per share to $8 to $8.15. I'll be back later to provide more color on our markets and the outlook. Please go to slide four. Let's take a look at capital allocation for the second quarter, starting with investments for organic growth. As you may have seen at our recent Investor Day in New York, our Simons Voss business continues to be a great success story for Elysian. A known pioneer in our industry, Simons Voss is a leader in electronics, leveraging the global long-term growth trends we see across security and access. Most recently, Simons Voss has introduced a new portfolio of products called Fortlocks. which is launching with some of our key Simons Voss customers this year. FortLox is Allegiant's first batteryless electronic cylinder, offering customers the high quality and ease of use that Simons Voss is known for, and now without the need for a battery to power it. It's an incredible evolution of Simons Voss technology that expands applications and market segments that we can serve. Turning to M&A, since we spoke at Q1 earnings, Allegiant has announced four additional acquisitions, Novas closed in Q2, while Ellatech, Gatewise, and Waitwhile closed early in the third quarter. I'll spend some time on the next slide discussing these recent additions to the portfolio and how they support our long-term growth strategy. Elysian continues to be a dividend-paying stock, and in the second quarter, this amounted to 51 cents per share, approximately $44 million. And lastly, we made share repurchases in the quarter of approximately $40 million. We remain consistent to balanced We remain committed to balance consistent capital allocation with a clear priority of investing for growth. Please go to slide five, where I'll discuss our recent acquisitions. These acquisition categories should look familiar to those of you who tuned in for Investor Day. At that meeting, we outlined a capital allocation strategy that takes advantage of Allegiant's demand generation model, channel and distribution strength, and solid relationships. This framework also includes growing our portfolio with additional electronics products, as well as software and services that differentiate our hardware and security and access environments where Allegiant has a right to win. Starting with additions to our mechanical portfolio, Allegiant recently completed the acquisition of Trimco in the Americas, which we announced prior to Q1 earnings, and Novas in the international segment. Both of these businesses leverage existing go-to-market channel strength in their respective geographies, while broadening the high-quality hardware offerings we provide to our customers. Trimco expands our accessories portfolio in non-res America's markets, while Novos adds to our residential offering in Australia. Moving to our electronics portfolio, Allegiant closed our acquisition of Germany-based Elitech in the third quarter, adding to our international segment. Similar to our existing electronics portfolio, Elitech has an attractive growth profile in the high single to low double-digit range with strong profitability. Elitech's readers and credentials bolster Allegiant's electronics portfolio globally, including in the US, and expands our reach into new applications and customers. Lastly, we'll continue to look to acquire complementary software and service businesses that differentiate our hardware, and drive adoption in security and access environments where Allegiant has a right to win. Our two most recent July acquisitions highlight this. We added GateWise, a software-as-a-service provider that offers a modern and retrofit-friendly gate entry system for multifamily communities. This business is a hand-in-glove fit with Allegiant's electronic locks and Zantra multifamily property access solution, bringing together expanded perimeter security with unit and common area security. We also acquired Waitwhile, a leading software-as-a-service provider that specializes in cloud-based appointment scheduling and queue management. With Waitwhile, we can connect the virtual queue to secure and seamless physical access at the door in core non-residential markets that we know well, ultimately providing the right access to the right people at the right time, all while streamlining operations for the building of the campus. Both of these SaaS businesses have strong growth fundamentals and deliver recurring value to our customers in a way that differentiates and supports our electronic hardware business. Collectively, we expect these acquisitions to be accretive to 2026 adjusted earnings per share and increase the long-term growth potential of Allegiant at attractive margins. Mike will now walk you through the second quarter financial results.

Thanks, John, and good morning, everyone. Thank you for joining today's call. Please go to slide number six. As John shared, our Q2 results reflect continued strong execution from the Allegiant team, delivering another quarter with mid single digit top line growth. Revenue for the second quarter was over a billion dollars, an increase of 5.8% compared to 2024. Organic revenue increased 3.2% in the quarter as a result of favorable price and volume led by our America's non-residential business, where demand remains strong. Q2 adjusted operating margin was 23.7%, flat to the prior year. Both our segments had margin expansion, which was offset by increased corporate expenses, primarily for incentive compensation. Volume leverage and mix were accretive to margins, driven by our America's non-residential business. Price and productivity, net of inflation and investment was a headwind in the quarter of $5.3 million for the enterprise. Adjusted earnings per share of $2.04 increased $0.08 or 4.1% versus the prior year. Operational performance and accretive capital deployment were more than offset by higher tax. Our Q2 tax rate was negatively impacted by discrete items. we still anticipate the full year tax rate to be in the range of 17% to 18%. Finally, year-to-date available cash flow was $275.4 million, which was up 56.5% as we continue to generate strong cash flow. I'll provide more details on the balance sheet and cash flow a little later in the presentation. Please go to slide number seven. This slide provides an overview of our quarterly revenue. I will review our enterprise results here before turning to our respective regions. Organic revenue grew 3.2% in the quarter, which included volume growth of 0.6% and price realization of 2.6% as we are taking pricing actions to offset inflationary pressures. Acquisition strove 1.9 points of growth as both the Americas and international businesses benefited from acquired growth. Currency was a tailwind of 7 tenths of a point, bringing the total reported growth to 5.8% in the quarter. Please go to slide number eight. Our Americas segment delivered strong operating results in Q2. Revenue of $821.5 million was up 6.6% on a reported basis and up 4.5% on an organic basis. Organic growth included both favorable price and volume in the quarter. Reported revenue includes 2.1 points of growth from acquisitions. Pricing in our Americas business was 3% in the quarter. This includes a combination of core pricing actions and surcharge revenue as we cover inflation related to tariffs. Our non-residential business increased high single digits organically as demand for our products remain healthy, supported by our broad and market exposure. our residential business declined mid-single digits in the quarter as markets remained soft in the current high interest rate environment. Electronics revenue was up low double digits and continues to be a long-term growth driver for Allegiant, as we highlighted at our Investor Day in May. America's adjusted operating income of $245.6 million increased 8.6% versus the prior year. Adjusted operating margin was up 50 basis points as volume leverage and favorable mix from stronger non-residential growth were accretive to margins. Price and productivity, net of inflation and investment, and inclusive of transactional FX were a tailwind to margin rates. Similar to what we discussed on our Q1 call, we had a slight tailwind from transactional FX, primarily related to our Mexican operations. where a portion of our local costs were favorably impacted by the sizable year-over-year decline in the peso compared to the U.S. dollar. Please go to slide number nine. Our international segment delivered revenue of $200.5 million, which was up 2.9% on a reported basis and down 2.2% organically. Our electronic businesses continued to grow organically, but were more than offset by pressure in the mechanical portfolio. Acquisitions contributed 1.1% to international revenue. Currency was also a tailwind, positively impacted reported revenue by 4%. International adjusted operating income of $26.2 million increased 11% versus the prior year. Adjusted operating margin for the quarter increased 100 basis points driven by favorable price and productivity, net of inflation and investment, as well as accretive acquisitions. Earlier in July, we agreed to divest our API business, a small non-core locksmithing operation in Australia, which we expect to close in early August. The API business had approximately $6 million of revenue in the first half of 2025. Please go to slide number 10, and I will provide an overview of our cash flow in our balance sheet. Year-to-date available cash flow was approximately $275 million, up nearly $100 million versus last year. This increase is driven by higher earnings, lower capital expenditures, and improvements in working capital. I am pleased with the strong cash generation in 25. Next, working capital as a percent of revenue improved as we continue to effectively convert earnings to cash. Finally, our balance sheet remains strong, and our net debt to adjusted EBITDA is at a healthy ratio of 1.5 times. Our business continues to generate strong cash flow, and our balance sheet supports continued capital deployment. I will now hand the call back over to John.

Thank you, Mike. Please go to slide 11 and I'll share our updated outlook. Starting with the Americas, the non-residential markets, particularly institutional verticals, remain resilient and Elysian is performing very well in the aftermarket. Our spec activity has grown steadily over 2024 and year-to-date 2025, driven by broad end-market exposure and supports our outlook. Residential markets have been soft thus far in 2025 with interest rates as the key swing factor. We are increasing our organic outlook for the Americas to mid-single digits due to strength in the non-residential business, as well as the inclusion of surcharge revenue from tariffs. International markets have been largely unchanged year to date, and we continue to expect roughly flat organic performance. However, we are updating the outlook for completed acquisitions as well as foreign currency changes resulting from the weaker U.S. dollar. We now estimate approximately $40 million of tariff surcharge revenue in the outlook, and as I noted earlier, this is included in our organic revenue outlook in the Americas. We continue to expect tariffs to be neutral at the EPS level, as we shared with you in As a result, we're raising our 2025 adjusted EPS outlook to $8 to $8.15 based on our strong operational execution thus far in the year, continued strong demand in non-residential, accretive acquisitions announced to date and updated foreign exchange rates. You can find additional details as well as below the line model items in the appendix. Please go to slide 12. In summary, I feel Allegiant is executing at a very high level while staying agile and steadily delivering on the long-term commitments we shared with you at our investor day. We've delivered strong performance led by an enduring business model in non-residential Americas, double-digit electronics growth, and a creative capital deployment as we acquire good businesses in markets where we have a right to win. I'm very proud of our team's performance in this dynamic environment. which gives us the confidence to raise our EPS outlook for the year. With that, we'll take your questions.

Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, please limit yourself to one question and one follow-up. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. This time we'll pause momentarily to assemble our roster. And our first question comes from Joe Day from Wells Fargo. Please go ahead.

Joe Day Hi, good morning. Thanks for taking my question. Just a little bit of a two-part question in terms of activity levels in non-res in Americas. First, just with the overall kind of tariff backdrop, any signs of pull forward that you in the quarter to get ahead of some of the pricing, and then just bigger picture, you touched on specification activity that's up here to date. Just what you saw in Q2 versus Q1, any indications of elevated uncertainty and impacts on specification activity?

Yeah, Joe, this is John. That's, I think, both really good, really timely questions. And in terms of any abnormal ordering or pull ahead because of tariffs, I would say no. We look for that. We watch that. We monitor sell through very closely. And there's no evidence of that on the non-res side. Project demand, project work for our customers and their customers is humming along pretty well. So we don't see evidence of pull ahead. On the spec activity, like we shared last couple of quarters, specs, spec writing accelerated through 2024. That momentum has continued year to date 2025. And I would say continues to be strong, continues to grow and very much supports the outlook. So there's, you know, there's new Tariff news just about every week, but I think the project activity and non-res is humming along pretty well.

Perfect. And then I wanted to touch on America's margin. It was really good in Q1 and then saw sequential growth off of that. Can you talk about the timing of price cost with tariffs? Because I think the framework was that could be a little bit of a headwind in Q2 and and then a little bit better in the back half of the year, if that's still the case for the lower tariff amount, and then just unpack the mix that you saw in the quarter, the degree to which some of that doesn't continue into the back half, or if that's just broadly kind of non-res mix that's favorable.

Yeah, Joe, if you think about tariffs, when we met on the Q1 call, we originally had an estimate out there of $80 million. and we said there would be about a month lag. Overall tariffs are about half of that because the trade regulations have changed, right? So we've updated our assumptions to that 40 million for 2025. That month lag is still relevant. So you can think of that as, you know, $5 million a month. So if you think about for us, that's about, a quarter of our total tariff revenue we expect to recover in the second quarter, with the remaining amount being rest of year. That helps you understand how to kind of model that on a top line. And obviously, when you think about fall through, we would all set that at the operating income level on a neutral basis, as we've been discussing for some time. The second piece related to MIPS, I'll kind of send you over to our 10Q where we outline the components of our operating income and margin bridge. You'll see we had favorable mix in the second quarter and the first half. And that is primarily the result of the non-residential growing as well as it is, right? Non-residential is a stronger, more profitable business than the residential. If you think of rest of year, I would say it would be imprudent to assume in the outlook that level of margin expansion, so I wouldn't say we've included it. But I would say we do expect non-residential to grow, to be the driver of growth in the back half of the year as well. That's the market that's really humming, as John mentioned.

Understood. Thank you.

The next question comes from Jeff Sprague from Vertical Research. Please go ahead.

Hey, thanks. Good morning. Also just wanted, and I didn't get a chance to look at the queue yet, Mike, so I'll do that. But just thinking about some of these moving pieces, right? I would imagine deals are negative to margin rate and price-cost parity on surcharge is negative to margin rate. So, you know, is that uplift and solid-looking margin performance all mixed? Is there some other kind of cost actions, you know, that are supporting that?

Yeah, on the enterprise level, obviously the segment margin performance in the second quarter was positive. You have the offset in corporate, as I mentioned. In the case of the Americas, which I think is where you're going.

Yeah, that's where I'm going. Yeah.

Yeah. You see that strong into, uh, incrementals driven by mix. We did cover, uh, price and productivity, um, did cover the inflation and the investments and a slight tailwind from the transactional FX, which I talked about on the first quarter. So I think you have to remember that as well. And then as far as acquisitions, you've got to look at them by regions. They are accretive and international, and they're not enough to really call out either way for the Americas in the first half.

I see. Great. Thanks. And then, John, just back to kind of market conditions, you know, you are kind of later cycle. I mean, it sounds like from the spec activity, though, that stuff entering the pipeline, you know, is still reasonably positive. How do you, I know we kind of talked about this before, but how do you square that relative to the weak ABI and these, you know, folks like Sherwin-Williams missing and things like that? I mean, do you think you're gaining share or is there just some other dynamic at play here?

Yeah, Jeff, it's a good question. I think there's a There's lots of factors going into that. I think the ABI has been rather depressed for pretty much my entire tenure here with Allegiant. And I think the snapback in demand from the pandemic, followed by labor shortages, followed by rapid inflation, just really disrupted some of these more traditional leading indicators. And I think you had a dynamic to where construction backlog remained pretty high. Projects were delayed because of labor, so that long tail got a little bit longer on an individual project basis even. And then you've got where a lot of projects went through the planning phase, went through the design phase and hit pause, waiting for some interest rate relief. You see now, today, Jeff, you've got segments that have been depressed for a long time, like commercial office. actually showing little signs of growth here and there, particularly in major metro areas where you're seeing tenant turnover, tenant fit-out starting to come back in places where it was really flatlined. I think you've got a mix of end-user verticals where some might be depressed, some might be up. The institutional, as we highlighted, healthcare education in particular, have been hanging in there very well. A lot of work in both of those verticals, both from the spec activity and from the project work. So I think institutional has remained quite positive. Data centers, of course, growing very nicely. It is small for us, but growing nicely. And so you add all that together, and we're still seeing high single-digit organic growth in non-res Americas. I do feel that Allegiant is finding our way to gain some share, probably at the expense of the smaller players in the industry, not so much our largest competitor. And that's just due to better supply chain performance, better operational performance in the factory, so we can really get out and compete for some more of the discretionary work. But all in all, I'd say project work remains very healthy.

Great. Thanks. I'll leave it there. Appreciate it.

And the next question comes from Julian Mitchell from Barclays. Please go ahead.

Hi, good morning. Maybe first off, I just wanted to try and understand that slide 18 is kind of very useful. Maybe if you could help us with kind of, you know, of that EPS guide raise, you know, 30 cents plus or so versus a few months ago. Which are sort of the biggest pieces there, sort of moved around, and maybe just clarify for us what's embedded now for FX, FX versus previous?

Yeah, thanks for the question, Julian. First on the FX, obviously there's been a big swing in currency rates, hitting our international business the largest. You see it impacting top line. FX will fall to the bottom line based on normal translational impact. So, you can calculate that. But that is impacting EPS. In addition, we put in the acquisitions on the EPS side, right? And you can calculate what year to date is. We put that in the previous page. And you see the full year on the page of 15 to 20 cents So you have an idea between FX and acquisitions, the increase of the raise associated with both of those. The last item, obviously the first half performance has been quite strong. So that's been a big driver in our operational income, operating income number you see there on the first bar. So those three items, are the big drivers of the EPS raise. This was not an EPS raise where it's all back-end loaded. It's those three big items that are driving the majority of it.

That's helpful. Thank you. And maybe just on the more sort of operational part of it, homing in on that for a second, you've got a slight acceleration, I suppose, in organic sales growth dialed in for the second half versus the first half performance. And that's really in the Americas. Maybe sort of flesh out, you know, to what extent that's kind of price versus volume driven or something in non-res.

versus Rez any sense of kind of you know why that second half is a little bit stronger than the first half yeah I would say on the tariff piece the biggest item is what I discussed earlier it's now included in the outlook and you have three quarters of that 40 million in the back half versus only one quarter in the first half so that's a big driver of it you could think of that as driving the full year outlook of $40 million. That's a point plus as you think about the Americas. And then as far as other accelerations, I would just say non-residential continues to be strong, and we expected that to be the driver of growth in the back half for us.

Great. Thank you.

And the next question comes from Brett Lindsey from Mizuho. Please go ahead.

Hey, good morning. Congrats on the quarter. Thanks, Brett. I wanted to revisit the organic sales outlook one more time here. So the $40 million surcharge and the revenue contribution, I guess how did that compare relative to the original expectation on a netting basis? Were there any surcharge rollbacks you had to do on the de-escalation? And then, or do you think you're pretty well covered for the balance of the year?

Yeah, we actually have updated our surcharge, not only in our estimates to you, but even the announcements to our channel partners and customers. So as this moves, these surcharges allow us to be flexible and agile to our customer base. And Brent, continue to think of it as neutral. We're going to drive the surcharge to offset the inflationary pressures. And I think, as you saw in the first quarter, that price productivity inflation investment for the Americas was pretty close to that. So it was breakeven. So look for us to continue to drive that, to offset it at the enterprise level, such that when you think of the full year, also expect PPII to be breakeven to slightly positive at the enterprise level.

Okay, great. And then just on the acquisition side, so four additional here encouraging to see. I know your long-term framework target, the three points of annual acquired growth, you know, certainly running ahead here. I guess as you look at the scope and the size of the pipeline, was there some pull forward on deals you thought, you know, you had a shot on? Or should we think of it as, you know, maybe a little bit upside of that target as we look out over the next, you know, 12 to 24 months?

This is John Brett. Appreciate the question. And I'd say, you know, each acquisition takes on a life of its own. Certainly we had several acquisitions that came to the point of closure in a pretty tight time window. But if you just take a look at Elitech, I mean, that's a company we've had our eye on for a long time. And so really excited to bring that into Elitech. the portfolio here, very excited to have them on the team. I think our pipeline remains active in both of our segments, in international and in the Americas. It remains active in mechanical as well as electronic products. So it looks very good. I think our team is performing very well. I think our integration muscle, our synergy capture is accelerating. And I think this will be a source of continued profitable growth for the company.

All right. Great. Thanks for the insight.

Thank you. And the next question comes from David McGregor from Longboat Research. Please go ahead.

Hi. Good morning. This is Joe Nolan on for David. Hi, Joe. Hi. I was just going to ask, price costs remain modestly positive in the quarter. Just your view into the second half and what you're seeing with some of the different cost buckets, if you could talk through some of those. Thanks.

Yeah, thanks for the question. As I mentioned earlier, obviously there's going to be more tariffs coming, which we're going to offset with the associated revenue. And then as you think about pricing actions, look for us to continue to take, right, the necessary actions to cover inflationary pressures. I try not to get into the details of providing an outlook for any one individual item, but rather just say look for us in totality to cover that by a combination of pricing and productivity covering the cost pressure.

Got it. And then non-REVs, Strong outlook into the second half. Just with the tariff surcharges, have you seen any sort of demand elasticity related to that? Or it doesn't sound so much like it, but just wanted to check on that.

It's a fair question. And I'd say no. Project activity in the non-res space has been strong. Demand has been good. You know, as a business, we operate predominantly in a short lead time, made-to-order environment. book and ship kind of business. Our customers operate in a similar manner, and that's really the dynamic today. So I think project work continues on, and I have not seen that elasticity impact that you asked about.

Great. Thank you.

And the next question comes from Tomo Sano from J.P. Morgan. Please go ahead.

Hi, everyone, everyone. Morning. Thank you. So I'd like to ask you about the international business for the second half outlook, especially. So you had a volume decline 3.2%. Any changes that you see from the past quarters? And how do you see the flat dish market outlook in a full year basis? Any things that we should look at in a second half for this business, please?

Yeah, I would just, I know you've been following us a little less than maybe others on the call. So if you think of our business, our fourth quarter in international tends to be our strongest business. So as you think about modeling this, just take a look at the historic quarterly phasing for seasonality. And then with respect to the outlook, I would say still rethink the years, you know, around flat. We talked about that Q1 on our outlook and at the beginning of the year and still expect full year to be roughly around that flat organic outlook. Obviously, we have the benefit of currency rates and acquisitions, which you need to make sure you take into account. And we give that. detail as well.

Yeah, that's very helpful. Thank you. And just follow up on the margin side on an international business. So in terms of the recent acquisitions accrued to margins, how – Should we think about the levels of the margins from the recent acquisition into 2026 for international business? If you have some thoughts of, like, how it's actually exciting in terms of the margin side of Genesys, please.

Yeah, the biggest acquisition, obviously, Elitech. That is margin accretive for international. We gave some details when we put out the earnings release where you can you can calculate that and see that, you know, you're thinking mid-20s percent, which is certainly accretive to international on that business. So as I think about margin rates on M&A for international, think of it as accretive to the margin rate.

All right. Thank you very much. That's all.

Thanks, Tomal. And as a reminder, if you have a question, please press star, then 1. And our next question comes from Chris Snyder from Morgan Stanley. Please go ahead.

Thank you. I just wanted to ask on price. I think the company in April was pushing surcharges for about $80 million of tariffs. Obviously, you guys are now putting that number at $40 million. So, like, is Q3 price effectively lower than Q2 price? I think Q2 came in at plus 3% because of that rollback. Just any thoughts on, you know, that price trajectory, intra-quarter Q2, and then as we kind of go into the back half?

No. If you think about our tariffs, think of 25% of the full year. So, 25% of the $40 million will be in the second quarter of And then the remaining 75% will be pretty even over the last six months of the year. So that can kind of give you an idea of the tariff revenue.

Okay, so the company wasn't really realizing price on the surcharges at the $80 million level in Q2.

Yeah, let me kind of walk this back for you, Chris. We came out with the $80 million. Shortly thereafter, the government changed their policy on what tariffs were, and we immediately adjusted what we went to the marketplace and adjusted the surcharge. Think of it as, number one, we're going to offset it on a dollar basis, and then I gave you the components for you to model it throughout the year.

Thank you. Thank you. I appreciate that. So if we kind of look at the guide, I guess it's up, you know, 150 BIPs at the midpoint, 4% organic from 2.5% organic. Price is one point of that, the $40 million, and then I guess there's just like modestly better volumes in some other piece of the business. I guess where do you guys see the volumes getting better versus prior? Thank you.

I think it's fair to say non-residential. As you think about this versus the beginning of the year, our non-residential business in the Americas is performing quite well, even better than we expected.

Thank you. I appreciate that.

This concludes our question and answer session. I would like to turn the conference back over to John Stone for any closing remarks.

Thanks very much for the engagement and the questions. Again, I would just reiterate, I feel that Allegiant is performing very well, executing at a high level, and steadily delivering on the commitments we made to you at our investor day. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.