Good morning, and welcome to the Allegion First Quarter 2024 Earnings Call [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Josh Pokrzywinski, Vice President of Investor Relations. Please go ahead.

Thank you, Drew. Good morning, everyone. Thank you for joining us for Allegion's First Quarter 2024 Earnings Call. With me today are John Stone, President and Chief Executive Officer; and Mike Wagnes, Senior Vice President and Chief Financial officer of Allegion. 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.allegion.com. This call will be recorded and archived on our website. Please go to Slide 2. 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 3, and I'll turn the call over to John.

Thanks, Josh. Good morning, everyone. Thanks for joining us. Allegion is off to a solid start in 2024, and I'm very proud of our entire team. I'll walk through some of the top Q1 highlights briefly, and will share more on each of these through the course of the presentation. Institutional markets remain healthy as we expected, our team continues to leverage our capabilities in spec writing, made-to-order manufacturing and strong distribution partnerships to best serve our end user customers. We're executing at a high level, expanding margins in the quarter and delivering balanced capital allocation. As previously announced, we acquired Boss Door Controls and Dorcas in Q1 and returned cash to our shareholders through dividends and share repurchases. Driven by our vision of enabling seamless access in a safer world, Allegion's Q1 performance has set a solid foundation for the year. We're performing well, and we're affirming the 2024 outlook we provided to you in February. Please go to Slide 4. Allegion continues to deliver on balanced and consistent capital allocation and our Q1 performance showcases this. We continue to invest for organic growth, building on the legacy of our flagship brands delivering new value and access through industry-first innovations and nurturing strategic relationships to be the partner of choice. In March, Schlage announced a new smart lock integration with Airbnb to help improve and simplify host and guest experiences alike. Our integration means most Airbnb hosts with listings in the U.S. and Canada can now provide the seamless access experience to guests with the industry-leading Schlage Encode smart lock family directly within the Airbnb app. Host can streamline the check-in and checkout process with automatically generated guest access codes, removing the need to manually create unique codes for each visitor. Access codes are shared with guests at the time of booking, and those codes are only active during their trip, automatically deactivating after checkout. Hosts can make any needed adjustments to their guest check-in and checkout times in the Airbnb app, which will automatically update the smart lock, keeping them in control of the access experience, while guests can rest easy with the peace of mind brought by having Schlage on the door. The smart lock integration within the Airbnb app is currently only compatible with Schlage, making this another industry first for our company. Allegion also continues to be a dividend-paying stock. And as a reminder, in February, we announced our tenth consecutive annual dividend increase. For the quarter, this amounted to approximately $42 million in cash returned to shareholders. Additionally, in Q1, we closed 2 bolt-on acquisitions. During our last earnings call, we discussed the February acquisition of Boss Door Controls in the U.K., which brings a strong architectural channel and a flexible supply chain while positioning us to increase our spec-driven business in Allegion International. In March, we acquired Dorcas, a leading manufacturer of electromechanical access control solutions based in Spain. Dorcas' solutions are distributed and sold internationally with a strong presence across European markets, including in the education and health care verticals. Their electric strikes and locks are integral elements of access control systems and bringing this business into Allegion International is another strategic investment in the quality of our portfolio there. Lastly, in the first quarter, we made additional share repurchases amounting to approximately $40 million. Overall, I'm happy with the balanced capital allocation you see here on this slide. We continue to invest in the core, continue growing the business and continue returning cash to shareholders. Mike will now walk you through first quarter financial results, and I'll be back to provide some final thoughts.

Thanks, John, and good morning, everyone. Thank you for joining today's call. Please go to Slide #5. As John shared, our team's Q1 performance reflects a solid start to 2024. Revenue for the first quarter was $893.9 million, a decrease of 3.2% compared to 2023. Organic revenue declined 3.6% on a challenging prior year comparable, which was up 15%. Q1 2023 experienced abnormally strong seasonality as the business recovered from previous supply chain interruptions. Adjusted operating margin and adjusted EBITDA margin increased by 40 and 50 basis points, respectively, in the first quarter, driven by price and productivity in excess of inflation and investment. The team executed well to deliver margin expansion despite the volume declines. Adjusted earnings per share of $1.55 decreased $0.03 or approximately 1.9% versus the prior year. Volume declines and tax headwinds more than offset margin expansion and interest and other favorability. Finally, Q1 2024 available cash flow was $23.9 million, which was a 48.8% decrease versus last year and represents a return to historical norms. I will provide more details on our cash flow and balance sheet a little later in the presentation. Please go to Slide #6. This slide provides an overview of our quarterly revenue. I will review our enterprise results here before turning to our respective regions. Organic revenue declined in the quarter by 3.6% as a result of the tough comparable I just mentioned. We saw the business returning to more normal seasonality in Q1 2024 versus what we experienced last year. Currency and acquisitions drove additional favorability in the quarter, bringing the total reported decline to 3.2%. Please go to Slide #7. Our Americas segment delivered strong operating results in Q1. Revenue of $709.3 million was down 4.3% on both the reported and organic basis as favorable pricing more than offset lower volumes. On a 2-year basis, our Americas business grew approximately 17% organically. Our nonresidential business, inclusive of Access Technologies, declined mid-single digits against the prior year comp that grew nearly 30%. Residential markets remained soft with our business down low single digits in the quarter as higher interest rates continue to impact new and existing home sales. Demand for electronics in our Americas business remained strong. While revenue was down low single digits in the quarter against a tough comp, our electronics business has grown nearly 30% over the last 2 years. Americas adjusted operating income of $197.3 million decreased 0.4% versus the prior year period due to lower volumes. However, adjusted operating margin and adjusted EBITDA margins for the quarter were up 120 and 140 basis points, respectively. Overall, our Americas team continues to execute well and operate efficiently, driving margin expansion through price and productivity in excess of inflation and investments despite lower volumes. Please go to Slide #8. Our International segment continues to see a challenging macroeconomic environment. Revenue of $184.6 million was up 1.4% on a reported basis but down 0.8% organically. Price realization was more than offset by lower volumes associated with soft end market demand. Currency and acquisitions were a tailwind this quarter, positively impacted reported revenue by 0.8% and 1.4%, respectively. International adjusted operating income of $19.3 million decreased 2% versus the prior year period. Adjusted operating margin and adjusted EBITDA margin for the quarter decreased 40 and 50 basis points, respectively. Price and productive tailwinds, covering inflationary pressures, but modest volume declines resulted in lower year-on-year margin rates. Please go to Slide #9. As I mentioned earlier, year-to-date available cash flow came in at $23.9 million, down $22.8 million versus the prior year. Q1 2023 cash flow was particularly strong as it benefited from supply chain lead time reductions, while the current year is more in line with historical norms. Next, working capital as a percent of revenue increased primarily driven by higher receivables as a result of timing of revenue and collections within the quarter versus the prior year. Finally, our net debt to adjusted EBITDA remains at a healthy ratio of 1.9x, consistent with where we finished 2023. Our business is generating strong cash flow and our balance sheet supports continued capital deployment. I will now hand the call back over to John.

Thanks, Mike. Please go to Slide 10. As we did last quarter, I want to spend a moment to highlight some of the key factors that we believe distinguish Allegion's business model and how we win in the marketplace. We continue to see favorable long-term demand drivers, particularly in our core institutional markets. Projects in these markets are largely funded outside of traditional bank financing and may be more commonly funded by municipal bond issuance. Bond issuance has continued its steady long-term growth with cycles around election year referendums. Issuance continues to support our view for stable institutional market demand as we progress through 2024. Moving to the right side. We feel strongly we have a winning formula that comes from bringing the depth of Allegion expertise into these attractive markets. Our team has notched multiple health care wins in 2024, our traditional mechanical hardware and sliding door solutions have a strong value proposition in this vertical and the service capability we acquired with Access Technologies frequently puts us over the top. This shows the value we unlock through M&A as we continue to deploy capital and broaden our portfolio as a pure play in security and access. Please go to Slide 11. In summary, Allegion's first quarter was marked by strong execution. Our team expanded margins and delivered balanced capital allocation, and we're affirming our full year 2024 outlook. It's noteworthy to share that Allegion was named a 2024 Gallup Exceptional Workplace Award winner earlier this month. This highly competitive award recognizes Allegion as 1 of the most engaged workplaces and it's a testament to the dedication of all 12,000-plus Allegiant employees. Our team truly believes in Allegion's responsibility to keep our employees safe, operate sustainably, live up to high ethical standards and serve our local communities. By living our values and increasing employee engagement, we accelerate Allegion's success and advance our vision of enabling seamless access in a safer world for you. I'm proud of the progress we're making and grateful to be a part of this high-performing team. Okay. Let's turn to Q&A.

[Operator Instructions] The first question comes from Julian Mitchell with Barclays.

This is Matthew Pan from Julian Mitchell's team at Barclays. Just the first one, kind of thinking about seasonality, Q2 is typically about 25% of the year's earnings. Any reason that might be different this year?

Thanks for the question, Matt. When you think about our year, I would say return to normal seasonality is a theme that we said last year was abnormal. As far as individual quarters, we really don't like giving individual quarterly guidance, as you know. I would just say, as you think about our business, don't think of last year as normal. Think of maybe some of the history that we had in the past where the summer months have more revenue. Like many companies that deal with the construction industry, we have more revenue in the summer months, the middle 2 quarters, with the revenues on the book ends 1 and 4 being a little less. So our business tends to have a little more revenue in the back half of the year than the first half. But in general, think of '24 as a return to more normal seasonality versus what you saw in '23.

Got it. And then just 1 follow-up. Lennox talked about some project delays in commercial construction and Otis was pretty downbeat on new orders. Does Allegion see any sort of project delays or any worse market outlook in the Americas nonresi piece versus, say, 6 months ago?

Yes. So this is John. I appreciate the question. I think we would just go back to some of the prepared remarks, where we see Allegion's business is rather heavily weighted towards institutional, which, as we indicated, has more public financing type avenues to market. And the institutional segment is stable. And I think in the commercial space, if our commercial business is kind of split between office, multifamily and then kind of everything else, which would include retail, which would include warehouses, manufacturing, data centers, there are certainly pockets of strength and pockets of weakness. I think the broad portfolio and the broad end market exposure we have, that's what comes together and gives you the guide that we're contemplating for 2024, the outlook that we're contemplating. And so institutional, stable. Bond issuance actually had a pretty strong Q1, if you look at that year-over-year, which gives us a good feel that our outlook is pretty solid. In terms of specifics, like did this project get delayed as you go through channel checks and as we get out and visit distributors and customers and things, yes, you do hear about that. You don't hear much in the way of cancellation. You do hear maybe a multifamily project is on hold for a little bit. You do hear some of that. But I'd say our business is more heavily weighted towards institutional and that segment is quite stable right now.

The next question comes from Joe O'Dea with Wells Fargo. Joseph O'Dea: So I wanted to ask on Americas electronics. The downward single digit in the quarter on a tough comp, plus 30% to your stack still showing strong demand there. I guess just in terms of as you think about the year and what the comps look like in the remainder of the year, is this an area where you expect to see growth? Any context on kind of magnitude of year-over-year change for electronics demand in Americas on a full year basis?

Joe, if you think about -- thanks for the question. If you think about individual product lines, we don't guide a product line or electronics. What I would share with you, long-term growth driver. You can see this business on a long-term basis, delivering CAGRs of high single-digit to low double-digit growth for electronics. Clearly, last year, we had some catch-up associated with previous supply chain challenges. And so it was very robust growth that you saw, frankly, over the last 2 years. When you think of our electronics business, think of it as a long-term growth driver that's going to provide tailwinds for us to deliver above-market growth. Joseph O'Dea: Got it. And then also just related to the end markets and I guess, what we've seen recently in kind of ABI and Dodge Momentum, some of the softening there. Not really sure that, that kind of aligns with maybe the way you're characterizing things in particular, saw some softness related to Dodge Momentum in institutional markets. And really just interested on your perspective and what we're seeing in some of those leading indicators versus what you're seeing in spec writing and activity on the ground. And especially as it relates to backlog of projects and the degree that, that could be weighing on some of the lead indicators where there's just a large backlog of projects. And so the stuff that's coming in might be a little bit slower just because of long lead times. So anyway, observations on kind of lead indicators.

Yes. This is John. I'll add some comments, I guess, to your comments, Joe. I think the lead indicators are what they are. I'd say we always got to be cautious not to read too much positive or too much negative into those. They're good signals, and we watch them just like you do. I think over the last like 18 to 20 months, institutional has been favorable when compared with some of the other commercial verticals. That does seem to play out in the end market as we get out and visit customers and distributors. I think the lead time that you brought up with construction labor shortages, projects taking longer, that probably is extending some jobs out, some projects out longer than maybe historically it has been. In terms of quantifying that in an impact and the Dodge Momentum or any of these indices, we're not the right people to do that. What I would say is, again, we see stable institutional markets as -- and again, that's where our business is heavily weighted. And the commercial segment of our business, you see a mixed set of verticals, just like we mentioned on the previous question. Our resi business, as we mentioned, is flat to slightly down. And in our outlook, we don't contemplate any dramatic changes or any dramatic tailwinds from those end markets, but feel good about the outlook we've provided. And I think initial start to the year affirms that for us.

The next question comes from Brett Linzey with Mizuho.

This is Peter Costa on for Brett. I just have a strategic question around the election and tariffs. Obviously, we don't know what the outcome looks like, but just understanding that Allegion has a manufacturing footprint outside the U.S. Can you just talk about how nimble your supply chain is and just your ability to flex around different regions should we enter a more aggressive tariff regime?

Well, let me -- this is John. I would just open with tariffs of any kind or not helpful to a company like Allegion in terms of our supply chain. I'd say we learned a lot of lessons as did everybody else over the course of 2022 and 2023. And in terms of supply chain resiliency, we feel a lot better about our position than we would have a couple of years ago. Not going to get into specifics of where we buy this part or that part or where we make this or that. But I would say, managing the portfolio of several million SKUs like we do, made-to-order environment in terms of supply chain and manufacturing, I'm quite confident in Allegion's capabilities regardless of tariff regimes or administrations.

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

Well, thanks very much. And just to reiterate, we feel we're off to a solid start in 2024. We look forward to connecting with you again next quarter. Be safe, be healthy, everyone.

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