Hello, good afternoon, and thank you for joining us for Allegion's 2023 Investor and Analyst Day. I'm Tom Martineau, Vice President, Investor Relations and Treasurer. I'd especially like to welcome everybody that made the trip and that's here live with us at our Carmel, Indiana facility, as well as those that are listening on the live webcast. Just for a reminder, the presentation today will be recorded and archived on our website at investor.allegion.com. The presentation we will refer to today is also available on the same website. Now, one of the most anticipated parts of the presentation, the forward-looking statements. Statements made today that are not historical facts are considered forward-looking statements pursuant to safe harbor provisions of federal securities law. Please refer to our most recent SEC filings for some of the factors that may cause actual results to vary from projections. The company assumes no obligation to update these forward-looking statements. Done. We will be using some financial non-GAAP measures, discussions in today's presentation. Please refer to the reconciliation tables in the presentation for further information. At Allegion, safety is our passion. Up on the screen, you'll see a couple of our key metrics that we think define that, what we believe are industry-leading safety metrics for the company. To ensure everybody's safety, I do have a couple of announcements or requests. In an emergency and a need to evacuate the building, please use the closest exit, which would be out these doors, and you're gonna see it in the, in the middle of the hallway, an exit straight out the back of the building. There'll be people there to help guide you. In the event of inclement weather, please find, take shelter in either one of the two stairwells that you'll also find exiting the back of the room, either on the left or on the right. This is a tobacco-free, smoke-free campus. If you need the bathrooms, you're gonna get used to this. It's out the back, down the hall to the right. You'll be able to find it. We're very excited to share our Allegion story with you today. You'll be able to hear from our CEO, John Stone, our CFO, Mike Wagnes, as well as our regional leaders, Dave Ilardi and Tim Eckersley. We will have an opportunity for Q&A at the end of the presentations. I'll circle back then with more instructions on the Q&A session. With that, let's jump right in, and I'd like to welcome John Stone, President and CEO of Allegion, to the stage. Tom said it very well. Good afternoon. Thank you all so much for the investment and your time that it takes to be here with us. I think we've got a great program for you both here in the room as well as at our Technology Center later this afternoon. As I shared with many of you there in the meet and greet time, the Technology Center, we're very proud of. We're gonna put the actual engineers doing the work, doing the designs in front of you. We don't have paid actors for presentations. It's just the real folks. Please ask them questions. They would really be happy to answer that. Four years since Allegion's last Investor Day. We're excited to get this back as a habit, let's just say. A little bit about me first, maybe to start, as I'm a brand-new face for some of you and still a very new face for a lot more of you. Former Army officer. I'm an engineer. I had about close to a 20-year career with John Deere, where I played a rather key role in helping John Deere advance more highly automated machines, pushed into artificial intelligence. Then my last posting with Deere was leading a $12 billion P&L for construction, forestry, and power systems equipment. I'm sorry, my mic is cutting out a little bit. Maybe I'll turn this way instead of just turning my head. Led that division of John Deere to, I think, probably record results in terms of revenues and margins, and also made some strategic investments in their own excavator line as well as battery electric systems for zero emission machines. ConExpo, CES would be proof points if you wanna take a look at that work. Got attracted to Allegion. Really wasn't necessarily looking for an opportunity, but the hook for Allegion was this whole idea, and you see it in tiny font underneath our logo there of pioneering safety. I'm a mission-driven person. The mission of pioneering safety is personal. It's work I'm proud of. It's work this entire team is proud of, just overall very, very grateful to be here. Let's get into it. I love this slide. Pictures say 1,000 words and kind of how we'll talk about Allegion today through two lenses. One would be we've got a great legacy. Some of the brands in this portfolio have a legacy dating back over 100 years. While our company is just about to turn 10, the legacy obviously is much, much longer than that. We'll take a lot of time and talk about how we're gonna secure the future of this great company, what we're going to invest in, how we're driving growth, and how we're driving your returns. The pictures that says 1,000 words is superimposed there. You have one of Walter Schlage's original patents right next to a text editor showing some of our embedded code that goes into one of our electronic locks. To monitor the signals, monitor the performance of the lock and the status of the lock, and report that to the end user. Quite an interesting parallel of 100 years worth of technology. Who are we? Who are we at Allegion? I think most of you are familiar with us. A lot of this should look familiar, and that's part of building on our legacy. Leading pure-play provider of security and access solutions. We have many iconic brands, Schlage, Von Duprin, LCN, Cisa, with strong market positions. By a fair margin, in fact, we have the industry's leading EBITDA margins and definitely intend on staying in that position. A very broad customer base, strategic partnerships across the spectrum that we need to enter into many customer verticals. We have expertise in key technologies that are helping transform physical security like the Internet of Things, electrification, cybersecurity and communications technologies. We have a healthy and growing services business that we'll talk more about later in the deck. This is gonna become more important to Allegion's future. We have a highly engaged workforce, very much focused on safety. Just like Tom said in the intro, Dave Petratis would say, "Be safe, be healthy," at the beginning and the end of every meeting. I've taken up doing the exact same thing. If we keep our people safe and healthy, they'll take care of this company, and they'll take care of your investment. Leading presence, we'll talk about how we do this through our own innovation, through industry association, through advocacy for codes and standards, but a leading presence in shaping a transforming industry. Lastly, we'll talk capital deployment and how we're orienting our capital deployment for growth to drive returns for you. Next, I'd like to talk a little bit about ESG, it's very timely. We just released our annual report and our ESG report this week. I'd say starting back in 2020, we published long-term goals. We've made great progress against these goals. On this slide, this is a snapshot of where we concluded 2022. Just color-coded the slide. Walking left to right here, the green would be our environmental goals, this is just a couple of them, but very good performance. Likely, we're gonna see line of sight to even increasing our long-term goal for reducing greenhouse gas emissions intensity, reducing water usage, good progress. In the middle, in blue, I think we've made some very good strides in being an employer of choice. Our DEI progress is good, but we're a long way from satisfied. We just finished in at the end of June, our most recent employee engagement survey, and we're at a nine-year high. I can tell you as a new CEO, as an outsider coming into the company, replacing someone like Dave Petratis, that was part, like, really happy and part relief. If you know Dave, he's a big personality, very charismatic personality, and in many ways personified Allegion. Really happy that what little contribution I could make there has continued that engagement going in the right direction, but very happy to see that. Shifting to governance on the right-hand part of the slide, I would say we already have a quite diverse board of directors. Very proud of that. It's a good group. We just upgraded the group, if you will, with the addition of Ellen Rubin, who brings a pretty fantastic background in entrepreneurship and technology. She joined in April. Also on our board, and this is largely due to feedback from some of you, from some of our largest and most important investors, we do have a separate CEO and chairman role with an independent chairman. Lastly, we do have a component of executive compensation tied to performance against these ESG goals. Shifting to our vision and our strategy, and it's a simple slide, but I'd like to spend a little bit of time and talk you through it. Some feedback we got from 2019 was, "We love the company performance, but we don't really understand what is this seamless access idea that you're talking about. Can you describe it for us?" In army guy language, let's talk through it. Enabling seamless access in a safer world. In short, what I'd ask you to think about is that means whoever possesses the right credentials, whether that credential is a metal key, whether it's an encrypted proximity card, or whether it's your digital identity and mobile credential in your smartphone wallet, you will have the most convenient and secure experience possible, while those without those credentials simply don't get in. Those three different types of credentials, cards, phones, keys, coexist all over the world today, we can work with all three. Another part of seamless. Strategy is that Allegion creates value as a solutions provider of security and access. That's where we're headed. We concluded 22 with just shy of $3.3 billion in revenues, a high mark for the company, high watermark for the company. 22, just over 22% adjusted EBITDA margin. Got back, expanding margins. Mike Wagnes will talk about this some more. We've got a ways to go, but we feel good about how we turn the corner on price cost. We feel good about how we further turned the corner on price, cost, productivity, and investments. Mike will let you know where we're headed in the future. Things are starting to operate better. Take a look at our business mix. Just recognize these are not super precise numbers. If we're today 80/20, 80% Americas, 20% international. Within that, 70% mechanical, 30% electronics and software. In the middle, we'll talk by segment. If we're 75% non-res, 25% res. Within the non-res side, we're a bit heavily weighted towards the institutional segment. Think hospitals, think education, higher ed, K-12 schools, large, complex campuses, where we really excel. Lastly, in terms of new construction and aftermarket, again, not a super precise number, we would tend to fluctuate around 50/50 between new construction and the aftermarket. We'll talk more about some of the more interesting aftermarket drivers later in the presentation. I would say what gives me confidence is the breadth of our portfolio, the breadth of our distribution coverage, the way we can manufacture millions of SKUs in a made-to-order environment. We're able to react to whatever the market brings. If new construction is really strong, we can react with our specifications and consulting. If aftermarket is really strong, we can react with our manufacturing and our distribution strengths. Now, speaking of the markets we serve on a global basis, I'll just walk the slide left to right. Non-residential mechanical, we would see is still growing, driven by things like U.S. funding for education, the Infrastructure Investment and Jobs Act, monies that are still flowing through. Higher Education Emergency Relief Fund, money is still flowing through for contactless and touchless technologies in universities. In the middle, growing more at a high single-digit rate would be our non-residential electronics and software, commercial electronics and software. The convenience and added security that can come about because of a digital identity and mobile credentials is driving this. The Internet of Things, connectivity, open ecosystems and open platforms are making adoption of these technologies easier for your building end users, hospitals, schools, university campuses, et cetera. I'll have a couple of case study examples to share with you to bring this home. Particularly in multifamily settings, we're seeing an acceleration of adoption of electronic locks and other hardware in the aftermarket. There are compelling business reasons that we'll get into as to why that's a good thing to do for your apartment complex. Lastly, in residential, and this would have both an electronics and a mechanical mix, we would see a low single-digit growth environment going forward. What's special about Allegion? How do we win? I think, you know, I came from a special company, a much different company, but a very special company. I can tell you without a doubt, Allegion is a special company. There are very few companies that can do what we do here. It starts with this right here. I'll give you some numbers. In our regional sales offices across the United States, we have great coverage, but we also have a three-to-one mix. Three people in those offices working on end user outcomes, understanding end user critical outcomes, building those end user relationships, understanding what they need for security, for disabilities accessibility, how rugged, emergency egress, seamless access, et cetera, understanding their needs, and then in a consultative way, designing and specifying in Allegion products to meet those needs. It's not simply put product in a channel and hope it sells. This is a consultative business-to-business sales process. From the time of that engagement with the end user, whether it's again, hospital, university, K-12 school district, et cetera, and the architect that's doing the design work, it could be six, 12, 18 months or more before our hardware actually comes through the channel and goes into that particular building. It's very interesting. Again, three people doing that for every one person doing more traditional channel sales. Our focus is clearly on the business-to-business consultative sales process of understanding these outcomes and then designing solutions that meet their needs. That then creates the demand that pulls our product through the channel. These spaces are complex, and it literally takes millions of SKUs to meet the demand. You can't go into a hospital and say, "I have designed a new electronic lock." They need a lot more than that. They need automatic doors, they need closers, they need readers, they need access control systems, millions of SKUs, and even furthermore, in a made-to-order environment. If you think about the timeline of a construction project, if we're in early with the architect, providing the service, designing these complex entries, writing those specifications, largely these are skills that no longer exist in architecture firms, they come to us for that work, increasingly in a paid way, as a paid service. The construction project takes whatever time it takes. There's undoubtedly going to be delays and missteps in the process. When it comes time to install the doors and the door hardware, that's usually some of the last things that go into that building. We have to produce that, deal with that SKU complexity in a made-to-order environment. There are a very few companies in the world, you can count them on one hand, that can do this at scale. Another key advantage in how we win is, again, as this trusted advisor. Three people, again, working on demand generation with end users and specification consultants, which by the way, are some of the most impressive talent I've met since I've been at Allegion. Trusted advisors with those decision-makers, with the people who are advocating for industry standards. We have Allegion employees in these industry organizations, leading committees, advocating for good standards, helping educate, helping raise the water level of knowledge as to what is good safety practices. The pictures there tell 1,000 words, and if you could indulge me for a bit, school safety, extremely important. It's a point of personal passion. My mother was a school teacher for 40 years. I was a product of small-town Arkansas public schools. School safety is really critically important. Budgets go to schools, they invest in this every year, and you would still be shocked, Josh, you get the best seat here, that something as seemingly simple as this, locked doors save lives. A tamper-proof visual indicator from the inside of the classroom that the status of the door. You can see it from a wide angle. Locked doors save lives. This even works if you're color blind. Advocating for simple things like this to keep our kids safe at school is something that really drives us, and we're excited to produce products like that, advocate like that for the schools, and make sure that not only do we run a good business, but we serve a higher purpose. Threats don't always come in the form of needing a locked door. Just recently, a tornado went through Oklahoma. Sadly, several people perished in that tornado. It went through and right over Shawnee High School, where as I understand, the school volleyball team was having practice. Heard the sirens go off, team goes to the tornado shelter that was there in that new building that we helped consult on. Got behind Allegion doors and Allegion door hardware. The gym was completely destroyed. There was nothing but the floor and debris left as they came out of the doors. That volleyball team went home safe. Those doors did their job in a time of need. That moment of proof, Allegion products save lives. When you go to the technical center, you'll see some of the tests we do for that type of application, and it'll wow you. I would say, don't just see the test and what we do, think of it as this is how much Allegion cares about keeping you and your kids and your family and friends safe. That's the commitment we make. Last piece on how we win. Last year, literally six days before I came in the job, as CEO, we had closed on Allegion's largest acquisition in our history, the $900 million purchase of Stanley Access Technologies. The title says highly strategic combination. I would tell you that understates how I feel about it. This is going very, very well. Retained all the key talent. The engagement of that team is very high. The alignment of our sales teams out in the field is going very well. You already know the story of automatic doors with Allegion hardware, very complementary product portfolio. Recently with my mom in a hospital there in Arkansas, where she had to have a procedure, all Allegion hardware throughout the hospital, all Stanley doors. That's a rarity. We have nice complementary product portfolio, but also nice complementary markets. If you walk into a Walmart or a Home Depot or a Lowe's, chances are you'll walk through a Stanley door where Allegion might have a rather diminished presence. It's a nice opportunity for us. In these institutional segments where Allegion hardware is very strong, Stanley Access Technologies probably has a pretty good growth opportunity there. The key thing, though, is this upfront specification demand generation engine that we have. Stanley had very little of that capability. We have a lot. Putting automatic doors into that demand generation engine upfront, specifying those into new construction projects, et cetera, very excited about the long-term opportunities that provides. The last piece I'll highlight here is their high-growth services. About 40% of the Stanley business was recurring services. I would tell you, if you look at what we talked about in Q1, the services part of that business is growing faster than the whole business. We're really excited about that. We're excited about the potential that it holds for Allegion overall, but it's a great part, great add to the portfolio, and we're excited about Access Technologies and automatic doors going forward. Now let's talk growth, and let's look to the future. These are our strategic priorities. I would say these are mainly a tool to help us organize internally. This is how I'll allocate talent. This is how we set priorities. I'm a firm believer all the way back to my Army days of a vital few priorities. The most important, highest return projects will get funded. We'll work on those. We will not die of indigestion by trying to do too much. We'll be focused and disciplined and execute very well. In these case studies that I'll show you'll understand the importance of the things that Allegion has been investing in over time to be a partner of choice. These are complex landscapes that our hardware operates in and needs to interact with. I think we've got some interesting things to share with you there. We see a good potential, we'll talk about it, both on the access technologies on the automatic door side, as well as our core hardware business in Allegion to deliver new value and access, new recurring value at the point of entry with nominal fees each month for services that we can provide. They're going into the market right now, and some of our largest and most discriminating customers are not only excited about them, but they're paying for them right now. Lastly is operate with excellence, I'd say certainly during the COVID period, we had some struggles. Supply chain, we had some struggles. Inflation, we had some struggles. We're turning the corner on all of that and getting back to operating at a high level. We're not satisfied with where we're at, but getting back to operating at a high level. This is a growth trend that's been around for a little while, but what I would tell you is it's got new drivers and it's got legs. It's got a long runway still in front of it. The industry adoption of electronics in access and security, we feel we're in a leading position, and we're also shaping this transformation of our industry. Just have a timeline here to highlight this history of innovation with Schlage all the way back to Walter Schlage himself, 1909, like, first smart home device patented, where he patented a doorknob that as you unlock it'll turn the lights on in your house. Kind of interesting. I mean, not that profound today, but in 1909, that was pretty cool. That moves into the 1970s, and you start to see the advent of keyless technologies with proximity cards, and again, Schlage was an innovator there. You move into the 1990s and the 2000s, where the internet becomes mainstream. Internet protocol and the communications technologies start to make electronic locks pretty interesting for folks. Schlage was a leader there. We had the first Wi-Fi deadbolt compatible with Apple HomeKit. We will continue to do things where we are the first in the market. Now as this continues on, I would tell you what the driver is now and what we hear on practically every new construction project that we get involved with. Again, very early in the design phase, writing specification, understanding requirements, but practically every new opportunity, at least the compatibility with mobile credentials is being requested. The convenience that's there, the idea that you can have multi-factor authentication at every access point using a digital identity and mobile credentials, so convenience but also added layers of security, this has really taken off. This is what we see continue to pull through Allegion electronic locks. I put artificial intelligence out there. I would tell you it's a dotted line for a reason. That likely has some relevance to access and security in the future. I would say it's not the highest priority for Allegion today in terms of technology investments. We have a lot to do with electronic locks, connected systems, and the access software that knits all that together for our end user customers. This is our view of adoption, in its current state, and this is why we would feel the electronics transformation is still in its early innings. You know, roughly 10%, maybe a little bit over 10%, again, not super precise, we feel a long runway of adoption in the key markets that Allegion operates in. Again, it's not just new construction that pulls these electronic hardware devices through. The examples we'll talk about can illustrate this well for us. How are we shaping the future of seamless access? We want to lead. We want to lead in this space. I'd say it's five years now. Allegion Ventures just celebrated five-year birthday, if you will. I would compliment Rob Martens and that team, their entire history. Two things: One, the quality of that portfolio, they've picked winners. The value of that portfolio is quite attractive. Furthermore, we've invested in some really interesting technologies that are related to seamless access, and we're learning more about these as these startups continue to mature. We look forward to continuing to invest in Allegion Ventures. It is a competitive advantage for us, we feel, in terms of technology understanding and engagement with very interesting entrepreneurs and startup companies. The next box, guiding standards and open ecosystems. A lot of different standards organizations there. You'll hear more about this out at the Hague Road Technical Center. Allegion employees are active in these associations. We have a very prominent voice in these associations. We're helping to shape standards going forward, both in the hardware space as well as in the technology space for the Internet of Things. We have been and will continue to create digital customer experiences. I have the Overtur tool highlighted here. You'll hear more about this from Dave Ilardi in the Americas, and you'll actually see a little bit more detail out at the technical center. But think of this as a digital collaboration tool that, cloud to cloud, if you will, the architect sends design files to Allegion specification writers. We take that, we do the heavy lifting of Division 8 in the building codes to specify the openings, specify the doors, specify the hardware. Send that back to the architect, working with the end user the whole way to make sure we understand what type of experiences, what type of critical outcomes they want to have in their building. It's a very interesting tool. You'll learn more about it as you go through the presentation. Lastly, we feel that growing services capability in our portfolio there is very attractive for our long-term growth as well as the future of seamless access. Two case studies here for you, and this would be one to highlight the importance of working in open ecosystems and being that partner of choice. Auburn University has been an Allegion client for decades, let's just say, typically all mechanical products for a long time. Made the choice for efficiency reasons, for student experience reasons, for security reasons to go to electronic locks and readers. That's our hardware. We supply that. On the campus, there was a combination of Lenel access control systems as well as CBORD access control and OneCard systems. We supply the mobile credential and ensure secure credential parity across both those systems, regardless of whether the student has an iOS or an Android phone. That's not easy to do, and again, we're one of a very few companies that in the world that can do this at scale. Next example here is on the multifamily residential side, and this we would feel is quite an underserved market, quite a fragmented market, and has great opportunity for new value with electronic locks, readers, and a very simple, easy-to-use cloud-native, mobile-first UI access control system. Think of the labor savings that an apartment building would get if they don't have to hire a locksmith to go and change out mechanical locks every time a tenant moves. Think of the ease of digitally applying credentials to one mobile phone for the gym, for the pool, for the resident, for the tenant. Visitor management becomes so much easier. This is an efficiency gain for that apartment complex, and it's a simple enough environment in an underserved vertical where we feel a complete turnkey solution from Allegion is the most efficient and most cost-effective way to deliver this value to the end user. We're working with a couple of pilot customers right now with great great results so far in these early days. Okay, next to last point, obviously a very large part of my responsibility is capital allocation, capital deployment. With your returns driving my priorities, investing for organic growth, and again, big proponent of a vital few, the best programs are gonna win. They're gonna get the investments, and that's how we will continue to drive above-market organic growth. We are a dividend-paying stock today, and we will continue to be a dividend-paying stock tomorrow. We do look to grow through acquisitions. We will see combinations, I think, of both, complementary portfolios, like you saw with Stanley Access Technologies, as well as software as a service that's related to seamless access and related to our hardware, like you saw with plano. High margin, recurring revenue, software as a service or bolt-on acquisitions that fill portfolio gaps in the hardware space for us too. Good pricing discipline, and you can count on us to deliver a good ROIC. Lastly, of course, share repurchases. We will, at a minimum, buy back any creep from equity compensation and then other share repurchases, as required or as needed. What I hope you heard today and what I hope you've seen from our recent quarters is we are returning to operating at a high level. We're returning to executing at a high level like we should be. Turning the corner on price cost, beginning to improve inventory turns, coming out of this supply chain malaise, and executing at a high level. Mike Wagnes will lay that out for what that means in terms of our financial performance and our outlook in the future. Electronics, this transition to electronics is the key growth driver. While I've talked about and we see good potential for growing software and services revenues, I want to let you know very clearly, and this was in my very first town hall with all Allegion employees, this is not a from-to story. This is not Allegion's trying to go from hardware to a software company. Not the case. The magic here is. That the hardware, the electronic hardware, our ability to provide and manage mobile credentials in addition to master key systems in a mechanical world, that's where the magic happens for our end users. That's how we leverage our specification and consulting expertise. That's how we leverage what I feel is the best distribution partners in the world. Lastly, capital deployment with your returns in mind. Thank you very much. That concludes my remarks. At this point, I'd like to introduce Dave Ilardi, who's our president for the Americas division. Dave, come on up. All right. Thank you, John. Welcome everyone to our Americas headquarters here in Carmel, Indiana. As John said, my name is Dave Ilardi. I lead the Americas organization. Been with the organization now for 20 years. Spent the last 15 years really focused in on the security industry parts of the company. Prior to taking over as the Americas president in 2022, I had the pleasure of being the general manager for our residential business in North America. Really prior to that, spent a lot of time in our commercial part of our portfolio. Really excited to share a bit more with you about the Americas organization. Let's dive right in. When you think about the Americas, we're about a $2.5 billion business, focused across several key brands that we'll talk through on a couple upcoming slides, but really in diverse end markets. You think about us really having that non-residential-focused business, our automatic doors and service business, and a residential business. It means we really capture quite an extensive wide breadth of our portfolio going into multiple end markets. In the center of this graphic, you'll see institutional markets are really our largest segment of our business. This is the K-12 markets, the higher education markets, healthcare markets, including what's going on in a lot of urgent care and medical buildings, outside of the hospital space, as well as some of the government work that we support in the market as well. What's really critical around that institutional market space as well is it's quite stable. It's quite stable as you think about some of the downturns and challenges that the market can deliver, and that end user relationship is where we really focus our resources on that John talked about earlier. Whether that's with the end user or the architectural community, that institutional market really values that consultancy as they think about very long-term investments in their buildings and minimizing the level of cost it takes to maintain and manage those facilities long term. Of course, we obviously operate as well in the commercial space where you might have more of your traditional office environments, manufacturing environments, and other types of buildings as well. Our residential business is about 25% of the Americas. Think about this not only from a new single-family home construction part of the market, but the large consumer markets as well that we serve through retail channels and e-commerce channels, every day. You really have this opportunity where we've expanded our portfolio quite dramatically. The acquisition of Stanley Access Technologies has really introduces this component of services. That's not only the only area. The bolt-on areas of ongoing innovation and development of our portfolio has allowed us to widen that breadth of offering into the marketplace, whether it's mechanical offerings or that mobile credential that John talked about as well. Overall, the adoption rate in the Americas that we talked about of about 10% on the electronics gives us a lot of opportunity for continued growth. Today, about 25% of our business in the Americas is really coming from that electronics portfolio of solutions, while the rest is dominated more through the mechanical business. The installed base that we've created over decades of having those long end user relationships really sets us up quite nicely for having a good balance between what we do from an aftermarket perspective and new construction, allows us to really be dynamic on what's coming as opportunities from the market. We can play through our distribution channels and through our relationships across both vectors of new construction and aftermarket. From a product category perspective, we look at our non-residential business. You have both a mechanical component to that and an electronics component. It's the largest segment of what we do in the Americas. The LCN brand, the Schlage brand, the Von Duprin brand, really help us solve for all of that complexity that was talked about earlier. The solutions required in non-institutional or non-residential institutional types of markets is highly wide, and whether you take a lock, an exit, a closer, the hinges and the accessories or the metal doors and frames that come into play in those markets, you have to have that breadth of offering to really say you can solve the opening, solve any opening in that type of a facility. We heavily drive that through what we do in that mechanical portfolio. On the electronic side, we certainly have been electrifying locks for decades. The Schlage brand really serves a key focus area in non-residential electronics for us, but we're electrifying exit devices as well. Von Duprin exit devices have electronics in them, and we're gonna continue to see that adoption across the portfolio as we grow into the future. I wanna take a moment and talk a bit about automatic doors and service. The Stanley Access Technologies brand, obviously, that we acquired is a key segment of that. The leverage that we get across this portfolio that John talked about is going to help drive the service components and the automatic door business into the future. We have some great technology innovation I'll share in a couple slides as well around how we go to market in this area, but in that business, we're gonna be able to leverage across multiple parts of the portfolio. Software and the Internet of Things platform. We just launched, you may have seen a press release, last month around Zentra. This is that solution that we're trying to bring to market that helps solve for multifamily aftermarket solutions. This is an area where we feel the market is fragmented and the customer has been coming to us consistently saying, "Help me solve for access solutions in my property. Help me deliver more value to my tenants. Help me elevate what level of class of property I have, for my, you know, for the rents that I can also achieve into the marketplace." That is powering a lot of the electronic hardware that goes along with it. It's not just about software and getting that fee there on a recurring basis, but it powers the electronics hardware and helps drive and pull that into our solution. Some of you may recall, we acquired Yonomi, it's a brand that you see on the bottom of the chart, as our Internet of Things platform. We've continued to invest in bringing all of our hardware and solutions to be able to be connected and onto the Internet, help us drive that also into partners that wanna integrate into our hardware. That's a key part of our product categories as well in that software and IoT segment. Lastly, on the right-hand side, you see the residential portfolio driven heavily by the Schlage brand. That is where we really drive home the innovation that comes from that, electronics and mechanical products certainly embedded in that residential market, really helping satisfy the consumer demand that we see coming through retail and that new single-family new construction. The markets we serve, John talked about the total available market. About $20 billion of that is sitting in the Americas region. When we think about these markets to really try to organize these in a way that helps simplify where we see the over long-term growth trajectory. Non-residential in the mechanical space of that work, really growing at about a low double single-digit level. In the electronics and software space around the non-residential markets, that's growing more at a high single-digit growth level. That's where we see good opportunities for our solutions to really be the leadership position that they're in to help drive growth in that transforming marketplace. On the residential side, there actually is both a mechanical and electronics element to this as well. Overall, growing at a low single-digit rate. Electronics, when you think about the electronic smart lock component of that, certainly growing at the high single-digit, near double-digit levels, over the next, you know, foreseeable future as adoption of that, businesses or adoption of electronics in the residential space continues to increase. Let's talk a bit about how we win in the Americas. I get pretty excited about how we go to market, and you can really think about it in three distinct ways. In the non-residential space, we talked a bit about what happens in the new construction phase, but it's really about how we go from new construction all the way back to how you manage and maintain your facility long term as an end user. Our consultants in the field, the 3-to-1 ratio John talked about, build relationships with end users first. That is driven heavily into those institutional markets that we talked about earlier, where we're working with end users. That's the facility managers, that's superintendents, that's owners, developers, owner/developers in areas like multifamily, for example, where the intent is to help them build a standard on how they wanna operate their facility, ensuring that we can meet all those requirements and complexity that comes from having different types of openings. Our experts are coming in to help and consult on what do you need from a fire code perspective? What do you need from an occupancy load perspective on a certain type of a room? A room like this versus a classroom versus an office has different requirements, and our teams are in a position to help consult on those standards that we wanna set at the end user level. That translates right into the design side of a new construction facility, where we're working on behalf of the architect to take the blueprints of that building that has been designed and apply the Allegion solutions of hardware into every opening. One by one, it's a very tedious process, but it is a key critical value add and a competitive advantage for us in the marketplace. We digitally transfer that information back to that architect, and it moves into the new construction phase, where a general contractor then is getting involved to bid out the work to the subcontractors. Our relationships and our strong channels now come into play. That contractor is working with our channels of distribution to provide back pricing for the hardware, deliver that to the job site. In some markets, they are installing it and helping provide services into that process for the general contractor. Once that is turned over, that building is opened up, if you will, and turned over to the end user, that end user wants to validate and have surety that what was designed, what was specified in their request as their standard, made it through that construction process all the way through. And they wanna be able to know to maintain that facility long term what is the hardware on there. We provide consultants into every phase of this process, and we stay with that end user long term to ensure that they're able to meet those needs long term for their facility. That demand generation, really, as you see there, goes throughout the life cycle of the building, and it's a powerful advantage and competitive position we have in the marketplace that very few can really offer that level of service to each of these stakeholders in that process. When you think about automatic doors and service, the acquisition of the Stanley Access Technologies business, Access Technologies is a full-service provider. We design the product, we innovate around that. There's new trends that continue to grow in areas of grocery store pickup, online delivery, new openings getting built into existing buildings. Drive-through really has changed quite a bit. There's new segments starting to be created there. This is an important part of being a design and innovation player, a manufacturer. We then can go sell that. We do that ourselves. We also then can install that, and then we can service it on the back end. They really bring a full-service approach to those automatic doors. John mentioned this earlier, but I wanna highlight it again. The demand creation that we create on that non-residential side of our business is leveraged now through what we can do in the automatic door business. We will drive synergies through that work. Lastly, on the residential side, right? This is very different. When you think about this, you have the consumer play here more than anything. We really drive the Schlage brand across three dimensions: quality, innovation, and trust. I think now, four years consecutively in a row, we have been rated as America's most trusted lock brand in the Americas. That's external research and analysis that's been done, and very proud of that. Our teams are very proud of that. It comes through the design criteria that we follow. It comes through what happens from a quality and manufacturing perspective, and it comes through the ability to be leading in the technology and innovation space. If you haven't had the chance to check out some of the products over there, that have been launched recently from a smart lock perspective, this is where partnering with the large mega techs in providing that seamless access experience in residential has really begun to pay off over the long haul with this business. The marketing activities, the consumer demand that we create there, the presence from a channel perspective to serve new construction and aftermarket and replacement work, a big part of how we win in the residential space. All right, let's dive into a few of the key priorities. When we organize some of our initiatives within the regions, you'll see this both in the international business and in the Americas. We do it around these three focus areas, and the focus areas are around how are we growing seamless access and that vision we have created for the organization? How are we driving organic growth? How are we playing around our business portfolio to continue to drive the margin, profitability and expansion of our portfolio long term? In the seamless access space, I wanna talk first around software. John mentioned it a bit earlier. It is a key differentiator for some key vertical markets that we believe drive more value than just having the business alone of hardware. When you combine the hardware and the technology that's built into the hardware with the software and create a full solution for the end user, we can drive more value in areas like multifamily and solve for some of those challenging problems that have been, so far, very fragmented solutions in the marketplace. You see up there the Zentra mobile application that I talked about earlier. We're bringing that brand to market. We're gonna continue to innovate on how we bring that solution, full stack solution for the end user. They're not dealing with multiple parties in order to solve for services, access and management of the properties long term. Property managers get more efficiency out of that. The building tenants get more value out of the convenience of seamless access as they move about in that facility. I think John mentioned using credentials like mobile credentials throughout the property and being able to provide access to visitors. All critical things that take time and wasted time for some of the property management needs of the owner. I'll jump to the far right, 'cause I mentioned mobile credentials. This is one of the most exciting areas for us. We are in a leadership position here. This isn't something we're developing or it's coming down in our long-range plans. It's here now. You can provide this to the marketplace today. We're already activating our demand generation activities. We're activating our sales organization. We've got the great partnerships built with the technology players for the mobile phones across all of those. Today, we're already starting to engage in how we launch and expand and scale this, and it's really an acceleration opportunity for this business, and it will continue to pull electronic hardware with it. Not only do you get the mobile credential, you also get the hardware and electronic locks to go with it. How are we moving so quickly? That comes from our efforts and investments in platforming and expanding our level of innovation across multiple device types. Platforming is very simple. You'll see some of this in our tour this afternoon, but it's quite simple. I'll boil it down to this. The level of connectivity platforms, level of hardware that we can share and reuse across multiple products, so we're not reinventing some of the technology and connectivity solutions that we've built with partners, we will embed those across multiple product types. We'll be able to have a much more scalable solution that we can get to market faster. Getting to market faster is a key part of winning in this electronic space. Let's jump to driving organic growth. On the far left side, you'll see our strategy around being the partner of choice. John talked about that earlier. In the Americas, it really starts with our distribution channel. We recognize that we have to have the right relationships to win, both in the new construction space, but also in this area of electronics and aftermarket adoption. We've invested the time to build networks and integrators, locksmiths, contract hardware channels, wholesale aftermarket channels, over decades to really be available and be able to solve for all of those ways that a customer may be seeking our products, especially in that non-residential space. It also goes into the ecosystem side on the technology side. Whether it's the Googles, the Apples, the Samsungs, or even some of the physical access control providers that are integrating our hardware into their solutions, being the partner of choice is a key differentiator for us. We want to continue to lead in being able to integrate products into that ecosystem. Overtur in the center, I like to kind of call this how we've digitized the whole front-end process of demand creation. John talked a little bit about that as well earlier. I shared the journey we go through in the non-residential space of going from the end user to the architect and back through. All of those stakeholders have an ability to collaborate across each other using the Overtur platform. We write the specs in that platform, we transmit that digitally to the architect. They provided the blueprints digitally to us. We work within the system to apply those hardware sets. We then can have integrators, contractors, end users, architects, all working in collaboration on that project. Why is that important? It's really important. These jobs are so complex, they take years to build. We get everyone in a room related to the hardware and access solutions. There's no hiding. Let's look at all the electronic openings and what needs to be done to make this a successful solution for the end user. We can quickly use our tool to pull that together, manage the scope for that project, and ensure that we're giving the training, installation tools, and support for that end user to put that product and solution in quickly and make sure it's working right the first time. We manage a lot of that complexity utilizing some digital tools that will continue to support us in the future. All right, on the right-hand side, talking about this connected data and service expertise. You may not be able to see it too well, I wanna talk about the photo. All of us have experienced a service call where maybe a technician shows up, tells you something's broken and says, "I'm gonna have to come back because I don't have the parts," or, "I don't have the knowledge on how to repair this." Or maybe even worse, they showed up, flipped a switch, charged you a few hundred dollars and said, "Wow, I could have done that myself," right? In some cases. There is a... We're investing, and we're continuing to move forward. Now we have customers already using this tool today, where now the technician actually has a connected device, and over the last several years, our Stanley business has been selling controllers that already have smarts built in. Now we're layering on that the software and the application to run the diagnostics, pull that information onto the device. Technician knows exactly what the challenges are with that opening, can either provide services to that end user via the phone, or can get on site already with the right materials, already with the right knowledge and skill set to repair that door more effectively and efficiently. It reduces the level of nuisance calls for areas like a pebble in the track at the door or someone put a sign in front of the door, and those can be solved very simply for an owner. Whereas when we show up on site, we're bringing the most value-added service to that customer. It's technology that's going to be very powerful to also bring data back into our organization and provide that to an end user around the health of their openings. A really exciting area of growth for us as we continue to drive synergies and technology through even what is today a very service-driven business. I wanna finally talk a little bit more around enhancing our business portfolio. We talked quite a bit around access technologies. You know, that is a great healthcare example. The ICU doors, the perimeter access doors in a healthcare environment. We have a great opportunity to drive synergy with the legacy Americas team and demand creation engine. I know we've highlighted that quite a bit. But resiliency, I think, is another key item I did wanna spend a little time talking about. We've all had great amount of lessons over the last couple of years from a manufacturing perspective on building greater resiliency in our supply chains, in our own factories as well. We announced earlier this year that we have been investing in building a new manufacturing facility in central Mexico. That's part of building and having our own resiliency in-house in the region to support the region. It's broader than that. We have been investing in automation, investing in efficiency tools that really get back to driving the margin position profitability of the Americas business and continuing to expand that as you think about us going forward. Obviously, we've been able to demonstrate some of that in recent quarters and excited that these investments are paying off and I think delivering the value that you would expect as investing in the company. Lastly, very open to continue to look for opportunities to expand inorganically just as much as we are driving the organic story. This doesn't just mean some of the bolt-on areas of our portfolio, but investing in more services and software as well. Wrapping it up here, a couple key takeaways. We have a strong team in the Americas with decades of expertise and experience building those relationships with end users, architects, driving demand. A strong brand and presence built on trust in that residential business, and a growing synergy with bringing in an automatic door, full service provider of automatic doors and service into our portfolio. Really excited about the trajectory and the investments we've already made and the growth we see in the electronics portfolio and some of those solutions that we'll deliver with taking hardware and software and bolstering that solution all the way to an end user. We've already invested and see a lot of greater level of resiliency. You know, in 2021, we had a lot of challenges. I think as we've seen over the last three quarters, we are stronger than ever, and I feel we've exited some of those challenges in a much better position to capitalize on where we're going into the future. Thank you for the time to spend a little bit on the Americas. Wanna welcome Tim Eckersley up here to talk to you about the Allegion International business. Thank you. Hi, everybody. It's great to see so many familiar faces in the room. I was last with some of you in 2019. I think we were in New York City, if I'm not mistaken. Weren't we, Tom? Yeah. At that time, I was actually running the business that Dave just talked to you about. I was in my eight year of running the Americas business. Man, I miss some of that. I was asked about two years ago to actually take on board the challenges associated with Allegion's international businesses. You know, it's funny, one of the questions I get most often is, what were the big surprises that you found when you started to run the international business? The thing I always go to is that I always expected that the markets and the businesses were actually quite different. The big surprise I had when I arrived and started to dig into our businesses across the world is that for all of the things that matter, the businesses are exactly the same as our Americas business. I quickly became the chief of dot connecting. All I was doing was connecting dots, connecting people, putting my arms around my Americas friends, and helping the organization learn and understand how to better leverage the skills and capabilities of a very long and large and successful business in the Americas. Today, the international business arrives here as a much more focused organization, one that's aligned globally. The investments are aligned globally. It's leveraging a tremendous amount of the investments that have already been made in the Americas. I have great leaders in the local markets that understand what winning looks like and are holding their teams accountable, and perhaps last but not least, delivering improved, predictable, and sustainable business results for the company. Those things make me very proud. Let's jump into what our growth plan is. In 2022, we delivered $741 million of revenue in a, I would call it, a respectable 15.3% EBITDA margin. You guys that have followed us for quite some time, you know our margin levels internationally have never been this high. Despite the fact that we ran into a pretty significantly difficult macro environment in Europe and in Asia in 2022, being able to deliver north of 15% EBITDA in that environment, particularly with the issues we were bringing, felt really, really good. With strong and growing electronics and software business, important to note that throughout the pandemic, 2021, 2022, the growth of both our Interflex and SimonsVoss businesses continued through that malaise. We've invested in market-leading brands and entered into new channels in places like Italy, France, Spain, Germany, Australia, New Zealand. Entering into new channels, taking a playbook out of my Americas history and building channel-based businesses in some of these countries. We focused on aligning our strategy with the Americas, which gave us the ability to drive synergies and accelerate our growth potential in our businesses. We're starting to get more creative and aggressive on generating demand. Both John and Dave talked about the demand generation engine of the Americas. We have adopted Overtur. We are going to begin to build some of those capabilities. Overtur, spec Riders, those are investments that we're making now in many of our core markets. While 80% of our business happens to be in Europe, I will tell you, Europe and Asia remain very fragmented businesses that have plenty of opportunity for growth and that we can believe we can gain share both through acquisitions and our organic investments in almost every market we're operating in. Our product category, similar to what Dave talked about, my mechanical range it ranges across both residential and commercial, and depending on the markets that you're in, you could be in one or both of those. As an example, CISA Italy operates across the spectrum from residential to commercial, in their markets. On the flip side, Gainsborough in Australia is a pure residential play. We have a little bit of both in some of those. Our electronic strengths are in Germany under the brands of SimonsVoss and Interflex. Both of these teams have done a tremendous amount of work over the last several years of expanding their business outside of their core German market. Software and solutions is anchored by our Interflex business, where their product strength and breadth is their portfolio of capabilities around not just access control, time and attendance, and workforce management. Those are the key dimensions of their offer. They also have a blue-chip customer base. If you are a German industrial or if you're a German airline operator, pretty good chance that you're an Interflex customer. If you're a supplier to the automotive industry in Germany, pretty good chance you're a customer of Interflex. Not only are you a customer of Interflex in Germany, but you've deployed Interflex in every country that you're operating in. A pretty significant list of blue-chip companies that they do work for. Recently, in January, we acquired a company called plano in Germany. That was a business that we bought to support and develop further our workforce management platforms. It is a mobile first cloud offer, and it enhances our ability to do workforce planning in a mobile environment. Perhaps the biggest key competitive advantage that product gives us is the fact that now not only can managers plan their workforce, but individual employees can plan their workforce on their mobile phone. They get sick, they have to go to the doctor, they can get on their mobile phone, they can actually have somebody fill their hourly slot so that they can go to the doctor and do that knowing that the person that they've contacted put into that role is available, willing to work, and has the skills to do the job. Enormously powerful in an environment like manufacturing. Global portable security is the final category of our business. It is the most unique in Allegion. It is exactly what it says. It's a portable security, meaning bikes, motorcycles, and the like. We operate there under the brand names of Kryptonite, Trelock, and AXA. Our businesses are in the U.S. and in Europe, we do business in both the OEM space. If, again, if you think about a car manufacturer, a bike manufacturer also has suppliers that supply right onto their manufacturing floor. A good piece of our business is actually supplying locks and lights directly on the bikes in the manufacturing environment for these big bicycle OEMs. We also participate in a significant do-it-yourself retail environment, both in Europe and in the United States. Perhaps the most exciting thing going on in global portable security is the advent of e-bikes. I'm guessing that at least some of you in this room have an e-bike or have seen them. They are taking off. They're growing very, very quickly, particularly in Europe and in the United States. In the United States, they're also be participating in what I would call micro-delivery activities, so downtown environments where you would have a cargo, a small cargo e-bike delivering for a company like Instacart or something like that. If you think about an e-bike, generally, it will have a lock on it, and in fact, it most likely has two locks on it. Doubles our business opportunity because you gotta lock up the battery, and you gotta lock up the bike. It normally has lights on it, usually front and rear lights on it. It creates an opportunity because it has a battery to have some connectivity into it that builds then into our connected, seamless, strategy on a going forward basis. Good opportunities for our business in global portable security. Looking now at our market size, roughly about $20 billion in our available markets. You can see similar portfolio of opportunity as Dave talked about his. Non-residential mechanical, low single digit opportunities there. We think that there are if you go into the electronic side in the middle, high single growth opportunities there, our fastest-growing market segment. In addition to in electronics, in addition to SimonsVoss and Interflex, once I get into my strategies, this is where we're going to lean in hard on all the platform work that Dave was talking about that we're doing in the Americas to attack other markets like France, Germany, Spain, Italy, Australia, New Zealand, where we believe we can leverage technology and bring those things to market. Our mechanical and portable security segments are expected to grow at a slower pace. However, here we're leveraging our brands and our portfolio and our geo footprint to get better scale out of those businesses. As an example, we can sell global portable security products in Asia. We're not currently doing that. We're not currently selling in Australia, so pretty easy lift to go do some of those things for us as we go forward. Finally, innovation and digital simplicity is also going to play a role in allowing us to grow faster in these lower or slower growth markets in residential and global portable security. How do we win in the international business? Well, we're in the early stages, as I mentioned earlier, of creating demand for ourselves. We know the model, writing specifications, creating steep, long relationships with architects, building end user connections, and then working with the channel is a proven model. We just have not yet that deployed that in a big way in the international markets. Even without that, today, we do have some strengths. In the electronic side, we are the innovation leader in the markets where we play in SimonsVoss. Around Germany, we're also deploying a direct model. It allows us to bring those innovations faster to market and have less reliance on training and developing a distribution channel. On the mechanical side, we enjoy some of the same benefits that Dave has on his historic legacy businesses. We've got businesses that have been in their markets, leading in their markets for over 80 years. We've got tremendous channel access, which is particularly important in some of these European markets where the installer base for this work, it's not a huge DIY market in Europe. The installer base is very fragmented. Lots of small little operators are doing the work. Critically important to have good, strong channel relationships and channel capabilities. Finally, on the software solution side, the strength and the depth of our solutions portfolio is the key driver and key reason we tend to win. I've already mentioned the fact that we have the access control, we've got time and attendance, and we also have workforce management. You combine that with a robust API that is bringing in world-class technology partners for video management, visitor management, and on and on and on, you get a very broad portfolio, deep solution that is one of the key competitive advantages to our business in software solutions. While there are subtle differences between what Dave and I are doing in our markets, largely due to the maturity of the international market compared to where we are in the Americas, our key priorities remain virtually the same as his. They are the same. Extend and grow our position in seamless access. Again, Dave's further along in his markets, we have got a great opportunity to extend and grow our seamless access capabilities, drive organic growth in the business, and continually enhance our business portfolio. If I jump into each one of these separately, you will start to get a sense of the work that is currently going on that is fueling our growth for the future. Under growing seamless access, it first starts by building and growing our software solutions business. The strength we are going to and are in the process of strengthening both SimonsVoss and Interflex through the development of cloud-based solutions. We are going to supplement our current license model in those two businesses and begin to attack market segments with a smaller software-as-a-service opportunity for the marketplace. The acquisition of plano in January gets us going on that path and on that journey, and we are already selling well over several million dollars of software as a service on a monthly fee in those businesses in Germany. We'll also need to, as I mentioned a minute ago, leverage the platform work that's going on in the Americas. 90%, 90%, of the platform hardware work that the Americas team is driving can be applied to the markets in international. It's only 10% differences around either aesthetics, the mechanical connection with the actual mortise lock on the door, or door thickness are the drivers that change that. Outside of that, I can reuse 90% of those investments. When it comes to software, the multiplier is even better. 99% of what we're doing in either the connectivity software or in some of the application software can be used and applied to my markets in international. What does that do? It reduced my cost, it reduces my execution risk, and it accelerates my time to market. We have programs now in place to support growth in places like Australia, New Zealand, and France, where we're not currently doing any commercial electronics, bringing those products to market in the next several quarters to accelerate our growth and opportunities there. Finally, we're going to leverage our heritage and credentials that John spent a good bit of time talking about to establish leadership globally in monetizing mobile credentials. There is only maybe three companies in the world that have the capability and the scale to monetize and drive mobile credentials globally, and we're one of those, and we're going to lead that space. becomes a lot easier when you're working on platforms that are the same everywhere in the world. John mentioned this as well, but I think it's an important point. In our electronics business, we have virtually no new tenders for either retrofit or new construction that don't have some requirement to either provide mobile credentials or be prepared and ready to deploy mobile credentials if they're needed. It's happening now, and it creates a great opportunity for our business as well as, Dave's business in the Americas. On the organics side, we're just getting started with Overtur. I'm super excited about the opportunities and how great this can be for our core markets. We have now deployed in Australia, New Zealand and the Middle East. The benefits of collaborating with architects, general contractors, end users, and channel partners are already reducing errors and reducing the number of change orders that come out of this process. These companies are getting off jobs faster, it's having a meaningful impact on the momentum that they can drive. I would also say that artificial intelligence and machine learning capabilities that have been early capabilities that have been built into Overtur are also allowing me to leverage a low-cost specification model. My specification teams, the people that write the specifications, are all centralized in a low-cost country. Gives me speed, gives me lower cost, and it gives me the ability to deploy specifications anywhere in the world using that team. Really powerful capabilities there. We're also developing new markets and new channels, window, door, again, leveraging the channel work from my days in the Americas. Mr. Vigran's over there smiling. He remembers that playbook. Entering new channels, windows and door OEMs. We're having a conversation around some of the demand that's coming in Europe for some of the new energy requirements, a lot of the new windows and doors that are going to be put into these facilities to meet this new demand are going to have equally challenged and code-compliant hardware that gets attached to them. We have been moving into the OEM space in a very, very aggressive way. Finally, our geography, the fact that we're in so many countries, gives us scale to take our offers into other markets. I mentioned high security cylinders that we do in Europe, we can bring into Australia, New Zealand. Similarly, portable security in Asia. Those all represent opportunities to take our SG&A base on a global basis and drive down the cost of deploying and driving higher growth in our business. Finally, enhancing our business portfolio. Dave spent a lot of time talking about SAT, fantastic acquisition for Allegion. I would never have had the ability to go buy a much smaller door or automatic door company in a European country. Allegion now owns the global leader in auto doors. I now have the obligation to build a global platform using that as a base. Our ambition level and our expectation is that we can build a manufacturing service and install business, just like SAT, in many markets around the world. Some of that will be done by organically and some of it may be done inorganically. We have the opportunity to take the very strong model that is represented in Stanley Access Technologies and bring that to many of our core markets. Sorry about that. One of the other areas that we are leveraging from the Americas perspective is that they have, we have been investing heavily in front-end and back-end digital capabilities, things that make it seamless and easier to do business with, transmit orders, understand, the status of orders, enhance the experience customers have. We are in the process of replicating those same tools into the international market. Again, very little in unique requirements when you go about doing this. Sometimes you've got some language work to do, but for the most part, whether you're talking about a product management database or a call center system or an order management automation process, those tools can be leveraged. I am stealing everything from Dave that I can possibly steal and putting it into our business to simplify it, streamline it, drive down our costs. Finally, as we did with plano this year, we will continue to manage a robust portfolio, a pipeline of acquisition targets that are largely around technology, largely around software and extending our position. We also have quite a few bolt-on opportunities in our markets as well to add and supplement either a geography or a core part of the mechanical, hardware as well. We'll be looking at all of those things on a going-forward basis. In conclusion, the transformation of the international business is underway. It's happening today. We have a sustained growth mindset across my entire business, good leaders in the field. We've demonstrated our ability to improve and sustain our margins, and we're not done improving our margins. There's still opportunity ahead of us. We're leveraging the Americas hardware and software platform work, quickly establishing a comprehensive electronic commercial offer in markets that we do business in. We're investing in leveraging in digital tools, and while we're a bit behind the Americas on electronics, we have significant market opportunities awaiting us based on the brands and the position that we have in our core markets, and we're poised to capture that opportunity. The international business has never been in a better position to grow. I'm super excited about it, the leadership is focused on it, and I believe our best days are ahead of us. I appreciate your time and your patience as I presented. I wanna turn over the podium now to Mike Wagnes, our Chief Financial Officer. Good afternoon, everyone. Thanks for joining us today. We're really excited to have you join us here, at our Carmel facility, as well as come to our tech center later today. I'm Mike Wagnes, I'm the CFO of Allegion. Many of you know me as when I was in my investor relations role. Been with the company 12 years. The role I had prior to this, I ran our North American non-res business. I was the GM. Dave at home, I was the non-res GM. If you think about what I'm here to present today, I'm gonna take the strategy that we went through earlier today, and I'm gonna build it into our financial framework. Our financial framework starts with creating long-term shareholder value for you. We think about it as returns for you, the shareholders. It starts with organic growth. We're gonna drive above-market growth. We're gonna have accelerated growth coming from electronics, as you heard the team talk earlier today. We're also gonna drive margin expansion. For us, margin expansion is in our DNA, and we're gonna be driving that margin expansion moving forward. John talked a little earlier about some of the challenges we had with the supply chain, but I think those are mostly behind us, and we are back to driving margin expansion. With the combination of growth and margin expansion, we're gonna convert that earnings to cash, and that cash we're gonna deploy effectively to drive shareholder return. When you think of Allegion with capital deployment, think of us as a double-digit EPS growth through the cycle. This slide is our historical performance since spin, and as you can see, it's that mid-single-digit growth, organic growth, driving that double-digit EPS growth over the period from 2014 since spin 'til last year. Admittedly, it's a little muted because of the results last year from supply chain, but we are in a much healthier position as you've seen the last three quarters. We're back to expanding margins. If you look at the cash flow, although less last year due to some investments we've made in inventory, as you saw last week in our earnings outlook, we talked about this year growing cash $100 million over what it was last year. That formula for us, driving the growth, leveraging the margins, the EPS growth, and deploying the capital for shareholder returns, that message we've talked to you about since we spun is still intact. One of the things about our business is the resiliency of the business as well as the margin profile. Dave talked earlier about that institutional non-res business. That is a very resilient late-cycle business. You've heard us talk about this on earnings calls, that we're a late-cycle business. That gives us visibility to markets and how they move and their dynamic and change. It also allows us to have a more stable top line as a result of institutional markets not having the choppiness as you think of other markets. It's a very resilient business that leads to resilient and stable margins. A capital allocation John spoke to earlier today, it starts with investment for growth, right? Dave and Tim both gave you the specifics for their respective regions, but we're gonna drive above-market growth, capitalizing on the opportunity in electronics. From dividends, as you all know, our dividend has increased steadily since we spun out. We're now at a payout ratio of about 30%. Look for us to increase dividends, commensurate with earnings moving forward. 30% payout ratio is the right ratio for us, and look for us now to grow the dividends commensurate with earnings. M&A, John talked to it as well. We feel this is a good way to return or drive shareholder returns for investors, and I have a few slides coming up where we'll walk through that in detail. Lastly, share repurchases. At a minimum, we're gonna offset any dilution from incentive comp, and then from time to time also as needed, make additional purchases. This slide shows our capital deployment numerically. Over to the left, you'll see over the planning period, there is approximately, let's say roughly $1.7 billion planned in available cash flow. That is after CapEx as well as organic investments. Over to the right, you see we have very minimal debt payments. We have a very healthy balance sheet. We have $100 million there. That represents the revolver borrowings that we had at the end of last year and a small term loan repayment that we have on our existing term loan A. The, obviously, the repurchase of the creep is illustrated there for repurchases. Then with the remaining $1.5 billion, think of it as a third dividends and then two-thirds additional deployment available for shareholders, whether M&A being a big piece of that. In addition rather, we have significant borrowing capacity. Our I'll go through this on our next page. Our debt to EBITDA is in a great place. Our leverage ratio and balance sheets are in a great place, so we can borrow for the right acquisitions. This is our leverage profile over time. As you'll see, from time- to- time, we'll increase our debt for the right acquisitions. I'll draw your attention to 2022. We bought SAT last year, Access Technologies. We levered up to 3.5x. We were able to drive that down a full turn by the end of last year by paying down some debt and growing EBITDA. We are in a very healthy balance sheet. We're an investment-grade company. We expect to remain an investment-grade company. That is important to us. It gives us access to the most cost-efficient capital for the enterprise. Excuse me. Organic growth investments, they're really important for us, right? As we think of our organic growth investments, there's three areas where we focus these investments. Number one, innovation. You've heard a lot about electronics. Electronics is accelerating for us, right? We're gonna capitalize that and make the necessary investments in electronics in the business to take advantage of this market opportunity. Demand creation. The front-end demand creation activities that Dave walked through for the, for our business, especially in the Americas, is a competitive advantage. We will continue to fund those demand creation activities. Those are great return on investments, and they help lead to us having the competitive advantage we have in the marketplace. Then operational excellence. Operational excellence is more than just building a plant in Mexico. It is about driving operational efficiency using automation, driving productivity, which helps drive that margin expansion story, right? We are committed to driving margin expansion. You heard me on the call last week. In our earnings call, we expect to see 50- 100 basis points in margin expansion moving forward every year. This is part of those investments we're gonna make in order to drive it. From an M&A perspective, you heard John talk about some of the priorities we're looking at. We're gonna have a focused approach to M&A. It's gonna be three priorities we look at four targets. One, does it expand the product offering? Right? Tim talked some of it in Europe as well as John talked about it as well. An example, I'll go through some case studies on the next slide. If you think of Access Technologies, it gives us that product gap fill that we needed in that hospital. A great add to fill that product gap that we had. Emerging tech and electronics, we will continue to look at acquisitions that drive the electronics growth opportunity that we see. This is a long-term growth driver for Allegion. Electronics is not something that's gonna be a three-year phenomenon, and then everyone full penetration, everyone's at full penetration. Think of this as a long-term opportunity, and electronics assets for us are gonna be things that we desire and target. Lastly, software and services. We know that SAT or Access Technology is a great example of this acquiring a high growth, stable service business. We love that asset in our portfolio. From a criteria standpoint, any kind of acquisition that expands our TAM, gives us a leadership position we can scale, as well as we look for assets where there's clear synergies. You've heard us talk over the last year, the synergies of the spec engine in the non-res business with the Access Technologies business is a real asset we can leverage. We're looking for transactions that we are able to leverage. Then from a financial profile, obviously, need to have ROIC, or we target having ROIC in excess of WACC. Right? We gotta return our cost to capital for the benefit of shareholders. We love adding more recurring revenue. An example would be Access Tech as well as the plano acquisition that Tim talked to. If you look at some spotlight of acquisition targets, I laid out three here that give examples of what you just saw on the previous page. SimonsVoss, that's that electronics and technologies business that we love. It was purchased in 2015, since we bought it, delivering double-digit revenue growth, CAGR for us. This is when you think of electronics, it's not just the Americas. It's also international, and this high profitable business is helping drive the higher margins you see internationally. AD Systems is a business here in the U.S. in Seattle. Think of it as a specialty door company that we bought in 2018. We've been able to double the size of that in five years by leveraging our sales channel in our existing business, where we take that product, put it through our sales channel and really drive returns. Of course, Access Tech love the business. We think that this business is even better than we announced it in April of 2022, the synergies between both sales forces is a long-term growth driver for us. This brings us to the money page, the organic financial targets. This is excluding capital deployment. As you think of the three-year framework, look at revenue growth as a mid-single-digit. This is above-market growth driven by that double-digit CAGR coming from electronics. Historically, you know our business. We're a little more back half than front half. If you think about 2024 and 2025, a little more back half than front half on the top line. Of course, in 2023, you saw our strong results last week. We'll be more 50/50 in 2023. As you move forward, think of it more along with historical levels, a little more back half. Margins, we're gonna be driving that 50- 00 basis points of margin expansion each year. We're gonna do it two ways. Number one, we're gonna be getting volume leverage on that high variable contribution margin business. two, we're gonna drive pricing and productivity to cover the inflation and investments so that in aggregate, both items will lead you to that 50- 100 basis points of margin expansion. From an EPS, think of us organically as driving 8%-10% EPS growth before deployment. From a cash conversion, roughly 90%-100% of earnings, net earnings to EPS. And that is one of the dilution items, as you all know, is the difference between the book tax and the cash tax. I just walked through the organic framework. This is the framework on a long-term basis with deployment. Right? Over to the left, you see the above market growth, margin expansion, driving the 8%-10% organic EPS growth. It's the ability to leverage that cash and deploy it effectively to drive the 10%-13% returns inclusive of deployment, with the dividend yield driving 11%-14% returns for shareholders. Through the cycle, this is a double-digit returns business. Which I'll conclude the finance section where I started. It all starts with creating shareholder return. Once again, organic growth. We believe there is an opportunity to capitalize on electronics and software to drive above-market growth, and we're poised to take advantage of this market opportunity. We are the leading EBITDA margin business in the industry, and look for us to continue to expand those margins, convert cash in a very resilient industry and margin profile to drive the shareholder returns of the double digits. With that, I'm gonna pause temporarily while we get ready for Q&A, and I'm gonna bring Dave, John, and Tim up with me. All right, I think we're back. Just for the questions, we've got two microphone runners in the room. If you have a question, just raise your hand, they are going to find you. Make sure you wait for them so that everybody on the webcast can hear the question as well. Be sure to introduce yourself. They'll hold the microphone while you're asking. At the end of the Q&A, we'll just have a few final remarks from John, and then we'll break. I just ask everybody to stay seated until the end of the webcast, and then we'll come back with more information as regarding those that are going on the tour. All right? Sound good? Let's open it up. Who would like to... Let's start over here. Excellent. I can't touch. I can't touch. All right. Thanks. Josh Pokrzywinski from Morgan Stanley. Two questions. I guess first, a lot of focus on the growth vectors, including inorganic, getting a lot more attention than I think we've seen for a while. Anything relative to the Americas non-res business is margin dilutive, and that's just, you know, sort of the price of success. Like, how do you guys view, you know, how wide that aperture is and that trade-off of growth versus margin coming from that high level and what you'd be willing to underwrite, at, you know, different margin levels? That's just a really good question, Josh, and thanks for going first, I'd say. First off, I don't subscribe to the assumption that anything we do inorganically is automatically margin dilutive to Americas non-res. I think there are opportunities, particularly in these new technology spaces and around electronics and the software that interacts with those electronic hardware pieces that give us pretty interesting and compelling opportunities. I'd say that's not a given. I would also say, just like with Access Technologies, we did make a large acquisition that is dilutive to Americas non-res. Like you saw from Mike, Allegion has a history of expanding margins on a very regular basis. We have a capability, we have muscle around that, we can do that. Access Technologies is gonna be no exception. We will be able to expand the margins of that business and continue to expand the margins of Allegion as a whole. You know, I think the aperture to that part of your question, just think about how we describe ourselves. We are a pure play provider of solutions for security and access. That's our sandbox, and that's how wide the aperture is. Just follow up, a lot of discussion again on the electronics area of this kind of transcendent credential. You know, a lot of us in this room have one of these, probably with a different logo on the back than. Right. you guys are used to seeing. Right. Moving over to mobile breaks that ecosystem a little bit more, which I would imagine you guys love. Any way to give us, you know, some sensitivity on what this kind of before and after looks like as, you know, maybe some of these barriers to really getting the product out there around credential go to something a little bit more ubiquitous like a phone? Yeah. Great, great question. Right up the middle of what we see as driving change in the industry. Would say our industry doesn't turn on a dime, right? We don't change at lightning speed. Again, like some of the case study examples we talked about, you know, a large, complex university campus with a lot of legacy systems. My first definition of seamless access, you know, you use the metal key that gets in certain doors and not in others, an encrypted card like you have and like I still have. I just don't need to use it 'cause we have mobile credentials here at our campus. With the mobile, the digital ID, they're gonna coexist for a long time. We need to be able to have solutions that meet those end user requirements and desired outcomes with all three of those particular technologies. Like you heard from Tim, like you heard from Dave, the end user pull for, at a minimum, the capability to be able to adopt mobile credentials is really prominent in our space right now. I think that's what is continuing to pull electronic hardware through the channel. That's what's continuing to drive different tenant experiences in apartments, different student experiences at the university, and efficiencies for those end users in their business. The transition has legs. It won't be overnight. This is a multi-year, mid to long-term transition that we feel internally is a double-digit growth driver for our business. Can I add one other? Please, sure. ... quick point to the. The real disruption here is the breaking of the credential from the identity. The old world that you're walking around with, the identity and the credential are one thing. In this new world, the identity gets owned by somebody different, mega tech, maybe even yourself individually, whereas the credential gets attached to that identity. The ownership of the identity is one of the big questions, and of course, we're agnostic there. Some of the other companies that play here aren't agnostic. Let's just go on this side. Let's go back. You get a hold the mic. Is that how this works? Okay. Well, thanks for the presentation, everyone. I guess I just wanted to ask about the margin expansion. Just thinking back prior to the pandemic, you know, you guys were generating kind of a 30% EBITDA margin, and then through 2021 and 2022, that came off about 300 basis points. Now you're talking about growing your margins, your EBITDA margins of 50- 100 basis points a year. Is the goal just to get back to that 30% EBITDA margin, or is there an opportunity to go beyond that? If so, could you just talk a little about that? Yeah. If you think about our margin expansion, this is not just a three years to get back. This is part of our DNA. We're gonna expand margins. We're gonna drive price and productivity to fund the investments and the inflation. Think of this as beyond that. You determine based on your model when we get beyond the historical peak. If you look at that three-year planning horizon, we should be back, as you saw on the chart, I showed EBITDA down less than 200 over the on that EBITDA chart. We'll get there over the three-year period. Then we're gonna continue to expand margins on the core business. Each business is gonna drive that productivity and pricing discipline to get back that product margin expansion mantra. I think we have one over here. Okay. Thanks. Yeah. Thank you. Brett Linzey, Mizuho. Just wanna put a finer point on some of the long-term algorithm. You laid out the different segmentations of the market. I just wanted to clarify, does that include just market volume itself? And then if not, how do you think about higher ASP and, you know, mix and price, you know, within that component, thinking about the long-term construct? When you think of a long term, think of it as market plus for us, especially as you get out to 2025, it's more choppy to understand what market will be. Just know that we'll outgrow it, driven by that electronics. Electronics gives you that ASP uplift as well. Where we are in that mid-single digit is gonna be determined on market, but we will outgrow because of our ability to capitalize on this real opportunity in electronics. Okay, got it. You talked a lot of today about the front-end demand creation. Just curious where you're at in terms of the, you know, continuum of investment. Do you think you're at the right level now? Does it need to step up, you know, over the horizon? Any way to quantify that? Yeah, you'll have a couple of conversations at the Tech Center, for those of you who do get to go and hear a little bit more about the Overtur tool. There's investments both in human capital on that front, and also on the digitization of that front-end demand generation. Dave and Tim have been really instrumental in leading programs that bring in young civil engineers, train them as specification writers, get them out to the field, get them with customers, learn how to do that job, because that's a tough ramp. That's a tough skill set to build. I think continued investments in both the digital experience as well as the human capital. Mike categorized it right. I mean, these are high ROI people that we invest in. Thanks for the question. We'll just keep going back and forth, I guess. Hi, Jonathan Brandt from Ruane Cunniff LP. Compared to your largest competitor, your R&D expenses are about 170 basis points lower as a% of revenues. How should we interpret that difference? Are we more efficient with R&D? Is there a business mix difference? Are there differences in what you classify as R&D and how they classify that their expenses, should we expect that difference to narrow or stay the same over the next several years? Yeah, Jonathan, thanks very much for the question. Sorry, I need to turn a little bit this way so the microphone works. As an engineer, I can tell you, certainly any engineering organization can do more with more. If you join us at the tech center, you'll hear more about what Tim was talking about, what Dave was talking about on platforming, which is very powerful for us, very powerful for efficiency as well as speed to market with new designs. Yeah, I would feel also that again, speaking as an engineer, having grown up in those kind of organizations, a bit of a tight belt drives some of the most incredible innovations you can come up with. Too much money is bad for an engineering organization. In terms of the accounting differences, I don't know. I don't know that it matters all that much. What I would say is we're proud of the product portfolio we've got. We lead with innovation, particularly in the premium price point segments of the markets we operate in, and we earn that premium through the quality, the design, the features, the robustness, the ruggedness that you'll see when you go out and watch the demos there. Overall, I feel very good. If you look at our history, engineering headcount has gone up a lot more than total dollars spent since spin from Ingersoll-Rand. Vince, our CTO, will give an intro, but I'll steal a little bit of his thunder, that we have a very large engineering center, technical center in Bangalore, India, quite cost-effective center for us as well. That is taking us to new heights in terms of the amount and quality of new product development design we can do. Tim, did you? Thanks. Tim Wojs from Baird. Thanks for your presentations. The first one I had just on, just on the software and the service piece, I mean, what is the business model, I guess, behind software? Like, what are the unit economics to Allegion when you think about, you know, kind of the software accretion or the business model for you guys? I guess maybe secondarily, kind of high level, how do you kind of balance the open approach to kind of owning more software assets? Great, Tim. Thanks for the question. I would say, unit economics in simplest terms, just think of this again as commensurate with the economic value that the full stack solution is delivering. At an apartment building, I don't need so many people. I don't need to hire a locksmith to come and change out all this stuff every time my tenants change. I can do it from a laptop or a tablet in an office, et cetera. Those cost efficiencies we feel we can charge for. Think of it as a nominal fee per door per month. Similar on the automatic door side, Dave was talking about the efficiencies of technician efficiencies on our side that I know what the problem is when I go out to fix it. First time, right, I show up on the job, I fix the problem. Technician time is extremely valuable, right? You don't wanna waste time just looking through a windshield. Also nominal fee per month per door. The benefit, in that case is fewer false alarms. I'm not paying, you know, technician rates for something that was not really a downtime failure type problem. Simplest level, that's how I would ask you to think about it. High level, I would just say again, you heard from Tim, a good proof point is the Interflex business that's been in access control and workforce management for some time now. Bolt-on acquisition with plano to continue to grow that, what I would say is a high margin recurring revenue level. We're looking to do more of that. The magic is still what I would come back and make sure we walk away knowing this is not a from to story. It's. The hardware is the magic. The hardware is what's so hard. The specification, consultative sale, millions of SKUs made to order. I can't overstate the complexity of that and how hard that is. One of the main drivers as to why there's only a handful of companies in the world that can do this at scale. When you see that Von Duprin exit device, as complex of an assembly as that is, a life-saving device, and we're producing multiple different SKUs and one's coming off the line every 30 seconds. It's quite amazing to see how that's managed as a manufacturer, and I think that's really important for us going forward. Thanks, Tim. Let's go to the back. Hi, this is Vivek Srivastava from Goldman Sachs. My first question is on total addressable market. The TAM went from, I think 2019, it was $20 billion, and now it's $40 billion roughly. Just how much of it is really pricing related? What new end markets or verticals got added to it? That would be helpful. I think looking at the total market, wasn't here in 2019, so I can't give you the quite detail there. I would say we engaged several external parties to take a rather expansive look at the markets we participate in and take a look at in the security and access space where we play, what's that addressable market. Again, we see it about 50/50 split, 50% in Americas, 50% in international. How much of that was price inflation? I don't really know. What I would say is you look at our total sales in either market against that total addressable market, and we feel very good about the current position we're in and our ability to continue to drive above market organic growth in that space. I can add a little as well. If you think of 2019, we did not have Access Technologies or any of the addressable market that came with Access Tech. We also had a smaller software business, so as we think about the TAM, it gets a little larger as you think about some additional businesses we're in today. We were pretty narrow when we defined it in 2019. As we've expanded our offering, it does expand the TAM as well. Great. Maybe just a follow-up on margin front. The 50-100 basis points goal, any color between International or Americas, any specific initiatives? What are the different initiatives between the two verticals and who might probably have more growth would be helpful. Yeah. If you think about margins, obviously our Americas business is so large, right, 80/20. As Americas goes, it tends to shape the total business. When you think about modeling this, just make sure your Americas makes sense in line with the total. Both businesses, we expect both our businesses to drive margin expansion. You heard Tim talk about it and Dave as well. This is not an either/or, it's a both. I gotta expand a lot more to get that 1% than Mr. Ilardi. Right. Fair. Thanks. It's Joe O'Dea at Wells Fargo. I wanted to start on the electronics adoption and talking about North America, 10%. Could you start with sort of where the electronics revenue mix is on the non-residential side and the residential side? Could you talk about the growth opportunities that you have in electronics on the aftermarket piece and then the new construction piece? Not sure if you see sort of more ability to drive that growth on the aftermarket, where maybe the new construction is a little bit more vulnerable to whatever's going on in that markets. Yeah. What, what I would say is, to that last piece, again, if you look at our total business mix, sort about roughly, again, not super precise, but roughly 50/50 aftermarket and new construction. The demand pull, the end user pull that we're feeling is on both sides of that pie, right? Again, you heard from Dave, you heard from me on the multifamily residential, very strong pull in the aftermarket because there's a reason to invest in that technology for your multifamily units. Better tenant experience, tenant retention is everything for those folks, so it's a reason to invest in the aftermarket. Honestly, it's not a really huge capital outlay for them. There's operating efficiencies, so this is a good business outcome for them to do. On the new construction side, again, a key driver is this at least capability to, in the future, adopt digital identity and mobile credential, just for the simplicity that that offers your overall system solution and architecture in the building. It cleans a lot of things up. It simplifies what all you have to install. Easier install, easier to operate, and, you get a lot more flexibility on the added layers of security that you want for your building. I think the demand is both. In terms of a mix and maybe just looking at the Americas from residential to non-res on electronics, Paco, how would you feel? What you would say historically, residential is a little has a little higher percentage towards electronics than non-res. I think the thing that has us so encouraged is that non-res is really starting to see an acceleration of electronics as well, as we talked about earlier in the presentation. Thanks. Also, you know, when you think about sort of postmortem on the operating challenges of the past couple of years, in both, say, pricing agility and then reactions to kind of supply chain constraints, what types of changes have you embedded into the operating model to be more agile and respond to things like this going forward? Yeah. Honestly, I walked into an operating model that wasn't broken, right? Allegion operates very lean, and anyone who is operating very lean got bit pretty hard when the supply chain and logistics challenges, excuse me, hit. The Allegion operating system, honestly, I took it from Dave Petratis and just we kept it going. I mean, we reinvigorated some things that had languished a bit, to be honest, like our investment committee for building an M&A pipeline that's more robust today. In terms of factory operations, I would say similar to what we told you in the Q1 call, it's in the DNA in our factories. Lean execution, efficient execution, driving productivity, driving quality, it's in the DNA. I didn't need to bring any new operating model for them. What we needed to do was work with our supply base, get parts. That meant new redesign, alternate suppliers, alternate materials, qualify those parts. As the supply flows, our factories have been very adept at compounding that into- Mm-hmm ... incremental improvements in inventory turns, incremental improvements in productivity. They're gonna help drive that margin expansion that Mike was talking about. I'd say it was more a matter of getting our teams together and our leadership together, key supplier leaders personally on the phone and on video and Zoom and other things with a lot of them, over the first few months versus needing to spend my time putting a new operating model on the manufacturing. That part of Allegion is very sound and very strong. Thanks for the question, Joe. Thanks. We're getting close to the end, but let me get a final raise of hands. I know, Josh, you've got one. David, you've got. Let's go on. Let's try new, and then we'll circle back. I had a question really regard to your recipe for value creation. You guys enjoy economic margins that are almost twice the size of your largest competitor. Yet, when I look at your map, you don't tag anywhere on there a defined goal around return on invested capital. I just wanna make sure you're not signaling that you're anticipating much higher levels of inorganic growth as outside investors should expect returns on capital to fall with the hope that we would make up the economic margin growth with higher velocity of earnings going forward? We're just kinda surprised that you guys didn't actually have some kind of guidepost or anchor given the incredible benefits you have over your largest competitor on the returns front. Wanna take that? Yeah. as you look at our returns, obviously, really strong, highest in the industry. You wouldn't want to have a situation where the ROIC has to be at the level of the existing non-res business. You would do zero acquisitions. I think the way we look at ROIC for acquisitions is ensuring that we drive ROIC that gives us returns in excess on net acquisition, our cost to capital, not the existing non-res business, 'cause we're not gonna have acquisitions that from an ROIC perspective, that are gonna be that high. We still want strategic acquisitions that drive our seamless access strategy and, ensuring that it's a combination of driving the right acquisitions at the right valuation that returns, that drives the returns for shareholders. I guess I was trying to suggest that. Can you give him the mic? Can we? In total, that you're not gonna have a significant decline on return on invested capital at the corporate level as your chief competitors experience, with the hope that the velocity of earnings will make up for that, which it never does. That's why your economic value creation's twice your chief competitors. That's what I'm trying to get at. Yeah. If you look at our history, that is not how Allegion has targeted acquisitions. Think of something like the Stanley acquisition as a good example of the type of deal we would do to drive shareholder return, this is not the primary competitor strategy of making the acquisitions at the volume that you've seen over the last few decades. Go right to David. Yeah. It's David MacGregor at Longbow Research. A couple of things. I guess, first of all, I'd love to hear you talk a little more about Allegion Ventures. You mentioned that you've got a strong portfolio there. I guess, you know, how are you extracting value from that? What's the ultimate monetization goal for some of those things? How are you thinking about the amount of capital you're prepared to deploy in that direction going forward? You know, how pivotal is it to a lot of the growth that we're talking about here today? And then secondly, just on a separate dimension, you talked about building the service capability here. That can be a little tricky. Maybe it'd be good to have you talk a little bit about how you're thinking about acquisition versus organic. How, how creative could that be? Are you prepared to suffer dilution to percentage margins in order to get greater dollar margins? How are you thinking about the build out on that service capability? Thanks. Okay. A lot of questions there. Let's start with Allegion Ventures. I would say again, five years in now, you know, Rob Martens and his team have full-time jobs, but they also take care for the Allegion Ventures portfolio. They've built a great reputation in the venture capital and the entrepreneurial communities, which is not easy to do. I think the staying power of Allegion Ventures has been instrumental in that reputation. When Allegion Ventures calls, the entrepreneur CEO answers the call. That's important for us. I think the portfolio has performed very, very well. A notable exit would be a company called Openpath. You'll still see evidence of us working with them even on this campus. Motorola acquired Openpath two years ago, and Allegion Ventures was one of the early stage investors there. You know, in terms of the primary path to monetization, I think you'd look for our portfolio companies to pursue whatever exit is appropriate for them, whether that's a strategic acquisition or an IPO or whichever. A bit more up to that company and their strategy. Primary benefits for us have been focused on learnings and exposure to new and potentially disruptive technologies. Again, I compliment Rob and the team. I think they've identified the winners in space around access and security and building management. They've done quite well. We've learned a lot. One other interesting case study was Yonomi. Talked about that. Dave talked about that in the Americas presentation. That was an early-stage investment that Allegion wound up acquiring because that Internet of Things platform and the ability to commission, connect all of our hardware onto whichever of these different physical access control system providers we need to, that really became core. Core to what Allegion needs to deliver in terms of solutions to the market. That was an acquisition we actually made out of the portfolio. I think we'd like to keep the full spectrum of option there, options with the Allegion Ventures as we go forward. What else you had there, David? Sorry. Yeah. Thanks, Steve. The second question was just with regard to building out your service capability and- Yeah. Right. Right. I'd say Tim talked about the Interflex business. There's a healthy service component there that we've had in the portfolio for a long time. With the Access Technologies acquisition, healthy and growing services portfolio there. At this point, that sort of becomes organic growth and investments. You heard from Dave about the IQ controller and platform there to again increase our technician efficiency, increase the value added with just proactive maintenance with the end user customer from the data that's coming off of that door and off of that controller. I see things like that are able to extend into other parts of Allegion's business that we might not even have realized yet. There's a lot for us to learn and continue to develop and nurture this services team in Access Tech. Let's close it out here. One more. Promise I'll be done. We're about five and a half-ish years removed from, I think, the last labor bottleneck that you saw in non-res Americas. I don't think anything's gotten better since then structurally. How would you just pair up what you guys are expecting or seeing on the demand side relative to the trade labor out there? I know you talked about the service productivity- Yeah. Yeah You know, some of the ways to do that. The core business and on the installer side, do we have the warm bodies available to do that? Is that a limiting factor in your mind? You mean our own employees? No, no. or the broader job site? Yeah, the job site folks. Okay. Yeah. Good question, Josh. I'd say Dave, maybe you- Sure ... add a little bit too. Listening to as the Access Technologies folks came in, you know they do a lot of business in retail and other small projects and such, job site readiness, I heard every single week, multiple times a week, as just disruption to the Stanley Access Technologies team. Like, door is usually the last thing going on. We've got it, got it loaded up, technicians going out for the install, four other things that should have happened, didn't happen. My impression anecdotally is that's happening a lot less now. Dave, what are you seeing there on job sites? If you think about it over the last two-three years especially, some of that was driven by some of the supply chain challenges. As jobs were almost ready to get installed, we weren't necessarily ready or the job site wasn't ready for us to be there to install some of the hardware. I think that the labor component around construction continues to be a challenge. I think we'll see a little bit of rightsizing of how long projects are taking to get installed as supply chains have continued to improve. Relative to where we were five or 10 years ago, it's taking longer for jobs to finish. I do think that the productivity, we have not seen the level of productivity in the construction phases that we would have expected over time, and some of that does come from some of the labor on the skilled trades side. I've seen a big ramp up in trying to train, advocate, and drive more and more to come into the trades. We've been a part of that in our own manufacturing facilities as well, doing the things necessary to try to get into the trade schools, talk to people that are coming out of high school and talk about the value of being in manufacturing or into the skilled trades. There's a lot of efforts across manufacturers, industry associations as well. I would just say we're holding par at this point in time, in my opinion, until we see some of the supply chain disruptions over the last couple of years normalize. We'll see more of that in 2023, and we'll get a better gauge of whether that's a long-term trend or not. All right. I think we're gonna close down the Q&A, and we're gonna turn it back over to John for some final remarks. Let me just click forward one slide, make this real quick. Okay. Thanks so much for your time. Hope this was informative. Hope it was insightful. Hope you got to know our new leadership team a little bit better. Here's the takeaways. Again, I hope you feel like, and I want you to feel like, 'cause I know we feel like this, and our team feels like this, that Allegion is back to operating at a high level like we used to. We're not all the way there. We still have more to do in terms of inventory turns, margin expansion, factory productivity and efficiency, but we're back to operating at a high level and committed to continuing to do better. Electronics and electronics hardware, smart hardware, if you will, is the key growth driver for us here in the near term. We are planting the seeds now for future growth in software and services, growing more recurring revenues for Allegion. Lastly, we are going to deploy capital with your returns in mind. Thanks so much. Tom, let's close out.