Good morning, and welcome to the Allegion Q3 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw your question, please press Star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Jobi Coyle, Director of Investor Relations. Please go ahead. Thank you, Drew. Good morning, everyone. Thank you for joining us for Allegion's Q3 2023 earnings call. With me today are John Stone, President and Chief Executive Officer, and Mike Wagnes, Senior Vice President and Chief Financial Officer of Allegion. Our earnings release, which was issued earlier this morning, and the presentation, which we will refer to in today's call, are available on our website at investor.allegion.com. This call will be recorded and archived on our website. Please go to slide number 2. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our most recent SEC filings for a description of some of the factors that may cause actual results to differ materially from our projections. The company assumes no obligation to update these forward-looking statements. Today's presentation and commentary include non-GAAP financial measures. Please refer to the reconciliation in the financial tables of our press release for further details. Please go to slide 3, and I'll turn the call over to John. Thanks, Jobi, and good morning, everyone. Thanks for joining us today. This current quarter was all about outstanding operational execution from the entire Allegion team, and I'm pleased with our performance. Electronics demand remains strong, with, in our opinion, a long runway for further adoption. In the quarter, Allegion delivered mid-teens organic growth in electronics and software solutions globally, led by our America's non-residential business, which had another robust quarter. We already have the highest margins in our industry, and we're driving additional expansion at the gross and operating margin levels, despite not having some of the mechanical volume tailwinds from a year ago. Our balance sheet is getting stronger. We delevered from the Access Technologies acquisition quickly and are now building capital to deploy for growth. Bottom line, Allegion is poised for a record year in total revenue, adjusted operating income, and adjusted earnings per share. As a result, we're raising our guidance for full-year adjusted EPS. Please go to slide 4. Allegion's vision of enabling seamless access and a safer world remains core to our company culture, performance, and results. Securing people where they live, learn, and work has never been more important. We are a pure play provider of security and access solutions. We have a great legacy of the strongest brands and the highest margins. We operate with excellence and are accelerating our year-over-year productivity with normalized lead times, while still managing the massive SKU complexity that we manage in a made-to-order environment. This makes Allegion a partner of choice, and we're leveraging that unique position to promote the adoption of open ecosystems that maximize our addressable market. We're also delivering new value and access, continuing our drive to wrap software and services around our hardware solutions. This is the critical unlock of additional value for our end user customers, for Allegion's growth, and for long-term shareholder return. A great proof point of how our company is living this vision and strategy is the Allegion Ventures announcement we made yesterday. Allegion Ventures has made a strategic investment in Ambient.ai, whose cutting-edge AI platform utilizes innovative technology to enable seamless access in a safer world. This is the largest investment in Allegion Ventures' history, and it reflects the tremendous potential we see in Ambient.ai and Allegion's collaboration to deliver new value and access. Please go to slide five. I'd like to turn to our capital allocation priorities. When I joined Allegion, we had just announced the acquisition of Access Technologies, and over the last year, I feel we've done a good job in quickly delevering back to pre-acquisition levels while still investing in our business and returning cash to our shareholders. Allegion is an investment-grade company, and we expect to remain an investment-grade company. This is critically important to us. We will continue investing for above-market organic growth, prioritizing projects and solutions that drive seamless access and make the world safer. We're a dividend-paying stock, and you can expect our dividends to grow commensurate with earnings over the long term. We will also drive growth through acquisitions, considering complementary portfolios like you saw with the Access Technologies business, as well as software as a service related to seamless access, like you saw with plano. High-margin, recurring revenue businesses and bolt-on acquisitions that fill portfolio gaps in the hardware space will remain priorities. And while we may increase our debt for the right acquisitions, we've demonstrated the ability to quickly delever. Lastly, with regards to share repurchases, at a minimum, we will continue to offset incentive compensation, and we will make additional share repurchases as appropriate. Mike will now walk you through Q3 financial results, and I'll be back to discuss our full year 2023 outlook. Thanks, John, and good morning, everyone. Thank you for joining today's call. Please go to slide number 6. As John shared, Allegion continued to execute at a high level. We delivered another quarter of solid performance, with strong electronics growth, sustained margin expansion, and healthy cash flows. Revenue for the Q3 was $917.9 million, an increase of 0.5% compared to 2022. We continue to see favorable price realization along with strength in electronics and access technologies. However, ongoing pressure on our residential business, paired with a challenging prior year comparable, resulted in organic revenue declines of 0.6%. Adjusted operating margin and Adjusted EBITDA margin in the Q3 both increased by 110 basis points. Price and productivity in excess of inflation and investment, along with strong operational execution, more than offset the volume decline impact. On a year-to-date basis, we have achieved the highest adjusted operating margin in our history. I'm pleased with the margin performance over the last 18 months, as we have now recaptured the margin loss during our supply chain disruptions. Our operating model and strong execution have positioned us well for future margin expansion. Adjusted earnings per share of $1.94 increased $0.21, or approximately 12% versus the prior year. Operational performance drove nearly $0.10 per share, with the remaining coming from tax, driven by timing of discrete items versus the prior year. We expect our full year adjusted effective tax rate to be approximately 15%. You can find further details of our earnings per share performance in the appendix. Year-to-date available cash flow is $320.4 million, an increase of approximately $95 million versus last year, driven by higher earnings. I will provide more details on our cash flow and balance sheet a little later in the presentation. Please go to slide 7. This slide provides an overview of our quarterly and year-to-date revenue. I will review our enterprise results here before turning to our respective regions. As I just mentioned, we had reported growth of 0.5%, with a decline in organic revenue of 0.6% in the quarter, as price realization offset pressure on mechanical volumes. As you see on the top of the slide, Q3 is comping against our prior year quarter with organic growth of more than 18%. If you recall, that is when our supply chain improvement efforts allowed us to start working through backlogs and past due customer orders, and represented the highest organic growth in our company's history. Currency drove some favorability in the quarter, bringing total reported growth to 0.5%. On a year-to-date basis, organic revenue was 6.1% overall, with Americas at nearly 9%, driven by strength in our non-residential business. Our international business is down about 3% year-to-date. Please go to slide number eight. Our Americas segment continues to deliver strong operating results in the Q3, expanding margins despite lower volumes. Revenues of $740.9 million was down slightly on a reported basis and flat organically, as favorable pricing was offset by reduced volumes. Let me disaggregate the components further. The Americas non-residential business was up low single digits against the prior year comp, which grew approximately 30%, driven by backlog reductions I just mentioned. On a year-to-date basis, non-residential business has grown double digits. Our Americas residential business is down low teens in the quarter, as we continue to see weakness in the residential market, as higher interest rates continue to impact new and existing home sales. Our Access Technologies business delivered organic growth of mid-teens, representing another strong quarter of top-line growth and demonstrating the stability that this business provides us. Demand for our electronic solutions remains strong in the Americas. We delivered high teens organic growth in electronics in the quarter, and we continue to see a long runway for further adoption, as electronics remains a key growth driver for the long term. As we discussed during our Q2 call, mechanical volumes were expected to be a little soft in the Q3 as customers adjusted to our reduced lead times. We feel the channel has worked through this adjustment, and we are back to a more normal book and ship business. Our Americas adjusted operating income of $210.6 million increased 5% versus the prior year period, while adjusted operating margin and adjusted EBITDA margin for the quarter were up 140 and 150 basis points, respectively. Pricing and productivity exceeded inflation and investments, driving substantial margin expansion, demonstrating the resiliency of our Americas business model. Please go to slide number 9. Our international segment executed well in a challenging macroeconomic environment. Revenues of $177 million was up 3% on a reported basis and down 2.8% organically. Price realization was more than offset by lower volumes, primarily associated with our global portable securities business and our China business, which are operating in challenging markets. We continue to see strength in our electronics and software solutions, which grew low double digits organically in the quarter. In addition, currency was a tailwind this quarter, positively impacting reported revenues by 5.2%. International adjusted operating income of $23.7 million increased over 18% versus the prior year period. We also saw improvements in adjusted operating margin and adjusted EBITDA margins of 180 and 190 basis points, respectively. This substantial margin expansion, despite reduced volumes, highlights the healthier portfolio within our international segment. Please go to slide number 10. As I mentioned earlier, year-to-date available cash flow came in at $320.4 million, up nearly $95 million versus the prior year. This increase is driven by higher earnings, partially offset by higher capital expenditures related to our new facility in Mexico, which begins production later this quarter. Working capital as a% of revenue increased versus the prior year. This was primarily driven by timing of revenue and associated receivables within the quarter, as well as timing of payments to suppliers in the prior year. Working capital and inventory management remain a priority for our company as we efficiently turn earnings to cash. Our net debt to Adjusted EBITDA is down to 2x as we continue to successfully delever following the Access Technologies acquisition. We repaid the final $39 million on our revolving credit facility in the quarter, completing our repayments of short-term borrowings associated with that acquisition. We are now back to pre-acquisition leverage levels, which demonstrates our proven track record of effectively deploying capital while maintaining an investment-grade credit rating. Our business continues to generate strong cash flow, and our balance sheet continues to be in a healthy position. I'll now hand the call back over to John for an update on our full year 2023 outlook. Thanks, Mike. Please go to slide 11. As I mentioned earlier, our company is on track for record full-year revenue, adjusted operating income, and adjusted EPS in 2023. We're raising our full-year outlook on adjusted EPS and affirming our full-year outlook on revenue and available cash flow. We continue to expect the Americas segment to be 15%-16% for total growth, 7.5%-8.5% organically, led by our non-residential business, which is still expected to grow high single to low double digits organically. Residential business is expected to be down slightly as markets remain challenged. For international, we continue to expect revenue to be down 1% to flat in total and down 1%-2% organically. All in, for the company, our outlook continues to reflect total revenue growth between 11.5% and 12.5%, with organic revenue growth between 5.5% and 6.5%. Based on our strong operational performance in the Q3, we're increasing our adjusted EPS outlook to the range of $6.80-$6.90, which is approximately 13.5%-15% growth over the prior year period. Lastly, we still expect our outlook on available cash flow to be in the range of $500 million-$520 million. I'm very proud of the work of the entire Allegion team and our distribution partners over the course of this year and the record results we're on track to achieve. Looking forward, we'll provide our full 2024 outlook to you during our Q4 call, as we normally do. However, given the uncertainty in the market moving into next year, we wanted to give you some insights into our view of the market dynamics today. First, we expect growth in electronics adoption to continue, driven by the convenience and added security that digital identities and mobile credentials, leveraging smartphone wallets, provide to our end user customers. A shift from mechanical systems to electronic access control systems with connected hardware provides efficiencies and operating cost savings for buildings and campuses, and recent channel checks and recent end user visits in the institutional segments in education and healthcare reinforce this trend. And while small today, our software solutions portfolio is growing, and we look to accelerate this growth into 2024 and beyond. In addition, while the most recent ABI headline dipped, the institutional segment has been very resilient over the last 12 months, and five of the last six months still reading above 50. Allegion's context is important here. You'll recall that we're a late-cycle business and also rather heavily weighted towards the institutional segment. We have an auto door business with strong backlogs and a blue-chip customer base, and a service business that continues to grow. Our channel is in good shape on inventory, and our lead times across the portfolio are now normalized. Our supply chain has improved to the point where we can regain market share in the aftermarket space. Expected headwinds are well known at this point. Commercial office in major metro areas is indeed soft. It's been soft for several months now. However, that part of our business is only a low double-digit% of our overall Americas portfolio. Weakness in residential and certain international markets is expected to continue, particularly for mechanical products, which we've highlighted for you throughout this year. We expect productivity and recent cost actions that we have taken to help drive margin expansion into next year. Before we go to Q&A, I'd like to reiterate what I said at the beginning of the call. Allegion is in a good industry, and we're well positioned, thanks to the strong execution by our team. We've navigated industry cycles very well in the past, and with the improvements we've made to our portfolio and operations, we feel confident in our ability to succeed and drive continued organic growth and margin expansion. With that, let's turn to Q&A. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. Again, please limit yourself to one question and one brief follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Joe O'Dea with Wells Fargo. Please go ahead. Hi, good morning. Thanks for taking my questions. Hey, Joe. Hi. So, John, maybe on that last point, I'm not sure you're sort of willing to maybe elaborate a little bit more, but just the '24 kind of considerations. I mean, it seems like if, you know, institutional channel checks are constructive, market share gain potential and aftermarket, understandable headwinds in commercial office and resi, but then productivity and cost actions as well. I mean, it seems like it's setting up for margin expansion. Is it also, you know, today, setting up for, for top line growth with the mix of those factors? Yeah, Joe, appreciate the question. I'd say, again, the short answer, yes, we see organic growth in the future. I'd just keep bringing you back to, you know, Allegion is a late cycle business. We're heavily weighted towards institutional. If you look at Dodge Starts, if you look at ABI, the institutional segment has been very resilient the last 12 months or even longer. And so, yeah, we feel pretty good about that, both on driving organic growth as well as just like you mentioned, on the margin expansion side. So, margin expansion might not be as robust as you've seen these last quarters, but we still feel well positioned to continue to drive margin expansion. Productivity and as you heard and as you called out, the cost actions that we've taken here recently. Still well-positioned. All right, I appreciate that. And then also just international and maybe level setting on sort of your views on where things stand within that cycle, where we've got, I think now six quarters of volume declines. It's been, I think, some time that a lot of that has been on portable security. I think electronics has been holding up quite better. But just where you think you are in that cycle, you know, how close you are maybe to a bottom within the international trends? Yeah, that's, that's tough to peg, Joe. Like, where, where's the bottom? You know, for international, our portfolio spans Europe and Asia Pacific. And certainly, I think we see continued weakness in China, even though that's a small part of our portfolio. I'd say continued weakness would not be ready to call a bottom. On the portable security business, it's still a challenged market. There's no doubt about it. Time to call a bottom, we're definitely flirting with a bottom, I would say, which could provide, you know, a small bit of tailwind into next year and beyond. But you called out the most important piece, and that's the continued growth around our electronics and software solutions portfolio in Europe. They've been performing extremely well. We're continuing to invest in that business, like the bolt-on acquisition of Plano. That team came on board and is performing very well, integrating very well with our Interflex team. And we see a really bright future there. And in the electronic space, yeah, continued growth, and we will continue to drive investments to drive that growth. Hey, Joe, I might also add, if you think about that global portable, we've been calling that out all year, so it's gonna be a soft 2023, all four quarters. So if you think about next year, it's not a big headwind- I'm sorry, a big headwind versus the current year, because you do have four soft quarters. So I think it's important to understand that dynamic about global portable. I appreciate the color. Thank you. Thanks, Joe. The next question comes from Julian Mitchell with Barclays. Please go ahead. Thanks very much. Good morning. Maybe just wanted to circle back to the Americas organic sales outlook. So it looks like the Q4 implied is organic sales may be up mid-single digits year on year in Q4 and sort of down mid-single digits sequentially. So just wanted to sort of make sure that's roughly correct and any color within that on non-resi vs resi dynamics. And when we look at that plus mid-single digits entry rate into 2024 and the fact that your guidance from the investor day was plus mid-single digit for the Americas market, are we assuming that kind of run rate can sustain into early 2024? Yeah, Julian, if you think about the current year, so much of the current year growth rates are driven by comps in the prior year. So if you think about Q3, we last year really started to ramp our plants out as we got rid of that excess backlog in mechanical. That continued into Q4 last year. So this year, obviously, back half does have lower growth rates than first half. With respect to the two businesses, I think it's fair to say that non-residential certainly is healthier or stronger than the residential end markets. So as I think about a full year, think of non-res double digits, right? And you can do the math to back into the Q4 imply. That residential, we are gonna be down slightly this year as we put in the prepared remarks, which is we've been saying relatively that this year, whether it's down slightly or relatively flat all year. So you do have a dynamic where resi is a little weaker, as we've been saying, and the non-res, led by institutional, is hanging in there. But prior year comps do impact the year-over-year quarterly growth rates. That's helpful. Thank you. And it sounds like you're fairly confident that that inventory destock process by your sort of customers and channel partners is largely done. You know, maybe just sort of help us understand the conviction level around that. And you know, when you're looking at your sort of forward-looking indicators, I think you mentioned you know, backlog down a bit, but maybe any color on sort of the spec writing for the Americas business overall, how does kind of the order patterns change? Have you seen any evidence of project pushouts, that type of thing? Okay, that's, that's about five questions in there, Julian. Well done. I'd say- Sorry. I'd say on the channel destock, we feel pretty good there. You know, I think our commentary in Q2 kind of indicated we didn't view this as a real long-term issue, and channel checks kind of prove that out. I don't think it's still a big headwind at this point. We've met with our 25 largest distributors in the past few weeks, and that would confirm that. So again, you know, there's still certain metro areas that are a little bit soft. There's still suburban areas that are quite strong, quite robust, aftermarket, et cetera. So overall, feel pretty good, along with the comments that Mike just shared. Let's see, what else to mention there? I think with respect to the spec activity, spec activity still remains solid, and it's still hanging in there. And so we would expect that institutional-heavy business to be driven by-- that's the spec engine that we have to still remain solid as we move forward. So spec activity still remains strong for us. That's great. Thank you. The next question comes from Joe Ritchie with Goldman Sachs. Please go ahead. Thanks. Good morning, guys. Morning. Hey, Joe. So, hey, so can we maybe just following up on the mechanical business bottoming comment. So your portfolio has, you know, has gone through some change, obviously, with the access business, the electronics business growing at a faster pace. If I think about the kind of overall level of where the mechanical business is today, what's the kind of right run rate that that should be bottoming, whether that's on a quarterly basis or an annual basis? If any color around that would be helpful. I'd share this with you, Joe. If you looked at our revenue growth, starting in Q3 last year, we started, you know, shipping those past due orders, serving our customers. That continued, if you recall, Q1 this year, real large growth that we had. So you could think of that as a kind of a three-quarter burn through that backlog type challenge and the customers adjusting to our new lead times. I think from that point on, we're kind of more normalized, right? We talked in Q2 about that item. So I feel that that's behind us. It's those three quarters where you do have that more challenging comparable on the non-residential mechanical business we talked about. Okay, great. Appreciate that, Mike. And then maybe my follow on John. You talked about the balance sheet getting back into investment grade, you know, good shape. You've delevered now the two turns. I'm curious, there are some fairly sizable assets that are out there, potentially on the security side. As you're thinking about deploying capital, how are you thinking about, you know, M&A and particularly, like, bolt-ons versus maybe some more transformative type deals? Yeah, great, great question, Joe. And I think, again, the team's performed very, very well. Cash flow has improved very well this year, and we did delever quite well. And I think happy with where we're positioned. And again, as in the prepared remarks, building capital to deploy for growth. And I think for us, you can look for us to be acquisitive. You can look for us to look to fill portfolio gaps with bolt-on hardware solutions like we did with Access Technologies, or SaaS businesses like we did with plano. As long as things are the right strategic asset, the right leadership team, a business model, a culture that fits with Allegion and is in the sandbox of security and access solutions, you can look for us to be acquisitive. Certainly not right to comment on any particular transaction, but we do expect to grow through acquisition and building capital to do just that. Okay, thank you. The next question comes from Brett Linzey with Mizuho. Please go ahead. ... Hi, good morning, all. Hi, Brett. Hey, Brett. Hey, just wanted to dig in on the complexion of the marketplace and really thinking about, you know, the softer commercial pockets versus the institutional resilience. Is there any good way to think about the lock or access content per building between those two verticals? I think you get multiples of the wallet share in a, you know, a school or a hospital versus a retail front, but any insight there would be helpful. Yeah, Brett, when you think of our business, the more complex the business—a building rather, the richer the mix for us. So if you think about a higher ed school, a hospital, those are really good for us. A K through 12 school, there's doors frequently and openings frequently per square foot. If you think about open floor plans like commercial office, there's clearly less openings on a commercial office floor plan than there is in an institutional business door or a warehouse. Or A warehouse, absolutely. So a warehouse has been awful over the last 12 months from a starts, but we really don't have any openings in a warehouse. So when you look at our business, that institutional-heavy aspect of our portfolio gives us a richer mix and gives us more opening-- openings to address. So that's a net positive for us. John? Yep, got it. And then, just shifting back over to residential down low teens, you will be lapping your first destock comp in the Q4 of 2023 here. Could you just characterize where you see those categories in their destocking phase? And, you know, any visibility you have on the sell-out trends within some of those resi channels. It's so, I think resi mechanical, you know, when we see our own results and we see some other industry participant results, it's a tough end market, let's just say. So I don't know that I'd necessarily attribute it just to destocking, but it's a soft end market with mortgage rates going up. You know, house churn, if you will, or resale, is certainly a bit depressed. Permits and starts, you maybe if you look through a rose-colored lens, you see some green shoots of hope for the future, but I think that overall market is still depressed. When we think about our comps, I would, you know, just, just come back to there was a period of time in 2022, where we just couldn't ship our electronic locks, even in the resi segment. And so the restocking phase was still going on until rather recently, and now you could say it's a more normal point-of-sale driven business on the e-lock side. The mechanical side, I think it's just end market is depressed. Yep, makes sense. Thanks a lot. Thank you. The next question comes from Chris Snyder with UBS. Please go ahead. Thank you. I wanted to ask on, on the Americas business into Q4. So if we look at—and if my math's right, if we kind of look at the Q4, or the full year organic guide, it kind of pegs Q4 revenues in the Americas anywhere from flat sequentially to maybe down 4% sequentially versus Q3. I mean, when we look at all the pre-COVID years, it seemed like Americas was typically down, you know, anywhere from 4-7 into Q4, so it's, it's calling for better than normal seasonality. Can you just maybe talk about what's driving that or is there, if you remember Access Technologies? No, Chris, if you remember, on an organic basis in the summertime, we talked about, "Hey, we're burning through this channel, destock." And we said it will be a little flatter this year than historically. So what you saw, we did get through that in the Q3, which is what we expected. Now, as you think about Q4, sequentially, we're normally down. We're just not down as much as historically we may have been on a more normalized, no channel and order pattern challenges that we had in the current year. So think of it as working through that channel item we discussed in the Q2 call. And I think, Chris, this is John. I heard you squeeze in, you know, a mention of Access Technologies in there. And you're right, I mean, this is now considered in the organic part of the portfolio, and that business is performing very well. Again, you got strong backlogs, blue-chip customer base, and a very healthy service business there. So yeah, they've been performing well. Very happy with that acquisition. Yeah, definitely saw the organic growth coming, this quarter there. I guess, you know, maybe if I could, you know, follow up, I think you kind of said earlier, that, you know, when you talk to your channel partners, it sounds like the destock is largely in the rearview, if, if I heard that right. Does that like, what does that assume for the cycle? Does that assume, like, the cycle is kind of flattening out? You know, are we through the destock, even if the cycle kind of is, is going lower from here? Because it does feel like the amount of inventory in the channel, you know, does reflect what the outlook for the cycle is going to. Yeah, I think the way I would see that is similar to what Mike said. You know, given the rather dramatic volatility and upheaval that the entire industry experienced with the rampant inflation and the pretty acute supply chain challenges in the latter half of... or actually, all of 2022, you know, no parts in the first half to, you know, work overtime, 6 days a week and overship in second half. You know, that is, at least in our view, normalizing, and I think you could see, as we progress on through another 2, 3, 4 quarters, that cycle, Allegion, seasonality, etc, starts to look more normal. You know, our lead times across the portfolio are back to a more normal level. And so with a nine-month or so construction backlog, a lot of work still out there, book and ship business, like Mike said, and a spec engine that's running all the time. Yeah, I'd say, you know, we feel just normalizing is maybe the word that I would use, Chris, and that's what it starts to feel like. And again, our channel checks recently would indicate the same. Thank you. The next question comes from Tim Wojs with Baird. Please go ahead. Hey, guys. Good, good morning. Nice job. Hey, Tim. Maybe just... I have a couple just kind of modeling questions, but, I guess when you're thinking about raw material inputs, you know, steel, you know, copper, zinc, that type of things, I mean, what are you seeing in terms of your purchases today? And how do you think about, you know, inflation versus deflation on kind of a go-forward basis on the raw side? Yeah, Tim, it's a great question. If you think of our business, if you remember, pure raw mats, let's call that maybe 15% of our COGS. And, the remaining 35% you could get, have some element of metal in it from a source component. We would expect to see some favorability. As you've seen, we have had some tailwinds in commodity prices versus previous peaks. However, I'd caution you, there's been significant inflation that we've experienced over the last few years in other elements of the cost base, so that we're still in an inflationary environment, but you are getting some relief from the previous highs of the commodity costs. So, hopefully, that kind of gives you some color for you to factor in. Okay. Okay, no, that's helpful. And then just on pricing, if I kind of take a three years kind of stacked price in Americas, I think there was some acceleration kind of sequentially, and I don't think you put through, like, a new increase, but is there some mix dynamic kind of going in there? Did you guys put through more price? Yeah, Tim, as you know, we put price increases in over the last 18 months because we felt so much of that inflationary pressure, right? We managed this equation, price plus productivity, to cover the inflation and the investments. If you think about pricing moving forward, think of us as a more normal business, which does our annual price increase in the kind of the beginning of the year, based on an expected inflationary level. No more of the multiple price increases a year. I think that's behind us because inflation has moderated from the previous significantly elevated levels that you saw a year-plus ago. And so just moving forward, just think of us, price plus productivity versus inflation and investment. And most importantly, you know, we price for value in the market that we provide our customers. Okay. Okay, very good. Appreciate it, guys. The next question comes from David MacGregor with Longbow. Please go ahead. Yeah, good morning, everyone. Hey, David. I wonder if you could just... Hey, good morning, John. Could you just talk a little about the mid-teens organic growth in the electronics and software solutions business? I don't know to what extent you might be able to open that up for us and, and help us with, you know, price versus units, or residential versus non-res, or Americas versus international, or POS versus inventory bills, but any sort of granularity around that would be helpful. Yeah, I think, in aggregate, you know, mid-teens organic growth in the electronics and software solutions globally, quite proud of those numbers, you know, between new product launches and just good execution by the team. And, you know, I'd say the end user demand is still strong. Again, recent end user visits continue to reinforce this. I've been to a couple of large universities lately, and even though they've been on, you know, the electronics adoption for a couple of years, they're still just scratching the surface. You know, one university was, "Hey, I've got - you know, I haven't even started on the dorms yet. I've just been doing classrooms and event buildings and things like this. And as budget comes next year, I'm putting it straight to e-locks for the dorms." I mean, that's sample size of one, but it's indicative of what we're hearing in the end user base, particularly education and healthcare. I would say our electronics and software business in Europe is doing very well. Blue chip customer base, great value prop on the electronic cylinder with the SimonsVoss team. And the plano acquisition, you know, adding a bit of inorganic growth into that space as well. That's a space we'll continue to invest in. Very proudly, it's a tiny amount, but our solution for multifamily in the United States, the Zentra platform, it's a very simple electronic access control platform designed specifically for multifamily applications is now a revenue-generating product for Allegion. So, you know, cloud-based SaaS revenue is a reality. It's very small. We're just getting started, but we do expect to accelerate that growth. I think the end user economic benefits of electronics adoption is important, and it's real. And I think the smartphone wallet and this mobile credentials and that convenience and the personalized security you get out of that will continue to drive end user demand. I'd say that's the main trend, David. I wouldn't. I'd encourage you not to get wrapped around the axle about channel build or restock, destock, anything like that. It's really, this is end user demand driven. Right. Right. Okay, thanks for that. And as my follow-up, we were looking at a relatively strong U.S. dollar here. I'm just wondering what impact that has on your business by, you know, drawing more imported product into the marketplace? You know, David, as you think about imports, they play at the very low end of the marketplace in, let's say, North America. If you think of our non-res business, we tend to be really strong in the premium space with our institutional heavy business. We've been talking about this for years. We tend to be strongest when the customer values that premium offering of complexity and solutions that we provide. So a strong dollar or a weaker dollar is not something that we view as really gonna be changing the dynamics of our competitive industry. Yeah, I would add just one comment there, David. You know, our some of our flagship products, like the Von Duprin exit devices, like the LCN closers, I mean, these are very proudly manufactured in the United States. Got it. Thanks very much, and good luck. The next question comes from Andrew Obin with Bank of America. Please go ahead. Hi, guys. Good morning. Good morning. Congratulations on a strong quarter. Thank you. Question on Europe, and you know, sort of the margins in Europe. Can you just give us a sense of what Interflex has been doing, right? Because I know it's one of the higher profitability businesses. Just trying to understand how much the mix is at play here, or if it's not Interflex, just, you know, as I said, the performance in Europe continues to surprise despite the headwinds from the sort of the backlog business. You know, just sort of more insight as to what's driving the structural improvements in margins now. Yeah, Andrew, I really appreciate that question because I am just super proud of how the international team has been on this steady march of building momentum, increasing productivity, expanding margins, without a volume tailwind, giving them operating leverage to lean on. They've been doing extremely well. I would say the Interflex, in particular, we're not gonna call out a specific margin or a PNL for them, but that's a very strong business, let's just say. And you know what? We talk about them together with the other electronics portfolio in Europe, double-digit growth for us and has been for a while. Strong margin performance as well. You know, I think we put our money where our mouth is with the Plano acquisition, and while that was rather small, the growth potential is quite large. The margin is very attractive, and the customer value delivered there between Plano and Interflex together is very compelling. You know, Interflex is another one of those very special businesses. Like in this call, we mentioned Access Technologies has a blue-chip customer base. Interflex really has a blue-chip customer base, and we take pride in delighting those customers with good solution and good service, and that business continues to grow. Very positive for us. Excellent. And just maybe a follow-up question. You know, I think your predecessor, when he started, used to talk quite a bit about discretionary retrofit market in North America being a source of outgrowth, and then we sort of stopped talking about it. Can we just talk about where we are there, and what's the remaining opportunity for continuing to increase your market share there? Have you taken a closer look at it? Just maybe an update on this business, because it used to be a big source of outgrowth. Yeah, Andrew, it's a hugely important point. You know, when the supply chain challenges hit and orders started piling up and backlogs started piling up, we were in the business of just shipping everything we could to make up for orders that had been in the queue for a long while. And then, obviously, aftermarket work is gonna take a backseat to whatever, you know, 3-4 months' worth of backlog that's just sitting there in orders that you've already got to fill for project business and other things. So I would say, I'd feel like, you know, when the supply chain challenges were at their worst, we definitely lost some aftermarket share to competitors that Allegion typically doesn't and shouldn't lose share to. We're now in a position with our lead times, our published lead times back to normal, our delivery performance improving, our supply chain performance is vastly better. We're in a position to now compete and gain that share back, and I think that's a real opportunity for us that has been a long time coming. But getting the lead times back to where they ought to be, getting the delivery performance up, and getting our internal productivity better now puts us in a better position to get out and win more of that business. Great answer. Thanks so much. This concludes our question and answer session. I would like to turn the conference back over to John Stone, Chief Executive Officer, for any closing remarks. Well, thanks, everyone, for a great Q&A. Just to wrap up the main themes that I hope you heard today, Allegion continues to operate at a high level. Strong execution drove these Q3 results that include mid-teens organic growth in electronics and software solutions, continued margin expansion, and a healthy balance sheet and cash flow, giving us good momentum going into next year. We're on track for a record year of revenue, adjusted operating income, and adjusted EPS results in 2023. We will continue to drive organic growth and margin expansion, as we mentioned. In both the short term and the long term, I feel we're very well positioned to both build on our legacy and continue to invent and deliver new value and seamless access. Thank you. Be safe, be healthy, have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.