Okay, and welcome to the Allegion Third Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Vice President of Investor Relations, Josh Pokrzywinski. Please go ahead. Thank you, Betsy. Good morning, everyone. Thank you for joining us for Allegion's Third Quarter 2025 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 two. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of Federal Securities Law. Please see our most recent SEC filings for a description of some of the factors that may cause actual results to differ materially from our projections. The company assumes no obligation to update these forward-looking statements. Today's presentation and commentary include non-GAAP financial measures. Please refer to the reconciliation and the financial tables of our press release for further details. Please go to slide three, and I'll turn the call over to John. Thanks, Josh. Good morning, everyone. Thanks for joining. Q3 was another strong quarter as we execute our long-term strategy and steadily deliver on our commitments to shareholders. I'm proud of our team's performance as we've remained agile in a dynamic operating environment. The double-digit revenue growth for the enterprise and continued segment margin expansion speak to the resiliency of our model, our broad end-market exposures, and the depth of our relationships with channel partners and end users. We continue to take advantage of our business's strong cash generation, returning cash to shareholders, and growing our business through accretive acquisitions. Year-to- date, we have allocated approximately $600 million to acquiring businesses, consistent with the priorities we outlined at our Investor Day. As we approach year-end, the key market trends supporting our outlook are largely unchanged. Our team continues to execute well, and we are allocating capital for the long-term benefit of our shareholders. As such, we are raising our 2025 full-year outlook for adjusted EPS to $8.10- $8.20. I'll be back later to discuss the outlook and share some early views on markets for 2026. Please go to slide four. Let's take a look at capital allocation for the third quarter, starting with our investments for organic growth. In September, the Allegion team launched a new mid-tier commercial product line for Schlage: our Performance Series locks. These locks bring Schlage quality to more price points in non-residential applications, giving us more ways to win in the aftermarket and building on the success of the mid-price point Von Duprin 70 Series exit devices released last year. Turning to M&A, since we spoke at Q2 earnings, Allegion has announced two more acquisitions: UAP and Bressant. These U.K.-based businesses strengthen our product portfolio, including electronic locks, in addition to enhancing our cost position. As discussed previously, the acquisitions of ELATEC, Gatewise, and Waitwhile closed earlier in the third quarter. Allegion continues to be a dividend-paying stock, and in the third quarter, this amounted to $0.51 per share, approximately $44 million. We did not repurchase shares in the quarter, and you can continue to expect Allegion to be balanced, consistent, and disciplined with capital deployment over time, with a clear priority of investing for profitable growth. Mike will now walk you through the third quarter financial results. Thanks, John, and good morning, everyone. Thank you for joining today's call. Please go to slide number five. As John shared, our Q3 results reflect continued strong execution from the Allegion team, delivering double-digit revenue growth for the enterprise. Revenue for the third quarter was over $1 billion, an increase of 10.7% compared to 2024. Organic revenue increased 5.9% in the quarter as a result of favorable price and volume, led by our Americas non-residential business, where demand remains healthy. Q3 adjusted operating margin was 24.1%, down 10 basis points compared to last year. Both our segments had margin expansion, which was offset by higher corporate expenses relative to the prior year comparable. Volume leverage and mix were accretive to margins. Additionally, price and productivity, net of inflation and investment, was a tailwind of $2.2 million. Adjusted EPS of $2.30 increased $0.14, or 6.5% versus the prior year. Operational performance and accretive acquisitions contributed 10.6 points of EPS growth. This was partially offset by a higher tax and interest in other. We still anticipate the full-year tax rate to be in the range of 17%- 18%. Finally, year-to-date available cash flow was $485.2 million, which was up 25.1% as we continue to generate strong cash flow. I'll provide more details on the balance sheet and cash flow a little later in the presentation. Please go to slide number six. Our Americas segment delivered strong operating results in Q3. Revenue of $844 million was up 7.9% on a reported basis and up 6.4% on an organic basis, led by our non-residential business. Organic growth included both favorable price and volume in the quarter. Reported revenue includes 1.5 points of growth from acquisitions. Pricing in our Americas segment was 4.6% in the quarter. This includes a combination of core pricing and surcharges as we cover inflation, including tariffs. Our non-residential business increased mid-single digits organically, and demand for our products remains healthy, supported by our broad end-market exposure. Our residential business grew mid-single digits, primarily driven by volume associated with new electronic products that we launched in the quarter and price. However, we still consider overall residential market demand to be soft, consistent with year-to-date growth rates. Electronics revenue was up mid-teens and continues to be a long-term growth driver for Allegion. Americas adjusted operating income of $252 million increased 9% versus the prior year. Adjusted operating margin was up 40 basis points as volume leverage and favorable mix were accretive to margins. Price and productivity, net of inflation and investments, was a tailwind of $10.2 million. Please go to slide number seven. Our International segment delivered revenue of $226 million, which was up 22.5% on a reported basis and up 3.6% organically, led by our electronics businesses. Acquisitions contributed 13.6% to segment revenue, consisting of the acquisitions John mentioned earlier, net of the previously announced divestiture of API. Currency was also a tailwind, positively impacting reported revenue by 5.3%. International adjusted operating income of $32.3 million increased 28.2% versus the prior year period. Adjusted operating margin for the quarter increased 70 basis points, driven by volume leverage and mix. Acquisitions were accretive to segment margin rates, although slightly diluted to the enterprise rates. We continue to drive portfolio quality in the International segment through self-help and adding high-performing businesses where we have a right to win. Please go to slide eight, and I will provide an overview on our cash flow and balance sheet. Year-to-date available cash flow was $485.2 million, up nearly $100 million versus the prior year. This increase is driven by higher earnings, lower capital expenditures, and improvements in working capital. I am pleased with the strong cash generation in 2025, and based on year-to-date performance, we see upside to our previous cash flow outlook. We now expect conversion of 85%- 95% of adjusted net income. Working capital as a percent of revenue increased due to acquired working capital, which does not impact cash flow. Organic working capital improved compared to prior year. Finally, our balance sheet remains strong, and our net debt to adjusted EBITDA is at a healthy ratio of 1.8x. We continue to generate strong cash flow, and our balance sheet supports continued capital deployment. I will now hand the call back over to John. Thanks, Mike. Please go to slide nine, and I'll share our updated outlook. With one quarter remaining in the year, our markets remain largely consistent with our prior outlook, and the Americas non-residential markets remain resilient, and Allegion is performing well in the aftermarket. Our spec activity has grown over 2024 and year-to-date 2025, driven by our broad end-market exposure, and this supports our outlook. Residential markets, however, remain soft, and as Mike mentioned, solid performance in Q3 was primarily driven by new electronic product launches. International markets have largely been unchanged year -to- date, and we continue to expect roughly flat organic performance. We expect approximately $40 million of surcharge revenue in the Americas related to tariff recovery, which does include the August 18th scope expansion for Section 232. Based on strong execution and the recent acquisitions of UAP and Bressant, we're increasing our 2025 adjusted EPS outlook to $8.10- $8.20. You can find additional details as well as below-the-line model items in the appendix. As you know, we'll provide Allegion's formal 2026 financial outlook during our February earnings call, so please go to slide 10. Today, we'd like to provide a preliminary view on our markets for next year, and I'd say overall we expect rather similar market conditions to 2025. In the Americas, our broad end-market coverage and spec activity continue to support organic growth in our non-residential business. Residential markets continue to be soft. The input cost environment remains dynamic with tariffs, and you can expect us to continue to drive price to offset inflation. Internationally, markets have been sluggish; however, we do expect to benefit from 2025 acquisition activity. For the enterprise, we expect carryover revenue contribution of approximately two points from acquisitions closed in 2025. Please go to slide 11. In summary, Allegion is executing at a high level while staying agile and steadily delivering on the long-term commitments we shared with you at our Investor Day. Our performance is led by an enduring business model in non-residential Americas, double-digit electronics growth, and accretive capital deployment as we acquire good businesses in markets where we have a right to win. I'm proud of the performance by the Allegion team in this very dynamic environment, which gives us the confidence to increase our EPS outlook for the year. With that, we'll take your questions. We will now begin the question-and- answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are 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. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Joe Ritchie with Goldman Sachs. Please go ahead. Hey, good morning, guys. Good morning, Joe. I appreciate all the color and the initial look into 2026. John, maybe just pulling on that thread on spec writing, continuing to be up and non-res specifically. I think you mentioned last quarter that you were starting to see some positive momentum on spec writing specifically as it relates to office. Can you maybe just give us an update on the key verticals and whether there were any kind of discernible differences between how you feel today versus how you felt a quarter ago? Yeah, it's a good question, Joe, and I think the comments would be very consistent that our spec activity accelerated over the course of 2024 and has grown year -to- date 2025. Rather than picking and choosing this vertical or that vertical, I would just say, you know, Allegion's spec writers are very versatile in their expertise, and one day could be writing a specification for an elementary school, the next day they could be doing multifamily, and the next day after that they could be doing a data center. They have that capability, and that engine never turns off. I think the main thing we'd have you take away is that spec activity has continued to grow in 2025, broadly speaking, and spec activity supports our outlook, as we talked about in the prepared remarks, and gives us the confidence that we still see organic growth in non-res Americas. Okay, great. Helpful. I want to also kind of just talk a little bit more about your M&A pipeline. It's been such a great part of the story, really, over the last 12- 18 months. I recognize that you've kind of given us the two points as a placeholder for next year. Just talk about the pipeline as you see it today, and as you're kind of thinking about the potential accretion from an earnings standpoint into next year, based on what you already know. Just any color around that would be helpful. Yeah, it's a great question, Joe, and it's something we're really excited about. I think the pipeline is still strong, strong in both of our reporting segments, strong in International, strong in the Americas. If you recall our Investor Day material where we talked, product categories that we're looking for, whether that's portfolio expansion in our mechanical business, whether that's electronics, whether that's complementary software, we've got activity in all of those categories right now. Very excited about the pipeline, and I'd say you can expect us to continue to be disciplined around the strategy, and around the types of businesses we acquire and around the shareholder returns that we generate from these acquisitions. I feel real good about it, and I think it continues to be an important part of Allegion's overall growth story. Hey Joe, with respect to the question on the adjusted EPS, in the appendix, we provide what the full-year benefit this year is, which allows you to calculate what the EPS benefit on acquisitions is in the fourth quarter. Think about that as a carryover rate for the first two quarters of the year. The acquisitions were largely done early July, so that should provide you enough information for you to get a framework for the relative size of the benefit that we have. Okay, perfect. Thanks, guys. Thanks, Joe. The next question comes from Joe O'Dea with Wells Fargo. Please go ahead. Hey, good morning. Thanks for taking my questions. Can you just talk about conversations with building owners, architects, overall end users on the current kind of uncertainty impact in the macro, what they're looking for? I'm really just trying to get a sense for what your perception is of activity that's sidelined and just waiting for a little bit better visibility, and what some of those key ingredients are to bringing that activity off the sidelines. Yeah, Joe, it's a good question. I would say there's a couple of things going on. As we are out with customers and end users quite frequently, our own channel checks would indicate comments very consistent with what we shared with you in the prepared remarks, that non-res project activity is humming along pretty well. I think some private finance came off the sidelines this year. A more favorable interest rate environment would certainly continue to be a swing factor that we would see to bring more of that private finance off the sidelines. I would say, overall, positive environment, and channel checks, our customers' backlogs are pretty healthy, which has given them pretty good confidence about organic growth as well. That's what we've tried to convey to you today. I think non-res overall is humming along pretty well. Appreciate that. On the international side, I think this was the first quarter of volume growth after four of declines. Actually better volume growth in International than Americas even this quarter. Just kind of unpacking a little bit more what you saw in the quarter, how you think about, you know, any momentum behind a little bit of volume growth there. Yeah, I appreciate you noticing that, Joe. I mean, we were certainly really happy to see that and proud of the international team to put those numbers up on the boards this quarter. I would say our view on the end markets is still largely unchanged, that it's around flattish kind of organic growth. I would also say you've had some of the market segments there really at historical troughs. You know, we don't anticipate that they trend negative in perpetuity. I think the international team has executed well in a lot of pretty challenging environments. Like Mike mentioned in the prepared remarks, our electronics businesses are still performing very well, and you add to that, we're still really excited about the ELATEC acquisition, which was a pretty sizable deal for us that will continue to add momentum there in the electronics space. Thank you. The next question comes from Julian Mitchell with Barclays. Please go ahead. Hi, good morning. I wanted to start with maybe the adjusted operating margins. Those were flattish in the third quarter year-over-year. I just wanted to check, but it looks like perhaps you're assuming they pick up again with some margin expansion of a few tens of basis points in the fourth quarter. I just wanted to check if that was the right assumption and how we should think about the corporate cost movement into Q4 and next year in that context. Yeah, thanks for the question, Julian. If you look at the third quarter with this segment, margin expansion did a really good job. We were negative in corporate. Part of that is just the year-over-year comps. Last year in the third quarter, corporate was low. This year, our third quarter is really consistent, slightly less than even what you saw in the second quarter. As you think about margin expansion for the year, you could back into it. We expect to have margin expansion for the year and in the fourth quarter. From a run rate perspective of corporate, the question you asked, you saw what we put up in the third quarter. Think of that as relatively what we've ran the last couple. You could kind of use that as a fine estimate. That's very helpful. Thank you. Just within the Americas segment for a second, you had a decent tailwind from that PPII bucket in the third quarter. I think that was a good pickup from what you'd seen, at that being flattish in the second. When we're looking out the next few quarters, should we assume that sort of gross price of about 4% or 5% is a good placeholder and PPII stays as a decent tailwind? Just trying to understand, you know, operating leverage. You have that mid-30s placeholder from the Investor Day. Are we sort of on that path now, leaving aside the corporate costs moving around? Yeah, if you think about the Americas, I talked about this earlier in the year. Inflation, especially associated with the tariffs, was a little quicker than some of the pricing benefits. We said that would improve as the year progressed. You see that in the third quarter. The big item for us on the pricing side is what is inflation, and tariffs are a component of that inflation. Just look for us to drive pricing and productivity, and you've heard me mention this many times before. Pricing and productivity covers the inflation and the investment, and that helps drive the margin expansion. Overall, feel good about the progress we're making in the Americas. I think we're doing a great job in combating a very dynamic environment of change when you think about tariffs and expect us to continue to drive that margin expansion that we talked about. Got it. That sort of mid-30% type rate based on inflation and mix and price, that should be achievable the next X kind of quarters. Nothing looks too out of line versus that. Certainly. Q4, you could calculate. We'll be back in February to give you a 2026 margin outlook. Think of that as a long-term, right? To the long-term investors out there, long-term, we should be able to drive incrementals of 35%. Let us get to February of next year when we give you our outlook and complete the annual operating plan. Certainly for the fourth quarter, you could calculate the implied margin expansion. Absolutely. Thanks very much. Thank you. The next question comes from Jeff Sprague with Vertical Research. Please go ahead. Thank you. Good morning, everyone. Hey, Jess. Hey, John. I want to come back to the deals, really kind of maybe a two-part question. First, just thinking about everything that you've done here. You know, it all looks like it makes sense and fits in and is nicely moving the needle, as we've seen your results. Just thinking about the margin entitlement of what you've acquired, where you might be on integrating these assets. Are they all truly being integrated or are any of them sort of standalone? Just trying to get my head around the journey you're on here. Yeah, I appreciate the question, Jess. I think, you know, if you recall our Investor Day commentary, we talked about being disciplined. I would say some of those guardrails around being disciplined would be consistent with our strategy, consistent with our geographic exposure, and consistent with markets where we've got a right to win, meaning we've got brand strength, we've got human capital and talent, we've got distribution strength. To specifically answer your question, all of these acquisitions are being integrated and being integrated rapidly. I think there are synergies across the board and revenue synergies, cost synergies. There are exposure to faster growing segments that we've acquired. I feel real good about the strategic alignment of every deal we've done and continue to feel the same way about the outlook on our pipeline there. Really good. We're not looking to acquire our way into adjacent spaces. We're not looking to expand geographic scope. We're staying in markets we know where we've got a right to win. We're acquiring enhancements to our product portfolio in electronics and mechanical and complementary software and feel real good about it. I think you can, again, you can look for us to continue to be acquisitive, but continue to be disciplined like we've shown. I guess discipline also includes the element of price paid. I appreciate like each individual deal. It's hard for me to press Josh or Mike for specifics on multiples and all that. Is there a way to just step back and sort of collectively say, you gave us the dollars deployed, right, on a year-to-date basis, kind of what the average multiple has been, and when you think about the synergies, kind of what the maybe what the forward multiple would be looking out, kind of 12, 24 months as you integrate these things. Yeah, Jeff, it's a good question. Very fair question. I think we've had some commentary around this in past quarters. On the mechanical side, if we're expanding our mechanical portfolio, you would see something in the high single-digit EBITDA multiple would be a fair approximation. On the higher growth, electronics and software, you're going to see a bit of a higher multiple there because we're expecting higher growth and higher longer-term returns. Jeff, maybe also to help you out, the biggest acquisition is ELATEC. Clearly, that is the lion's share. We gave that information when we released the acquisition, when we made the acquisition and we issued the press release. You could see that and you get at least a pretty good idea of all the acquisitions, what's the biggest piece there from a multiple paid. Got it. Thank you. Thank you. The next question comes from Tomo Sano with J PMorgan. Please go ahead. Hello, everyone. Hi, Tomo. Hi. I'd like to ask you about the residential outlook for Q4 in the Americas. The residential revenue improved to up mid-single digit in Q3, and you mentioned no clear signs of the recovery of the market for 2026. How would you see the residential segment performing in Q4? Could you share your current market outlook and also the new product contributions, especially for electronics in Q4, please? Yeah, great question, Tomo. As we talked about in the prepared remarks, residential was mid-single and much stronger than market. Market for residential soft. You have lost connection with our main speaker line. Please wait while we reconnect. Hello? Hello? We've lost connection with our speakers. Please wait while we reconnect. We've reconnected with our speakers. Yeah, hi, this is Mike. The team is back on. Tomo, to answer your question on the residential, I apologize. We had some phone difficulties there. Overall. No problem, Mike. Yes, please. Could you repeat that again, your answers, please? Thank you. Yeah, happy to. I apologize about that. Overall, market demand for residential is soft. It's been that way for a while. In the third quarter, we did have that benefit associated with the new product introductions, the e-locks. That was the Arrive lock that we talked about on the first quarter earnings call. We launched it in the third quarter, and we had the benefit. As I said on the prepared remarks, overall, think of market demand consistent with year-to-date growth rates for residential, which is, you know, down slightly. As you think about the fourth quarter, we would not expect a mid-single-digit positive growth. We would expect it more in line with market demand, which is that softer non-residential market that we're in. Softer residential. I'm sorry, residential. Thank you. Thank you. My follow-up question is on tariffs and pricing. You have demonstrated strong pricing power and agility in managing tariff-related cost pressures. Are you seeing any signs of pricing fatigue or customer weakness? How would you see the other market players reacting for pricing in the market, please? Tomo, this is John. I appreciate the comment. I think our teams and our customers have collectively responded well to the inflationary nature of the tariffs. I think our industry as a whole has moved up with price realization. I'd say, just as Mike said in the prepared comments, as inflationary pressures continue, we stand ready to cover that with price. I would say the demand environment in non-res, as we mentioned, is good. It's healthy. Non-res is humming along pretty well. Haven't yet seen something that we would call fatigue. Thank you, Josh and Mike. That's all from me. Thank you. Thanks. We have one final question in our queue today. The next question comes from Tim Wojs of Baird. Please go ahead. Hey, everybody. Good morning. Maybe just the first one, I'm kind of thinking bigger picture about, you know, kind of spec and spec writing and just kind of content within the spec. John, how would you kind of compare the content in the spec that you're kind of writing today versus maybe what you were doing three years ago? I'm just trying to kind of get at how that spec's evolving, particularly as you kind of have done some of the, I'd say, ancillary product kind of M&A over the last couple of years. Yeah, Tim, that's a great question. I appreciate you asking. I would say a couple of things come to mind in terms of spec content. We're seeing electronics adoption accelerate, and that's evident in our specs, and I think evident in the electronics growth numbers that we've been showing lately. Very pleased with that. I think the new product launches that we've been doing in non-res in particular are paying dividends there. I would also say we're starting to see, it would be very small, but starting to see even opportunities to spec in some of the complementary software that we've developed organically into like a multifamily application. That's very exciting for us to see as well. In terms of the new acquisitions, several of them, if you talk non-res Americas, like a Krieger Specialty Products, hand-in-glove fit with our spec engine. We're excited to see the growth there because if you recall, that acquisition brought products that we didn't have in our Hollow Metal portfolio, high margin, fast-growing niche products that we're finding great opportunities to spec into new customers even. Really good fit. Another good example from this year would be Trimco. Makes high-end specialty hardware for commercial applications. If you had polled channel customers of ours for the last couple of years, they would highlight something like a Trimco as one of the best acquisition targets for Allegion to go after. Really excited to have that team on board with us. It fits right into the spec engine. We're happy to see that momentum. Okay, that's great to hear. Maybe just on the modeling side, just in International, kind of the opposite of Julian's question on PPII, that flipped negative this quarter. Is that just a timing consideration, or is there anything to read in there around price productivity and inflation? Yeah, if you think about margins in International, good performance this quarter. It was slightly negative on the PPII. On a year-to-date basis, though, Tim, you know, think of it as it's negative like $1 million if you add up the three quarters. It's essentially covered. For us in International to cover that inflationary pressure, I wouldn't look too much into the third quarter at all. Look at the year-to-date rate and you get an idea. We're doing a pretty good job there. Okay. Sounds good. Good luck on the rest of your guys. Thanks, Tim. This concludes our question-and- answer session. I would like to turn the conference back over to CEO John Stone for any closing remarks. Thanks very much, and thanks everyone for the very engaging Q&A. We look forward to connecting with you on our Q4 earnings call in February. Be safe, be healthy. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.