Allegion plc (ALLE) Q3 2022 Earnings Call Transcript

Allegion plc (NYSE:ALLE) Q3 2022 Earnings Call dated Oct. 27, 2022.

Corporate Participants:

Tom Martineau — VP, Investor Relations

John Stone — President, CEO

Michael Wagnes — Chief Financial Officer

Analysts:

Josh Pokrzywinski — Morgan Stanley — Analyst

Kiran Patel-O’Connor — Barclays — Analyst

Ryan Merkel — William Blair — Analyst

Brett Linzey — Mizuho America — Analyst

Joseph O’Dea — Wells Fargo — Analyst

Joseph Nolan — Longbow Research — Analyst

Brian Ruttenbur — Imperial Capital — Analyst

Presentation:

Operator

Good morning, and welcome to the Allegion Q3 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note. this event is being recorded.

I would now like to turn the conference over to Tom Martineau, Vice President of Investor Relations. Please go ahead.

Tom Martineau — VP, Investor Relations

Thank you, Francesca. Good morning, everyone. Thank you for joining us for Allegion’s third quarter 2022 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 Slides 2 and 3. 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 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.

John and Mike will now discuss our 3rd-quarter 2022 results, which will be followed by a Q&A session. Please for the Q&A, we would like to ask each caller to limit themselves to one question and one short follow-up and then re-enter the queue. We would like to give everyone an opportunity given the time allotted

Please go to Slide 4, and I’ll turn the call over to, John.

John Stone — President, CEO

Thanks, Tom. Good morning and thank you all, for joining us today. Allegion delivered a very strong third -quarter, and as we look at-the-market dynamics we continue to see strength in the Americas non-residential sector. Leading indicators for that business like the ABI and AIA Consensus are positive and continue to be an expansionary territory, particularly for institutional verticals.

On the Americas residential side, our business grew nicely in the quarter, but we are seeing signs of a slowing market. Certainly, new construction is impacted by rising mortgage rates and retail point-of-sale for our industry is returning to more normal levels. Although Allegion International is experiencing broader weakness in many of its markets we continue to see strength in-demand for our electronics and software solutions.

Allegion delivered record revenue during the third -quarter this is due to, the hard work and dedication of our team as we’ve made significant progress on product redesign and other supply-chain improvements that are driving strong operational performance across the company. Top-line revenue was also aided by robust price realization in the quarter across the world.

I do want to highlight that while we’ve made some progress, there is still choppiness in the electronic supply-chain, backlogs in electronics are still elevated as demand for those products has remained strong. At the beginning of the year we underscore our commitment to aggressively pursue price across all products and in all channels. The result of this effort is evident in the quarterly results. While we continue to experience inflationary headwinds our price productivity inflation dynamic was positive this quarter both on a dollar and margin basis. Allegion will continue to assess the, need for future price increases. Lastly the currency pressures impacting our International businesses persist the reported revenues in the third-quarter reflect $26 million of pressure related to foreign-exchange rates.

Please go to Slide 5. At the beginning of the quarter on, July 5, in fact we officially welcome the Access Technologies’ business into the Allegion family. Together we will deliver long-term value for customers, shareholders and employees alike. And we’re already moving in that direction, The operational performance of the business was in-line with the expectations shared with you in last quarter’s earnings call and our teams are getting well-aligned on culture vision and strategy. Just as important our early work together affirms that Access Technologies and Allegion are a great combination, We have unique opportunities to accelerate our seamless access strategy with innovation that will create new value around doors and entrances.

This is where I get to say a picture says a 1,000 words, and we now have a well-established recurring service business that positions us to meet new customer needs as devices become more connected and technology advances. And we have an expanded portfolio of products that fill gaps complements our business and take full advantage of our demand-generation specification engine and the Americas. Bottom line, Access Technologies’strong business. It’s another category, market-leader for Allegion. We’re off to a great start and excited about the opportunities ahead.

Now, let’s turn to Slide 6 and, take a look at the quarter performance. For more details. Revenue for the, third -quarter was 914 million, an increase of 27.4% compared to last year. Organic revenue growth was 18.6% attributed to both significant price realization worldwide and strong volume growth in the Americas. The Access Technologies acquisition contributed approximately 12% to the total growth number and currency impacts remain a significant headwind. Mike will share more details on the segment reporting in a moment.

Adjusted operating margin and Adjusted EBITDA margins increased by 100 basis-points each in the third -quarter. The increase was driven by volume leverage in the Americas as well as price and productivity, exceeding inflation. These more than offset the margin dilution related to Access Technologies. Excluding the Access Technologies business, adjusted operating income margins were up 140 basis-points.

Adjusted EPS of $1.74 increased $0.08 or approximately 5% versus the prior year. Robust operational performance more than offset the unfavorable tax-rate impact which is compared against the prior year that had substantial non-recurring benefits.

Mike will now walk you through the financials and, I’ll be back later to discuss our 2022 outlook.

Michael Wagnes — Chief Financial Officer

Thanks John and good morning everyone thank you for joining today’s call. Please go to slide number seven. This slide reflects our earnings per share reconciliation for the third -quarter. For the third -quarter of 2021, reported earnings per share was $1.59 and adjusted earnings per share was $1.56.

Operational results were very strong in the quarter, adding in $0.49 per share, reflecting 30. 40% growth. This was driven by strong pricing, volume and operational execution, which more than offset inflationary and currency pressures. Access Technologies delivered $0.06 to earnings per share as operational results of $0.10 per share, offset $0.04 of intangible amortization. The operational results were as expected and amortization was favorable. A year-over-Year tax-rate reduced earnings by $0.28 per share. This decline was driven by tax benefits in 2021 that were non-recurring. As anticipated, interest expense was a $0.12 per share drag on earnings primarily driven by increased debt to finance the acquisition of Access Technologies.

Other income was an $0.08 per share reduction as the prior year had some favorable items that did not repeat in 2022. Favorable share count offset the impact of investment spending in the quarter. This results in adjusted third -quarter 2022 earnings per share of $1.64, an increase of $0.08 or 5.1%, compared to the prior year. Lastly we have a $0.34 per share reduction from adjusted EPS to arrive at reported EPS. This reduction is attributable to M&A and additional non-purchase accounting items related to Access Technologies, along with the loss on the divestiture of our Milre business in South Korea. After giving effect to these items you arrive at third -quarter 2022 reported earnings per share of $1.30.

Please go to slide number eight. This slide depicts the components of our revenue performance for the quarter. I’ll focus on total Allegion results and cover the regions on their respective slides. As indicated, we experienced a robust 18. 6% organic revenue growth in the third -quarter driven by both price and volume, strengthening Allegion Americas both non-residential and residential led to volume growth. Net acquisition and divestitures delivered 0.4% growth, driven by Access Technologies. Currency pressures continued to be a significant headwind primarily impacting our International segment bringing the total reported growth to 27.4% in the quarter.

Please go to slide number nine. Third quarter revenues for the Americas segment was $747.2 million, up 42.5% on a reported basis and up 25.8% organically. The segment delivered significant price realization in both our non-residential and residential businesses as we remain committed to addressing inflation. Aided by substantial price and strong volume, non-residential grew approximately 30% in the quarter. Residential was up mid-teens, also driven by both price and volume. A portion of our growth was fueled by backlog reductions as the actions our team undertook helped us improve component availability and shipments in the quarter.

Electronics revenue was up approximately 30% and was a significant improvement from the growth rates experienced in the past few quarters. This was supported by continued strength in demand and the timing of component availability. While it is important to note that electronic component supply chains remain choppy, our reengineering and alternate supply efforts are providing improved flexibility to our supply capabilities.

Access Technologies contributed mid-teens percent to the Americas reported growth numbers. Americas adjusted operating margins and adjusted EBITDA margins for the quarter were up 50 basis points and 80 basis points, respectively. This includes Access Technologies, which we previously stated would be dilutive to margins. Excluding Access Technologies, the business drove a 300-basis-point improvement in operating margins versus the prior year. Volume leverage contributed to the margin increase and for the quarter, price, productivity, inflation dynamic was positive both on dollars and margins.

Please go to slide number 10.. Third quarter revenue for our Allegion International segment was $166.5 million, down 13.6% on a reported basis and down 0.8% organically. In the quarter, strong price realization mostly offset lower volumes. Lower volumes are attributable to end market softening. However, demand for our electronics and software solutions remain stable.

Currency headwinds persisted this quarter and reduced reported revenue by 12.8%. Third quarter International adjusted — third quarter international adjusted operating margins decreased 180 basis points compared to last year, and adjusted EBITDA margins were down 160 basis points. The margin decline was driven by reduced volume and FX pressures, which more than offset favorable impacts of the combined — combination of price productivity and inflation.

Please go to slide number 11. Year-to-date available cash flow is $225.6 million, which is a decrease of more than $102 million compared to the prior year period. This year’s available cash flow continues to be in-line with pre-pandemic levels. We continue to operate with a strong debt structure, with 80% of our debt having fixed interest rates. We currently have $199 million outstanding on our revolving borrowings, and during the third quarter, we repaid approximately $140 million from the initial draw used to help fund the acquisition of Access Technologies.

We have a strong leverage profile, with our net debt-to-EBITDA ratio at 2.9x at the end of the quarter. We still plan to use the excess cash generated during the remainder of the year to pay down the revolver. This would be after paying expected dividends, which are subject to board approval, and other debt payments. The 2022 full year available cash flow outlook is unchanged from our prior outlook, remaining at a range of $420 million to $440 million.

I will now hand it back to John for an update on our full year 2022 outlook.

John Stone — President, CEO

Thanks, Mike. So please go to Slide 12 and looking at our full year 2022 outlook. And to reiterate a few things said earlier in the call, we see non-residential market demand in the Americas as remaining strong. Leading indicators remain favorable. Further, while demand for electronics products remain strong, residential markets in the Americas are indeed softening. As you’ve heard, the Allegion team has made significant progress on supply chain challenges, our electronics growth was strong this quarter, and we continue to navigate the choppiness of component supply. Long term, we expect electronics adoption to remain a growth driver for Allegion. Given this backdrop, we’re raising the outlook for Americas and are now projecting total growth to be between 22.5% and 23.5%, with organic revenue to be up 13.5% to 14.5% for the year.

Allegion International experienced another quarter of solid price realization and stable demand for our electronics and software solutions. However, we see the broader markets continue to soften, driven by macroeconomic and geopolitical factors and currency pressures are anticipated to remain. For the Allegion International segment, we’re revising our outlook for total revenue to be down 10.5% to 11.5%, with approximately flat organic growth. All in, for total Allegion, we expect revenue growth to be in the 13% to 14% range, with organic revenues increasing 9.5% to 10.5%.

Please go to Slide 13. We are expecting reported EPS to come in at a range of $4.90 to $5 per share, and adjusted EPS to be between $5.40 to $5.50. The adjusted EPS increase from the prior outlook is driven by lower Access Technologies and tangible amortization, the revised amortization takes the outlook acquisition impact to negative $0.05 per share versus negative $0.10 per share we communicated last quarter.

Our updated outlook assumes incremental investments of approximately $0.17 per share, and, as a reminder, the incremental investment spend is predominantly related to R&D and technology investments to further accelerate our growth and support our seamless access strategy. The $0.20 per share increase in reported to non-GAAP adjustments from the previous outlook is driven by the loss on the Milre divestiture and non-cash purchase accounting adjustments, which were primarily recorded in this quarter.

Please go to Slide 14, and let’s wrap this up. Here’s the main themes I hope you heard today. Allegion had a very strong third quarter. Our operational performance was exceptional. The entire Allegion team deserves a lot of credit for this. The Access Technologies acquisition is off to a great start and performing as expected. We’re excited to have this business and the people as a part of the Allegion family and to have automated entrance solutions in our portfolio. We’ve made significant progress on supply chain challenges, although choppiness in electronics components persist. Americas non-residential demand is still strong, leading indicators are still positive, and we continue to see strength in demand for our global electronics products. To reiterate, we see electronics adoption as a long-term growth driver for Allegion.

I’m very proud of the dedication and resiliency of our entire team and the results we’ve delivered this quarter. With that, Mike and I would be happy to take your questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Josh Pokrzywinski with Morgan Stanley. Please go ahead.

Josh Pokrzywinski — Morgan Stanley — Analyst

Hi, good morning, guys. Just wanted to get a little bit on this kind of non-resi backlog phenomenon. It’s not really a metric you guys talked about as much, but with the growth in the quarter, clearly, supply chain improving everybody get some product out the door. Can you maybe contextualize how much of the excess backlog you worked off? And how should we think about maybe kind of a a normalized margin because I would imagine the mix on that influences things a lot once we get past that backlog period?

Michael Wagnes — Chief Financial Officer

Yeah, Josh. As you know, we had built backlog starting the end of last year and most of that driven by some supply chain as well as really strong demand. As you look at the third quarter, we have better component availability, as we talked about on the call, that helped drive more revenue in the Americas non-res at 30%, and not all of that, obviously, is demand. So we did reduce backlog levels. We don’t disclose the exact amounts, but we did have a very strong volume growth, which we provided and that’s driven by both demand being strong as well as backlog reductions.

With respect to margins, the key thing about margins for us is we’re driving that price realization to offset the inflationary pressures that we’ve been seeing. This quarter, we finally turned the corner on the margin percent. Last quarter, it was offsetting on dollars. So we’ve made significant progress here as we progressed over the last few quarters on that element. So it’s those key items, I think, that have led to the margin expansion you saw.

John Stone — President, CEO

Josh, this is John. I would just add 1 thing that probably every manufacturer has dealt with — when we talk about choppiness in the supply chain, without a doubt, that injects this or the other inefficiency into the factory. So that’s — there’s been some cost inefficiencies over time that we’ve been working through. And certainly, that’s on the way towards improvement as well. But just one other nuance there to your question, but that’s a good one. Thank you.

Josh Pokrzywinski — Morgan Stanley — Analyst

Got it. And then just a quick follow-up on the pricing dynamic. I know you guys and the industry in general honors existing quotes out there. So price kind of layers in over time. What inning are we in, in terms of being caught up on price versus having these outstanding older price quotes?

Michael Wagnes — Chief Financial Officer

Michael Wagnes – CFO

Yes. We’ve been raising price pretty consistently over the last year as we’ve had such challenges in the inflationary environment. I would say the dynamic of price productivity and inflation will be positive moving forward. So I wouldn’t expect a situation where we turn the other way. We’ve had the dynamic positive and expected to be positive moving forward.

Josh Pokrzywinski — Morgan Stanley — Analyst

Perfect. Appreciate the color, guys. Best of luck.

Operator

The next question is from Julian Mitchell Barclays. Please go ahead.

Kiran Patel-O’Connor — Barclays — Analyst

Hi. This is Kiran Patel, Connor on for Julian Mitchell. So I just wanted to ask on residential. So it looks like residential growth in the Americas inflected positively. And I just wanted to get a sense of, is this more of a function of supply chains easing versus underlying demand? And to what extent do you see this growth as sustainable going forward, given what we’re seeing in the housing market?

John Stone — President, CEO

Yeah. Thanks for the question. This is John. I would say, going back to our comments, certainly, the Americas residential market is softening. We’re reading the same headlines that you are, higher mortgage rates is certainly going to have an impact there. I would say our performance in the quarter is without a doubt due to strong demand for our products. We have good products. People like them. We get good reviews. Our electronics growth you saw was very strong, which is quite prevalent in the residential sector. But yeah, the broader market is softening without a doubt. I think electronics remains a tailwind for us. And yes, so what more to say there. I think that’s it. Yeah, broader markets softening a little bit. Electronics is favorable. That’s a tailwind. And yeah, so we’re still chugging along.

Kiran Patel-O’Connor — Barclays — Analyst

That’s helpful. Thanks. And then my follow-up is just kind of what you’re seeing in the channel? Based on our results today, it doesn’t seem as if you’re seeing any signs of destocking, which we’re seeing in some other industrial markets. So can you give us a color of what you’re seeing in channel from an inventory perspective, and what underlying demand is looking like relative to that? Thanks.

John Stone — President, CEO

Yeah, you bet, very, very relevant question. Thanks for that. I’d say we’d liken it to more normal levels. I wouldn’t necessarily say destocking, restocking, just more normal point-of-sale pull-through based on retail demand. And I think that’s the environment we’re getting back to as lead times normalize to more of what the industry is used to. Retail demand pull-through is what’s going to drive the stocking levels.

Kiran Patel-O’Connor — Barclays — Analyst

Appreciated. Thank you.

Operator

The next question is from Ryan Merkel with William Blair. Please go ahead.

Ryan Merkel — William Blair — Analyst

Hey, good morning. And thanks for taking the questions. My first question is on 4Q. It looks like guidance implies a little bit of a cut there. Can you unpack any changes you made versus prior expectations?

Michael Wagnes — Chief Financial Officer

Yeah. Ryan, if you look at Allegion, we always guide for the full year. In July, we put a guide out there. And essentially, we reiterated the guide this quarter for the full year because we’re a full year guiding company. With respect to Q4, you can back into some math, see strength in the Americas, right? America’s top line guide implied in the high-teens. We are seeing, obviously, some weakness in that guide internationally, right, which we called out. So overall, our business is seeing strength in Americas led by, obviously, non-res, which we talked about, and seeing some softening internationally. Full year in-line with what we said in July. So I don’t think there’s major changes from what we told you previously, but you do have some mix between the two regions.

Ryan Merkel — William Blair — Analyst

Got it. That’s helpful. And then, for my follow-up, you mentioned progress on supply chain, but still some choppiness. Where are there still issues? And when do you expect to fully catch up?

John Stone — President, CEO

Yes, that’s the question of the year, I think, on fully catch up. But I would think of it like this. If three or four quarters ago, we had like 50 suppliers on the severely delinquent list, today that would be seven or eight. just to kind of quantify it for you. I think the choppiness still exists primarily in semiconductors, microprocessors. Now the redesign work that Allegion did is obviously having benefits. We’re seeing strong electronics growth. Some of those suppliers are performing quite well. Some are still having a lot of issues. And it comes up both in terms of quantity that we need to fully meet retail demand, but then also linearity that we need to really have a productive manufacturing operation.

So that’s kind of if we double-click into what we mean by choppiness. I’d say this is definitely continuing on into 2023. But we’re making progress, and we feel good about the progress we’ve made. We feel good about the improving flexibility and resiliency of our supply base. And I think the improvement trend will continue.

Ryan Merkel — William Blair — Analyst

Thank you.

Operator

Next question comes from Brett Linzey with Mizuho America. Please go ahead.

Brett Linzey — Mizuho America — Analyst

Good morning, all.

Michael Wagnes — Chief Financial Officer

Good morning.

Brett Linzey — Mizuho America — Analyst

Congrats on a great quarter. Just back to the price and productivity and specifically within the Americas business, it did step up nicely from what, $6 million in Q2 to $24 million here in the third quarter. Should we see that continue to move higher into Q4? And then given the wrap around price, you should be able to get next year, I mean, should we think of $25 million in Q1 and Q2 of next year at a minimum?

Michael Wagnes — Chief Financial Officer

Yeah. Brett, with respect to next year, we’ll give an outlook when we come back in Feb. I’m certainly not on the third quarter call, going to get that specific of price productivity inflation. However, in general, think of this dynamic as progressively improving to this point, right? We were weaker last year, negative, got back to positive this quarter in a substantial way. Obviously, volume drives more ability to get that price because you have more revenue. But, in general, we’re going to fight that inflation and have that dynamic positive moving forward.

Brett Linzey — Mizuho America — Analyst

Got it. And then just back to the backlog question. So you’re obviously working here to uncork that specifically on the electronic side. As these supplier additions are ramping here, should we think of the electronics growth normalizing back to that double-digit plus level that Allegion has really observed pretty consistently for several years before the pandemic, so going forward, kind of double digit in that territory?

Michael Wagnes — Chief Financial Officer

Yeah, especially long term, this is a great growth driver for us, and that be a double-digit growth business for us as you think about the long term. We talked about choppiness, right? But long term, this is a double-digit growth opportunity for us.

Brett Linzey — Mizuho America — Analyst

And just a quick follow-up. Do you think you have enough availability to kind of sustain that into Q4 here?

Michael Wagnes — Chief Financial Officer

Yeah, I’m not going to guide a specific quarter, but as you looked at our results for the Americas in particular, we have a pretty healthy top line guide in Q4. So you can draw your conclusions to that particular item, but we still see strength in Q4, as indicated in our guide.

Brett Linzey — Mizuho America — Analyst

Appreciate the color.

Operator

The next question is from Joe O’Dea with Wells Fargo. Please go ahead.

Joseph O’Dea — Wells Fargo — Analyst

Hi, good morning. I wanted to start on the operational and FX piece of the guide. And if you could just sort of bridge from prior guide to revised guide? I mean the numbers didn’t change, but what some of the moving parts are? And given the strength we saw in the third quarter, would have expected to see that, that could have moved up, but if you could just talk kind of the Americas piece, the international piece, the FX piece in terms of what moved from last guide to this one?

Michael Wagnes — Chief Financial Officer

Yeah. So, Joe, if you think about FX, we actually took down our guidance in July when we reported our Q2 results for currency. So a good chunk of the currency pressure you’ve seen with the dollar strengthening, we anticipated and put in that guidance that we put out in July. Currency rates have gotten a little worse since that period of time. But a good chunk of the FX pressure we called out previously.

And then with respect to operations, we’re right on line with what we said in July for the year. Obviously, like I mentioned earlier, a little more strength in Americas as we took up the revenue outlook there, and a little more pressure from the markets internationally.

Joseph O’Dea — Wells Fargo — Analyst

Okay. And then I wanted to ask on the Americas margin, excluding Access Tech. Clearly, some nice progress that we saw sequentially. But when we go back to where kind of where pre-pandemic margins were, there still appears to be some good opportunity there. So again, kind of bridging to that, I mean, what are the keys to sort of get back to those kinds of margins, Pretty good volume this quarter. I’m not sure sort of mix side of things. if still from a price productivity inflation, there’s room to go and you have visibility into that, is kind of a time line to getting back to where your margins were?

Michael Wagnes — Chief Financial Officer

Yeah. If you think about the margin profile in Americas, the strong contribution margin those businesses have, as we grow, we should get margin expansion. We’ve done a much better job this year driving the price realization to offset the inflation. We’ve been talking about this all year on these calls. We expect that to continue. So we think that there’s margin runway for the Americas, and we’ll continue to drive that pricing to offset inflation, with an understanding that this has been the most significant inflationary environment I’ve ever personally experienced, and we’re going to have to just combat that with the pricing actions?

John Stone — President, CEO

And Joe, this is John. I’d add that, again, there’s an electronics angle to this as well. Electrified and connected products are delivering substantially higher value to the end customer, which then should also be not just organic growth on the top-line, but also a margin expansion opportunity, too, as electronics adoption continues. So that’s an element as well that we’re really keen to continue to grow and deliver more value to the customer.

Joseph O’Dea — Wells Fargo — Analyst

Just related to that, do you think you’re capturing that value proposition today? Or do you think there’re opportunities to sort of better capture that margin opportunity on the electronics side?

John Stone — President, CEO

I think both. I think we’re doing very well today. And I think there’s continued opportunity. That’s a tailwind for Allegion.

Joseph O’Dea — Wells Fargo — Analyst

Got it. Thank you.

Operator

The next question is from David MacGregor with Longbow Research. Please go ahead.

Joseph Nolan — Longbow Research — Analyst

This is Joe Nolan on for David McGregor. First, I just wanted to ask, within the Americas Group, can you talk about volume versus price trends for both the non-res and residential businesses?

Michael Wagnes — Chief Financial Officer

Yeah. Historically, we don’t disclose those individual components. What we did share for the quarter was they were both up, pricing and volume, for each segment, but the individual numbers, historically, we have not and don’t anticipate disclosing that level of detail.

Joseph Nolan — Longbow Research — Analyst

Okay. Got it. And then just on the Access Technologies business, I realize it’s still early from an integration standpoint. But can you just give any update about how that’s going in terms of the integration?

Michael Wagnes — Chief Financial Officer

Yeah. I appreciate that question. I think, as we said in the prepared comments, off to a great start. Our teams are jelling very well. There’s this or the other small project win here and there. So — and I think the early work on some of the heavy lift in terms of systems and things like this will continue for the next many months, but off to a very good start. Cultural fit is very good. Strategic fit is very good. The automatic doors is an excellent complementary portfolio to the rest of Allegion. And just really excited for that team and really excited for the services business that comes along with that. And we’re quite bullish on the future there.

Joseph Nolan — Longbow Research — Analyst

All right. Thanks for answering the questions.

Operator

Last question is from Brian Ruttenbur with Imperial Capital. Please go ahead.

Brian Ruttenbur — Imperial Capital — Analyst

Yes. Thank you very much for taking my questions. Can we talk a little bit about the competitive landscape right now, what you’re seeing given the ASSA, ABLOY, HII spectrum Transaction appears to be at least held up some with the DoJ. Can you talk about the opportunity that you see out there with Allegion in the competitive environment? Are you gaining market share or losing market share because of this transaction, or it doesn’t impact you at all?

John Stone — President, CEO

Yeah. It’s certainly not appropriate for us to comment on that particular situation. I would say we feel good about our product portfolio, about our brands, about our competitive position in the market. I think our third quarter results reflect that, that as we made the supply chain improvements we’ve continued to talk about, we generate good results. We’ve been saying for several quarters now, we were supply constrained versus demand constrained, and I think that continued to prove itself out. And so, yeah, we’ll continue to compete vigorously in the segments where we compete. And I think Allegion’s best days are still ahead.

Brian Ruttenbur — Imperial Capital — Analyst

Okay. As a follow-up, I’ll go in a different direction, then. Can we talk about — you addressed it a little bit, but price increases going forward. Are you starting to see a pushback on the non-residential market yet in the Americas on price increases and that kind of tells you when you’re done. And I just want to get kind of an indication from you what you see in terms of price indication — price increases going forward if you feel like you can push more through, or you feel like that you’re at the top end of that market?

John Stone — President, CEO

Yeah. We put a number of increases in. I would say it all depends on what the future inflationary environment is. But as we sit here today, we would always communicate future price increases to the channel before an earnings call. But expect us — if inflation persists, expect us to pass along pricing to mitigate that, but it all depends on the inflationary environment moving forward.

Brian Ruttenbur — Imperial Capital — Analyst

Great.Thanks.

Operator

This concludes our Q&A session. I would like to turn the conference over the call over to John Stone for any closing remarks.

John Stone — President, CEO

Thanks very much, and thanks, everyone, for attending today. I would just like to again reiterate, we feel like we delivered an outstanding performance this quarter, the entire Allegion team and our distribution partners deserve credit for that. Access Technologies, awesome acquisition off to a great start. We are making the supply chain improvements that we’ve been promising for a while, and you see that reflected in our results. And we see continued strength in the Americas nonresidential end markets and global electronics demand. Allegion’s best days are still ahead. Thanks very much.

Operator

[Operator Closing Remarks].