Good day, everyone. My name is Stefan, and I'll be your conference operator today. At this time, I'd like to welcome you to Allegiant's first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, and if you've joined via the webinar, please use the raised hand icon, which can be found at the bottom of your webinar application. At this time, I'd like to turn the call over to Joby Coyle, Director of Investor Relations.

Thank you, Stefan. Good morning, everyone. Thank you for joining us for Allegiant's first quarter 2026 earnings call. With me today are John Stone, President and Chief Executive Officer, and Mike Wagness, Senior Vice President and Chief Financial Officer of Allegiant. 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 in the financial tables of our press release for further details. Please go to slide three, and I'll turn the call over to John.

Good morning, everyone. Thanks for joining us. The Allegiant team has remained agile in a volatile environment and stayed focused on serving our customers alongside our strong channel partners in q1 we delivered high single digit revenue growth led by the america's non-residential business and contributions from acquisitions in the america's performance was in line with our expectations we outlined back in february in our international segment top line growth was led by acquisitions which are on track however our q1 organic revenue growth and margins and international were negatively impacted by an erp implementation in one of our legacy mechanical businesses production rates there have started to improve and we expect to recover the q1 shortfall over the remainder of the year as you'll see on the next slide a legion remains committed to balanced discipline and consistent capital deployment and finally with respect to our outlook for the year we are raising our reported revenue outlook to six to 8% to include the DCI acquisition, and we are affirming our outlook for organic revenue growth of 2% to 4% and adjusted earnings per share of $8.70 to $8.90. Please go to slide four. Taking a look at capital allocation for the first quarter, starting with our investments for organic growth, the latest example of this is our next generation LCN Senior Swing Series of auto operators for heavy use doors across health care offices and other high traffic environments easy to install and upkeep these automatic door operators self-adjust in real time to external pressures like wind allowing smooth safe and consistent operation while saving the building time energy and maintenance calls turning to acquisitions earlier in march we closed the acquisition of dci a west coast-based manufacturer of hollow metal doors and frames specializing in custom design and quick ship capability historically we've had to rely on our cincinnati ohio manufacturing facility to serve customers on the west coast which extended lead times and drove higher freight costs compared to local suppliers dci makes us far more competitive on the west coast helping the totality of our america's non-res business not just our door offering as customers purchase complete door and hardware packages together. DCI today has a low double-digit EBITDA margin, resulting in limited EPS accretion in the current fiscal year, but the strategic nature of this acquisition gives us significant improvement in serving our customers at a better cost position. I'm confident our execution and pricing discipline will drive higher profitability over time and expect performance to improve moving forward. Moving to dividends, Allegiant paid $47 million in dividends in the quarter, consistent with the long-term framework we outlined at our Investor Day last year. We repurchased $40 million of Allegiant shares in the first quarter. Our board also recently approved a new $500 million repurchase program. As we've said in the past, you can expect Allegiant to be balanced, disciplined, and consistent with capital deployment oriented towards profitable growth and driving long-term returns for shareholders, including share repurchase as appropriate. Mike will now walk you through the first quarter results.

Thanks John and good morning everyone. Thank you for joining today's call. Please go to slide number five. Revenue for the first quarter was over a billion dollars, an increase of 9.7 percent compared to 2025. Organic revenue increased 2.6 percent in the quarter, led by our America's non-residential business. The enterprise organic revenue increase was driven by price realization, partially offset by volume declines. Q1 adjusted operating margin was 21.2 percent, down 150 basis points compared to last year, partially driven by a combination of volume declines and mix. Pricing productivity, net of inflation and investment, and inclusive of transactional effects were favorable by $5.3 million. However, this resulted in a 40 basis point headwind to margin rate in the quarter. I'll provide more details on revenue and margins within each of the regions. Adjusted earnings per share of $1.80 decreased $0.06 or 3.2% versus the prior year. EPS from acquisitions was more than offset by higher tax and interest in other in the quarter. Finally, year-to-date available cash flow was $80.3 million, consistent with the prior year. Please go to slide number six. Our America segment delivered revenue of $809.9 million, which was up 6.9% on a reported basis and up 4.5% on an organic basis. Our non-residential business increased mid-single digits organically, driven by price realization. Demand for our non-res products remains healthy, and spec activity continues to be strong. Our residential business was flat in the quarter, with price realization offset by volume declines as residential markets remained soft. Electronics revenue was up mid-single digits for the quarter, and we continue to see electronics as a long-term growth driver of the business. In addition, reported revenues increased 2.1 points of growth from acquisitions and a slight tailwind from foreign currency. America's adjusted operating income of $227.4 million increased 2.9% versus the prior year. Adjusted operating margins were down 110 basis points in the quarter. Pricing productivity, net of inflation and investment, and inclusive of transactional foreign currency, was favorable by $9.9 million. however this was a 30 basis point headwind to margin rate the transactional foreign currency headwind relates to the prior year benefit of three million dollars that we disclosed in q1 last year driven by the mexican peso operating margins were also impacted by acquisitions which were a 40 basis point headwind additionally volume declines and unfavorable mix were a headwind to margin rates please go to slide number seven our international segment delivered revenue of 223.7 million which was up 21.5 percent on a reported basis and down 5.3 percent organically organic revenue declines were the result of volume weaknesses in our mechanical business primarily related to the erp disruptions john discussed earlier this was partially offset by growth in electronics and price realization net acquisitions contributed 15.9 percent to segment revenue currency was also a tailwind positively impacted reported revenues by 10.9 percent international adjusted operating income of 17.9 million decreased 4.8 percent versus the prior year period adjusted operating margin for the quarter decreased 220 basis points price and productivity, net of inflation, and investment was a 210 basis point headwind, inclusive of operational inefficiencies associated with the ERP mentioned earlier. Additionally, volume declines were headwind to margin rates, which was mostly offset by acquisitions. Please go to slide number eight, and I will provide an overview of our cash flow and our balance sheet. Year-to-date available cash flow was 80.3 million consistent with the prior year for 2026 we still anticipate our acf conversion will be approximately 85 to 95 percent of adjusted net income next working capital has percent of revenue increased in the first quarter due to acquired working capital which does not impact cash flow finally our balance sheet remains strong and our net debt to adjusted EBITDA is at a healthy ratio of 1.7 times, which supports continued capital deployment. I will now hand the call back over to John.

Thanks, Mike. Please go to slide nine. One quarter into the year, we are affirming our organic revenue growth outlook of two to four percent and adjusted earnings per share outlook of $8.70 to $8.90. We are raising our reported revenue outlook by one point to six to eight percent to include the acquisition of dci you can find more details on our outlook in the appendix while our core demand assumptions are unchanged from our february call i'll provide some additional details on our view for the remainder of the year in the americas our markets are largely as we expected to start the year but we're experiencing higher inflation based on current conditions we anticipate an incremental headwind of approximately one percent of cogs from tariffs and other inflation. We expect to offset this on a dollar basis through a combination of price and cost actions. However, given current volatility, we are not updating our organic growth assumptions to include any incremental price at this time, similar to our approach in the first quarter of 2025. Most importantly, we expect this to be neutral to 2026 adjusted operating income dollars and earnings per share for international we expect to catch up on production impacts from the erp implementation during the remainder of the year supported by existing orders and backlog in that business our core demand assumptions are similar to our prior outlook and beyond the erp catch-up it's also important to note that our electronics businesses are a source of strength in the international segment and we expect these to ramp seasonally through the year we have not experienced a notable demand impact from the effects of the conflict in iran and our exposure to the middle east is negligible for the organization we're committed to serving our customers while remaining agile in the current macro and input cost environment please go to slide 10. in summary allegion delivered nearly 10 percent revenue growth in q1 and deployed capital effectively for the benefit of our shareholders before turning into Q&A, there's one more highlight from Q1 that I'm proud to share with you today. Allegiant was honored for the third consecutive year with the Gallup Exceptional Workplace Award. This recognizes our team for fostering one of the most engaged workplace cultures in the world, and we are one of only five companies to earn this award with distinction in 2026. We know highly engaged teams deliver stronger results for our customers, our shareholders, and our partners. With that, we'll take your questions.

We will now begin the Q&A. For today's session, we'll be utilising the raised hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you've been called upon, please unmute yourself and begin to ask your question. Thank you. We'll now pause for a moment to assemble the queue. Our first question will come from Joe O'Day with Wells Fargo Securities. Please unmute your line and go ahead. Joe, please unmute your line and go ahead. Okay, we'll move on to our next question.

Joe, please go ahead. Sorry about that. Getting used to this new format. Good morning, everyone. Starting on the demand side in America, it sounds like spec activity largely pacing as expected. But just interested in any color on the time from spec to order. if you're seeing any elongation in that with respect to what you would normally see on spec to order and what you're currently seeing, the degree to which tariffs and other inflationary pressure is behind that. And then just related, we have heard some comments around kind of data center crowding out and inability to service other projects because of data centers growing more activity and the degree to which you're seeing any of that.

Yeah, Joe, this is John. I'll get started there. And I'd say, like we said in the prepared remarks, spec activity is strong in non-res. Might go so far to even call it very strong in recent months. and i'd say it's it's uh broad-based um you know we've got a portfolio and a channel reach that affords us broad in market exposure so we're seeing broad-based growth on the spec side um channel checks uh with our our largest customers uh support that that view um to to more detailed points of are we seeing elongation from spec to um you know shovel ready or or doors being hung uh not really i don't think that environment hasn't meaningfully changed um but that that is a reason why we don't disclose a whole bunch of detail because the line of sight from a spec to uh revenue for us really depends on the vertical in the project you could imagine you know, smaller projects or maybe multifamily office renovations for tenant improvements could be pretty quick. Something like a very large hospital complex could take a couple of years. But suffice it to say, spec activity has been strong. Channel checks also, we feel, support our outlook. On the question about data centers crowding out other projects, I would feel like not in our space, do I see that really as an impact. That being said, you know, I feel good about the position, the competitive position we've carved out for doors and door hardware and data centers. And that's a small part of our business, but it has been growing nicely.

That's helpful detail. And then on the tariff side and the 1% of COGS headwind that you talked about, But just in terms of how you're addressing that, are surcharges already in the market? How much of this is price? How much of this is more kind of cost mitigation on your side? And is it primarily tied to the latest kind of tariff changes and the impact that it has from Mexico?

Yeah, I think so. there's been, like the last many months, there's been a flurry of changes with respect to trade and tariff policy. IEPA was declared unconstitutional. Right on the heels of that, Section 122 was implemented. Soon after that, there was a wide range of Section 232 changes. and when you net all of that out along with some inflationary pressures on fuel in particular we see an impact in that impact of around a point of cogs and think of the playbook we used a year ago some pricing actions it could be surcharges it could be list price increases they are not yet in the market. And that's why we're not yet updating any organic revenue guide as a result. We'll certainly announce that to the market, to our customers first, as we work through all of the details there. And as always, there's an enormous amount of details to work through on all the different trade policies. There are some cost actions that that we're taking i think just normal hygiene for a company our size and uh that will contribute so when you add it all up uh we expect to mitigate this on a dollar basis at the adjusted operating income line and at earnings per share thank you maybe i'll just jump in and add if you think about um the mix between price and cost obviously it's going to come from more pricing than cost actions due to this the size we discussed but similar to last year look for us to make sure

that we're driving that price and productivity to cover that inflation and investment that's something we've been talking to you for for a number of years about understood thanks man thank you our next question will come from tim weiss with robert w bird and company please unmute your line and ask your question.

Hey, guys. Good morning. Maybe just the first question. I guess if I look at North American margins, I was wondering if you could maybe just add a little bit of color on some of the mix puts and takes this quarter. I think it's been a while since we've had kind of a negative mix impact in the bridge there. So maybe just add some color there as to what the drivers were and how you see that kind of playing out for the rest of the year?

Yeah, Tim, so if I bring you back to Q1 of last year, we had really strong volume leverage and positive mix. And what that was, it included mix within non-res. And specifically, our non-res business is so much more than just a lock. It's the mix between the different businesses within non-res this quarter was a little different than q1 of last year so it was some negative mix if you think of the americas and you take a step back and think of the full year don't look at don't expect to see a headwind for a mix for the full year for the americas you did have a headwind in q1 but full year think of it like most years makes kind of evens out over the course of the year for the americas okay okay so it's mostly it's mostly products product mix on it's okay i got you i understand okay and then i i guess how you know to that like how would you

kind of expect margins in north america to kind of sequence through the year i i guess that that mixed impact kind of drove it you know i guess a little kind of weaker qq than you q1 than we thought so just trying to understand kind of how we should expect margins in north america to kind of kind of pace this year like would you yeah kind of a you know a negative variance in q2 as well just just trying to think through those pieces yeah as you think about let's talk just margin rate for the americas um as you as you progress throughout the year obviously in q2 we do have the peso impact from q2 of last year i'll call that to your attention we put that on the earnings

stack of q2 in 25 but throughout the rest of the year expect most of the expansion to come in the back half of the year we'll get better sequentially you could think of the second quarter as improving from where it was in q1 uh versus the prior year but the q3 and q4 is where you really start to see the margin expansion. I'll, I'll just add, um, obviously for each of the we got to now put in DCI, going to be a margin rate can think of it as 30 basi year to one, obviously on of activity. The last th well, three months. So th items I would call out. B you think about margin expansion think of it more in the back half and part of that is the comp that you're going up against vis-a-vis 2025. okay good that's clear thanks guys i'll hop back in queue our next question will come from tomo sano with jp morgan please unmute your line and go ahead tomo your line is unmuted please go ahead hello can you hear me yes Okay, thank you for taking my questions.

In first quarter, the America's electronics business was at mid-single digits, which is a little step down from the double-digit growth seen in Q4. Could you provide more breakdown of volume versus price contributions for Q1 in any color on what drove the decelerations, and do you anticipate any changes in a growth perspectives after two QPLs?

Yeah, Tomo, if you think about non-res, we said in the prepared remarks, non-res was driven by price realization. Just to remind you, Q1 of last year, really strong volume growth in non-residential. You could think of that at the higher end of mid-single-digit volume growth for non-res last year. So this year, obviously, a little less. when you think of volumes full year for non-res expect to see volume growth for the full year in non-residential i think that remains a strong market for us like we talked about and so i think q1 and non-res if you think about volumes part of that is just the comp in the prior year and tomo this is john on on the electronic side yeah mid single uh growth this quarter look a year ago it was double digit very very strong i think when we still when we look over the cycle if you will we still see electronics being a long-term growth driver for a legion

the adoption rates are are still increasing and growing and i think uh you know that is providing that point of outgrowth that we expect to achieve. So still feel good about our position in electronics. We're still rolling out new products and I think still stand firm that that's a long term growth driver for the company.

Thank you, John and Mike. Just one follow up. There was a commentary that ERP implementation and legacy mechanical business were key headwinds for the the international segment in Q1. Were there any execution challenges associated with these factors? How do you view the prospects for recovery in international operations from second quarter, please?

Yeah, it's a very timely question, Tomo. And yeah, the ERP implementation was limited to one of our legacy mechanical businesses in Europe. And so while we haven't sized that exact amount, it does explain most of the organic revenue and margin decline in the quarter i would say since i've been here in the legion we've done a lot of erp implementations it's it's a core part of just investing in the core business and we've had a lot of very old systems to update this was one of them we've never had to talk about this before every other erp implementation has gone very well this one we've just had a lot of struggles with as i said in the prepared remarks um very recently our production rates are getting back on track and so um it's not a demand issue either the the customer orders are there the backlog is there it's our execution that needs to improve and i think it is improving i do have confidence we will recover the q1 shortfall over the course of the year thank you very much thank you our next question will come from jeffrey spray with vertical research partners llc please unmute your line and ask your question hey thanks good morning everyone hey hey john just picking up on the on the erp so um are there any other implementations that you're planning for this year or have you are you done upgrading

what you want to do in Europe. And also just, just to comment on catching up, you know, I've seen companies before have these snafus and they don't catch it up, right. Cause you failed to deliver. So somebody else, you know, you know, filled that void, you know, so you can get back to run rate, but maybe not lose or regain what you lost. So maybe just a little bit more context on that.

Yeah, Jeff, those, those are very salient points and something we're watching very, very carefully. I would say we have been holding on to the customer orders. We still have more inbound customer orders. We do have a backlog that supports our commentary and our execution is improving. And so I do feel confident that we'll recover this Q1 shortfall over the balance of the year. It won't all happen like immediately, but it'll happen over the balance of the year. I think, as I mentioned, we've done a bunch of these implementations over my tenure here at Allegiant. We do have more in the works. There are more businesses that do need these system upgrades, and I don't anticipate we're going to have a problem like this again.

And could you just maybe address also Europe in a little more detail, right? Not a lot of direct Middle East exposure, but, you know, Europe's probably most prone to seeing collateral economic damage first from what's going on.

Is there any, you know, visible change in tone there, business trajectory, orders, you know, just kind of ear to the ground what you're seeing real time in those markets? that's it's it's a good question and i'd say uh consistent with our prepared remarks the the demand has shaped up about the way we saw it shaping up um when we introduced the guide back in february the big miss was again our our own challenge with that erp say our electronics businesses in europe uh still performing well our acquisitions in europe are basically right on track so feel good about those elements um like in general markets are still not super strong uh and and agree they are more directly impacted by the two uh active conflicts but i i think market demand is about how we saw it uh at the february guide okay great thank you for the color thank you our next question will come from joe ritchie with goldman sachs please unmute your line and ask your question.

Joe, please unmute your line and ask your question. Okay, we'll circle back to Joe. Our next question will come from Julian Mitchell with Barclays Equity Research. Please unmute your line and ask your question.

Hi, good morning. Maybe just based off the commentary around the America's margins being down year on year in Q2, and also the fact that the international catch-up on ERP isn't all coming in the quarter of Q2. Should we expect that this year is a bit more back-end loaded than normal in terms of kind of first half, second half EPS contribution? I think in recent years, you've been sort of 47, 48% of EPS in the first half. Should we think this year is maybe more like mid-40s, but because of that, America's margin pressure and ERP headwind?

Yeah, Julian, as you know, we don't really give quarterly guidance, right? So if I give first half, second half, I'm giving an EPS for Q2. I'll just share just a little more from what I said earlier. In the Americas, I wouldn't expect, you know, a big headwind to margin rates year on year in the second quarter. I just don't expect to see much expansion there, right? So you can think of it as not expansionary. For international, I think it's fair to say second quarter a little softer versus last year on margin rates. Similar to Q1 we talked about, the sequential improvement versus Q1 of 26 will be similar to the sequential improvement you saw in 25. And then you start to see it recover some. If you think of the Americas, though, think of it more, a little more margin expansion in the back half of the year. This is not a massive margin expansion delta. It's more margin expansion in back half, and you know what Q1 was.

That's helpful. Thanks very much, Mike. And then just on the kind of PPII, you know, you had that 40 bips margin headwind in the first quarter kind of total company. How are you thinking about that sort of play out of the balance of the year? You know, I think when I'm thinking about sort of total margins, you've got a volume improvement to margin rate in the back half from easier sort of volume comps. so that helps with that margin step up in the second half we're just wondering kind of any puts and takes on ppii you know how's kind of pricing playing out and competition and that type of thing please yeah so um obviously you saw the headwinds in q1 if i if i break it out between the two businesses similar to what you would expect in margin rates america's expect to see for the full year right our full year ppii expect to see some margin expansion

there dollar positive international is going to be a little tougher this year so at an enterprise level i expect the total company to be roughly around the americas for the full year a little more in the back half than first half obviously uh q1 was was poor second quarter uh certainly better than what you saw in the first quarter um and then think about the core business we expect this business to get back to that core incrementals we outlined at investor day right the core x acquisitions and currency of that 35 plus as you think of our business for the remainder of the year

that's very helpful thank you thanks julian our next question will come from joe ritchie with goldman sachs please go ahead joe your line is unmuted please go ahead okay we'll try alex on oh go ahead joe yeah oh there you got me okay great thanks guys uh sorry struggling with the uh perhaps maybe not doing this on my ipad next time um no worries joe yep around just the international segment right this is um this this is a segment that historically you've tried to scale via acquisition um recognize that you had the issues with with erp this quarter and that impacted it um but i'm curious like as you kind of think about like does it make sense you know for for legion to to have an international presence um the domestic business is doing so well um is there is there does it ever make sense for it to be more of a domestic centric company and you know maybe it's just too difficult to scale the business internationally yeah i i think uh probably q1 earnings call is not the time to have such a conversation jill but i would say uh one business with an erp challenge that we haven't had before

driving a miss. I don't think such extreme conversations are necessary right now. I'd say we've been very pleased with the growth we've seen in international. We've been very pleased with the portfolio improvements we've seen in international. The market conditions have been rather soft, but our teams have performed well. And one, what I consider temporary blip on the legacy mechanical side with this ERP implementation, we're going to overcome that. I have confidence there. It's not a demand issue. We've got some operating performance that needs to improve and we'll improve it.

Fair enough.

And then I guess just the follow-on is just around capital deployment um just given given you know kind of like the start to the year from from a share perspective i'm just wondering like how are you thinking about buyback versus mna at this point yeah it's a great question joe and i think uh as you saw in q1 we did repurchase 40 million dollars worth of shares and you saw that our board authorized a 500 million dollar share repurchase program so i think uh that being said you know our our expectation and your expectation of us should be balanced disciplined and consistent capital deployment for the benefit of our shareholders and uh certainly we understand where we're trading right now uh and i i'd say on top of that our m a pipeline is is active with uh good quality bolt-on acquisitions so i would say expect us to do both for the benefit of our shareholders okay great thank you thank you if you would like to ask a question simply click on the raise hand button at the bottom of your screen once you've been called upon please unmute yourself and begin to ask your question our next question will come from raif jad rossi please unmute your line and

ask your question hi good morning thanks for uh taking my question morning i just wanted to follow up on the electronics growth in the quarters the mid single digit i think in the fourth quarter it was who is low doubles which is what you did through 2025 if i remember right um you're calling out like a tougher comp there how should we think about that growth through uh 2026 and maybe just a little bit more color around the deceleration yeah i have to apologize when i answered that previous question i i struggled to uh to hear the question i answered about the non-res business so

i apologize uh with respect to electronics uh electronics was really strong for us last year right and uh it was strong each of the four quarters i expect to see electronics to be a long-term driver of growth for us we keep on talking about this including investor day quarter to quarter can move around a little but if you think about electronics for us think of it as hey this is going to be the accelerated growth driver and over the course of a year it tends to outgrow the mechanical we expect that to be the case for 2026 as well okay that that's helpful and then um just on the one percent of like incremental inflation on on

cogs uh is there any way to parse out how much is tariffs um or like incremental two three two versus just broader metals inflation and anything else um and then just the the um you've had a lot of success historically offsetting with price how do we think about the cadence of that through the year how like how much of a lag is there between when you start to see the inflation versus when you can can raise raise price thank you yeah if you think of our business uh we try to manage all cost inputs uh so when we talk about it we talk about pricing and productivity has to

cover that inflation in those incremental investments uh tend not to get details by each subsection just think of it as a total cost inflation number we provided and then as far as as lags i would say historically there is a little lag between pricing and uh inflation meaning the inflation could be a little sooner but it's not enough where i would call it to your attention to to change it much what you tend to find is the cost inflation comes but it sits on the balance sheet until it gets sold and flushed through cogs so it's not that dissimilar historically

we'll continue to monitor it and if you know as there's updates throughout the year we'll just provide you more details great thank you our last question will come from alexander virgo with isi evercore please unmute your line and go ahead uh yeah thanks very much um for taking the question I wondered if you could just dig a little bit more into the ERP impact. Just what was it that surprised you? What was it that went wrong? And I guess I appreciate your point that you've implemented many of these in the past and not had to talk about them before. So what is it that you're taking away from this to ensure it doesn't happen again? And then if I could just follow up on the electronics side of things. Are you happy that you can get what you need from the perspective of chips and supply chain? Do you have enough buffer? Is it just a case of pricing that will end up coming through there? Thanks very much.

Good question. So on the ERP, again, it's just a case of a legacy system. Been in place and highly customized over 25, 30 years. people got very accustomed to it new workflows just slowed us down in this legacy mechanical business and people are adjusting to it people are adapting to it people are learning and getting better with the new system again as we've turned the chapter into 2q i do see our production rates are improving our demand still supports the outlook customer orders backlog still support the recovery, and our operating performance is giving us confidence that we will recover the Q1 shortfall over the balance of the year. Then shifting over to electronics on the supply chain, certainly with the conflict in the Middle East, we've been watching component supply chains very carefully, haven't yet seen any major disruption, and I do feel as a company we're better positioned with respect to electronic supply chain than we were back in the pandemic timeframe.

Great. Thanks very much. Our next question will come from David McGregor with Longbow Research. Please unmute your line and ask your question.

Yes. Good morning, everyone. I wanted to begin with, hey, good morning.

I wanted to go back to the mixed question, and it was asked earlier, and just in the americans business how much of the market pressures are you think resulting from the introduction more value-oriented products like the performance series and the von dupren 70 and those products i don't think it's that david it's really the mix this isn't the case where someone's trading down this is the mix between the various businesses that we have um and so it's not a case where you're trading from a high price point to a mid price point offering it's more of the mix between the various product lines that we that we offer so you're not seeing any

change in terms of how these jobs are being specced in terms of more value orientation no i i would not say that's the case at all okay all right thanks for that and just follow up i guess on the residential business you know are you confident that you held market share in that uh business this quarter and um i guess what are the strategic options available to you to uh maybe affect a stronger position versus some of the secular trends?

Yeah, I think, David, on the Resi side, for a while now, we've been dealing with just a relatively soft end market. We've still seen electronics growth in Resi. I think that has been a positive for us and continue to introduce new products in the electronic segment. um as as you've heard from i think a lot of companies uh new build is is very soft um aftermarket is is probably just treading waters and so overall the the market remains a little bit soft i think in terms of uh our share all the indicators that we watch on on point of sale and other things would indicate yeah our market share is definitely holding up thanks very much good luck at this time i see no callers in the queue so i'll now hand back to the ceo john stone for closing remarks well thank you all very much uh for the q a and attending the call today we look forward to connecting with you on our q2 earnings call in july be safe be