00:05 Good day and welcome to the Allegion’s Fourth Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. 00:24 I would now like to turn the conference over to Tom Martineau. Please go ahead.

00:29 Thank you, Jason. Good morning, everyone. Welcome and thank you for joining us for Allegion's fourth quarter and full-year 2021 earnings call. With me today are Dave Petratis, Chairman, President, and Chief Executive Officer; and Patrick Shannon, Senior Vice President, and Chief Financial Officer of Allegion. 00:48 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. 01:02 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 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. 01:28 Today's presentation and commentary includes non-GAAP financial measures. Please refer to the reconciliation in the financial tables of our press release for further details. Dave and Patrick will now discuss our fourth quarter and full-year 2021 results and provide an outlook for 2022, which will be followed by a Q&A session. 01:48 For the Q&A, we would like to ask each caller to limit themselves to one question and then re-enter the queue. We would like to give everyone an opportunity given the time allotted. 01:57 Now, I’d like to turn the call over to Dave.

02:00 Thanks, Tom. Good morning and thank you for joining us today. Please go to Slide number 4. Q4 was tough for Allegion and although we achieved the expected results, we discussed last quarter, I was disappointed that we were unable to fully meet the market opportunity presented. 02:22 The strength and demand, particularly in America’s non-residential end markets continued. And as I said last quarter, this trend began softly in Q1, accelerated in Q2, and continued throughout the back half of the year. 02:40 Leading indicators like specs written for Allegion America’s, ABI, and Dodge new construction indices, retail point of sales, and macroeconomic indicators in our Allegion International segment all remained positive. These indicators suggest continued strength in all end markets for the foreseeable future. 03:02 However, with supply chain challenges, we continue to experience difficulty converting that demand into revenue. Typically, we’d be able to gear up our supply base in short fashion, but the accelerated increase in demand occurred during an unprecedented time when suppliers where experiencing labor, raw material, transportation, and electronic component shortages creating tremendous global disruption. 03:32 What we typically resolve in a quarter is now taking much longer. We are making good progress on product redesigns and alternative sourcing, which should alleviate some of the supply chain pressure, but we do expect revenue to continue to be constrained in the near-term. 03:53 Even with the supply chain improvements we are making, it’s important to note that the pressures in electronic components are expected to continue throughout 2022. Looking at price versus cost, we continue to experience high inflationary impacts for material cost, labor, and freight. The pricing that we put in place last year is currently lagging inflation. That coupled with productivity challenges is a major contributor to margin declines in Q4.…

08:37 Thanks, Dave and good morning, everyone. Thank you for joining today's call. Please go to Slide number 6. This slide reflects our earnings per share reconciliation for the fourth quarter. 08:49 For the fourth quarter of 2020 reported earnings per share was $1.01, adjusting $0.48 for charges related to restructuring, M&A costs, impairments, as well as a loss on held for sale assets, the 2020 adjusted earnings per share was $1.49. 09:08 Favorable year-over-year tax rate and share count drove another $0.04 and $0.03 increase respectively. Interest and other income were slightly positive as were the impact of acquisitions and divestitures, both at $0.01 per share. 09:24 The story for the quarter is reflected in the operational results, which decreased earnings per share by $0.41. The inflation of productivity headwinds were predominantly driven from higher input costs, wage increases, and efficiencies from supply chain challenges and the bounce back of variable related costs, which were not as high in the prior year. 09:46 These added costs were partially offset by price. Pricing sequentially improved in the quarter and will continue to accelerate in 2022. Investment spending increased during the quarter and reduced earnings per share by $0.06 [when we] [ph] remain committed to investing in new product innovation and technology that will accelerate future growth and deliver solutions that enhance customer and end user experiences and connectivity. 10:15 This results in adjusted fourth quarter 2021 earnings per share of $1.11, a decrease of $0.38 or 25.5%, compared to the prior year. 10:25 Lastly, we have a $0.15 per share increase for the combination of a non-cash gain on a remeasurement of an Allegion Ventures investment offset by charges related to restructuring, M&A and debt refinancing. After giving effect to these items, you arrive at the fourth quarter of 2021…

17:29 Thank you, Patrick. Please go to Slide 11. Before I get into our outlook for the year, I want to highlight actions we are taking to mitigate constraints and drive growth and profitability in 2022. 17:47 Our expectation is to fully cover inflation with price. We are in the midst of executing aggressive pricing actions across the globe in all product categories and all channels. We will remain vigilant during the year and we will not hesitate to pull the pricing lever if inflation headwinds increase further. 18:12 With regard to timing, we expect net margin pressures during the first half with the price versus cost dynamic improving sequentially throughout the year and turning positive in the middle of the year. 18:26 Our product redesigned and alternative sourcing work is expected to be completed by the end of Q2. This will help alleviate the supply chain pressures related to our mechanical business and provide access to additional electronic component solutions. However, electronic chip allocations will continue to be choppy throughout the year. As the supply chain normalizes, we will continuously improve our lead times and reduce our record backlog. 18:58 Our greatest strength lies in the people of Allegion. With broad tightness in the labor market, we are protecting our labor pipeline. We have implemented pay increases and are not flexing labor to the degree we normally would. This is operationally inefficient in the short-term, but when supply chains pressure ease, we want to be sure we have the labor in place to move product out of the factories and reduce backlogs. 19:30 We expect return to margin expansion this year. Second half margins are anticipated to perform stronger than first half, and we will exit the year on a path back to peak margin performance. We continue to…

27:14 [Operator Instructions] Our first question comes from [Brett Lindsay] [ph] from [indiscernible]. Please go ahead.

27:41 Hi, good morning all and congrats to Patrick.

27:44 Thank you.

27:45 Good. A strong outlook overall. I'm just curious what level of price are you expecting within the guide for the full-year? And any directional color you can give us between how you're thinking about the residential and non-residential piece within the Americas business for 2022?

28:05 Yes. So, I would characterize as you look at price, again, good sequential improvement in Q4 of 2021. You will see continued improvement as we progress throughout 2022, both on the non-residential and residential side of business. It is a large component of our overall revenue growth kind of reaching a peak, if you will, in terms of price realization in Q3 as we realize the full implementation of all the price increases, including both list prices and surcharges on certain products. 28:43 So, a big part of the revenue growth and if you, kind of look at it relative to non-res, res, the non-resi in terms of our guide, full-year revenue growth, you'd be looking at the high-end, kind of low-double-digits, residential mid-single digit type of growth for 2022.

29:09 Okay, great. And then just to come back to the electronics, you noted growth year-over-year on a full-year basis, I'm just curious, what's the pacing look like through the year? Is it really Q3 until that turns positive again or does it happen earlier? Just curious what’s your planning processes looks like there?

29:28 We've spent a lot of time looking at electronic chip and component allocations. And as you think about our guide, it will be – it will improve sequentially quarter-to-quarter in terms of the flow of electronic blocks and be strongest in the second half and as we move into 2023.

29:50 Okay, great. I'll pass it along. Thanks.

29:52 Thank you.

29:54 The next question comes from Julian Mitchell from Barclays. Please go ahead.

29:59 Hi, good morning and thanks for all the help Patrick and wish you all the best. In terms of – my question would be around the underperformance of, sort of the volumes Allegion in the Americas relative to some of its biggest peers, that's clearly been a point of focus for investors for a few months now. So just wondered what you thought the main factors were behind that seeming share loss, particularly from a non-resi side, if it’s simply a difference in kind of procurement and sourcing strategies? And is there anything else perhaps doing on more on the commercial or customer facing front as well?

30:46 I think you've got to call our second half as of is. Number 1, markets are incredibly strong. Number 2, our loss in opportunity by the company, because of supply chain difficulties. Our supply chains tend to be in region. They perform incredibly well giving high inventory turnover, high return on invested capital when they're working well. 31:16 The pandemic, especially as we move through 2022 was severely impacted by chips and labor shortages that affected our very complex supply chain within region. And when I say complex, you've heard me say Julian, complexity is our friend at Allegion, but when you throw that – those challenges in supply chain, you're really working a variety of issues, which I'd say stabilized as we ended December and will get sequentially better as we go on. 31:57 I would also say, some of the moves that we made pre-pandemic to vertically integrate actually helped us. And I think, I'm confident that we'll get the mechanical side of the Americas business straighten out its things like investing, investment capping that make the Von Duprin exit device what it is. And as we move through the year, the pacing item will be electronics. 32:30 We build our plan based on the allocations that we believe that we will get, and I believe in the electronics, the supply chain disruptions there have pulled demand forward and will benefit in the secondary markets that will help us exceed our plan in 2022, if that in fact impacts. So, a lot into that answer. I hope that gives you some color.

33:00 Julian, I would also just add real quickly, when you look at, kind of the order activity on non-res, really strong, we're kind of giving indication, maybe similar what we're seeing from our peer set, just this inability to be able to ship and realize of revenue. So, we'll call it, kind of differed or delayed revenue, it will come. They’re definitive orders. We're not seeing any cancellations. And that's why we're going to anticipate 2022 to have accelerated revenues we progress throughout the course of the year with the resolution of some of these supply chain difficulties. 33:40 The other thing is, on the residential side, keep in mind, we got a large channel load last year that's impacting negatively the comparisons year-over-year. So that has kind of the distortion. I mean, if you look at it on a two-year stack basis, it's not as pronounced as what you saw perhaps in Q4 2021. So, just kind of keep those things in mind if you would.

34:08 Thanks a lot. That's very helpful. And then just one very quick follow-up. Just [on kind of] [ph] final point on the, sort of the price volume split within the organic sales guide for total company 2022, is this the sort of rough assumption that the organic sales growth is split sort of 50/50 price and volume?

34:28 Yes, I'd say that's pretty much in the ballpark. Again, we're going to push the price lever and because right now, as the numbers would indicate, underwater relative to the inflation we've seen, but I think that's a decent assumption.

34:49 Great. Thank you.

34:52 The next question comes from Joe O'Dea from Wells Fargo. Please go ahead.

34:57 Hi, good morning. First, just a cadence question. You gave some helpful details in terms of how you're thinking about the back half of the year, but I think with the fluidity of the current environment, just anything that you're able to talk about in terms of the first half? I think, first quarter EPS tends to be maybe a high teens percentage of the full-year. Just trying to understand based on the visibility you have on supply chain, what kind of progression we should be thinking about, kind of as we go first quarter and the second quarter if you're able to talk about that?

35:31 I think, we gave you a [nugget] [ph] there, 60% of the EPS will be in the second half of the year. Second, you know you think about the labor ramp up that I think is happening for us [Technical Difficulty] see people are coming back to work, back into the factories, that momentum is important for us to drive the supply chain to meet this, you know the demand and backlog that we've got to drive through. 36:03 The second would be chip supplies, sequentially they'll get better quarter-to-quarter and it leads to that back half being stronger.

36:12 I would just add, seasonally, Q1 normally our weakest quarter from a revenue perspective and earnings. The year-over-year decline in margin not as pronounced. Obviously is what you saw in Q4, but yet margin down relative to Q4 just from a seasonal perspective, that's kind of normal course of business, but as we progress throughout the course of the year, the price cost dynamic, you will see continuous improvement beginning in Q1, relative to Q4, and that will progress throughout the course of the year, as we get more price realization and our assumption is, on inflation that, we've kind of plateaued where we are and actually steel is, if you kind of look at on a [cold role] [ph] per ton basis has come down a little bit, maybe a little opportunity there. But margin expansion really back-end loaded where that price cost dynamic becomes very favorable. 37:20 And obviously, we have easier comps, back half of this year, compared to 2021. So, that's kind of how we see it playing out sequentially.

37:32 I appreciate that. And then I wanted to ask about some of the commentary 2022, but also constructive on 2023 in terms of the conversations that you're having with customers and the amount of backlog that's even scheduled for 2023, but you can just expand on that a little bit in terms of, kind of what you're seeing to help kind of build what would be, kind of a two year constructive outlook on improving demand?

38:03 So, we certainly filtered through the macroeconomic indicators, which we feel all positive all levels. I think as you travel around the country, you see the strength in construction markets. You've got stimulus coming from the top, you also are working through the backlog of work that was disrupted by the pandemic. So, as I think about [K through 12] [ph] hospitals, multi-family, and the overall res, which drives expansion, I feel very good about the next couple of years.

38:47 I would also add, we've talked about this record backlog, both on the mechanical electronics, we’ll have an opportunity to work through a lot of the mechanical backlog in 2022. There's still going to be an overhang, if you will, or excess elevated backlog associated with electronic products going into 2023. And so, with that backdrop and their continued strength and market demand, would expect 2023 to be – have a pretty robust organic revenue growth as well for the Americas region on non-res and really good electronics growth year-over-year. So, would expect that to, kind of continue on, compared to 2022.

39:35 Thank you.

39:37 The next question comes from David MacGregor from Longbow. Please go ahead.

39:43 Good morning, everyone. Just a couple of quick ones, maybe Dave, you could talk about the backlogs and in the past, you've indicated a disinclination to want to put through pricing on backlogs as you protect some of the spec business that you've [booked] [ph]. I'm just wondering if that's changing now as you think about becoming more aggressive on pricing into 2022? And then obviously great results from Europe under some pretty difficult circumstances there as well, clearly Tim and his team are executing well there. Can you just talk about one of the biggest pieces of the 2022, 2023 margin progression opportunity in Europe? Thank you.

40:20 So, I'll talk about international first. I think Tim, our Allegion Home, Europe, SimonsVoss, Interflex, the [Australian business] [ph], great focus of execution in 2021 in the phase of the pandemic. The consolidation that we drove a year ago and announced in combining that did a couple of things. One, simplify their structure. We cleaned up some bits of the portfolio, but Tim's knowledge of the capabilities of America accelerated capabilities that we have here into those markets. It's things like diligence. 41:02 It's things like our electronic software platforms and a belief that some of that product platforms that we're having advanced development can be extended and help us compete. So, I think, when I think about Allegion International that we pulled that off in a pandemic year, is some work that's been going on at Allegion for a couple of years, and it came to our head, and I think our best days are ahead of us. 41:31 I think, in terms of margin expansion, I think the long-term goal would be to be a margin equal or better than [ASSA] in the competitive markets. We're not apples to apples in terms of how we compete, extremely strong in the electronics and then you get more into the regional market forces and what those markets allow where we're competing. 41:59 The second part of the question was?

42:00 Yes. So, David, on the pricing associated with the backlog, keep in mind, industry standard normally when you give a quote, on a project based job or and/or you have an order in-house prior to the price going into effect, you kind of honor that. 42:24 So, normally, there's a time lag between when you announce a price increase and the realization and that could be, we'll call it on average, 90 days to 120 days type of time timeframe. And so, that's why relative to the price increases, we've already implemented and are executing. You don't get to a full run rate realization that we'll call at Q3, but normally you don't go back and reprice quotes and backlog. 42:55 Okay. That's a consistency, kind of in our industry. Now, we have looked at other parts of the business and doing that, but predominantly it’s protected.

43:09 Is there any way you can update that 80 million to 100 million of backlog number that you gave us last quarter, just to indicate where you think that is today?

43:16 So, it exceeded or increased compared to Q3, just kind of given the surge and order activity. Now, some of that and it's difficult to characterize would be a pull forward from 2022 activity when customers are just trying to get to orders at and get in-line for the products, but increased and I would say, if you're, kind of looking at the full-year revenue impact on Allegion north of 100 million would be how to think about it.

43:53 Thanks very much, gentlemen.

43:55 Thank you.

43:56 The next question comes from Andrew Obin from Bank of America. Please go ahead.

44:02 Good morning.

44:03 Good morning.

44:04 Hey, guys. Just trying to understand how much overlap is there between your supply chain and the supply chain of your competitors? i.e. just sort of ability to compensate for the fact that it sounds you underestimated the strength of the demand and sort of catch up when the competitors already have sort of slots [on the line] [ph] or is that not an issue?

44:26 I don't believe there's little overlap. You know, look at Von Duprin devices and look at [indiscernible] whatever brand go market with, significant differences on the mechanical side, different [indiscernible] came out of San Francisco. I mean, there's just differences. I think there's also advantages, disadvantages, also out of scale, something we're not shy of. 45:00 A bigger electronic expense would may give us some advantage. I think when I look at the performance of [ourself] [ph] in 2021, I’m humbled and I would say, it's a strong reflection of the opportunity out there in the marketplace for approach.

45:16 Yes, we can figure up, I was seeing more on the electronics side, but that makes a lot of sense. And another question, sort of, look you guys have been fairly conservative with the balance sheet usage, particularly on the technology side, you have a lot of, sort of things incubating inside, but the valuations out there are a lot more favorable than they were a year ago. How do you think about strategic opportunities post the sell-off, and I would imagine there are more sort of desperate buyers/sellers than they were a year ago? How does that look for you?

45:51 So, I'd say, number one, on the software electronic seamless access side of this, our software stacks that support expanding access, capabilities to customers have never been stronger. We've invested through the pandemic and our ability to bring in visitor management and schools or capacity flow through a building or solving problems and verticals where there's multifamily K through 12, those software stacks are critical, and I believe we're in a leadership position. 46:32 Two is, the valuations are softening. We will be opportunistic on both. You've got to have one leg in the mechanical world and one foot at least in the seamless access world, and we're ready to deploy capital in both that in areas that extend our value proposition and advance our position and seamless access around K through 12 multifamily and hospitals, and we’ve never have been in a better position to do it Andrew.

47:06 Great and congratulations to Patrick. Thanks a lot.

47:10 The next question comes from Jeff Sprague from Vertical Research. Please go ahead.

47:17 Thank you. Good morning, everyone.

47:19 Good morning.

47:21 Just kind of come back to price cost and also Dave your comment about, kind of glide back to prior peak. When you're talking about recovering inflations fully in 2022, is that kind of accumulative inflation burden that you've taken through this entire episode or are we just speaking about 2022 specifically? And really the nature of my question ties back to the glide path comment, you know your revenues here in 2022 look like there'll be 12% or 13% above 2020 and the margins are 100 bps below 2020, 100 bps below 2019. So, maybe you could just kind of bridge us a little bit more back to where you think you're [normally] [ph] heading here?

48:10 Yes. So, on the price cost dynamic, the commentary relative to 2022 is margin accretive, obviously. Pricing exceeding inflation cost. And then when you add productivity, we're in the positive territory there, margin accretive. If you look at it over a two-year basis, net positive, okay, but down on margin, and you understand obviously the math on this. You can offset inflation, but it's not enough to, kind of cover your normal margin profile. So, pressure there. 48:51 When I look forward to 2023, you've got continued growth in the business. So, you can have volume leverage there. Assuming inflation is normalized, we carryover a price improvement there, plus any incremental pricing improvements would be additive. And then, you just have the normal leverage on the business, plus business mix should be favorable as well. 49:18 So, kind of looking forward, past 2022, glide path to peak margin performance from an overall Allegion perspective, you heard Dave talk about the improvement in the international segment, leveraging corporate spend etcetera, I think it puts Allegion in a good position to be a peak margin performance, and hopefully by the end of 2023 and going into 2024.

49:45 I'd add one other, as I think about pricing versus pre-pandemic, we are increasing product – pricing on our residential products and we'll make sure that we true that element of our portfolio as well.

50:03 And could you just speak to, I mean, obviously everyone is dealing with supply chain issues, but the key competitor does seem to be fairing a little bit better, is there any, kind of dis-slippage in, kind of distribution posture with key distributors or in retail, where you're kind of, for like a better term, I guess stocking out and kind of losing shelf space?

50:32 I'd say, my reaction is no, not losing shelf space. I think, one is, when I think about ASSA, they would run with significantly more inventory Allegion versus ASSA. It's a different model, but if we would typically run with $400 million, $500 hundred worth of inventory, they are 4x or 5x bigger on that. So, you got to bigger math. They have to drive that on a global basis. 51:02 I think their electronics position is particularly driven by HID [indiscernible] advantage there. With that said, we worked extremely hard to adapt our supply chain. Again, I talked about the velocity we get through that supply chain in a normal time. We were hit by the electronics, investment casting some extrusion, the mechanical side easier for us to go in effect. The electronics as we think about our guide, allocations equal to the guide, if electronics improved, which I see some bricks. 51:42 We're going to sell more electronic [indiscernible] to be good for Allegion. As I think about lack of shelf space, Jeff, you know as well as I do. If you're – if the installer needs it today, and you can't provide that, it goes to the competition. And I'm confident we have faced some of that. I'm confident that we will regain whatever we lost.

52:09 Great. And maybe just one housekeeping question. Wages came up a couple of times. Can you just give us a sense of, kind of labor – direct labor as a percent of COGS or however you'd want to frame it for us just to have the perspective on that?

52:24 So, if you look at it relative to the gross profit, it's a low piece of the overall product manufacturing cost. Wage rates have increased here. We're competitive in the marketplace and so what you're seeing across the board, we would participate in that relative to the increases. I’m sure we're competitive and attracting and retaining good talent.

52:50 I would just add, especially in the major sites, our goal is that, Allegion to be that shiny manufacturer on the hill, great benefits, great wages, great opportunity to develop, one of the safest workforces in the world, and a place where people can engage and grow.

53:08 Great. Thanks. Patrick, congratulations. Enjoy retirement. Mike, congrats.

53:13 Sure.

53:14 Just a reminder, if we could just have one question and a very short follow-up if possible just to ensure we get everybody in.

53:21 The next question comes from John Walsh from Credit Suisse. Please go ahead.

53:27 Hi, good morning and congrats to Patrick and Mike both. I guess just for my one question here, as we think about the margins for the two segments and I appreciate we're not going to get, kind of quarterly detail here, but would you expect both of them to kind of lever at a normal type incremental back half of the year? Is there any kind of divergence between the two of them as we think about the margin growth opportunity for both segments in 2022? Thank you.

54:06 Yes, I would say the international segment would be on a more normalized basis, and obviously didn't see the pressure that the Americas region in 2021. And so, your question is specific to the back half of the year. Americas would lever more than what you would normally see, again because of the price cost dynamic, becoming much more positive there, and the efficiencies from a manufacturing perspective as we work through some of these supply chain constraints. 54:38 Now, they will have much better leverage because productivity will be a lot better and then, kind of leveraging on the SG&A cost base. So, higher incrementals in the back half of the year, and you would expect that just kind of given the dynamics of where we are today.

54:58 Great. I'll just leave it at the one question there. Appreciate it.

55:03 The next question comes from Josh Chan from Baird. Please go ahead.

55:08 Good morning, Dave, Patrick, Tom. Best wishes Patrick in your retirement.

55:14 Thanks, Josh.

55:16 I guess my one question based on your comments about raw materials and steel maybe be coming down a little bit and your, kind of how costs flow through your P&L, when do you expect to, sort of hit peak raw material costs, if you will, prior to steal maybe benefiting you a bit later on?

55:39 So, we're currently at peak costs right now. That will kind of carry forward into Q1, you know Q2 it starts to level off relative to prior year comparison, but just a quick reminder, even with the market costs being lower today than what it was well say in early to Q4, we don't see the benefit of that roll into our numbers, maybe 3 months to 6 months later, just kind of basis of how we manage our supply chain and entering into contracts with average prices and those type of things. 56:22 So, kind of like the pricing dynamic, there's always a lag relative to market. And so, would expect if they retain here some of that to flow through, we'll call it in Q3.

56:38 Great. And I appreciate the color and good luck in 2022.

56:43 Thank you.

56:44 The next question comes from Josh Pokrzywinski from Morgan Stanley. Please go ahead.

56:50 Hi, good morning guys and congrats to Patrick and Mike both. Just maybe first question on the supply chain side, you guys had talked about a lot about chip shortage, but I guess, maybe just kind of zooming out the bulk of the portfolio really is mechanical versus electrified, like any other pieces of supply chain that are still, kind of jump [indiscernible] for 2022 that we should think about or will a lot of that throttling really be determined by chips?

57:22 We have, what I would describe as more control over that mechanical supply chain have been able to move faster and to develop alternative sources wherever that could come from the world. Again, I'd say a lot of our U.S. mechanical supply chain is based [in region] [ph]. And again, the mitigating moves that we made, I think are substantially more operational execution than the chip side of it.

58:00 Got it. And then just quick follow-up to want to make sure I heard you right, Patrick, on the return to prior peak margins. It was an exit rate for 2023, not a full-year comment? I know, it’s sort of silly like sitting here in early 2022, but just making sure I understood you right?

58:16 So, first of all, what I did mention is, exit rate 2022, kind of, if you kind of go back to, we'll call it more of a normalized margin profile, Q4 this year 2022 is going to look pretty good. So, feel good about that. As we progress throughout 2023, we could be back as a total company, Allegion peak margin. Again, a lot of inputs there and factors, kind of playing into that and things could change, but so if you were in a good trajectory for 2023 for peak margin for the full-year, Americas will still have some wood to chop, kind of get back to peak margins, but we're working at.

59:04 I want to make one more comment to make sure I'm clear on the electronics side of this. The team, our engineering resources have done a great job adapting and developing second sources for electronic chips, particularly in some of our newest locks, those chips are in high demand in the external market. 59:31 So, things like our exit devices, those chips, maybe more options on the market than some of the things like the incurred plus that are right on the cutting edge.

59:45 Appreciate it. Thanks.

59:49 The next question comes from Chris Snyder from UBS. Please go ahead.

59:54 Thank you. Actually just wanted to follow-up on those prior comments around chip procurement. Can you maybe talk where the company is in terms of sourcing alternative suppliers? And at this point, is the chip constraint more of a revenue headwind in that, you cannot get the chips or is it more of a margin headwind and that the chips can get from alternative suppliers are running at a higher cost?

60:18 I would say, the chip constraints are our revenue headwind. If we could get more, we could some more. And I’m encouraging you take a look at our new [indiscernible] plus, it's the first touch to tap lock on the market. It's constraint. It's got some of the newest chip technologies, battery savings, energy savings, you like it, but it's constraint. 60:48 The second part of your question?

60:53 I think that answered. I guess my follow-up question was actually, would be on pricing methodology. Obviously in the current market where availability matters more than price, you can push pretty hard, but how do you guys determine or how do you gauge like what's the sustainable level? How much can we put in Q1 2022 that that could sustain through 2022 because it sounds like the assumption is that availability across the supply chain improves throughout the year?

61:21 I think in the [indiscernible] quote market, we're testing that market. We're testing that pricing every day. So, two price increases in 2021 in the commercial institutional, another coming out. So, we're raising list prices. We're making sure we're capturing our freight, but in the bid – in the quote bid order procurement phase of that, it’s been tested everyday by the marketplace, are you winning or losing and whether it's a bit of an auction market, but we're living that every day. On the residential side, we're going to be strong and stand-up from the inflationary forces that are impacting our products and not give away some of the furnished products on the [plan] [ph] in terms of residential security.

62:18 And, Chris, I'll just add to your question on the product redesign and alternative sourcing strategy, making really good progress. It impacts a lot of products throughout our product portfolio. The expectation is, the majority of it will be completed and executed by the end of the second quarter. 62:41 It’s kind of phased in throughout a little bit this quarter, most of it Q2, which will help us alleviate and start getting more product into the channel or customers, etcetera and higher growth rates organically. And so – and to start working down the backlog.

63:03 Appreciate all the color. Thank you.

63:06 The next question comes from Brian Ruttenbur from Imperial Capital. Please go ahead.

63:12 Yes. Just real quick. I had a number of questions. So, I'm going to hit you with, maybe the easiest one. The total price increases that you had in 2021, can you give us a range, was it on the low of 5% up to [20] [ph]? Can you give us a range on where prices went in 2021 and where you anticipate those to go in 2022, overall in terms of the ranges of price increases you had on your products?

63:39 You know, I would say characterize it as a wide range, different product segments get different price increases, you know residential, non-residential is different. Even within non-nonresidential, our hollow metal door business for example has surcharges attached to it, which would be higher than it’s specific to steel, but list price increases maybe is what you're more at asking for. 64:07 I'd say, we're competitive with the market relative to the increases we've already announced and implemented in the market, and then another increase this month as well, pretty sizable, but remember, it's less price and as always discounts off a list price of the key item here is what you end up realizing and that number will continue to accelerate reaching a peak in Q3 of this year.

64:36 Okay. Just as a follow-up to clarify that, since you didn't mention any specific numbers, the market as I hear it is around 15% increases, is that the right markets that I'm hearing that you're talking about?

64:50 I'd say, again, it depends what you're talking about. That to me sounds like there's a lot of surcharges baked into that number. That is not in aggregate, kind of the list price on your traditional mechanical electronic business.

65:08 Thank you.

65:09 So, let me – specifically with hollow metal steel doors, you could easily be in that zip code or more. But there's a wide range of SKUs here and we're in a – a lot of it's been [indiscernible] where we're competing every day, but prices are up.

65:33 Thank you.

65:36 This concludes our question-and-answer session. I'd like to turn the conference back over to Dave Petratis for any closing remarks.

65:46 To wrap up the main things you heard today, demand remains robust and leading indicators are positive. We're working through the supply chain challenges, which are expected to improve, but we still see some pressure in electronics. 66:01 We will get the price cost equation back to positive this year and we expect to deliver organic growth of 7% to 8.5%, adjusted EPS of 7% to 11%, and high cash conversion in 2022. The long term fundamentals of Allegion remains strong and we are well-positioned to capitalize on the opportunities and we’ll return to peak performance as conditions normalize. Thank you, and have a great day.

66:30 The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.