ALLE
#I would anticipate ---+ well, first of all, the step up here is all related to specific opportunities that we see, specific around the market segmentation that <UNK> talked about, expansion of the channel, discretionary market opportunity, new product development, those type of things.
The other thing that's fueling that a little bit is when we acquire companies, there's opportunities that, in order to fully realize that investment and take advantage of that investments are needed to expand the capabilities of that.
Republic Doors would be a good example of that where we need some infrastructure spending, if you will, to fully take advantage of that acquisition and to fill out the regional distribution capabilities for fulfillment for customers.
So it really is going to be dependent upon what's taking place in the industry, acquisitions, etc.
But I would say going forward long term, $0.15 to $0.20 I would say is probably a peak.
How much it will taper down from there is hard to say, but each year we'll look at individually.
But I think the critical thing is that when we evaluate these, we ensure that there's good revenue growth opportunity, that we can execute on it.
The risk of doing that isn't significant.
And we have got to demonstrate a proof of concept in the marketplace before we put a bunch of capital behind it.
So we have got levers we can pull.
If we can't execute, we can throttle back a little bit.
I would add to that too, as we move into 2017, a hard squeeze on what I call back-office costs, then any increase in investments in things that we believe that will produce growth for us going forward in the future, including new products.
Hi <UNK>.
Incremental year-over-year improvement.
When you come to investor day, we'll give you a better look at that, what we see long term.
But continued step up year over year.
I think, as I think about Europe, it's a little bit like three-dimensional chess.
We have to continue to improve our geographical position.
The northern margins are better than our traditional markets.
Second is investment in growth in our spec writing capabilities.
It is important.
I describe our core mechanical business as more of a flow goods business.
That wholesalers are providing it.
We do the best in the world where we can drive specs.
So I wish I could be more aggressive and say, it's going from this point to this.
We've made the moves, but as we look at ourselves versus our competitors with similar geographical regions, we were significantly above them so we have got to be realistic in terms of how it goes forward.
Our ultimate goal would be mid teens.
Yes.
So it is true we have repositioned the portfolio, I think, nicely.
It's allowed us to focus on our core business.
We are applying the same segmented market approaches that we are in the US to drive growth, and it's yielding results.
We will continue to be opportunistic in terms of M&A in the region, but I'd also say patient with a flavor towards electronics.
Our Milre acquisition in South Korea, growing quite nicely, and we see the Asia-Pacific region, in terms of the electronic convergence, moving faster.
We want to be a part of that.
But overall, feel good about our execution, confident in our growth ability.
More based on the segments that we're driving.
We had some project wins in the fourth quarter.
That's a little bit like a license to hunt; we have got to go deliver those, which we're confident we can and continue positive on the region.
It's a good aspiration.
We again think the improvement year over year, and we'll go into more detail at investor day on how we see the next three to five years in the region.
A little bit more difficult, just given the scale and size of the region.
But steady improvement, kind of like where we are now with Europe.
We'd expect to leverage on top-line growth and continue to drive a price to exceed inflation and just steady improvement.
I'd say the first headwind versus the 10% is more the challenge of redeploying our manufacturing capability.
We took out over 150 jobs in Italy.
We've have gone to some partners in some new production sites.
There's always challenges with this.
And as we've said in past calls, that didn't go off exactly as we would have anticipated.
But we're well positioned for 2017.
In terms of ---+ there was a pretty big transformation in the portfolio.
We cut parts out, we have added with SimonsVoss, AXA.
In 2016, we established what we call global portable security.
They're working to forward the strategies on that, which we think will fuel growth and profitability.
So overall, we're very pleased with the improvement over the last 36 months.
We have not been at this level of profitability since 2008.
The other opportunity is continuing to build our specifying capability.
This comes with people; it can also come with acquisitions.
SimonsVoss helps us in the spec writing capability, but you have to coordinate that across the region.
This takes more time, but we think our prospects going forward are positive.
I don't see any further changing needs in terms of any environmental exposures we have globally.
This is another example, over the last 36 months, we did not inherit from Ingersoll-Rand an environmental department; we had to establish that.
Establish a review of the sites that we operate in the world.
And the change or investment that we made was more driven by proven technologies.
We felt that we could make that investment and remediate those sites at a faster pace versus what we were conducting.
We had to work with state and local officials, and take it as our commitment to do the right thing in the places that we operate.
Those will be cleaner sites, and I think we have a very good handle on what we own today.
Hi <UNK>.
So number one, I would look at our return on invested capital profitability margins.
We're significantly ahead of the competition.
Our engineered order of nature and the varieties of products that we make don't necessarily leverage huge automation investments.
In things like polishing, our finishing facilities, you will see a high level.
But if you go down here to indy ops or into the facilities at SimonsVoss in East Germany, I think we use a balance of build-to-order human hands and automation to deliver some of the best return on capital.
Oftentimes in manufacturing, it's how we eliminate non-value-added work and help our people to improve quality customer satisfaction that yields our margins versus straight automation investment.
It's not what I believe get us to the promised ground in terms of effective manufacturing.
So we certainly followed the Stanley movement almost from the day I arrived at the door.
I think we understood our opportunity there clearly.
Was not surprised at all with where that asset held up.
I think you got to step back and look at it.
The performance of the Stanley Mechanical asset had not grown over time, number one.
Number two, kabadorma also made another move, and that was called Mesker Door.
And I think they are working to try and position to look more like ourselves and [ASA] in the North American market.
I can only say, bringing together companies is never easy.
And being able to put together the capability of distribution, specification resources around that, those new acquisitions and portfolio I think open up opportunities for us to grow.
Change is never easy, that's my point there, and that's why we continue to segment the market and invest in the US to drive our organic growth.
I was not surprised by how those things came out, and have no remorse.
No slowdown.
I think, we look at this market and think 5% to 8% annual market growth.
We're doing better than that.
And I think the challenge is for the industry and for Allegion to accelerate the adoption.
These are clearly devices that can improve home, commercial, institutional security.
As we connect these with mobile devices, people want to be confident in them.
And in my mind, this market will continue to progress, and Allegion should outgrow the market in that convergence.
We would like to thank everyone for participating in today's call.
Please call me with any further questions.
Have a great day.
