APG - Earnings call transcript Q3 2024

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Operator

Good morning, ladies and gentlemen, and welcome to APi Group's Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note this call is being recorded. [Operator Instructions] I will now turn the call over to Adam Fee, Vice President of Investor Relations at APi Group. Please go ahead.

Adam Fee

Thank you. thank call. joining and XXXX third everyone, conference earnings morning, you our for quarter Good

on call Executive me Franklin CEO; Chief Joining the Officer; and and President Becker, Financial Board Kevin and Jim our Lillie, Krumm, Co-Chairs. sir our and Vice our and today President Martin are Russ

projections actual forward-looking to or press release expectations, of forward-looking Before future press subject on and risks, facts. release we results like to known that future the our a and statements, unknown are not implied statements. statements and on from risks materially remind In expectations. with filings regarding are based our which we and guarantee and performance, statements to detail These are matters may begin, or I from those in future to certain material intentions announcement, by or this you are results trends that differ our historical could would that such expressed other anticipated SEC, the the earnings company's performance cause call, and uncertainties company's not factors differ are that cause events other

as obligation required statements of XX, Our statements any law. undertake we no October are we to may and by make today, as forward-looking update except

Investor reminder, As the our posted page Relations third on a we performance of have quarter a presentation detailing financial our website.

and metrics. pleasure presentation. call will other and in Our reconciliation turn operating now press found non-GAAP items and measures to is Russ. my key regarding our comments today It these other be over the can also financial include of The to information release

Russell Becker

you our call. the to you, time Good taking Thank for morning, Thank Adam. everyone. join

and leaders thank would #X of into our our value. well-being The for health each get safety, approximately XX,XXX we I like our of is dedication to APi. teammates their Before to results, our

in I'm with the every opportunity up that of mention organization our hurricanes Southeast of the our in teammates we the quarter, to way the teammates impact has which the to the the happy few practice. on the months, other I stepped including each our given communities events this put operate. and While impacted help last to value

adjusted we as year-end by detailed part XX/XX/XX our third of broader Back target you on of XX% Creation Shareholder Framework plus quarter in Slide EBITDA our our margin XXXX, presentation. XXXX can find X that Value

XX%. the adjusted and from In target, XX% monitoring, the financial and are and flow inspection, addition XX% XX free XX long-term goals long-term revenues service of approximately cash to conversion of

intended and its few our we with to initiatives communicated Over or expanding goals XXX EBITDA margins XX% excellent on year approximately and expansion the past on basis this points. key progress strategy our these made executed with margin have executing The XXXX. adjusted specific margins team reach has in years, initiatives up to expected a more achieve focus

accomplished on focusing been First, the the following: has by This pricing.

mix. Second, improved monitoring service and inspection, revenue

be progress XXXX, free with has resulted record have cash generation. procurement, revenues, Third, highlight to selective disciplined M&A it expected net the XXXX project as always made a being always profitability we last opportunity accretive say, to capture. our strongest Chubb from scale. Six, few team's like work value And Fourth, just of APi customer we The On I finally, business systems Fifth, over and Slide strategy ever been. business and selection. year the and X, years better. in XX/XX/XX to be executing the as the the XXXX has to we pruning. and flow have

in The third XX in U.S. growth quarter in Life of revenues marks Safety. row organic quarters double-digit a inspection

towards to our and revenues of coming XX% service been key our performance a long-term from inspection, of contributor has steady monitoring. This progress target

X as year first years became million it a in billion closed next a new set XXXX. to on is to progress $XXX in for we to reflect in we gratifying of and company have financial in As annual and late our traded generated our expect we first prepare company, XXXX, we publicly increased In adjusted about our $X the since This million deliver public $XXX year, adjusted we EBITDA EBITDA. sites. goals

As our we our enter to M&A organic plan strategy, bolt-on prepare and growth, margins XXXX, continue accelerate to we to execute increase program. expand

Before on results, address been financial targets. significant the customer we quarter improvements which I has to our into wanted initiative and project the a contributor Slide our made Kevin third to disciplined gets XX/XX/XX X, have towards selection

selection our planning and the our field best on made XXXX. opportunities business of growth. risk have and We on early higher lower-margin, in leaders it We project focus valuable profitable evolve customers position business away a and for focused to from allocating point leaders the cycle for now opportunities time some large, to in our disciplined emphasis to long-term challenged

us and allowing leadership results, deliver EBITDA it is positively ahead our Our has financial strategy team expectations. impacting margins of this our job excellent an adjusted to done executing

generation important timing recurring to smaller in service expected cash to recently, consistently continue is headwinds with growth More businesses. these this our faced second this market setting take revenues. been projects. reaccelerating year, as a grown certain lower us margins quarters in service relates it of we during and as as customer XXXX underlying risk has We've and tiny expected business business in Equally It we new that the in work unexpected comes to beyond delays revenue share. APi's in encouraging due note have time, steadily project gives and to third towards This confidence with is evolve and core flow our temporary we higher us higher to backlog healthy that margin, sizes. records and growing margin, more

be the impact headwinds and the total by with approximately We driven on net businesses. to our Services $XXX expect impact million, revenues this of predominantly Specialty these HVAC XXXX

execution delays broadband program. by driven permitting Specialty following: and of customers certain to engineering Services were the In delays business. these and headwinds higher-than-expected planned certain rural our with believe and XXXX to the Specialty and telecom Services, federal portions than We related are of limited slower were primarily primarily utility and

business, Safety core represents Our project-heavy progress in XX% overall strong revenues. Safety protection, growth by excellent excludes made fire the revenues elevator and monitoring organic electronic led security as single-digit inspection, has X. businesses and consistently on highlighted HVAC Core total growth APi which our demonstrated service Life business of more over has Life Slide includes and net organic and high

business From high adjusted Safety in XXXX approximately more considerably, margins margins Life seen year organically basis improved XXXX, Safety record have a it. to EBITDA billion, up healthiest EBITDA and Life points. prior backlog $X with we've The is profit XXX adjusted the versus of X% has expanding and gross than

XXXX, growth the margin flywheel, the business businesses in our revenues to drive expect expansion in Starting inspection-first beyond. will decision allow the driving core service project strategy, by in underpinned be the Safety Services XXXX We to outsized will network across to realign and more our further selective continue branch and Life under which clearly is our the Specialty revenues HVAC have more segment. you businesses see we made as on

Slide entered put our synergies a growth highlight We a customers in to operating strong. business providing plans. inspection, service proposal will similar is inherited that and in growth and Organic our growth end create into business in other XXXX on change similar of of markets and with backlog positively, lot X. segment branch organic trending serve streams is for to revenues. a with contracts which momentum. Safety remain This and activity consolidation HVAC and through monitoring efficiencies, The companies Services nearly subpar we finished support project working international revenue Organic return its

engine October. Elevated, at On Slide the XX and multiples through to XX, organic continues with support bolt-on accelerate growth acquisitions, reasonable bolt-on M&A excluding closed future

executing momentum XX/XX/XX XXXX we continue value creation the which see accelerated on Slide through and have this the to M&A long-term expect in initiatives behind our We framework. And we you shareholder can benefits, beyond. XX, of

continues to an recurring into business more branch-led mix of higher-margin increased model Our a revenues. operating with asset-light services-focused evolve

as in which less the from in XXXX on the percent and more our of reflecting strong selection X.X% contract project to dollar loss field. execution total than measures customer evolution, this rate, dropped and loss X.X% During disciplined approximately revenue projects XXXX, a in

our the team's I'm of strategy. of proud execution

of growth the built return business have to strong XXXX. organic improved We expect and in to margin and accretive our backlog quality foundation, a

XXXX well positioned the guidance are more We set new following Kevin? review financial adjusted in to during higher next EBITDA over discuss call our and detail. achieve to meaningfully in X targets and hand to for the target our Day margin now Kevin year. our we like XX% plus will results I would to Investor which years,

Kevin Krumm

favorable Services representing ended increases, quarter. driven billion billion by revenue, by revenues compared in Chubb year XX higher-margin compared the value the Russ. Good well Adjusted X growth point revenues modest X foreign gross a months service in ended margin Safety prior basis, essentially driven the by the price for On year Specialty in September margin our segment. organic growth capture decline period, the XX%, morning, project period, Services X% and to organic revenues for X.X% revenues basis outsized Reported as of and savings. services September by increase X.X% in to segment for $X.XX from offset total currency to flat rates to an $X.XX our everyone. were company exchange This M&A. months for a grew strong XXX XX and expansion prior as service organic increased in Thanks, was partially benefits both

the earnings an X the to by in period. a due the primarily primarily adjusted margin margin, partially to specialty in outstanding. adjusted by offset X.X% XX.X%, the was increases per per representing quarter driven factors businesses coming representing or offset gross by months by increase $X.XX impacting increase ended Adjusted growth X.X% to adjusted partially XX HVAC revenues. in fixed year increase year lower-than-expected compared period. share Adjusted absorption and with diluted EBITDA, prior expense and XX, cost lower the basis third share, to was point in diluted This shares $X.XX at The interest for share EBITDA was per EBITDA compared our for due prior increased September

billion I in in months the for will results the segment. the to prior billion X our $X.XX ended year. $X.XX Safety Safety XX detail Services revenues to compared more reported for now by increased Services X.X% September discuss

revenues by in businesses, low as growth organic partially international in organic attrition was as revenues inspection organic driven growth led offset inspection, delays in well was and double-digit U.S. which revenues. single-digit in our monitoring growth project This double-digit Safety HVAC business quarter, service customer by broader project in by decline planned business. and posted Life This a the our

year prior increased by third record basis as quarter was representing gross revenues. an X a and increase as driven basis expansion project adjusted in third was increased basis, ended increases, year X months increase business XX. revenue and margin September gross well XX% XX.X%, compared margin factors in to point margin On X.X%. margin. ended the XX improved to prior inspection, Adjusted a services for Services mix point XX.X% the gross gross months monitoring primarily Safety the service for due adjusted And XXX a Adjusted organic by both revenues period and impacting adjusted representing adjusted margin, our the price by the September to EBITDA margin XXX compared for record quarter EBITDA the and

to relationship by on year primarily I driven Specialty Services was rural $XXX an revenues of X.X% revenue an in a well project the service XX organic September reported X.X% detail revenues. broadband driven million by engineering and in in months as prior and in first the execution basis Services divestitures, slower-than-expected our delays basis decline or customer the federal will quarter, decline for mentioned results XX.X%, in The decline now Specialty X the million period, higher-than-expected organic services on and our for compared by permitting to discuss declined and ended $XXX programs. exited in more a project segment. as

selection increase period, Our strategy. to year ended driven from the margin the a and adjusted was customer the prior XX months our by disciplined for XX September compared gross point project impacts X basis XX.X%, representing

X declined lower the a basis representing ended absorption due was to and margin months lower-than-expected prior by for XX.X% XX.X%, adjusted EBITDA near-term EBITDA September Adjusted the decrease on compared year XX point was cost fixed This period. revenues. XXX to primarily

We cash to free improvements on driving year-over-year. conversion continue strong flow focus

million, XX, months free $XXX of at X September the adjusted conversion For cash came cash XX%. adjusted in flow free flow reflecting an ended

adjusted XXXX. or months year, conversion of first the million, For was first representing flow of months the to of $XXX XX%, X an free slightly XX% of improvement X when $XXX cash over compared with the million

be finish puts to to at priority flow first is or in full our Free X a free guidance. up and now of been year XXXX increase performance in across a adjusted above the flow to us We generation APi from expect has which continues cash position XX% of our the months and flow our guide year XX%. cash conversion, cash year prior the

As to seasonality. strongest a our is cash conversion free quarter traditionally the fourth reminder, due flow

the quarter, M&A. even net our as At accretive approximately our of end of the below margin long-term X.Xx target bolt-on was leverage third we accelerated X.Xx

forward we to As we expect our significant laser-focused deployment. generation look on remain XXXX, free capital us opportunity cash grow will and providing to for flow cash value-enhancing a

capital as remaining reminder, net targets, leverage at our share repurchases, authorization multiples, maintaining have and M&A million under at long-term deployment $XXX where, priorities long-term Our remain current attractive stated levels. a we

full year the I now will for our discuss XXXX. guidance

from We end prior in revenue $XXX year HVAC of the adjusted project discussed revenues in reflects range prior EBITDA now and of the reported year on on expectations million growth the the delays impacts EBITDA the the $XXX revised adjusted This adjusted $X.XX basis the for at full $XXX in full margin which to reduction expect guide, currency EBITDA range XX.X% of billion. was low bottom and XX% narrowing call. billion, of The approximately our businesses million, expect of $X end. XX% Specialty of approximately a fixed reflects our million representing a and We the net earlier midpoint. of top and year

$XX interest million, to to rate expenditures adjusted depreciation be be expense approximately For million, be XX%. tax $XX capital million, and XXXX, to our be anticipate approximately $XXX approximately we effective approximately to

million year. average the for adjusted approximately diluted share XXX weighted for XXX the be our expect We to count quarter full million fourth and

in forward we strategy Investor plan XXXX, in more have long-term We look host early to in and year details May we we New in our the our As outlook at share the new its great confidence to momentum. Day, and which about York. to expect our business

turn the Russ. now to call back over I'll

Russell Becker

XX/XX/XX We Thank targets Kevin. XX% value laser long-term on value you, by believe in delivering can shareholder margins EBITDA our or on adjusted XXXX. sustainable of create more we creation a near-term focusing focused with

business our great beyond, have confidence to As into mandated business, sheet balance on focused our to and even look statutorily asset-light services. ability we and the CapEx XXXX we high-margin continue evolve backlog, APi in to an our lower

the call would operator the With the call now that, turn I like to and open back over Q&A. for to

Operator

comes from Mitchell question line the Julian first Your Barclays. with Instructions] [Operator of

Kenyon Pelletier

guided This at you earlier time EBITDA your is on sites. the provide be in of have to Kenyon Could Pelletier under billion to EBITDA get there? on in you for Julian. mentioned Maybe to what just million start, midpoint. And on any the you might color the that call, line you $X $XXX

Russell Becker

that one? do Kevin, Well, want you take to

Kevin Krumm

Yes, sure.

this is So -- Ken, our current Kevin. guide

this billion, from that $XXX comment the is Our current $X to $XXX to guide directed on clarify was our that is there. $XXX million, in to down time The million It's benchmark we date which just $XXX guide we million near-term towards as near million, with get or So is the believe business specific just term to near of mentioned, okay? point. And the question internally. prior term. -- at we no a have there the have Russ momentum in the

Kenyon Pelletier

and then you looks maybe what I about And environment at the pipeline talk if like M&A follow-up. just a was helpful. wondering as bit could quick That's current a present? your

Russell Becker

were mean, and have that pipeline excludes really recall, of we remains going and done accelerate last I that really of we full. said bolt-on $XXX Elevated, And job that we that. the And did really our we've that. take we shared acquisition we I'll year, XXXX into M&A. to and of Sure. million if a move that, like you approximately -- feel we good

We to have through we of we on capacity of momentum and a -- expect work year, quarter continuing number have to fourth to into go targets we're similar XXXX. this that the and as

been So really good. it's

And job. the robust, really are a done has team development corporate plentiful. pipeline Our is really nice opportunities our and

Operator

comes next Stephanie of from the with Jefferies. question Your Moore line

Stephanie Benjamin Moore

little I business guess wanted on a the I just side your a as project follow-up. maybe bit. of touch to

Maybe out to And you throughout guide. you some noted think a these quarter think color do you here us should give I these I feel called are XXXX confidence and today, bit could permitting that you delays and on just quarter. limited confident year the these of in of rebound should full the and last -- think these little and why by year-end? kind of return

Russell Becker

if I when are will. that's components program and of more the Like winterization we quarter, a we've utility see it, work with went moving to opportunities third if Well, off has, in Stephanie, the kicking year. we've of really potentially boots at pull look client the project through moving ground. next will than It's is work the proper actually government a the associated get the have significant in is forward. fashion, forward thank cited, work delays, a sure. large grammar. basically we just expected, -- was really on installation forward. in know don't you going to you. herky-jerky Yes, move the essentially, slower got originally has the first to you pause engineering just just everything But continuing that moving and and see restart that it that It's was on half and that

natural I the the in coming of issues distribution ground, one interference with project-related color we think they've of are opportunities anticipated that but X shared And And doing distribution -- existing to another Northeast. and anticipated. originally nobody kind duct down electrical now had we going issues power having right-of-way right started the got bank was It's well, work. that the high-voltage from on. some like and distribution had systems crews transmission there gas as due probably -- that has some in larger We a work bulk

get resolved, ramp the so work up can those And they're that and so to through going reengineering forward. issues move

just And some stuff can't that you plan is for of it.

And the But And and forward. it's in increase it's moving cited our unfortunate remarks, opportunities our those all are of difficult. we backlog. in

is moving business. backlog great And return for got that Our basically we've us up organically. confidence to to good gives the X% coverage into XXXX growth that roughly

the as way moving And really temporary have business short-term we we in through and move our we work into year. challenges, some so to, the the of of great confidence year as next where these is end

Stephanie Benjamin Moore

it. Got

fine in opinion. my is and So just -- word, herky-jerky perfectly

I think sums up it that pretty well.

what a So really it's but not -- not to some is the be there's deterioration these there's of is the little ramp of since anything just was outside was and effectively, the of you're bit is, XQ, slower, control. start XQ. when It changed kind than if much It's this going lot that a happening ramp. things saying that maybe as any that really you is about It's -- as not Is your changes your fair? control. there of since other on timing really kind outside which expected,

Russell Becker

say states how of That's right and known the would we've those the I the delegating way program be government's is would any states that's in and program, basically pretty It's that going. space. like well now. that, program a to well that distribution fair. challenge that those get broadband federal administering dollars and to are pullback allocating funds delegating significant the government that And place known seen the rural The only the it's telecom the

associated some administrative And so they're it. with you activity having getting work the started because proposal in like see seeing remains but issues actually really delays these of you're strong,

these really you other unforeseen So that to moving than some to just work But other It's due maybe place issues. is issues. the forward. where be core only moving underlying opportunities, forward the that there's would probably slower could like anticipated point

Stephanie Benjamin Moore

a Got that it. year margin and And to do continue talk the you've -- this to seen should of Safety Services I Can drivers that little here, quick the what real about want into expansion Kevin to kind and of switch kind drivers side. the you bit of XXXX? over just

Russell Becker

pull-through, remarks. in really our that's -- number it maybe work. see more about didn't and to one, then and good really safety to service that I'll incorporated, I can and But growth life would if this is strategy Yes. really talk itself. in detailed our leads we and our we've maybe our he continue we gross don't core we higher really our revenue, we inspection Kevin on good inspection-first that which key average, out on do service to manifesting business, add more color choose. inspection know double-digit on like while which specifically growth really continue on we start XX called we than monitoring in But monitoring, get, project margins even inspection, And our

And and that margins you in more when be project work. on the your field gets have mix selective you I think your business to business, in get and robust selective portion service really those of one that you're even going a leaders shuffle to and lost your where with be you thing deploy inspection go more to up allows and on that picky the project ultimately the is

So which would towards first revenue the component that inspection, and drives progress monitoring goal. grown make increased to service it our we of And of is, to the business total margins. XX% continue mix now, XX% of that that be we've

we've our pruning tremendous performing in number a and contracts nice their really look business, made customers well our at one, performance improving strides international of you international if business. their as to Then job eliminating branches, they branches do and in as loss-making and branches continue optimizing the poor of,

by the Chubb, the we'll but I that single I know don't to continuing we and make quite significant XX progress very now think digits expect bought into make and when end to branches that, like had there. down be no year. to that of close we really loss-making loss-making we're very, we're branches, originally

seeing is all really business. stuff and our margins, international additive that we're And to progress good the of in

lead and there's which selective has that is gross a improved that a with team the -- our improved EBITDA like see choosing the at contract loss you that programs if can of great to declined, And choosing. direct they're ultimately in they're really like rate, a margins, you as there's job doing being look margins. So relationship our work

Kevin, don't you add if know I anything? So to want

Kevin Krumm

don't Russ. I know,

that the see contract our segment. to and You to Services contribute highlighted now rate continues Safety execution we in the Chubb capture, the project value loss which

my nothing on So else end.

Operator

next comes of from Your with question the Baird. line Wittmann Andy

Andrew J. Wittmann

guess on I far? talk by start out? about of Maybe any checking of could I days the just maybe level Russ, employee to expected integrating you've you customer on in could about company's ability wanted the to how progress are and in of to revenue retention early terms making that compared out coming you way the the margins cross-sell Elevated. them talk or so even If that seen here come you're your you out and to

Russell Becker

more I key leadership leader Well, and that, to bolt-on and I like continue tell business We the to opportunities think we tell say, that starting as space. and that more we're them, number -- from, Andy, appreciate everything we to would I you retention know couldn't honestly potential in one, else, that of get at you can I like happier. M&A also be that look

these was at anything. other people. businesses. -- with was -- I time And guess some piece it's ran more leader good to us but really We there's afforded that that anticipated of lost than key business, And one that a leaders like spend some of taking and we our small advantage that's is done their look expertise some of their so as more it's of what

at So we business about with we're feel -- of and I there. we're prospects really with good that what long-term where really doing the like the

Cross-selling, national people accounts cross-selling we all that have And had them. meeting our we're to opportunity. our our as their on as we're together, they're and with in And had and our we had meeting, received it scratching continue as capabilities of group international started. We relates really professionals business well, just, meetings and great their kind them, well large getting joint like had development some well -- so hospital example, brought as client a like so surface for where team a this sales campus been to Elevated the to They and speak, inside a week we've the they from to on just annual there our of it's business. leader was collaboration bring we getting safety represented.

So it's been good.

announced to, business the to the back perform acquisition I way going We we June shared first guess, that probably as all just we now. expect when

no they the why so And to business the because some acquisitions think finish across on results not dip have a line. seen period deal we And in reason on is hasn't. have team I closes the the the I of this It's their uncommon little the after to near-term unexpected, private for start CapEx business the these in in trying get focused deal the shared investing of they didn't is that's rolling though. with when of transaction that equity [Technical Difficulty] the owned was real typical that. last a and -- like call from a It no weren't things where had there we a surprises perspective. the acquisition. was They fleet None kind of kind

firm. know the investments we're And these You private requisite the kind making going a the business. transactions equity is in that of when owner into

super platform So broader in long-term optimistic elevator I the about space. remain us building the like a for and prospects escalator

Andrew J. Wittmann

been? how sense those are factoring we into give just have Kevin, get could give annual a Great. And million. XX I this to done better to wanted us I I revenue year Kevin. paid $XXX your was that to question if aggregate so wanted the a the of how those, wondering, you've from us just probably and bolt-ons can those up guess follow meaningful which my outlook for understand I next just you've you sense here, try with of

Kevin Krumm

Thanks, Andy.

these to XX on the So date be purchase help that around listen, you, directionally don't north would price deals. $XXX average the transactions the to all -- date at at $XXX on annual just revenue so say, to deals We million. and But exactly revenue of million. you're I around has to is going right, excludes we've disclose -- done been about or or Elevated

Andrew J. Wittmann

it. Got

Kevin, is the are results. some X always is question, and definitional amortization things like just like of EPS outlook between those Okay. what Obviously, was my I going that adjustments final guess on -- on things your wondering just just adjusted convergence you're your and GAAP adjusted there are for that. and then intangible the I exclude your the to numbers.

But transformation in year investing and Chubb bigger been transformation. are come costs 'XX the in things and higher now, move cause for has where mean, like restructuring, numbers business cleaner other that you of is business we integrated things most to those that Is bucket -- the a your adjustments I as be what but forward? for down? might the Or

Kevin Krumm

Yes.

said restructuring we've big work non-service with point, Chubb, that to BPT are of our We and the value we're you company. will things pretty closed that's buckets. expense prior restructuring this be end a in buckets Andy, on -- we in contingent are the are at related and there that the doing the -- a the pension largely is still material capture in the for at X the And said But expectation. gap buckets, there, driving some highlighted which largest X that consideration done There's there's few the restructuring. to XXXX. so deals other X to So public respect really consistently being

subside. is The Chubb really primarily expect bucket things some other that, deals that and that we've done. I work deals, as larger deals with look do I restructuring and now would like absent continue like integration bucket Business other we bucket that of at Process expect would on that. of Transformation, to to bucket the bucket focused But you XXXX, elevated associated and as platform sort

Operator

line Your next Kathryn Thompson of question Research. the Thompson with from comes

Kathryn Thompson

including can the in ability the -- years somewhat, the over that great first that environment? Just to pricing pricing you've and reported. given in quarter you inflation abating gain is discuss on But moderating gained just inflation the

Russell Becker

anything Well, you I'll crazy wage start happen I continue like joining and business, and labor, our is some increase business, reasonable call. are then not the we're look which thank Kevin in I in can business, -- if take to service Kathryn, it, get me and color wrong. add our you inspection levels. see continuing mean, we're there. seeing our But we to mean and you predominantly price, especially for Don't rates continuing to at at

take price we so of portfolio And our broader continue across really the to business.

really So see we actually stickiness -- in price. good that and

in that walked our struggled came Specialty segment earlier about and mutual we a to business our prices, client talked had the think raise we a we I Services relationship. agreement to from and year, we in a away

customer. we've And that started do for actually work to already

to We at particular levels -- returning prices. to that are say, programs doing returned different increased this we on but the work and customer in XXXX, we had, for executing haven't

to the And focus skills we to continued has work continue for are And that's clients we focus the the value price customers and to continue to price. and us, our the -- want those services for table. the take right leaders to be. that that So where on that's bring field and

the more So Kevin, it's been for business. maybe that's anything positive do have know, add I more detailed? you don't to

Kevin Krumm

side of and of the we some service be on -- that's teams side about room We've go lever internationally, here, mean, to of I into business pull. things course, to it internationally, pricing had And to look America it's allows where going to size the going value drive where some continue going they the talked And to think run then, service this us take you to drive site. take do we say, when be Group ticket would margin, that, continued about talked they that bring I to as we've that. able in the have as to forward and, and on at like the came a margin. to on North And we're our business. APi No I we're year, price consistently to

as we subside, could even work be to forward to here, I continue going think as our inflation so able have. to And as we're mechanics go pricing we

Kathryn Thompson

Great. helpful. one a is That's very -- little season. earnings bit This this -- just it's

up already So some than from nuggets including is a mentioned after delays, and that building it's reported, that exterior you pick COVID picking expected and large companies repair their distributor non-res year. remodel great this product up have activity better been that

does R&R are that delayed? that APG non-res nondiscretionary, So the So fit are activity really, opportunities? largely APG given services how was into what

Russell Becker

essentially in Good question, activities to have feel our normal. like business-related kind world I returned a Kathryn. post-COVID mean, I of

continued that inspection that and double-digit back, had COVID growth. really just this when this a is -- in dip sure double then and knew necessarily and to we growth opportunities when quite which continued since in see citing. just it other we've business not ample all see firm has nobody that continues And really, And digits going -- to mean, quarter our really, for again. again, COVID. first just hit, I what I'm So the was And what continued bounced on, inspections.

can to a out? it is guess know, I little a relates bit this so loss And citing. help Kevin, of what don't I at I'm other company as you me

Kevin Krumm

what we the just general I would momentum, added Well, to presentation. on it point to

backlog, You can up. at our look it's

robust. remains activity proposal track that. We Our

Our is up. proposal activity

service as doing As is on there. we double-digit on the growth And well. work our hit see sort inspections, portfolio service continue required, of our portfolio, work to security not statutorily would in side, but be we're up Russ which

So to momentum good we areas. we across look continue to see -- and those continue at, we what see

Kathryn Thompson

perspective, seems APi. positive be It like for Yes. only a only from our can it thing it's --

Russell Becker

Thanks, Kathryn.

Operator

Your of line next Andy comes from with Citigroup. the Kaplowitz question

Andrew Kaplowitz

still you're and So means service business And X% growing project your organic growth inspection is double it Safety. in digit, are declining. if recording

not get in to, that your of into lot it a the should about is in issue back now services and to projects market? the know think is current there moving good HVAC say, going business you're you're enough But Or comp growth anyway. I and Specialty going mid-single-digit Safety? Can out that? how weakness forward there let's work for So we

Russell Becker

well. and large good there, kind work from had as mean, business selection There's -- at our the out second hospital one, out business our up we've as look figures window site. I work when down project project literally, hospital on there. on the in booked of out the that in number you that focused half even recently the our Andy. into of -- the recently another you the shows of plenty backlog of forward. project a pushed We in put project that work into large I selection yet. moving can of look Kong, of year it half Hong office customer Asian project commencing first in if There's plenty we're look We in -- don't the good And actually now And is just year. think that you're standing that our in and

in business. you to is by that So interest in environment. revenue And American but perspective high cited take HVAC really then selection see lot at impact. ever down, pruning highest interest general North rates the distribution business impacted and positive It's down a South some. been work, in the a a the had business in remarks backlog and off I business my billion, that cited business, or has I think is of safety as in we have expect business it's and profitable And the project from our we've $X that some to that does based slightly we the safety rate But warehouse it's the come a continue our the been. of and a that that's business highly have

it's is really visibility and have look good going we year like, and this what we're So optimistic really to positive. into next

Andrew Kaplowitz

I No, new know, last over it. that's margin, give but Russ, you're know I those a already it's couple then, don't on to XX% And you targets out want obviously, quarters. of the X-year delivering business. helpful. over Got seasonal

look from project mid- inspection of about to but telling next how Or you what you be much at what least year? do high margins, forward, are sort services if could -- still, us delivering you higher So teens? stops like think you as

Russell Becker

need May, with we our And and done I when Well, directionally, just when deliver saying first expect you're to I And done goal a a and the we're get our that XX%. do on anything, target, we we're mean, in you Investor is targets like to Day that correct. And thing we yet. set set mean, that do will But in we we'll you. target. XXXX. not you that come share haven't to you

We will you if throw we be stone's finish guidance we look within out at provided a as year. this that the

we're progress our And in So we've to margins. stop. think, I not expanding made really, fantastic -- going there's

stop. not So to we're going when to we get XX%,

good a growth and upside going be are go to we're we're calling to long-term we're just does that where the but we're of prospects May. what us, margin And and where in taking from and about viability look of lot it that work on now not And And XXXX business. and perspective there next we the feel a continues share like, beyond. revenue And the for where of right expansion, the can opportunities really what doing -- business. the we really, just kind

Andrew Kaplowitz

still And quick Russ, still those do it's think core been you like markets? talk more it. is but love for to whether you if know or you it are about growing Got centers don't one about of I sort there some me. one How And been just any data that? more markets of backlog, is, delays bigger LNG, markets, think semiconductor, giving you Like those sequentially? about backlog, it whatever in Has generally, opportunities?

Russell Becker

was, Yes. that's -- I I we I -- growing, really it important it's continues mean about backlog healthier. and think it much talk grow, -- and a it when component it's to away than it's and so is growing, for say, yes, folks that, And months ago XX today when continues that to are or our more months take ago. joining yes, healthy the call XX

positive. And it's very so

you Our to need core opportunities center space. continues I many is mean, positive. talk even mean We so in remain so see semiconductor care the opportunities and markets, in data data the the end to there's hot, centers. still I market space. don't about good Health

of well. kind -- our of the will. program, continues and of was difficulty, space, lot issues that a But is the I we've when seen -- The backlog in a has place infrastructure as is really administrative seen think, some the Stephanie to cited do the sort if only a with Jefferies that from any place And opportunities where has the federal lot the the of and the funds telecom true think asking that -- of any space, remains rural from you the we've sort in government I BEAD, critical that's acronym strong. and only Probably I what super place have infrastructure pullback only question is. is that in to with broadband administering of sector

Operator

question Josh of comes line with UBS. next the Your from Chan

Joshua Chan

is I organic between could today? in the the And whether accelerating you kind there, composition and guess, both can in you the XXXX, service you're of When growth of about seeing delays 'XX? kind primary that the driver of about talk grow project talk and absence project

Russell Becker

do -- you you want don't one? to this why Kevin, grab Well,

Kevin Krumm

Yes, yes.

backlog say we the strong So it's to feel believe earlier be we XXXX, think about a can more going as that in with activity year, XXXX, going -- what is to like Josh. call, into normal I a of obviously, referenced and or it's -- going the we I

project to as And the so held of digits that as side in at high well. as low single go we up which look through year XXXX we'd this digits, mid-single expectation expect mid- to that that to at the and service, has perform our would business, be that we

organic half But and with high. first That's on to general, XXXX basis. of be in setting to mid, mid- see up a there'll service we in Now ramp-up that year. period normal year projects low the as an the

Joshua Chan

basis. Organic

component targets, important. you curious reach growth kind to of thinking of guys your have then expanding what round metrics as how margins and done going about targets X-year there will on your a Just organic be existing likely are to forward, well? of Kind job And the target. great obviously, an Okay. you're next a

Russell Becker

think go for organic to about think and and guess, growth Well, of as or question goals and business in planning I We XXXX there's yourself XXXX it we this that good feedback I of organic is thought I there's beyond exactly I no haven't look us But forward. about is from an about targets I something to mean, some through we long-term organic through XXXX. with a of folks -- our growth these us it's share think for Organic really algorithm growth what think for beyond. is like how sure, like and as of growth. we establish start we sure, that about the an what the as we element -- that. like like talked part does and like guess Josh, for way component in

And a think service? the bolt-on about it come We beyond. what those leg look there XXXX and like of much is stool? We from as about M&A it another perspective. business is transformational from play does And that think and under and things all think into about of M&A the how we

to yes, importance is of component So our We growth that. of a a target publish and business. establish organic think understand health growth the have the And we'll and perspective. how organic of about we from

thoughts Kevin, know, on don't that? any got you I So

Kevin Krumm

add, to Nothing Russ.

Operator

question next Tanwanteng with Your Securities. CJS from comes the line of Jon

Jonathan Tanwanteng

Or give if was 'XX you earlier wondering it Just and 'XX, to of the on maybe at the pipeline more maybe you little effect in of us could M&A just an I the is me the a and weighted? more these in has today. spread understand in year? for size looking timing what you're color opportunities some out? kind pipeline close your accretion more expect or help Do and of Or there. late back-half it on is that

Russell Becker

and consistently to reality business specifically now. year their reality M&A throughout happen that's that time, the about and M&A, think it bolt-on of have not -- is Well, like don't sell the when Jon, is Most of bolt-on we want of and the you talking I'm sellers we -- one it it. that these

have don't they lot usually resources. a sometimes so And of

so And moved transactions relatively quickly. sometimes

slowly. move they relatively Sometimes

about they the but these So that throughout you're balancing your do happen you have of timing Can information the XXX% workload. of transactions, the of them goal to don't control need, it's consistently pull on some resources? the some that is And the together have they et have we so based year cetera?

away like We're team some like not of kind killing and people you away to clicking clicking our do and and work and it's are just continue clicking done, -- transactions. we our just getting and and away the clicking you away

and here we'll through in into get and year. pushing we quarter, activity right completed expect just next some to continue -- deal continue -- up we'll fourth So the get have

digging doing a there's though some next something there's and kind it of we're work. that the move next bit Now we're to And the going looking always -- doesn't on. and Elevated, And opportunity mean when that always of along, at comes in going little forward.

disciplined the is are We whether we business value the us. and fit very these for in businesses right how

were have it's something it's -- I XXXX. something likely, happened -- -- probably whether will this be I doubtful. would is probably most doubtful. say, be year, so And would suspect would it in if happen but one to anything And happen, it we yet possible, there

Jonathan Tanwanteng

growth towards perhaps you follow at aspiration to to question, for provide capital your are inorganic expecting an it. Investor something earlier a target or like Got target deployment M&A Day? And on an or

Russell Becker

And through we've company, and But Again, to been I an it's a our part we've DNA we're really target. who bolt-on part publish what don't know that our acquisitive of and way worked big M&A playbook. always of is going our and we exactly are.

of going the the because not right not a opportunities And our shareholders going M&A do to part so playbook. to it. it good deals don't want amount of for be to deals. do situation into just to we're the us, it's about always need for will There's be doing we where a year That would to for of long we're disciplined, element be then get and X term. be do an And if hesitation saying to not need I we

of would X our and just future. of like sense. to make we're part part long It of So reticent planning. looks I don't be about It I know the term to how if be -- will year. in the of thinking will be It playbook. much business say what we're it each part do would amount our But M&A going be that will

Operator

I now That turn will closing to the the for Q&A our back remarks. session. over concludes conference Russ

Russell Becker

throughout their would of to you our In a would for like support thank like do daily have grateful as also the what you. look your updating year. morning. this everybody. on our Thank I you time appreciate on that to of long-term ownership well of our you, Appreciate as business. shareholders one progress the each us of dedication for we continued those their to for joined basis. remainder your We team to closing, and truly all forward Thank APi, members recently thank I'm I our and support.

Operator

Thank concludes you Ladies gentlemen, today's for that joining. and all call.

may disconnect. You now

APi (APG) 31 Oct 242024 Q3 Earnings call transcript