Q1 2025 APi Group Corp Earnings Call

Good morning, ladies and gentlemen, and welcome to E. P. I group first quarter 2025 financial results Conference call. All participants are now in a listen only mode until the question and answer session. Please note. This call is being recorded.

Operator: Good morning, ladies and gentlemen, and welcome to APi Group's first quarter 2025 financial results conference call.

Operator: All participants are now in a listen only mode until the question and answer session.

Operator: Please note this call is being recorded.

Operator: I will be standing by should you need any assistance.

Be standing by should you need any assistance.

Adam Fee: I will now turn the call over to Adam Fee, Vice President of Investor Relations at APi Group.

Speaker Change: I will now turn the call over to Adam fee, Vice President of Investor Relations at E. P. I group piece go ahead.

Adam Fee: Please go ahead. Thank you.

Speaker Change: Thank you good morning, everyone and thank you for joining our first quarter of 2025 earnings Conference call. Joining me on the call today are Russ Becker, our president and CEO David Jackson.

Adam Fee: Good morning, everyone. And thank you for joining our first quarter of 2025.

Adam Fee: Joining me on the call today are Russ Becker, our President and CEO, David Jackola, our Executive Vice President and Chief Financial Officer, and Sir Martin Franklin and Jim Lilly, our Board of Co-Chairs.

Speaker Change: Decorative vice President and Chief Financial Officer, and Super Martin Franklin and Jim.

Speaker Change: Co chairs.

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

Speaker Change: To begin I would like to remind you that certain statements in the company's earnings press release announcements and on this call are forward looking statements, which are based on expectations intentions and projections regarding the companys future performance anticipated events or trends and other matters that are not historical facts. The statements are not a guarantee of future performance and our sub.

Speaker Change: Jack to known and unknown risks uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements in our press release and filings with the SEC. We detailed material material risks that may cause our future results to differ from our expectations. Our statements are as of today.

Adam Fee: Our statements are as of today, May 1st, and we undertake no obligation to update any forward-looking statement we may make, except as required by law.

Speaker Change: May one.

Speaker Change: Undertakes no obligation to update any forward looking statement, we may make except as required by law.

Adam Fee: As a reminder, we have posted a presentation detailing our first quarter financial performance on the investor relations page of our website. This presentation includes historical quarterly financial information for our realigned segments on slide 16.

Speaker Change: A reminder, we have posted a presentation detailing our first quarter financial performance on the Investor Relations page of our website.

Speaker Change: The presentation includes historical quarterly financial information for our realigned segments on slide 16. Our comments today will also include non-GAAP financial measures and other key operating metrics a reconciliation of and other information regarding these items can be found in our press release and our presentation.

Russell Becker: Our comments today will also include non-GAAP financial measures and other key operating The reconciliation of and other information regarding these items can be found in our press release and our present Now my pleasure to turn the call over to Russell.

Pleasure to turn the call over to Russ.

Russ Becker: Thank you Adam and.

Russell Becker: Thank you, Adam, and good morning, everyone. Thank you for taking the time to join our call this morning.

Russ Becker: Good morning, everyone. Thank you for taking the time to join our call. This morning.

Russell Becker: Before discussing our results, I'd like to take a moment to officially congratulate David on being appointed the CFO of APi. I'm grateful to have him leading our global finance organization as we celebrate our fifth anniversary being listed on the New York Stock Exchange. The last five years have been both challenging and rewarding, and I am grateful to each of our 29,000 leaders for their hard work and unwavering commitment to API. Over the last five years, we have made great progress since becoming a public company. We have navigated the impacts of a global pandemic.

Russ Becker: Before discussing our results I'd like to take a moment to officially congratulate David I'm being appointed the CFO of API.

Russ Becker: Grateful to have him, leading our global finance organization as we celebrate our fifth anniversary being listed on the New York Stock Exchange flattish.

Russ Becker: The last five years have been both challenging and rewarding and I am grateful to each of our 29000 meters for their hard work and unwavering commitment to epi.

Russ Becker: Over the last five years, we have made great progress since becoming a public company.

Russ Becker: We have navigated the impacts of a global pandemic established our $13 68 shareholder value creation framework completed and integrated over 50 acquisitions, including Chuck.

Russell Becker: Established our 136080 Shareholder Value Creation Framework, completed and integrated over 50 acquisitions, including Chubb, and continue to evolve our business away from lower margin, higher risk opportunities, while focusing investments on building our business around statutorily mandated recurring life safety services. While more than doubling our net revenue since becoming public, our leaders have executed our margin expansion strategy, putting us in position to deliver on our 13% or more adjusted EBITDA margin target in 2025.

Russ Becker: And continue to evolve our business away from lower margin higher risk opportunities, while focusing investments in building our business around statutorily mandated recurring life safety services.

Russ Becker: While more than doubling our net revenues since becoming public our leaders have executed our margin expansion strategy, putting us in position to deliver on our 13% more adjusted EBITDA margin target in 2025.

Russell Becker: We are excited to host investors and analysts at our Investor Day in New York on May 21st where we look forward to detailing new, meaningfully higher financial targets and updates to our strategic plan. Next week marks API's 10th straight year of celebrating Safety Week. As I have said before, the safety, health, and well-being of each of our team members remains our number one value. Our commitment to safety drives industry-leading safety outcomes across the organization. At the end of 2024, our total recordable incident rate, or TRIR, was below 1.0. This is significantly below the industry average.

Russ Becker: We are excited to host investors and analysts at our Investor Day in New York on May 21.

Russ Becker: When we look forward to detailing new meaningfully higher financial targets and updates to our strategic plans.

Russ Becker: Next next week marks <unk>, 10th straight year of celebrating safety as I've said before the safety health and wellbeing of each of our team members remains our number one value.

Russ Becker: Our commitment to safety drive industry, leading safety outcomes across the organization.

Russ Becker: At the end of 2024, our total recordable incident rate for TR IRR was below 1.0.

Russ Becker: So significantly below the industry average.

Russell Becker: While we are proud of this, we continue to strive for zero waste. We believe our commitment to creating a safer work environment and investing in every leader's development makes APi a company where leaders are inspired to build long and fulfilling careers.

We are proud of this we continue to strive for zero incidents, we believe our commitment to creating a safer work environment and investing in every leader's development. These API company, where leaders are inspired to build long and fulfilling careers.

Russ Becker: Turning to the first quarter I'm again pleased with our record results delivered by our global team as we continue to see robust demand for the services, we offer across the businesses and an evolving macro environment.

Russell Becker: Turning to the first quarter, I am again pleased with the record results delivered by our global team as we continue to see robust demand for the services we offer across the businesses in an evolving macro environment. Net revenues grew organically by approximately 2% in the quarter, representing positive momentum as we return to more traditional levels of organic growth. In our safety services segment, organic growth came in at 5.6%. with high single-digit growth in inspection, service, and monetary revenues, and low single-digit growth in project revenues. Importantly, and in line with our strategic initiatives, we saw a double-digit increase in inspection revenue in North America for the 19th straight quarter as we march towards our long-term goal of 60% of total net revenues from inspection, service, and monitoring.

Russ Becker: Net revenues grew grew organically by approximately 2% in the quarter representing positive momentum as we returned to more traditional levels for our organic growth.

Russ Becker: And our safety services segment organic growth came in at five 6% with high single digit growth in inspection service and monitoring revenues and low single digit growth in project revenues.

Russ Becker: Certainly and in line with our strategic initiatives initiatives, we saw a double digit increase in inspection revenue in North America for the 19th straight quarter as we March towards our long term goal of 60% of total net revenues from inspection service and monitoring.

Russell Becker: In our specialty services segment, our businesses perform in line with what we outlined last quarter. The decline in net revenues moderated from the fourth quarter, despite a headwind from the adverse weather we faced early in the first quarter. Backlog continued to grow, up 7% organically, and we expect this segment to deliver positive organic growth in the second quarter.

Russ Becker: In our specialty services segment, our businesses performed in line with what we outlined last quarter. The decline in net revenues moderated from the fourth quarter. Despite a headwind from the adverse weather. We faced early in the first quarter backlog continued to grow up 7% organically and we expect this.

Russ Becker: I meant to deliver positive organic growth in the second quarter.

Russ Becker: With another quarter of margin expansion. The team continues to make meaningful progress executing our margin expansion initiatives as we close in on achieving our 13% or more adjusted EBITDA margin target in 2025.

Russell Becker: With another quarter of margin expansion, the team continues to make meaningful progress executing our margin expansion initiatives as we close in on achieving our 13% or more adjusted EBITDA margin target in 2025. As a reminder, these initiatives include improved inspection, service, and monitoring revenue management. Disciplined Customer and Project Selection. Chump Value Cash. Pricing Improvements, Procurement Systems and Scale, Our Creative M&A, and Selective Business Pruning. And as I like to say, we can always just be better.

Russ Becker: As a reminder, these initiatives include improved inspection service and monitoring revenue mix.

Russ Becker: Disciplined customer and project selection sharp value capture.

Russ Becker: Pricing improvements procurement systems and scale, our accretive M&A and selected business pruning and as I like to say, we can always just be better.

Russell Becker: We believe we are also well positioned to navigate the evolving macro environment, including the impact of tariffs.

Russ Becker: We believe we are also well positioned to navigate the evolving macro environment, including the impact of tariffs I truly believe that API is a safe harbor in the tariff storm.

Russell Becker: I truly believe that API is a safe harbor in the tariff storm. Our leaders have been proactive in working to get out in front of the terrorist situation and implementing mitigation strategies since late last We do not expect any material impact from tariffs on the 54% of our net revenues that comes from highly recurring inspection, service, and monitoring. These services benefit from statutorily driven demand and have a cost structure comprised predominantly of labor. Any parts and materials are sourced in real time with their costs passed on to the customer. In our projects business, we are currently only seeing impacts from tariffs on the cost of our materials and our North American safety business, where pipe prices have increased.

Russ Becker: Our leaders have been proactive in working to get out in front of the tariff situation and implementing mitigation strategies since late last year.

Russ Becker: We do not expect any material impact from tariffs on the 54% of our net revenues that comes from highly recurring inspection service and monitoring.

Russ Becker: These services benefit from statutorily, driven demand and have a cost structure comprised predominantly of labor any parts and materials are sourced in real time with their cost passed onto the customer.

Russ Becker: In our projects business. We are currently only seeing impacts from tariffs on the cost of our materials and our North American safety business, where pipe prices have increased our leaders have done a good job protecting our business from material cost increases through contract fuel provisions and we expect to be able to pass along.

Russell Becker: Our leaders have done a good job protecting our business from material cost increases through contractual provisions, and we expect to be able to pass along much, if not all, material cost increases that arise from these tariffs. Longer term, we expect increased investment in U.S. infrastructure and the onshoring of advanced manufacturing to be a benefit to the target end markets.

Russ Becker: If not all material cost increases that arise from these tariffs.

Longer term, we expect increased investment in U S infrastructure and the onshoring of advanced manufacturing to be a benefit to the target end markets we serve.

Russell Becker: As a reminder, shortly after becoming a public company five years ago, the world was in the midst of a global pandemic. While the pandemic posed many challenges, it also highlighted the strength and resiliency of our business model. Exiting the pandemic, we experienced a period of significant increases in pipe prices, far greater than we are experiencing today. Our leaders did a solid job protecting our margins and delivering on our commitments while being fair to our customers. We believe our robots backlog, variable cost structure. Statutorily Driven Demand for Our Services. and the diversity of the global end markets we serve combined to provide a protective moat around the world.

Russ Becker: As a reminder, shortly after becoming a public company five years ago. The ROE was in the midst of a global pandemic.

Russ Becker: While the pandemic poses many challenges it also highlighted the strength and resiliency of our business model.

Russ Becker: Exiting the pandemic, we experienced a period of significant increases in pipe prices far greater than we are experiencing today.

Russ Becker: Our leaders did a solid job protecting our margins and delivering on our commitments, while being fair to our customers.

Russ Becker: We believe our robust backlog.

Russ Becker: Variable cost structure statutorily, driven demand for our services and the diversity of our global end markets. We serve combined to provide a protective moat around the business we.

Russell Becker: We believe this positions us well to navigate the dynamic tariff variables in the market.

Russ Becker: We believe this positions us well to navigate the dynamic tariffs variables in the marketplace.

Russ Becker: As we move through the year, we remain relentlessly focused on our long term 13, 60 80 value creation targets, which include the following adjusted.

Russell Becker: As we move through the year, we remain relentlessly focused on our long-term 136080 value creation targets, which include the following, adjusted EBITDA margin of 13% or more in 2025. Long-term revenues of 60% from inspection, service, and monitoring. And finally, long-term adjusted free cash flow conversion of 80%. Our strong free cash flow generation and balance sheet strength provide us with the flexibility to pursue value-enhancing capital deployment alternatives, such as continuing our track record of disciplined M&A or opportunistic share repurchase. In the first quarter, we repurchased $75 million, or 2.1 million shares of our common stock. Additionally, our board has authorized a new $1 billion share repurchase program, giving us more flexibility to act as we expect to continue to increase our free cash flow generation in the years to come.

Russ Becker: Adjusted EBITDA margin of 13% or more in 2025.

Russ Becker: Long term revenues of 60% from inspection service and monitoring.

Russ Becker: And finally long term adjusted free cash flow conversion of 80%.

Russ Becker: Our strong free cash flow generation and balance sheet strength provide us with the flexibility to pursue value enhancing capital deployment alternatives, such as continuing our track record of disciplined M&A or opportunistic share repurchases.

Russ Becker: In the first quarter, we repurchased $75 million.

Russ Becker: Or $2 1 million shares of our common stock.

Russ Becker: Additionally, our board has authorized a new $1 billion share repurchase program given us more flexibility to act as we expect to continue to increase our free cash flow generation in the years to come.

Russell Becker: I always joke that we don't have to do much diligence and we really like the API's leadership team so it makes buying APG shares an easy decision. In terms of discipline M&A, we spent $250 million on bolt-on acquisitions at attractive multiples in 2024, and we are targeting a similar level in 2025. We expect that part of that spend will be on our first elevator service full-time under our API elevator platform. We are taking a walk before we run approach to our expansion into the $10 billion plus domestic elevator service market. We expect our ongoing expansion into the elevator service market to be accretive to our 1360-80 value creation framework.

Russ Becker: Always joke that we don't have to do much diligence and we really like the Wii Api's leadership team. So it makes buying APG shares an easy decision.

Russ Becker: In terms of disciplined M&A, we spent $250 million on bolt on acquisitions at attractive multiples and 2024, and we are targeting a similar level in 2025.

Russ Becker: We expect that part of that spend will be on our first elevator service bolt on under our API elevator platform.

Russ Becker: We are taking a walk before we run approach to our expansion into the $10 billion plus domestic elevator service market.

Russ Becker: We expect our ongoing we expect our ongoing expansion into the elevator service market to be accretive to our 13 60 80 value creation framework and importantly, this represents a continuation of our focus on building a robust line of businesses that provide statutorily mandated.

Russell Becker: And importantly, this represents a continuation of our focus on building a robust line of businesses that provide statutorily mandated recurring life safety services. We remain committed to building a $1 billion elevator service. market leader over the long term, as well as continuing to expand our fire protection and electronic security.

Russ Becker: Recurring life safety services we.

Russ Becker: We remain committed to building a $1 billion elevator service.

Russ Becker: <unk> leader over the long term as well as continuing to expand our fire protection and electric electronic security businesses in.

Russell Becker: In summary, we are off to a strong start in 2025, returning to traditional levels of organic growth after our thoughtful and selective pruning of certain low-margin customer accounts in 2024. We've also continued to expand margins and deploy capital on M&A and share repurchases to drive shareholder value. We are pleased with our leaders' execution across the business and have great confidence in our ability to deliver on our near-term commitments while maintaining a focus on the long-term opportunities in front of us.

Russ Becker: In summary, we are off to a strong start in 2025, returning to traditional levels of organic growth after our thoughtful and selective pruning of certain low margin customer accounts in 2024.

Russ Becker: We've also continued to expand margins and deploy capital on M&A and share repurchases to drive shareholder value. We are pleased with our leaders execution across the business.

Russ Becker: Great confidence in our ability to deliver on our near term commitments, while maintaining the focus on the long term opportunities in front of us I would like to hand, the call over to David to discuss our first quarter financial results and updated guidance in more detail David Thanks, Ross reported revenues for the three months.

David Jackola: I'd like to hand the call over to David to discuss our first quarter financial results in updated guidance in more detail. David?

David Jackola: Thanks, Russ. Reported revenues for the three months ended March 31st increased 7.4% to $1.72 billion compared to $1.6 billion in the prior year period. Organic growth of approximately 2% was driven by pricing improvements and strong organic growth in safety services led by inspection, service, and monitoring, partially offset by an anticipated decrease in specialty services revenue. Adjusted gross margin for the three months ended March 31st grew to 31.7%, representing a 100 basis point increase compared to the prior year period, and driven by disciplined customer and project selection, pricing improvements, and value capture initiatives in our international Adjusted EBITDA increased by 10.3 percent, 11.5 percent on a fixed currency basis for the three months ended March 31st, with adjusted EBITDA margin coming in at 11.2 percent, representing a 30 basis point increase compared to the prior year period, primarily due to the increase in adjusted gross margin partially offset by lower fixed cost absorption in the specialty services sector.

Speaker Change: Ended March 31 increased seven 4% to $1 72 billion.

David Jackson: Compared to $1 6 billion in the prior year period organic growth of approximately 2% was driven by pricing improvements and strong organic growth in safety services led by inspection service and monitoring partially offset by the anticipated decrease in specialty services revenue.

David Jackson: Adjusted gross margin for the three months ended March 31 grew to 31, 7%, representing a 100 basis point increase compared to the prior year period, and driven by disciplined customary project selection pricing improvements and value capture initiatives in our international business.

David Jackson: Adjusted EBITDA increased by 10, 3% 11, 5% on a fixed currency basis for the three months ended March 31, <unk> with adjusted EBITDA margin coming in at 11, 2%, representing a 30 basis point increase compared to the prior year period, primarily.

David Jackson: Due to the increase in adjusted gross margin, partially offset by lower fixed cost absorption in the specialty services segment I am pleased to report that adjusted diluted earnings per share for the first quarter was 37.

David Jackola: I am pleased to report that adjusted diluted earnings per share for the first quarter was $0.37, representing a three penny or 8.8% increase compared to the prior year period. The increase was primarily driven by strong growth in adjusted EBITDA, partially offset by an increase in interest expense, and adjusted weighted average shares outstanding. Safety Services reported revenues for the three months ended March 31, increased by 13.4% to $1.27 billion, compared to $1.12 billion in the prior year period. Organic growth of 5.6% was driven by double-digit inspection revenue growth in our North America safety business, and 7% organic growth in inspection, service, and monitoring revenues for the sector.

David Jackson: Representing a three penny for eight 8% increase compared to the prior year period.

David Jackson: Increase was primarily driven by strong growth in adjusted EBITDA, partially offset by an increase in interest expense and adjusted weighted average shares outstanding.

David Jackson: Safety services reported revenues for the three months ended March 31 increased by 13, 4% to $1 $2 7 billion.

David Jackson: Compared to $1 2 billion in the prior year period organic growth of five 6% was driven by double digit inspection revenue growth in our North America safety business and 7% organic growth in inspection service and monitoring revenues for the segment.

David Jackola: Project revenues grew 4% organically in the quarter. Adjusted gross margin for the three months ended March 31st was 37%, representing a 90 basis point increase compared to the prior year period, driven by disciplined customer and project selection, pricing improvements, and value capture initiatives. Segment earnings increased by 20.6%, 21.6% when measured on a fixed currency basis for the three months ended March 31st, and segment earnings margin was 15.7%, representing a 90 basis point increase compared to the prior year period, primarily due to the increase in adjusted gross margin.

David Jackson: Project revenues grew 4% organically in the quarter.

David Jackson: Adjusted gross margin for the three months ended March 31 was 37% representing a 90 basis point increase compared to the prior year period, driven by disciplined customer and project selection pricing improvements and value capture initiatives.

David Jackson: Segment earnings increased by 26% 21, 6% when measured on a fixed currency basis for the three months ended March 31, and segment earnings margin was 15, 7%, representing a 90 basis point increase compared to the prior year period, primarily due to the.

David Jackson: The increase in adjusted gross margin.

David Jackola: Specialty services reported revenues for the three months ended March 31st decreased by 6.8% to $453 million, compared to $486 million in the prior year period. Organic revenue declined 6.6%, driven by an anticipated decrease in project and service revenues, as well as adverse weather impacts. Adjusted gross margin for the three months ended March 31st was 16.8 percent, representing a 150 basis point decrease compared to the prior year period, driven primarily by lower fixed cost absorption due to lower net revenues, partially offset by the favorable impact from planned, disciplined customer and project selection. Segment earnings decreased by 32.6% with the three months ended March 31st and segment earnings margin was 6.4% representing a 240 basis point decrease compared to the prior year period driven primarily by lower fixed cost absorption due to lower net revenue.

David Jackson: Specialty services reported revenues for the three months ended March 31 decreased by six 8% to $453 million compared to $486 million in the prior year period organic revenue declined six 6% driven by an anticipated decrease in project in service.

David Jackson: Revenues as well as adverse weather impacts adjusted gross margin for the three months ended March 31 was 16, 8%, representing a 150 basis point decrease compared to the prior year period, driven primarily by lower fixed cost absorption due to lower net revenues.

David Jackson: Really offset by the favorable impact from planned disciplined customer and project selection.

David Jackson: Net earnings decreased by 32, 6% for the three months ended March 31, and segment earnings margin was six 4%, representing a 240 basis point decrease compared to the prior year period, driven primarily by lower fixed cost absorption due to lower net revenues.

David Jackola: Turning to cash flow, for the three months ended March 31st, adjusted free cash flow was $86 million, representing a $74 million improvement compared to the first quarter of 2024, and reflecting an adjusted free cash flow conversion of approximately 45%. Free cash flow generation continues to be a priority across API. We are pleased that we remain on track to achieve our adjusted free cash flow conversion target of approximately 75% for the year, while returning to more traditional levels of organic growth in the business. At the end of the quarter, our net leverage ratio was approximately 2.3 times below our long-term net leverage target of 2.5.

David Jackson: Turning to cash flow for the three months ended March 31, adjusted free cash flow was $86 million.

David Jackson: Renting a $74 million improvement compared to the first quarter of 2024, and reflecting an adjusted free cash flow conversion of approximately 45%.

David Jackson: Free cash flow generation continues to be a priority across API. We are pleased that we remain on track to achieve our adjusted free cash flow conversion target of approximately 75% for the year, while returning to more traditional levels of organic growth in the business.

David Jackson: At the end of the quarter, our net leverage ratio was approximately two three times below our long term net leverage target of two five or.

David Jackola: Our strong balance sheet gives us flexibility to drive our margin accretive bolt-on M&A strategy while allowing for opportunistic share purchases like we executed in the first quarter. We expect to continue to grow our free cash flow in 2025, providing us with significant opportunities for continued value-enhancing capital deployment.

David Jackson: Our strong balance sheet gives us flexibility to drive our margin accretive bolt on M&A strategy, while allowing for opportunistic share purchases like we executed in the first quarter. We expect to continue to grow our free cash flow in 2025, providing us with significant opportunities for continued value.

David Jackson: Enhancing capital deployment.

David Jackola: I will now discuss our guidance for the second quarter and full year 2025, which as a reminder is based on current foreign currency exchange Thank you. We expect increased full-year net revenues of $7.4 to $7.6 billion, up from $7.3 to $7.5 billion, representing organic growth and net revenues of 2% to 5% for the year. Moving down the P&L, we expect increased full-year adjusted EBITDA of $985 to $1.035 billion, up from $970 million to $1.02 billion, representing an adjusted EBITDA margin of 13.4% at the midpoint and adjusted EBITDA growth of over 10%. Our increased full-year revenue in EBITDA guidance is due to the impact of the weakening U.S.

David Jackson: I will now discuss our guidance for the second quarter and full year 2025, which as a reminder is based on current foreign currency exchange rates.

David Jackson: We expect increased full year net revenues of seven 4% to seven 6 billion.

David Jackson: Up from seven 3% to seven 5 billion, representing organic growth in net revenues of 2% to 5% for the year moving.

David Jackson: Moving down the P&L, we expect increased full year adjusted EBITDA of 985 to one point, both three 5 billion up from $970 million to $1 2 billion, representing an adjusted EBITDA margin of 13, 4% at the midpoint and adjusted EBITDA growth of AUM.

David Jackson: Over 10% our increased full year revenue and EBITDA guidance is due to the impact of the weakening U S. Dollar since our February guidance and more information on our revised guidance can be found on slide 10 of our earnings presentation on our Investor Relations website.

David Jackola: dollar since our February guidance, and more information on our revised guide can be found on slide 10 of our earnings presentation on our Investor Relations website. In terms of the second quarter, we expect reported net revenues of $1.875 to $1.925 billion, representing accelerating organic net revenue growth of approximately 3 to 6 percent. We expect adjusted EBITDA of $260 to $270 million, representing an adjusted EBITDA margin of 13.9 percent at the midpoint and accelerating adjusted EBITDA growth of 13 to 17 percent.

David Jackson: In terms of the second quarter, we expect reported net revenues of $1 875 to $1 92, 5 billion, representing accelerating organic net revenue growth of approximately 3% to 6%, we expect adjusted EBITDA of $260 million to $270 million.

David Jackson: Tenting and adjusted EBITA margin of 13, 9% at the midpoint and accelerating adjusted EBITDA growth of 13% to 17%.

David Jackola: For 2025, we anticipate interest expense to be approximately $145 million, depreciation to be approximately $90 million, capital expenditures to be approximately $100 million, and our adjusted effective tax rate to be approximately 23%. We expect our adjusted diluted weighted average share count for the year to be approximately 282 million, reflecting our repurchase of 2.1 million shares in the first quarter, but not incorporating any potential future share repurchase. We continue to expect adjusted corporate expenses to be between $30 and $35 million per quarter with some timing variability throughout the year.

David Jackson: For 2025, we anticipate interest expense to be approximately $145 million.

Depreciation to be approximately $90 million capital expenditures to be approximately $100 million and our adjusted effective tax rate to be approximately 23%. We expect our adjusted diluted weighted average share count for the year to be approximately $282 million reflecting on.

David Jackson: Our repurchase of $2 1 million shares in the first quarter, but not incorporating any potential future share repurchases. We continue to expect adjusted corporate expenses to be between 30% and $35 million per quarter with some timing variability throughout the year.

David Jackola: You may also have noticed a new line in our earnings release tables called systems and business enablement. This represents a recently launched three-year investment in systems and technology that will equip our branches and field leaders with the data, modern tools, and technology that they need to more efficiently and effectively serve our customers. This is a business-led and field leader-focused initiative, and one that we believe is a key enabler to achieving the long-term financial targets that we plan to share at our Investor Day Initiative.

David Jackson: You May also have noticed a new line in our earnings release tables called systems and business enablement. This represents our recently launched three year investment in systems and technology that will equip our branches and field leaders with the data modern tools and technology that they need to more efficiently and effectively.

David Jackson: We serve our customers. This is a business led and field leader focused initiative and one that we believe is a key enabler to achieving the long term financial targets that we plan to share at our Investor day in May.

Russell Becker: I will now turn the call back over to Russell. Thanks, David. API's record first quarter net revenues and profitability speaks to the effectiveness of our strategy and the alignment in its execution by our global team of leaders. As you've heard from us, we have great confidence in the business and the direction we are heading despite the dynamic macro-economic environment. We remain focused on creating sustainable shareholder value by delivering on our 1360-80 targets, with a near-term focus on generating adjusted EBITDA margin of 13% or more.

Russ Becker: I will now turn the call back over to Russ.

Russ Becker: Thanks, David.

Speaker Change: This record first quarter net revenues and profitability speaks to the effectiveness of our strategy and the alignment and its execution by our global team of leaders as you've heard from US we have great confidence in the business and the direction. We are heading despite the dynamic macro environment.

Russ Becker: Macroeconomic environment.

Russ Becker: We remain focused on creating sustainable shareholder value by delivering on our 13 60 80 targets with a near term focus on generating adjusted EBITDA margin of 13% or more this year.

Russell Becker: As a reminder, we will be hosting an Investor Day on May 21st in New York for professional investors. I'm looking forward to seeing many of you there, but also encourage you to reach out to Adam to register if you haven't already done so as space is limited.

Speaker Change: As a reminder, we will be hosting an investor day on May 21 in New York for professional investors Im looking forward to see many of you there, but also encourage you to reach out to Adam to Register if you haven't already done so as space is limited with that I would now like to turn the call over to the operator.

Operator: With that, I would now like to turn the call over to the operator and open the call for Q&A. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. To cancel your request, press star one again.

Russ Becker: <unk> and open the call for Q&A.

Russ Becker: Thank you at this time I would like to remind everyone in order to ask a question press.

Russ Becker: Press Star then the number one on your telephone keypad.

Russ Becker: So you recall press star one again.

Andy Kaplowitz: Your first question comes from the line of Andy Kaplowitz by Cedig Group. Your line is open. Hey, good morning, everyone. APi. Russ, I think you said publicly that combined backlog for APG at the end of last quarter was $3.5 billion. Can you give more color into what your backlog did in Q1? I think you said it was up 7% year-over-year in specialty. And then can you talk about the visibility you do have toward growth in both of your segments? Despite the uncertain macro, would you say you still have good visibility toward mid-single-digit growth and safety?

Speaker Change: Your first question comes from the line of Andy Kaplowitz Citigroup. Your line is open.

Andy Kaplowitz: Hey, good morning, everyone.

Russ Becker: Yes.

Speaker Change: Russ I think you said publically that combined backlog for <unk> at the end of last quarter was $3 5 billion can you give more color into what your backlog than in Q1, I think you said it was up 7% year over year in specialty and then can you talk about the visibility you do have toward growth in both segments. Despite the uncertainty.

Speaker Change: <unk> would you say you're still good visibility towards mid single digit growth in safety and I think you said specialty to return to growth in Q2 is that a function of project delays ending or new wins or both.

Andy Kaplowitz: I think you said specialty should return to growth in Q2. Is that a function of project delays ending or new wins or both?

Russell Becker: Well, that was a mouthful, Andy. So you had about seven questions in your one. Only three, only three. That's all it's all good. Yeah, I mean, our backlog is sitting right around three and a half billion. It's, you know, up on a year over year basis, it continues to actually, we continue to see momentum building in our backlog. And we expect it to continue to build that actually, as we work our way through the, through the second quarter, we feel good about the the end markets that we serve, we don't feel like we're over committed to any one end market, such as data centers.

Speaker Change: So that was a mouthful Andy so.

Speaker Change: You had about seven questions in your one full military theory.

Speaker Change: So it's all good yes, I mean, our backlog is sitting right around $3 5 billion.

Speaker Change: On a year over year basis, it continues actually.

Speaker Change: We continue to see momentum building in our backlog and we expect it to continue to build that actually as we work our way through the through the second quarter.

Speaker Change: We feel good about the end markets that we serve we don't feel like we're over committed to any one end market such as data centers.

Russell Becker: You know, even though we're doing, you know, data center work, you know, our focus remains on the, you know, ultimately, we want to be doing the inspection service and monitoring work for these facilities and the project work to come from the relationships that we've built with those particular, you know, clients. So we feel like, you know, we're in a really good spot, you know, regarding specific to specialty, you know, number one, it was a, it was a tough comp compared to Q1 from last year, is the we didn't really experience any adverse weather conditions like we did this year.

Speaker Change: Even though we're doing.

Speaker Change: Data Center work.

Speaker Change: Our focus remains on the.

Speaker Change: Ultimately, we want to be doing an inspection service and monitoring were found for these facilities and the project work to come from the relationships that we built with those particular clients.

Speaker Change: So we feel like.

Speaker Change: We're in a really good spot regarding specific to specialty.

Speaker Change: Number one it was a it was a tough comp compared to Q1 from last year.

Speaker Change: We didnt really experienced any adverse weather conditions like we did this year.

Russell Becker: You know, this was more of a what I would consider a normalized year. And we expect our specialty services business to see organic growth in the second quarter, aided in part by their growing backlog, their backlog is strong, I think, set up 7% organic, on an organic basis. And I think that we're really well positioned as we move are moving through the second Thanks for that, Russ.

Speaker Change: This was more of a what I would consider a normalized year and we expect our specialty services business to see organic growth in the second quarter aided in part by their growing backlog. Their backlog is strong I think stepped up 7% organic on an organic basis.

Speaker Change: I think that we're really well positioned as we move are moving through the second quarter.

Speaker Change: Thanks for that Ross and then can you elaborate a little more on the tariff related impacts on the business and what's embedded in the guide I think you said you are people are buying steel pipe upfront, you're not seeing as much in the way of type increases versus during the pandemic, but have you thought about any higher pricing in your unchanged guidance or do you expect to see any impact from task.

Tim Mulrooney: And then can you elaborate a little more on the tariff-related impacts on the business and what's embedded in the guide? I think you said your people are buying steel pipe up front. You're not seeing as much in the way of pipe increases versus during the pandemic. But how have you thought about any higher pricing in your unchanged guidance? Or do you expect to see any impact from tariffs on volume?

Speaker Change: On volumes.

Speaker Change: Yes.

Russell Becker: Well, I mean, You know, I guess first and foremost, number one, when President Trump was elected, you know, all the way back in last November, you know, we anticipated, like I'm sure everybody anticipated that he would use tariffs as a tool, you know, in his second term. And so we very proactively got out in front of that, you know, including language in our legislation, due to price escalation, due to tariffs, that, you know, we would be able to recapture, you know, that cost. Now, we're only recapturing the cost, we're not recapturing the margin on that, we're just getting, we're able to pass the cost on, and that's primarily in our project work.

Speaker Change: Well I mean.

Speaker Change: I guess first and foremost number one win win.

Speaker Change: President Trump was elected all the way back in last November.

Speaker Change: We anticipated like I am sure everybody anticipated that he would use tariffs.

Speaker Change: As a tool.

Speaker Change: In his second term.

Speaker Change: And so we very proactively got out in front of that including language in our proposals and ultimately our contracts that should we see rapid escalation due to price escalation due to tariffs.

Speaker Change: That we would be able to recapture that cost now we're only recapturing the costs were not recapturing the margin on that we're just getting we're able to pass the cost on and Thats, primarily in our in our project work. So I feel like our our leaders did a fantastic job of really getting out and getting out in front of it.

Russell Becker: So I feel like our leaders did a fantastic job of really getting out in front of it, just because, you know, we knew that it was potentially going to come.

Speaker Change: Yes.

Speaker Change: Just because we knew that.

Speaker Change: That it was potentially going to come the commodity that we watch the causes is hot rolled coil and thats, because thats directly effects pipe prices.

Russell Becker: The commodity that we watch the closest is hot-rolled coil, and that's because that's directly affects pipe prices. We've seen pipe prices increase since the first of the year, and we've actually seen them moderate and drop a little bit more recently. So we feel pretty good about, you know, where we're at. Yes, we did pull some material cost into the first quarter, you know, as the trade, as the tariffs, you know, kind of that whole conversation escalated, and some of the tariff, you know, the size of the tariff, so to speak, increased so dramatically. We definitely did do some pre-purchasing of material and pulled some of that material cost into the first quarter, which would be at a slightly lower margin than, say, what we're able to get, you know, from the labor that we, when we're executing our work, etc.

Speaker Change: We've seen pipe prices increase since the first of the year.

Speaker Change: We've actually seen them moderate and drop a little bit.

Speaker Change: More recently, so we feel pretty good about where we're at yes, we did pull some material cost into the first quarter as the trade tariffs kind of that whole conversation escalated in some of the tariff on the size of the tariff so to speak increase.

Speaker Change: So dramatically.

Speaker Change: We definitely did do some pre purchasing of material and pulled some of that material.

Speaker Change: Cost into the first quarter, which would be at a slightly lower margin.

Speaker Change: And then see what we're able to get from the labor that we are executing our work et cetera. So I don't know David do you have any extra color on that that you'd like to add I think that summarizes it clearly.

David Jackola: So I don't know, David, do you have any extra color on that that you'd like to add? No, I think that summarizes it. All right, I appreciate all the color, guys. Thanks, Andy.

Speaker Change: Alright, I appreciate all the color guys.

Speaker Change: Thanks, Andy.

Andy Kaplowitz: The next question comes from Tim Mulrooney from William Blair. Your line is open. Russ, David, good morning. 870-333-4700. Doing well, thanks. So on organic growth, I mean, you were guiding total organic growth to be down, I think, in the low single digit range in the first quarter, and you ended up at a positive 2%. So just just curious, what was the primary driver of that, that variance relative to your your expectations? Yeah, I think Russ probably answered that one in the last question, is we did pull some materials forward into the first quarter ahead of projected or potential price increases from the tariffs.

Speaker Change: The next question comes from Tim Mulrooney from William Blair. Your line is open.

Speaker Change: David.

Speaker Change: Good morning.

Speaker Change: Hey, gentlemen.

Speaker Change: Doing well thanks.

Speaker Change: On organic growth I mean, you're guiding total organic growth to be down I think in.

Speaker Change: In the low single digit range in the first quarter.

Speaker Change: We ended up at a positive 2%. So I'm just curious what was the primary driver of that.

Speaker Change: That variance relative to your expectations.

Speaker Change: Yes.

Speaker Change: I think Russ probably answered that one.

In the last question is if we did pull some materials forward into the first quarter ahead of projected or potential price increases from the tariffs and that was really the main driver.

David Jackola: And that was really the main driver in our VTOR revenue guide in the first quarter. Oh, okay. Thanks. Sorry, I missed that. But got it. So pulling forward the materials boosted your organic growth. Is that correct, David? Yeah, you captured that well. Okay.

Speaker Change: <unk> revenue guide in the first quarter.

Speaker Change: Oh, Okay. Thanks, sorry, I missed that.

Speaker Change: Got it so.

Pulling forward the materials boosted your organic growth is that correct David.

David Jackson: Yes, you captured that well.

Tim Mulrooney: And then just on projects, I mean, given the current state of macro uncertainty, what can you tell us about demand in the projects business? I mean, your guidance looks great, but I mean, as you look into specific projects, are customers holding back at all on pushing forward with new projects, kind of waiting to see what happens with the tariff situation? Curious what you're seeing with regard to proposal activity and the backlog generally within that project's business. Thank you. Yeah, we have not seen any delays or any significant delays or pullbacks due to all the noise associated with tariffs.

Speaker Change: Okay.

Speaker Change: And then.

Speaker Change: Just on projects I mean, given the current state of macro uncertainty.

Speaker Change: What can you tell us about demand in the projects business I mean, your guidance looks great, but I mean.

Speaker Change: As you look into specific projects are customers holding back at all on pushing forward with new projects kind of waiting to see what happens with the tariff situation curious what youre seeing with regard to proposal activity and the backlog generally within that that that project's business.

Speaker Change: Thank you.

Speaker Change: Yes, we have not seen any delay.

Speaker Change: Delays or any significant delays or pullbacks due.

Speaker Change: To all the noise associated with tariffs.

Russell Becker: I think I alluded to it in my earlier remarks, you know, we actually are putting on backlog right now. You know, I mean, it's anybody's crystal ball to You know what happens, you know, if you know, kind of the Tariff noise continues for six months, nine months, three months, you know, what happens from a demand perspective, but as we sit here right now today, we have not seen delays and our backlog continues to build. Got it. Thank you.

Speaker Change: I think I alluded to it in my earlier remarks, we actually are putting on backlog.

Speaker Change: Right now.

Speaker Change: I mean, it's anybody's crystal ball too.

Speaker Change: What happens.

Speaker Change: Yes.

Speaker Change: Kind of the tariff.

Speaker Change: Tariff noise continues for six months nine months three months, what happens from a demand perspective, but as we sit here right now today, we have not seen delays and our backlog continues to build.

Speaker Change: Got it thank you.

Jasper Bibb: The next question comes from the line of Jasper Bibb with Truist Securities, your line is Hey, good morning, guys. Wanted to ask some follow ups on the tariff comments. I think you said the only exposure to tariffs is the project revenues and US life safety. So if I do some math, Is the part of your revenue mix, I guess, directly exposed to terrorists, call it 15 to 20% of your total? And I guess separately with where road coil futures are now, are you seeing increased materials costs yet? Or is that kind of more managing a risk that you would see higher prices in the future?

Speaker Change: The next question comes from the line of Jasper Bibb with tourists Securities. Your line is now open.

Jasper Bibb: Hey, good morning, guys wanted to ask some follow ups on the tariff comments I think you said the only exposure to tariffs as the project revenues.

Speaker Change: U S life safety, so if I do some math.

Speaker Change: Is that part of your revenue mix I guess directly exposed to tariffs call it 15% to 20% of your total.

Speaker Change: I guess separately with where our Rod coil futures are now are you seeing increased materials costs, yet or is that kind of more managing our risks that you would see higher prices in the future.

Russell Becker: Unknown Speaker Yeah, so if I'm if I'm hearing you, Jasper, your comment was, do we do we expect that our revenues exposed to potential tariffs are approximately 15% or so? I think that's a fair estimate. Got it. And then the second part of my question was, you know, road coil futures at least haven't moved all that much. So are you seeing increased costs right now or with the materials you pulled forward into the first quarter? Is that more managing a risk that you could see increased prices in the back half of the year or over the next couple of quarters rather than today?

Speaker Change: Yes.

Speaker Change: If im hearing you <unk>. Your comment was do we do we expect that our revenues exposed to potential tariffs, our approximately 15% or so I think thats a fair estimate.

Speaker Change: Got it and then the second part of my question was.

Speaker Change: Yes rolled coil futures at least haven't moved all that much. So are you seeing increased costs right now are with.

Speaker Change: Materials, you've pulled forward into the first quarter or is that more managing risk that you could see increased prices in the back half of the year over the next couple of quarters rather than to that.

Russell Becker: So if you look at hot roll prices, I want to tell you from the first of the year, it was up roughly, it peaked at like, what, 40%? And it's dropped over the course of the last week or 10 days. I don't have all the exact figures in front of me, but it's dropped. So we've seen it moderate, which is really positive. We stay very close to our vendors to make sure that we're doing our best to try to anticipate what's going to potentially happen.

Speaker Change: So so if you look at hot rolled.

Speaker Change: Prices.

Speaker Change: I want to tell you from the first of the year. It was up roughly it peaked at like 40% and it's dropped over the course of the last week or week or 10 days I don't have all the figures exact figures in front of me but.

Speaker Change: But it's but it's dropped.

Speaker Change: No.

Speaker Change: We've seen it moderate and which is which is really positive.

Speaker Change: We stay very close to our vendors.

Speaker Change: And make sure that we're doing our best to try to anticipate what's going to potentially happen, but I would also go back to an earlier statement that I made that.

Russell Becker: But I would also go back to an earlier statement that I made that when President Trump was elected, we knew that tariffs were going to be a tool in his toolbox, and we got out in built into our proposals and our contracts that protect us from rapid increases in any sort of commodity prices. Yeah, that's helpful.

Speaker Change: When President Trump was elected we knew that tariffs were going to be a tool and its dual box and we got out in front of it and we should.

Speaker Change: We should have good protection built into our proposals and our contracts that protect us from rapid increases in any sort of commodity prices.

Speaker Change: Yes, that's helpful. And then I was hoping you could update us on your experience with the.

Jasper Bibb: And then I was hoping you could update us on your experience with the rural broadband program and specialty. It seems like maybe there's been some more delays as the state's reworked their proposals there. Maybe you could just frame for us how much revenue associated with the broadband program is assumed in your updated guide and how you see the cadence of that over the next couple of quarters. Yeah, so how we would frame that is it's choppy for sure, and we feel like we've got it built into our forecast and our guides, and we knew it was going to be choppy as we moved throughout the year and it's properly reflected in our forecast.

Speaker Change: Rural broadband program in specialty it seems like maybe there's been some more delays as the states where it worked their proposals there.

Speaker Change: Maybe you could just frame for us how much revenue associated with the broadband program is assumed in your updated guidance.

Speaker Change: How do you see the cadence of that over the next couple of quarters.

Speaker Change: So how we would frame that is it's choppy for sure.

Speaker Change: And we feel like we've got it built into our.

Speaker Change: <unk> in our guidance and we knew it was going to be choppy.

Speaker Change: As we as we move throughout the year and its properly reflected in our forecast.

Jasper Bibb: Got it.

Speaker Change: Got it thanks guys.

Jasper Bibb: Thanks, guys.

Andy Wittmann: The next question comes from Andy Wittmann with Baird, your line is open. Great, thanks. I just thought, so a couple questions here, I guess. On the international business that's underpinned by the Chubb acquisition, you commented on North American inspection growth and talked consistently about what Chubb has been doing. But can you just talk, Russ, a little bit about what you're seeing in terms of the organic growth rates internationally and how the uncertainty is affecting those customers?

Speaker Change: The next question comes from Andy Wittmann with Baird. Your line is open.

Andy Wittmann: Great. Thanks.

Andy Wittmann: I just thought so couple of questions here I guess.

Andy Wittmann: On the international business, that's underpinned by the Chubb acquisition commented on.

Andy Wittmann: North America and inspection growth.

Andy Wittmann: Consistently about what <unk> been doing but can you just talk to us a little bit about what youre seeing in terms of the organic growth rates internationally and how the uncertainty is affecting those customers.

Andy Wittmann: And then, David, maybe one for you. I know this is impossible, but I'm going to try anyway. Can you help us understand what the impact from the weather may have been on a year-over-year basis? You said we heard more normal, so that sets the base for next year. But I'm just wondering, Maybe it helps to understand, you know, just how good last quarter was and how variable your business can be with the weather.

Andy Wittmann: And then David maybe one for you I know this is impossible, but I'm going to try anyway can you help us understand what the impacts from the weather may have been on a year over year basis. You said, we heard more normal. So this is Doug.

Andy Wittmann: The base for next year, but I'm just wondering.

Andy Wittmann: Okay.

Andy Wittmann: Maybe it helps understand just just.

Andy Wittmann: How good last quarter Watson and how variable your business can be with the weather.

Andy Wittmann: So I'll go first.

Russell Becker: So I'll go first, and I guess I would phrase it for you, Andy, good morning, by the way, is that we had organic growth in line with expectations, again, in the first quarter in our international business, and I think the business has grown organically every quarter since we've owned it now for well over three years. And their organic growth was in line with our expectations, and if you recall, you know, we have said that they're no different than the rest of our business. We've guided them to high single-digit growth in inspection, service, and monitoring, and low single-digit growth in the project work, which leads to roughly mid-single-digit organic growth, and that's right where they were.

Speaker Change: I guess I would phrase it for you Andy good morning by the way.

Speaker Change: Is that we had organic growth in line with expectations.

Speaker Change: Again in.

Speaker Change: In the first quarter in our international business.

Speaker Change: I think the business is growing organically every quarter since we've owned it now for well over three years and.

Speaker Change: And there the organic growth was in line with our expectations and if you recall, we have said that.

Speaker Change: There are no different than the rest of our business, we've guided them to high single digit growth in inspection service and monitoring and low single digit growth in the project, which leads to roughly mid single digit organic growth and Thats right, where they were in.

Russell Becker: And so we're very pleased with the, you know, the trajectory that that business is on. I mean, and just in general, I just, I'm really proud of that team. They've done a great job, and they continue to make good progress, you know, in their business. Our sales leader has done a really good job of... I'll just say realigning our sales team across the entire international business and we're really showing good progress in the work and improving the end markets that we're serving and everything's headed in the right direction. Good.

Speaker Change: So we're very pleased with.

Speaker Change: <unk>.

Speaker Change: The trajectory that that business is on.

Speaker Change: Maybe just in general I just.

Speaker Change: Im really proud of that team they've done a great job.

Speaker Change: And they continue to make good progress in their business our sales leader.

Speaker Change: Has done a really good job of I'll.

Speaker Change: Ill, just say realigning our sales team across the entire international business and.

Speaker Change: We're really showing good progress in the work and.

Speaker Change: Improving the end markets that we're serving them.

Speaker Change: Everything everything is headed in the right direction there.

Speaker Change: Good I'll take your second question, Andrew, which I believe was on the impact of weather in our specialty business in the first quarter.

David Jackola: I'll take your second question, Andy, which I believe was on the impact of weather in our specialty business in the first quarter. You know, we look at weather days as an indicator of weather on a quarter-year-over-year basis. We think we lost around five days due to weather in the first quarter of this year versus last, which is approximately a mid-single-digit impact on organic farming.

Speaker Change: We look at weather days.

Speaker Change: As an indicator of whether on a quarter to quarter year over year basis, We think we lost around.

Speaker Change: One five days due to weather in the first quarter of this year versus last which is approximately a mid single digit impact on organic revenue growth.

Andy Wittmann: Okay, great.

Speaker Change: Okay great.

Russell Becker: And then, just for a couple quick follow ups here, the comments on the systems and businesses investment that you're making the three year program, Russ, I was just wondering, if you could just drill in a little bit more to that as to What this is going to enable your team to do in the future versus what it can do today. Is this an efficiency initiative for the margin, or is this more of a customer focus to improve customer satisfaction, which will have benefits to growth? I suspect it's both, but maybe that would be helpful.

Speaker Change: And then maybe just for a couple of quick follow ups here.

Speaker Change: Comment on the systems and businesses investments that youre, making the three year program. So I was just wondering if you could just drilling a little bit more to that as too.

Speaker Change: What this is going to enable your team to do in the future versus what it can do today is this a is this an efficiency initiatives for the margin or is this more of a customer focus to improve customer satisfaction she'll have benefits to growth I suspect, it's both but maybe that would be helpful. And then maybe I think.

Russell Becker: And then maybe I think a lot of people this morning were maybe surprised to see that you didn't report segment EBITDA. I was just wondering, David, if you could comment on that as well. Yeah, so David can have whatever color he wants. When we talk about the systems enablement and everything else. So we have a we have a I don't know if the concept, I don't know if that's the right way to put it. I mean, you're not, but we have a belief here, we call it our central premise. And our central premise means that every decision and every choice and initiative that we bring forward needs to put the men and the women that work in the field first.

Speaker Change: People. This morning, maybe maybe surprised you said that you Didnt report segment EBITA was just.

Speaker Change: I'm wondering David if you could comment on that as well.

Speaker Change: Yes, so David can add whatever color nuance.

Speaker Change: When we talk about the systems enablement and everything else. So we have we have a.

Speaker Change: I don't know if I were to concept I don't know if thats the right way to put it Andy or not but we have a belief here we call it our central premise.

Speaker Change: And our central premise means that.

Speaker Change: Every decision and every choice and initiatives.

Speaker Change: That we bring forward needs to put the men and women that work in the fields first.

Russell Becker: You know, 65 to 70% of our workforce is the men and the women that work in the field. And those individuals are, you know, basically, they drive our profitability. And so giving them the tools that allow them to be more efficient and productive, you know, in the work that they do is, you know, one of our key priorities just across the business and everything in the choices, you know, that we make. So that is a significant, you know, component of some of this. And as we'll talk a little bit more about, you know, at the investor day, about where we think the business can go, you know, if you do some simple math and you start thinking about, you know, we finished last year at just north of $7 billion in revenue.

Speaker Change: $65, 70% of our workforce as the men and women that work in the field and those individuals are.

Speaker Change: Basically.

Speaker Change: They drive our profitability and so giving them the tools that allow them to be more efficient.

Speaker Change: And productive in the work that they do.

Speaker Change: As one of our key priority just across the business and everything and the choices.

Speaker Change: That we make so that is a significant component of some of this and as we will talk a little bit more about at the Investor Day is about where we were we think the business can go.

Speaker Change: If you do some simple math you start thinking about.

Speaker Change: We finished last year at just north of $7 billion in revenue do you think about mid single digit organic growth and you think about.

David Jackola: And you think about mid-single-digit organic growth. And you think about, you know, this $250 million of bolt-on M&A, and then you add in, you know, say one or two larger transactions, you know, over the course of the next two or three years. You can really quickly see where this company can be $10 billion plus in revenue. And so some of that is we need to have the foundation to be able to do that, to build systems and scale in that. So it's a really, it's a combination of making sure that, you know, we're establishing a strong base to build on, but it's also to enable the men and the women in the field and make them more productive and efficient and get our tools, you know, state-of-the-art.

Speaker Change: $250 million of bolt on M&A and venue in many add say one or two larger transactions over the course of the next two or three years, you can really quickly see where this company can be $10 billion plus in.

Speaker Change: And revenue and so some of that is we need to have the foundation to be able to to to do that to build systems and scale.

Speaker Change: In that so it's a really it's a combination of making sure that we're establishing a strong base to build on but it's also to enable and.

Speaker Change: The men and women in the field and make them more productive and efficient and get our tools in our state of the art. So I don't know David you want to add anything to that I don't think theres anything I need to address.

David Jackola: So I don't know, David, do you want to add anything to that?

David Jackola: I don't think there's anything I need to add, Russ.

David Jackola: All right, question to the NANDI was around segment level adjusted EBITDA, and I would point you to maybe slide 9 in the presentation on our IR website, we've got segment earnings, which is a comparable metric to adjusted EBITDA at the segment level, and this is consistent with how we reported segment earnings at the end of fiscal 2024. Okay, thank you.

Speaker Change: So alright question to that Andy was around.

Speaker Change: Segment level, adjusted EBITDA, and I would point you to.

Speaker Change: Maybe slide nine in the presentation on our IR website, we've got segment earnings, which is a comparable metric to adjusted EBITDA at the segment level and this is consistent with how we reported segment earnings at the end of fiscal 2024.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Kathryn Thompson with Thompson Research Group. Your line is open.

Kathryn Thompson: Your next question comes from Kathryn Thompson. With Thompson Research Group, your line is open. Hi. Thank you for taking my questions today.

Kathryn Thompson: Hi, Thank you for taking my questions today.

Kathryn Thompson: I know there's a lot of noise around tariffs and changing landscape from a broad government standpoint, but what strikes me about API is that this seems to be your first kind of normal year since going public in 2020. You have digested your CHUB acquisition from three years ago. You've integrated your elevated acquisition, and you also have your division realignment behind you. As we the first part of my question, you're still throwing off a lot of cash, you've you're already you've that significantly increased your buyback program.

Kathryn Thompson: I know theres, a lot of noise around tariffs and changing landscape.

Speaker Change: From a broad government standpoint, but what strikes me about API is that this seems to be your first kind of a normal year since going public in 2020.

Speaker Change: So Jessica Chubb acquisition from three years ago.

Speaker Change: Integrated elevate.

Speaker Change: Your elevated acquisition and.

Speaker Change: Also have you repositioned re alignment behind you.

Speaker Change: As we.

Speaker Change: First part of my question there is still throwing off a lot of cash you already have.

Speaker Change: Significantly increased share buyback program could.

Russell Becker: Could you talk about your focus in terms of capital allocation between bullet on acquisitions and stock buybacks and the color and flavor in terms of how we should think about acquisitions and 2025 in particular? Thank you.

Speaker Change: Could you talk about your focus in terms of capital allocation between bolt on acquisitions and stock buybacks.

Speaker Change: The color and flavor in terms of how we should think about.

Speaker Change: Acquisitions in 2025% in particular, thank you.

Speaker Change: Okay.

Speaker Change: So.

Russell Becker: So. You know, from a capital allocation perspective, we've always said, first and foremost, you know, we want to deliver, de-lever the company to, you know, inside our target of two and a half times. So we've done that. So we don't get to use that as a, as an option anymore. So second would be M&A. And our, our preference would be to utilize and put our cash to work through a creative M&A. And I think we've demonstrated a solid track record on that front, you know, over the, you know, not just the five years that we've been public, but, you know, we have a long history of, you know, M&A.

Speaker Change: From a capital allocation perspective, we've always said first and foremost.

Speaker Change: We want to deliver Delever the company to.

Speaker Change: Inside our target of two five times. So we've done that so we don't get to use that.

Speaker Change: As an option anymore, so second would be M&A, and our preference would be to utilize and put our cash.

Speaker Change: To work through accretive M&A and I think we've demonstrated.

Speaker Change: Our solid track record on that front.

Speaker Change: Over the not just the five years that we've been public but.

Speaker Change: <unk> history of <unk>.

Speaker Change: M&A.

Russell Becker: And then, you know, share repurchases is our third option. And, you know, we continue to look at, you know, share repurchase as an opportunity for us based on, you know, where the share price, you know, is that in, in, in whatever environment that we're, that we're in. And, and that's, you know, when we bought back the $75 million worth of shares, we felt like our, our shares were, were undervalued. And as I said, in my remarks, you know, we actually like the leadership team of the company and don't have to do a lot of diligence.

Speaker Change: And then.

Speaker Change: Share repurchases.

Speaker Change: As our third option and we continue to look at share repurchase as an opportunity for us based on where the share price.

Speaker Change: Is that in whatever environment that we're in and.

Speaker Change: Thats.

Speaker Change: When we bought back $75 million worth of shares and we felt like our shares were undervalued.

Speaker Change: And as I said in my remarks, we actually like the leadership team of the company and don't have to do a lot of diligence and so we took advantage of that opportunity and as we move forward.

Russell Becker: And so we took advantage of that opportunity. And as we move forward, you know, and you're right, the cash flow generation, the capability that this company has is really, really strong. And I think you'll see a healthy mix and healthy blend between M&A and returning cash to our shareholders, you know, currently through share repurchases. you know, clear path to being able to execute on that, you know, kind of target of $250 million, similar to what we did last year, we will be disciplined, we will not buy something just to buy something. We're going to make sure that we're buying businesses that are creative to our long term, you know, financial objectives.

Speaker Change: And you are right the cash flow generation capability that this company has is really really strong and I think youll see a healthy mix and.

In healthy blend between.

M&A and returning cash to our shareholders.

Speaker Change: Currently through share repurchases so.

Speaker Change: From an M&A perspective.

Speaker Change: We see our pipeline and our funnel is very strong we see a.

Speaker Change: Clear path to being able to execute on that kind of target of $250 million similar to what we did last year, we will be disciplined we will not buy something just to buy something we're going to make sure that we're buying businesses that are accretive to our long term financial.

Speaker Change: Objectives.

Russell Becker: We continue to do some work on, you know, you know, bigger than our bolt-ons, you know, nothing, nothing chub ask, if you will. But we continue to do some work on other opportunities as well. So we see opportunities for us to potentially deploy capital from an M&A perspective on the, so we feel like we're, you know, kind of a destination of choice for many sellers. And we want to make sure that we're taking advantage of that.

Speaker Change: We continue to do some work on.

Speaker Change: Opportunities that you'd consider bigger than our bolt ons nothing nothing Chubb ask if you will but we continue to do some work on other opportunities as well, so we see opportunities for us to potentially deploy capital.

Speaker Change: Yes.

Speaker Change: From an M&A perspective on the so if we feel like were.

Speaker Change: Kind of a destination of choice for many sellers and.

Speaker Change: We want to make sure that we're taking advantage of that.

Speaker Change: Okay perfect.

Kathryn Thompson: Okay, perfect. Appreciate the color on that.

Speaker Change: Color on that.

Kathryn Thompson: My second question is stepping back and just looking at how APG could potentially win with a reindustrialization of the US market, you know, but when we look at your verticals, We believe around 45% of your end markets benefit from this broad trend. Could you clarify what are different ways, and even if it's just a little bit of story time, to be able to say how your, how APG's services benefit and support a broad reindustrialization of the North American market. Thanks very much and good luck. Thank you, Kathryn. I mean, if I'm understanding your question right, you know, you're talking about, you know, the potential, you know, re-onshoring, I guess, I don't know if that's good grammar or not, but, you know, advanced manufacturing, you know, in the U.S.

Speaker Change: My second question is stepping back and looking at how APG.

Speaker Change: Could potentially Glenn with the Reindustrialization of the U S market, but when we look at your verticals.

Speaker Change: We believe around 45% of your end markets benefit from this broad trend.

Speaker Change: Could you clarify what are different ways, even if it's just a little bit of time.

Speaker Change: To be able to say how you're.

Speaker Change: Our <unk> services.

Speaker Change: Benefit and support a broad reindustrialization of the North American market.

Speaker Change: Thanks, very much and good luck.

Speaker Change: Thanks Catherine.

Speaker Change: If I'm understanding your question right you're talking about the potential.

Speaker Change: Re onshoring I guess I don't know if thats, good grammar or not but.

Speaker Change: Advanced manufacturing in the U S and what I've seen specifically, especially in the life safety and security space is that.

Russell Becker: And what I've seen, you know, specifically, especially in the life safety and security space, is that a lot of these project-related opportunities, you know, are massive. and there's limited I would tell you that we are viewing a lot of these larger project-related opportunities as just that, opportunities, and we want that to be complementary to our business and complementary to our strategy of really building a resilient business model around inspection, service, and monitoring. So we want our project opportunities to come from the relationships we've built from an inspection, service, and monitoring perspective. And I would tell you that that's the approach we're taking with the really robust data center market is that we want to take advantage of the opportunities that are there, but we don't want to overcommit to any one end market or any one specific customer.

Speaker Change: A lot of these project related opportunities.

Speaker Change: Our massive.

Speaker Change: And there is limited.

Firms that have the capability to.

Speaker Change: To properly execute and manage.

Speaker Change: Some of these larger scale project opportunities and there is an there is an opportunity for companies such as ours to take advantage of that I would tell you that.

Speaker Change: We are viewing a lot of these large larger project related opportunities is just that opportunities and we want that to be complementary to our business and complementary to our strategy of really building a resilient business model around inspection service and monitoring.

Speaker Change: So we want our project opportunities to come from the relationships we built.

Speaker Change: From an inspection service monitoring perspective, and I would tell you that that's the approach that we're taking with the really robust data center market.

Speaker Change: Yes.

Speaker Change: We want to we want to take advantage of the opportunities that are there, but we don't want to over commit.

Speaker Change: To any one end market or any one specific customer.

Kathryn Thompson: So that you've seen some of the stuff with Microsoft going through, pulling back a little bit on a large-scale data center project that they had in Ohio as an example. We didn't have any exposure to that, and that's a positive thing for us. And so we want to make sure that we're viewing that as kind of gravy, if you will. And we want to take advantage of it, but we don't want to be overcommitted to it. I hope that was helpful. Yes, it was. Thank you very much.

Speaker Change: So that like you've seen some of the stuff with Microsoft going through pulling.

Speaker Change: Pulling back a little bit on a large scale data center project that they had in Ohio. As an example, we didn't have any exposure to that and Thats a positive positive thing for us.

Speaker Change: And so we want to make sure that we're viewing that as kind of gravy if you will.

Speaker Change: And we want to take advantage of it but we don't want to be over committed to it I hope that was helpful.

Speaker Change: Yes. It was thank you very much.

Stephanie Moore: Thanks, guys. Your next question comes from Stephanie Moore with Jeffries.

Speaker Change: Thanks Catherine.

Speaker Change: Your next question comes from Stephanie Moore with Jefferies. Your line is now open.

Stephanie Moore: Your line is open. Hi, good morning. Thank you.

Stephanie Moore: Hi, good morning, Thank you.

Stephanie Moore: It would be helpful if you could maybe talk a little bit about your margin expansion opportunities for the year. Kind of remind us, you know, what buckets are driving some of the improvement, and at the same time, maybe discuss the sensitivities to you achieving, you know, margin expansion and what could be a weaker demand environment. Thank you.

Stephanie Moore: It would be helpful. If you could maybe talk a little bit about your margin expansion opportunities for the year can you remind us what buckets are driving.

Stephanie Moore: Are driving some of the improvement and at the same time may be discuss the sensitivity to your achieving.

Stephanie Moore: Expansion and what does that what could be a weaker demand environment. Thank you.

Stephanie Moore: Well, I think, Kathryn, I made a comment in our prepared remarks, and it really, it really doesn't, or Kathryn, sorry, I'm sorry, Stephanie. Welcome back, by the way. And, but thank you. I made these remarks, but really it's continuing to improve the mix of, from a revenue mix perspective of inspection, service, and monitoring, continuing to improve that, doing more of inspection, service, and monitoring versus project work. I can't ever emphasize enough the importance of discipline, customer, and project selection.

Stephanie Welty: Well I think Catherine I made a comment in our prepared remarks, and it really it really doesn't hurt Katherine sorry, I'm, sorry, Stephanie Welty.

Speaker Change: Welcome back by the way.

Stephanie Welty: Thank you.

Speaker Change: Okay.

Speaker Change: I made this made these remarks, but really.

Speaker Change: Continuing to improve the mix of from a revenue mix perspective of inspection service and monitoring continuing to improve that doing more inspection service and monitoring versus project work.

Speaker Change: I can't I can't ever emphasize enough the importance of disciplined customer and project selection.

Russell Becker: This will probably be the last time you hear us talk in this context, but CHUB value capture, we have three really significant integration efforts going on right now, one in Benelux, one with our global monitoring centers, and another with our Canadian business that we need to continue to execute on, which our teams are doing a fantastic job on executing on it, but there's still work to do, and that is beneficial to the long-term profitability of the company. Price is a big component of it, and especially with the macro environment that we're in right now, we need to make sure we're staying on top of price.

Speaker Change: This would probably be the last time, you'll hear us talking this in this context, but Chuck value capture we have three really significant integration efforts going on right now one in Benelux, one with our global monitoring centers and another with our Canadian business that we need to continue to execute on which.

Speaker Change: As you know.

Speaker Change: Which our teams are doing a fantastic job on.

Speaker Change: On executing on it but there is still work to do and that that is beneficial to the long term profitability of the company price is a big component of it.

Speaker Change: Especially in the with the macro environment that we're in right now we need to make sure we're staying on top of price, obviously procurements and <unk>.

Russell Becker: Obviously, procurement and taking advantage of our scales, a big component of it, and accretive M&A, all kind of work into it.

Speaker Change: Taking advantage of our skills big component of it and accretive M&A all kind of work into it.

Russell Becker: And when we talk about just being better, we're talking about really improving the performance of our individual branches across the breadth of our portfolio, and if you're able to attend the investor day, you will see a very similar message coming from us as it relates to this what's next from a margin expansion, because we do think it's meaningful, where we think we can take the company from 13% where our target is today to what's next level. I think you'll see on May 21st that we think it can significantly improve from where we are today.

Speaker Change: When we talked about just being better we're talking about really improving the performance of our individual branches.

Speaker Change: The breadth of our portfolio.

Speaker Change: If you if you are able to attend the Investor day.

Speaker Change: You will see a very similar message coming from us.

Speaker Change: As it relates to this what's next from a margin expansion because we do think it's meaningful.

Speaker Change: Where we think we can take the company from 13%, where our target is today to what's next level.

Speaker Change: I think youll see youll see on May 21.

Speaker Change: We think it can significantly improve from where we are today.

Speaker Change: Okay.

Stephanie Moore: Great, and I appreciate the color and looking forward to attending. So just one follow up on maybe some of the M&A questions that have already been asked today. Can you talk about, you know, your appetite of maybe doing a larger deal, whether it's a platform deal or even, you know, if something even larger on top of that were to emerge, you know, your willingness or what it would take for you to maybe participate in something a little bit larger here. Again, not talking about necessarily this year or anytime soon, but general appetite.

Speaker Change: Great and I appreciate that color and looking forward to attending so just one follow up on Nathan's M&A questions that have already been asked today.

Speaker Change: Today can you talk about your appetite of maybe doing a larger deal whether it's a platform deal or even.

Speaker Change: If something even larger on top of that were to merge their willingness or what it would take for you to maybe participate in something a little bit larger here again, not talking about necessarily this year or anytime soon but general appetite. Thank you.

Russell Becker: Thank you. Well, I guess how I would respond to that is. By starting We feel like we've demonstrated our capabilities of doing something bigger, you know, since CHUBB. And I think if you go back three years ago when we first announced the acquisition of CHUBB, there were some folks that really took a, you know, show me, show me that you guys can do it. And I feel like we've demonstrated, you know, that we are capable and able to execute on a larger scale acquisition. So I feel like we have the bandwidth to do it should the right opportunity come along.

Speaker Change: Well I guess, how I would respond to that is <unk>.

Speaker Change: Starting.

We feel like we did up we've demonstrated our capabilities of doing something bigger.

Speaker Change: Since Chuck and I think if you go back three years ago, when we when we first announced the acquisition of Chubb.

Speaker Change: There was some some folks that really took a.

Speaker Change: Xiaomi show me that you guys can do it and I feel like we've demonstrated.

Speaker Change: That we are capable and.

Speaker Change: And able to execute on a larger scale acquisition.

Speaker Change: So so I feel like we have the bandwidth to do it should the right opportunity come along and that's where that's where we're at what I would emphasize it needs to be the right opportunity.

Russell Becker: And that's where, that's where, what I would emphasize, it needs to be the right opportunity for us so that, you know, we are good operators. We have a lot of really good operators in this business. And if it's the right opportunity and the right fit, I would say, and the right valuation, I would say that there would be appetite for that. But it has to, it has to fit and it has to be the right fit for us. And I think, you know, if you, you know, You know, look at the cash generation capabilities of the company.

Speaker Change: For us.

Speaker Change: So that.

Speaker Change: We are good operators, we have a lot of really good operators in this business and if it's the right opportunity and the right fit I would say and the right valuation.

Speaker Change: I would say that there would be appetite for that.

Speaker Change: But it has to it has to fit and it has to be the right fit for us and.

Speaker Change: I think.

Speaker Change: A few.

Speaker Change: Sure.

Speaker Change: Look at the cash generation capabilities of the company.

Russell Becker: We're going to have a lot of wherewithal and a lot of strength in our balance sheet to be able to do something bigger if it's the right opportunity and if it's the right Understood.

Speaker Change: We're going to have a lot of wherewithal allowed to strengthen our balance sheet to be able to do something bigger if it's the right opportunity and if it's the right fit.

Speaker Change: Understood. Thank you.

Steve Tusa: Thank you.

Thank you.

Steve Tusa: Your next question comes from the line of Steve Tusa with J.P. Morgan. Your line is open. Hi, good morning.

Speaker Change: Your next question comes from the line of Steve Tusa with Jpmorgan. Your line is open.

Steve Tusa: Hi, good morning.

Speaker Change: Hey, Steve.

Steve Tusa: Can you just, I'm not sure if you guys said this before, but what is your price expectation for the year? I know that's kind of tough with the labor dynamic, but... Any color there? Yeah, good question, Steve. We didn't comment on it. You know, I would expect our pricing absent any significant material cost increase to be consistent with the pricing that we've been able to deliver in in previous years.

Speaker Change: Can you just I'm not sure. If you guys said this before but what is your price expectation for the year I know thats kind of tough with the labor dynamic but.

Speaker Change: Any color there.

Speaker Change: Yes. Good question, Steve we didn't comment on it I would expect our pricing in the absence of any significance.

Material cost increase to be consistent with the pricing that we've been able to deliver it in previous years.

Steve Tusa: Okay, and did you guys comment at all on the backlog? I don't think we added anything in our prepared remarks, but I think I commented that generally that it's sitting roughly at three and a half billion. Which is up? I don't know. 5% or something organically. Okay, great.

Speaker Change: Okay and did you guys commented on the backlog.

Speaker Change: Okay.

Speaker Change: I don't think we added anything in our prepared remarks, but I think I commented that generally that it's sitting roughly at $3 5 billion.

Speaker Change: Which is up I don't know.

Speaker Change: 5% or something organically.

Speaker Change: Okay, great congrats on the execution in that kind of uncertain environment here. So congratulations thanks.

Steve Tusa: Congrats on execution in a kind of uncertain environment here. So congratulations. Thanks. Thanks, Steve. Appreciate it.

Speaker Change: Thanks, Steve I appreciate it.

Speaker Change: Yes.

Joshua Chan: Your next question comes from the line of Josh Chan with UBS. Your line is open. Hi, good morning, Russ David. Thanks for taking my questions. I guess, how are you guys thinking about APIs positioning? You know, if we were to go into a recession, I assume that the inspection safety and service and monitoring piece would be quite safe, but just curious how you're thinking about the project side of the business. Thank you.

Speaker Change: Your next question comes from the line of Josh Chan with UBS. Your line is open.

Josh Chan: Hi, Good morning, Russ David Thanks for taking my questions.

Josh Chan: How are you guys thinking about Apis positioning.

Josh Chan: To go into a recession I assume that the inspection safety service and monitoring piece will be quite safe, but just curious how youre thinking about the project side of the business. Thank you.

Josh Chan: Well I mean.

Russell Becker: Well, I mean, I guess first thing I would point you, I'd point you to two things. Number one is like 70% plus of our cost structure is variable by nature. So if we do see anything that is alarming, we have the ability to flex very, very quickly. Second thing I'd point you to is our performance in 2020, you know, right after the company went public and you know, the pandemic landed. And, you know, we proved that we could flex quickly, and we actually expanded margins in a very, you know, tough environment when people didn't know, you know, what the pandemic was going to bring.

Josh Chan: I guess first thing I would point you I'd point you to two things.

Number one is like 70%.

Josh Chan: Plus of our cost structure is variable by nature. So if we do see anything.

Josh Chan: That is alarming we have the ability to flex very very quickly.

Josh Chan: One thing I'd point you to is our.

Josh Chan: Our performance in 2020.

Josh Chan: Right. After the company went public in the pandemic land.

Josh Chan: Landed.

Josh Chan: And.

Josh Chan: We proved that we could flex quickly and we actually expanded margins and a very tough environment. When people didn't know what the what the pandemic was going to bring.

Russell Becker: Next, I would say is that if we do run into, if there is any sort of a, so to speak, you know, macro event that causes a slowdown, this company generates a ton of cash. You know, during the course of any sort of slower period. And that's a positive for us. 100%, our inspection service and monitoring business will withstand, you know, any sort of a slowdown. And the other part is, is that typically, if there is any sort of a slowdown, your project's business is booked backlog, and it typically, you know, it's going to take some period of time for you to work through that.

Josh Chan: Next I would say is that if we do run into if there is any sort of so to speak.

Josh Chan: Macro event that causes a slowdown on this company generates a ton of cash.

Josh Chan: During the course of any sort of slow slower period.

And.

Josh Chan: That's a positive for us 100%.

Josh Chan: Our inspection service and monitoring business will withstand.

Josh Chan: Any sort of.

Josh Chan: A slowdown.

The other part is that typically if there is any sort of a slowdown year projects business is booked backlog and it typically.

Josh Chan: It's going to take some period of time for you to work through that so like I have just really good confidence in.

Joshua Chan: So, like, I have just really good confidence in the resiliency, you know, of our business, and our ability to take actions should we need to. That's great to hear. I appreciate the color rust.

Josh Chan: In the resiliency.

Josh Chan: Of our of our business.

Josh Chan: And our ability to take actions should should we need to.

Josh Chan: That's great to hear I appreciate the color.

Joshua Chan: And then just a quick question on specialty. I guess if the business returns to organic growth in Q2, does it mean margin can be at the similar level as last year? Is there any reason why margins could contract if growth is positive?

Speaker Change: And then just a quick question on specialty I guess, if the business returned to organic growth in Q2 does that mean margin can can be at the similar level as last year is there any reason why margins could contract if growth is positive.

Joshua Chan: Yeah, hey, thanks for the question, Josh. Yeah, here's how I'm thinking about specialties as it goes through the year. Return to organic revenue growth in the second quarter, margins will begin to expand year over year as we get into the back half. But we still expect them to be modestly down year over year for the full year in returning Great.

Josh Chan: Yes, thanks for the question Josh.

Speaker Change: Yes.

Speaker Change: Thinking about specialty as it goes through the year.

Speaker Change: We returned to organic revenue growth.

Speaker Change: In the second quarter margins will begin to expand year over year as we get into the back half.

But we still expect them to be modestly down year over year for the full year.

Speaker Change: Turning to accretive in 2006.

Jack Cauchi: Thanks for the color and thanks for the time. Thanks, Josh.

Speaker Change: Great. Thanks for the color and thanks for the time.

Speaker Change: Thanks, Josh.

Jack Cauchi: Your next question comes from the line of Jack Cauchi. With Barclays, your line is open. Hi, good morning.

Speaker Change: Your next question comes from the line of Jakob Ritchie.

Speaker Change: With Barclays. Your line is now open.

Jakob Ritchie: Hi, good morning.

Jack Cauchi: You've previously mentioned that project pruning should be an ongoing process. Where do you see, you know, opportunities for further pruning? And at what point are you satisfied with the portfolio? Well, I would say that I would say like, as I sit here today, I'm not sitting here worried about whether you know, we've got some massive turning left to do with with our customers. I think it's Like you started your remarks, it's just kind of an ongoing, it's an ongoing, so I feel like we're there and we will always continue to focus on making sure that we're, that we're working with the right customers on the right type of work that we can, you know, that we can win at.

Speaker Change: You've previously mentioned.

Speaker Change: Project pruning should be an ongoing process, where do you see opportunities for further pruning and at what point are you satisfied with the portfolio.

Speaker Change: Well I would say that.

Speaker Change: I would say like as I sit here today.

Speaker Change: I'm not sitting here worried about whether we've got some massive pruning left to do with our customers I think it's like.

Speaker Change: Mike you started your remarks.

Speaker Change: It's just kind of an ongoing.

Speaker Change: It's an ongoing so I feel like we're there.

Speaker Change: <unk>.

Speaker Change: We will always continue to focus on making sure that we're that we're working with the right customers on the <unk>.

Speaker Change: Right type of work that we can that.

Jack Cauchi: But I feel like we're in a good spot right now as we sit here today.

Speaker Change: We can win that but I feel like we're in a good spot right now as we sit here today.

Russell Becker: For more information visit www.api.org Helpful.

Speaker Change: Helpful.

Russell Becker: And so just to follow up, gross margins are showing a decent increase. How's API coping so well with wage inflation among its service technicians? Well, I'd say in general, it's because we have pretty good visibility into, you know, what wage increases are going to be. So, you know, especially on the fire side, you know, in North America, you know, we're primarily a union firm. And so you have pretty good visibility into, you know, what the union agreements are going to be. And so it gives you a lot of... You know, you've got plenty of runway to build the wage increases, you know, into your proposals and into your pricing.

Speaker Change: So just a follow up gross margins are showing a decent increase how does API coping well with wage inflation.

Speaker Change: Service technicians.

Well I'd say in general it's because.

Speaker Change: We have pretty good visibility.

Speaker Change: Into.

Speaker Change: What wage increases are going to be so.

Speaker Change: Especially on the fire side.

Speaker Change: In North America.

Speaker Change: Primarily a union firm and so you have pretty good visibility into what the union agreements are going to be.

Speaker Change: And so it gives you a lot of.

Speaker Change: <unk> got plenty of runway to build the wage increases into your into your proposals and into your pricing. So.

Russell Becker: So, I would say it's just good visibility and good discipline by, you know, the individual business leaders.

Speaker Change: I would say just good visibility.

Speaker Change: And good discipline by the individual business leaders.

Russell Becker: Great, thank you for the color.

Speaker Change: Great. Thank you for the color.

Russell Becker: At this point, I would now like to hand the call back over to Russ for the closing remarks. Awesome, thank you. In closing, I would like to thank all of our team members for their continued support and dedication to our business. We believe our people are the foundation on which everything else is built. Without them, we do not exist. I would also like to thank our long-term shareholders, as well as those that have recently joined us for your support. We appreciate your ownership of APi and look forward to updating you on our progress throughout the remainder of the year.

Ross: At this point I would now like to hand, the call back over to Ross for the closing remarks.

Speaker Change: Awesome. Thank you.

Speaker Change: Clothing.

Speaker Change: I would like to thank all of our team members for their continued support and dedication to our business. We believe our people are the foundation on which everything else is built without them, we do not exist.

Speaker Change: I'd also like to thank our long term shareholders as well as those that have recently joined us.

Speaker Change: Your support we appreciate your ownership of API and look forward to updating you on our progress throughout the remainder of the year and hopefully we see many of you at our Investor Conference in New York on May 21, Thank you everybody.

Russell Becker: And hopefully we see many of you at our investor conference in New York on May 21st. Thank you.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect.

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