APi Group Corporation

Good morning, ladies and gentlemen, and welcome to API Group's fourth quarter and full year 2024 financial results conference call. All participants are in a listen-only mode until the question and answer session. Please note, this call is being recorded. I will be standing by should you need any assistance. I will now turn the call over to Adam Fee, Vice President of Investor Relations at API Group. Please go ahead.

Thank you. Good morning, everyone. And thank you for joining our fourth quarter 2024 earnings conference call. Joining me on the call today are Russ Becker, our president and CEO, David Giacola, our interim chief financial officer, and Sir Martin Franklin and Jim Lilly, our board co-chairs. Before we begin, I'd 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. Our statements are as of today, February 26th, and we undertake no obligation to update any forward-looking statements we may make, except as required by law. As a reminder, we have posted a presentation detailing our fourth quarter of financial performance on the investor relations page of our website. Our comments today will also include non-GAAP financial measures and other key operating metrics. The reconciliation of and other information regarding these items can be found in our press release and our presentation. Additionally, we'll be posting an investor update presentation on the investor relations page of our website later today. It's now my pleasure to turn the call over to Russ.

Thank you, Adam. Good morning, everyone. Thank you for taking the time to join our call this morning. We remain grateful for the hard work of our 29,000 leaders and their dedication to API. The safety, health, and well-being of each of our teammates is our number one value. As a side note, we are very thankful that our four teammates that were involved in the Toronto plane crash last week have returned safely to Minneapolis and are recovering well. I'd like to thank our API teammates who supported these individuals on their return to Minnesota. I'm also proud that API has once again been recognized as a military friendly employer for 2025. We remain committed to providing opportunities for veterans and their spouses to build careers and develop as leaders. 2024 was another solid year for API with record net revenues, record adjusted EBITDA, record adjusted earnings per share, and record adjusted free cash flow in an evolving macro environment. As I mentioned on the last call, the team's work executing our 136080 shareholder value creation framework, shown on slide five, has resulted in API being the strongest it has ever been from a revenue, profitability, and cash flow generation standpoint, which is highlighted on slide six. In 2024 specifically, our leaders delivered progress against each of our 136080 financial targets. First, expanded adjusted EBITDA margins 140 basis points to 12.7%, putting us in a position to surpass our 13% or more adjusted EBITDA margin target for 2025. Second, we increased the mix of inspection, service, and monitoring revenues from 52% in 2023 to 54% in 2024, on our way to our long-term target of 60%. And last, we improved adjusted free cash flow conversion from 69% in 2023 to 75% in 2024. Now, I will highlight our 2024 full-year results. Net revenues grew by 1.3% in 2024, finishing the year at a record $7 billion. This growth was driven by acquisitions strong organic growth in inspection service and monitoring revenues in life safety and pricing improvements. partially offset by divestitures and an organic decline in project revenues, driven by a purposeful focus on discipline customer and project selection and higher than expected delays in certain customer projects in our HVAC and specialty businesses. Importantly, we achieved double-digit growth in inspection revenues in our US life safety business for the year and in the fourth quarter, representing the 18th quarter in a row as we make progress towards our goal of 60% of our total net revenues coming from inspection, service, and monitoring. In line with our strategic initiatives, we continue to see strong improvements in adjusted gross margin for the year, up 250 basis points. The strong performance in gross margin led to full-year 2024 adjusted EBITDA margin of 12.7%, representing margin expansion of 140 basis points. We expect to see continued margin expansion in 2025 and beyond, largely driven by the same initiatives we've been executing for the past several years, including improved inspection, service, and monitoring revenue mix, disciplined customer and project selection, Chubb Value Capture, Pricing Improvements, Procurement Systems and Scale, Accretive M&A, and Selective Business Pruning. And as I always like to say, we can always just be better. Regarding Chubb and our international business As we exit 2024, we have realized more than $90 million of the $125 million value capture target, and we remain on track to realize the rest of the savings in 2025 and early 2026. 2024 was another year of strong free cash flow with record-adjusted free cash flow of $668 million, representing approximately 75% conversion of adjusted EBITDA. Our strong free cash flow generation helped us to repay $100 million of our term loan on December 31, 2024, and deliver on our commitment of reducing net leverage to under our target of 2.5 times, ending the year at 2.2 times. The strength of our balance sheet allows for flexibility to pursue value-enhancing capital deployment alternatives. such as continuing our track record of disciplined M&A or opportunistic share repurchases. As a reminder, we have approximately $400 million of authorization remaining on our share repurchase program. In 2024, we accelerated our spend on accretive bolt-on M&A to approximately $250 million. building on our long track record of integrating businesses and supplementing organic growth through M&A at attractive multiples. In addition, during the first half of the year, we entered the complimentary and adjacent $10 billion plus elevator and escalator services market with the acquisition of Elevated. We have long viewed the fragmented elevator and escalator service market as an attractive adjacency due to the highly recurring nature of the business DRIVEN BY NON-DISCRETIONARY, STATUTORIALLY DRIVEN DEMAND. WE EXPECT TO BUILD A $1 BILLION PLUS ELEVATOR AND ESCALATOR SERVICES PLATFORM OVER THE LONG TERM THROUGH A COMBINATION OF STRONG ORGANIC GROWTH, A LONG-TERM CROSS-SELL OPPORTUNITY WITH OUR EXISTING LIFE SAFETY BUSINESSES, AND A ROBUST M&A PIPELINE. LOOKING AHEAD, We are excited about the pipeline of M&A opportunities we see across fire protection, electronic security, and elevator and escalator services. Our team remains hard at work prioritizing the most attractive opportunities, both from a business quality perspective, but most importantly, from a culture, values, and fit perspective. In summary, I am proud of our team and the record financial results achieved in 2024. As we begin 2025, I have great confidence in our ability to continue to expand margins and grow free cash flow, but importantly, return to traditional rates of organic growth, driven by the following. Continued strong organic growth in inspection, service, and monitoring revenues. Pricing improvements. Accelerating growth in our backlog. Up high single digits in total and up double digits organically in specialty services with a focus on the right projects for the right customers in the right end markets. Positive progress working through project delays, annualizing the impact of disciplined customer and project selection, including the exited customer relationship mentioned in the first quarter of 2024 for specialty services. And finally, Our international business begins 2025 with less than five loss-making branches after having over 50 at the time of the acquisition. I'm grateful for our international teammates for their great work transforming our business over the past three years to position it for long-term profitable growth. In 2025, we began operating in our newly realigned segments with our HVAC business moving from safety services to specialty services. This change will provide opportunities to enhance our shared services capability in the specialty segment and allow the HVAC business to receive increased focus from the leadership team, putting it in the best position to win with its customers. Additionally, the change also sets us the change also sets up the safety services segment as more of a pure play life safety business focused on fire protection, electronic security, and now elevator and escalator services. I would now like to hand the call over to David to discuss our fourth quarter financial results in guidance in more detail. David?