APi Group Corporation

Good morning, ladies and gentlemen, and welcome to API Group's 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. 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 first quarter 2025 earnings conference call. Joining me on the call today are Russ Becker, our president and CEO, David Giacola, our executive vice president and chief financial officer, and Sir Martin Franklin and Jim Lilly, our board co-chairs. 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. 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. 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 realigned segments on slide 16. Our comments today will also include non-GAF 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. 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. 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 established our 13-60-80 shareholder value creation framework, completed and integrated over 50 acquisitions, including CHUP, 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. 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 ABI's 10th straight year of celebrating Safety Week. As I've 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. While 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 makes API a company where leaders are inspired to build long and fulfilling careers. Turning to the first quarter, I'm 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 court, 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 monitoring revenues, and low single-digit growth in project revenues. 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 marched towards our long-term goal of 60% of total net revenues from inspection, service, and monitoring. 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 segment to deliver positive organic growth in the second quarter. 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 mix, disciplined customer and project selection, shelf value capture, 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. 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. Our leaders have been proactive in working to get out in front of the tariff situation and implementing mitigation strategies since late last year. 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 in our North American safety business where pipe prices have increased. Our leaders have done a good job protecting our business from material cost increases 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 targeted markets we serve. 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 robust backlog, variable cost structure, statutorily driven demand for our services, and the diversity of the global end markets we serve combine to provide a protective moat around the business. We believe this positions us well to navigate the dynamic tariff variables in the marketplace. As we move through the year, we remain relentlessly focused on our long-term 1360-80 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 repurchases. 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. 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 bolt-on 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 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 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 businesses. In summary, we are off to a strong start in 2025, returning to traditional levels of organic growth after our thoughtful and selective pruning 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. I'd like to hand the call over to David to discuss our first quarter financial results in updated guidance in more detail. David?