APi Group Corporation

Good morning, ladies and gentlemen, and welcome to API Group's third quarter 2026 financial results conference call. All participants are now in a listen only mode until the question and answer session. We ask that all participants limit themselves to one question during 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 Walters, Senior Director of Investor Relations at API Group. Adam, please go ahead.

Thank you. Good morning, everyone, and thank you for joining our third quarter 2026 earnings conference call. Joining me on the call today is Russ Becker, our President and CEO, and David Jackola, our Executive Vice President and CFO. Before we begin, I would like to remind you that certain statements in the company's earnings press release 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 FCC, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, October 29th, 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 third quarter 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. Reconciliations and other information regarding these items can be found in our press release and presentation. It is 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. I would like to thank our 32,000 leaders for their dedication to API. The safety, health and well-being of each of our leaders remains our number one value. Our culture is foundational to our business and drives results. It differentiates API and allows us to win every day with our customers and in our communities. As we celebrate our 100 year anniversary with the theme of building great leaders who build great communities, We have asked all of our teammates to retake our I Am a Leader online development course. At API, we believe leadership is the single biggest differentiator between average and excellent. This investment in our teammates will reinforce the leadership behaviors and culture that have shaped API and will support our next 100 years of growth. I would also encourage those joining us on the call today to take the course by following the link in our earnings presentation. It's a 30-minute commitment, and I am confident you will find it worthwhile. Our business continues to perform at a high level, and that is reflected in our record third quarter results. Net revenue increased 23% and 16% on an organic basis, our fourth consecutive quarter of double-digit organic growth. Organic growth and safety services accelerated meaningfully, up 9% compared to Q3 2025. Our inspection-first strategy continues to deliver, driving consistent mid- to upper-single-digit growth in highly recurring and statutorily required inspection, service, and monitoring revenues, while positioning us to capitalize on a robust project environment. Our backlog remains at record levels, up double digits year-over-year, consisting of high-quality work that is accretive to current gross margins and diversified across a variety of end markets. adjusted EBITDA margins expanded 20 basis points despite a dynamic inflationary environment. This marks our 16th consecutive quarter of margin expansion and demonstrates our ability to improve profitability regardless of market conditions. Diving a little deeper into the business, the North American safety business delivered another outstanding quarter with double digit organic revenue growth despite a challenging prior year comparison and meaningful margin expansion. Inspection service and monitoring remain at the core of our business with inspection revenue growing at a double digit rate in Q3. The large project environment remains robust. Our record backlog continues to grow. Proposal activity is strong and we have seen no meaningful delays or cancellations. Demand spans multiple end markets, including semiconductors, advanced manufacturing, data centers, healthcare, and warehouse and distribution. Our large project success demonstrates the strength of our inspection-first strategy. These opportunities come from long-standing customers whose relationships began and grew through inspection and service work. We are winning this work at attractive margins, supported by the technical capabilities and scale that few competitors can match. Our national branch network and strong customer relationships position us well to capture recurring inspection and service revenue after project completion. As expected, international safety improves sequentially and return to organic growth in the third quarter. Inspection, service and monitoring continue to grow and remain at the core of our international business. Leading commercial indicators continue to strengthen. Order intake and customer additions increased, while project backlog reached a multi-year high in both value and book gross margin. Our playbook emphasizes branch-level fundamentals, recurring revenue and inspections, and empowering branch leaders to drive improved business outcomes. It has driven results in North America and will do the same in international. Looking ahead to 2027, we expect international safety to return to its historical mid-single-digit growth rate. Specialty delivered another impressive quarter with organic net revenue growth of 30%, its sixth consecutive quarter of double-digit growth. The project environment remains robust, driven by demand across targeted end markets, including data centers, critical national infrastructure, and healthcare. Our record backlog in this segment continues to grow. Life Safety Services specialty is a service business first. Nearly half of its revenues come from required and recurring services provided to long-standing customers. Service revenue grew at a double-digit rate in the quarter, and today's projects create attractive service opportunities across multiple API companies upon completion. We continue to improve collaboration across API companies, enabling us to offer customers multiple service offerings under one proposal. This contributed meaningfully to revenue growth in the quarter. Across our business, our teams remain focused on driving margin expansion, and I'm confident in the work we are doing to continue moving margins. Both North American Safety and Specialty Services drove meaningful segment earnings margin expansion this year, even as elevated project volume was a headwind to gross margin expansion. We continue to see stronger pricing on new project opportunities with higher margin work entering the backlog. As this higher margin project work converts to revenue over the remainder of the year and into 2027, it will become an increasingly meaningful contributor to margin expansion. As international safety continues to gain momentum and returns to normal levels of growth, we expect it to become a stronger contributor to margin expansion as well. We continue to be active on the M&A front. During the quarter, we closed the WTech acquisition and completed three bolt-on acquisitions, including adding Evergreen Fire and Security to the API family. Evergreen, a systems integrator based in Washington, expands our North American electronic security capabilities, which has been a key strategic area of focus. We have closed 13 transactions year-to-date. and remain on track to spend $250 million on Bolton M&A in 2026. Importantly, the multiples paid for both Bolton and larger platform type transactions remain consistent with historical valuations. The average EBITDA multiple paid for a highly complimentary Bolton acquisition continues to be five to six times. For larger strategic or platform acquisitions, We are acquiring businesses at an average EBITDA multiple in the low teens. As always, we will continue to be disciplined in our M&A approach with five important criteria that must be met. Geographic fit. The services that are offered. Financial profile. This has to have a near-term path to be accretive to our 10, 16, 60 plus targets. Our ability to integrate the business. and most importantly, culture, values and fit. Our M&A pipeline remains robust and we are building the capabilities to support $350 million of annual bolt-on spend. We see significant opportunity to add fire and life safety, electronic security, elevator and escalator and niche specialty services businesses to the API family. The industries we serve remain highly fragmented. and our value proposition as a forever home for sellers and their teams continues to differentiate us and position us well to capture these opportunities. Before I hand the call to David, I want to step back from the quarter and talk about where this business is heading. Three quarters into our 100th year, the picture is very consistent. Double digit organic growth, margin expansion, record back off and disciplined capital deployment. That consistency is not an accident. It is the result of the choices we have made about which customers we serve, which projects we take, and which businesses we bring into the API family. And it is why, as we look toward 2027, we do so with strength and real confidence. Momentum. The momentum from the first half continued through the third quarter. We delivered double digit organic growth in each of the first two quarters, raised our full year outlook three times based on business performance, and raised it again following acquisitions. Inspection, service, and monitoring revenue continues to grow. Our project businesses continue to win, and pricing discipline remains strong. We see no reason for that to change as we turn the calendar. Backlog and visibility. We enter the second half with backlog exceeding $5 billion for the first time, and it continues to grow. The backlog is diversified across both segments, service lines, and targeted end markets, providing meaningful visibility into 2027. It is also weighted toward the work we want, well-selected projects with the right customers and margins that create recurring inspection, service, and monitoring opportunities upon completion. End markets. and markets matter and we are positioned in the right ones. Semiconductors, advanced manufacturing, data centers, healthcare, critical national infrastructure are multi-year builds, not single year events. Our scale, technical expertise and longstanding customer relationships position us to support this build out across fire and life safety, electronic security, HVAC and mechanical, structured cabling and structural services and then serve these facilities for decades through statutorily required inspection and service. The demand we see today is the recurring revenue we will be serving in 2027 and well beyond. Margins. Our margin levers remain consistent and they are not exhausted. First, consistent organic growth, improved inspection, service and monitoring revenue mix, disciplined customer and project selection, pricing, branch and field optimization, procurement systems and scale, including the build out of our Global Capability Center, accretive M&A, and selective business pruning. And as I always like to say, we can always just be better. We expanded adjusted EBITDA margin in every quarter this year, despite elevated project volumes and rising material costs. We expect continued margin expansion in 2027. with our 2028 adjusted EBITDA margin target of 16% firmly in view. Acquisitions. 2026 has been one of the most active years in our M&A history. We closed CertiSight in February, Onyx Fire in June, WTech in July, and Evergreen in September, along with several smaller bolt-ons. Together, these acquisitions add well over $500 million of annualized revenue. every one of them accretive to our 10, 16, 60 plus framework. Importantly, 2026 only reflects a partial year contribution from these businesses. In 2027, we get the full year contribution. We also get the benefit from a full year of ownership and ongoing integration, including cross-selling, inspection and service into their customer bases, procurement scale, and the operating discipline that has driven margin expansion across API. This creates a built-in tailwind before any new acquisitions and our pipeline remains robust. In closing, as we look towards 2027, we see a business growing organically at a double digit rate, a record backlog in the right end markets, margins expanding with more to come, four acquisitions moving from partial year to full year contribution and a balance sheet and cash flow that allow us to keep investing and keep returning capital to shareholders. We intend to give you our budget and guidance for 2027 in February, as we traditionally do. But I want you to hear it from us now. We are entering next year from a position of strength and our 10, 16, 60 plus framework remains our North Star. With that, I'll turn the call over to David. David?