APi Group Corporation (APG) Earnings Call Transcript & Summary

I think we're good now. Again, welcome back, everybody. We are very, very excited to have with us Jim Lillie, who is the co-Chairman of API Group and Russ Becker, who is the President and CEO. I've got to know these guys for the last several years. And I think it's been an interesting and incredible experience with you guys, a lot of growth A lot of big things has been more for all of us. So maybe you can talk about the vision that you had. Jim you guys when J2 bought API, and Russ, as you sort of entered the partnership with them. What's gone well? Anything that still needs to be done as you continue to sort of evolve here?

So from our perspective, when we were looking for an investment, and this is going to sound a little pedestrian, but we were looking for something that was Amazon resistant. And what I mean by that is when the headwinds came, what had a good protective moat around the business, we really like the statutory elements of this business that the services were required or mandated. And particularly as it related to fire code, common sense tells you that fire codes are never going to get less stringent. They're only going to get more stringent. And so when we bought the business or when we met Russ, that whole thought process was kind of solidified because we really like the culture of the business. We like the team. We like the leadership. And we thought there was great potential to put a little more money into M&A, do bigger and better deals, expand the scope of the business, whether it be domestically or internationally, it's a hugely fragmented industry, and so there were plenty of opportunities. And based on what Russ had done by kind of cash flowing acquisitions over the years, we knew that through cash flow and through debt that there would be great opportunities to not only grow the business but grow the margins and with the growth of the margins we saw an opportunity for multiple expansion, which is what we see today. Little did we know that when we went public that COVID would come the next day, basically. But I think rather than having a thesis about how the business would perform and headwinds, we have a true case study of how a resilient business with a protective moat around it, can actually grow during headwinds, whether it be global supply chain issues, inflation, FX issues. We'll do results next week. We gave a little teaser this morning in a press release. But just imagine how well this business will perform when some of those headwinds become tailwinds. And so we're incredibly excited about the opportunity. We've got a great strategic plan to continue to execute over the next several years. We love Russ and the leadership team of the business. And so we couldn't be more pleased with how the thesis became a reality.

Russ, any thoughts from your side in terms of the symbiotic relationship. Jim warn -- you're already sort of doing your thing. what have they sort of brought?

Well, I think the Chubb acquisition is a great example of where 1 plus 1 equals 3. And I look at number of years there's a bunch of different places we could take that part of the conversation. But number one, as a private company, we wouldn't have participate -- been able to participate in that process. We wouldn't have been able to pay the multiple that we paid. We went to that access to capital like we have access to capital as a publicly traded company. And I look at their ability to help, so to speak, put that transaction together. We wouldn't have been able to do that, so to speak, on our own. And in the same sense, I think that what we brought to the table as it relates to the capability to own and operate the business, was right up our alley, and like I've said it probably 6 gazillion times now, it was a center of the fairway transaction for us, like I can see, especially as I've traveled around the business for over the course of the last 12 months, like what needs to be done. We're really focused on driving the business towards a branch-led operating model. And that's the way we've built our core safety services business in North America. And so we'll continue to drive the business that way. But -- so when you think about it from like just -- that's a great example of how 1 plus 1 equals 3. Obviously, from my perspective, as I've never been a public company CEO before. So having the resources to provide advice and coaching, if you will, has been really invaluable in our evolution. And I think that's made a big difference on why we're at where we're at today. And obviously, the road, the journey is never done. And part of that is just the way I'm wound, is like I'm never -- it's never -- I hate to say it like this, but it's like never enough. I'm never satisfied, and we can always be better, and there's always what's next. And I think that's what's exciting. And Jim talked a little bit about it, but there's so much opportunity for this business. As we continue to march it forward, it's -- we're just getting going.

And Jim mentioned sort of the teaser of what you put out today. So maybe we can talk a little bit more about it. Like you got to the high end for what you're going to report in Q4 and for the year, you gave out new guidance for '23. So what's going right, Russ. Is it on the revenue side in Q4? Is it revenue and margin? And obviously, you've given a revenue and EBITDA range, so we can sort of do the math on '23. But is the strength across both segments? Any more color you can give us on sort of what you're seeing.

Yes. I mean we're seeing like revenue has really never been a challenge or a problem for us. We just want to make sure that we're -- we stay super disciplined and focused on the right revenue with the right customers as we continue to grow the company. Our organic growth rates have been really solid over the period. Chubb as an example, has shown sequential organic growth over the last 2 quarters. We're excited about where we're going to be able to take that piece of the business as well. So like our mission and as we move into 2023 is going to be around gross margins and margin improvement. And you could see the guide that we gave today that we're taking an incremental step forward in our margin expansion goals, and that's something that's important to us because it's a commitment that we've made to you, our investors and potential investors. And that's a big aspect of what we're doing. What's going right is we continue to grow inspections. And for those of you that know the company and for those of you that are new to the story, inspections and growth of inspections, is like we're super focused on that. And for every dollar of inspection work that we generate, we know we're going to generate some place between $3 and $4 of service work. And we're continuing to show double-digit inspection growth in the business. And that is something that we need to continue to drive as the business marches forward. And I mean, we're relentless, and we have a phenomenal leader that's leading that effort for us. We have a new sales leader at Chubb that the individuals like super competitive. I love like his competitiveness and not that I'm competitive. And -- but we -- and we're bringing him together with Courtney Bogard, who's our in North American sales leader and sharing really kind of our recipe as it relates to inspection sales and inspection sales growth and what we're have happening there. we had actually good growth again in January. And so we just remain really optimistic if we stay focused on that. That will continue to help us drive towards that 60% of our revenue coming from inspection service and monitoring.

So I don't think that most of us have a doubt that you guys have been good and continue to be good at pushing inspection, right? We just wonder about the sort of underlying markets amongst that . So maybe we just -- I want to ask about Chubb separately, but just asking about the U.S., right, core markets, like you see the same indicators. We are but that starts were strong last year, for example, API is down a little bit. But like sort of what are you seeing in your core markets? When you think about data centers or health care, education, like anything more are you anything slowing down? How would you sort of characterize core markets?

I'm naturally productively paranoid.

Yes, So am I.

And so I've always got one eye open in the back of my head, and that's just it's a strength and a weakness, really all in the same breath to be totally honest with you. But I'm really confident in our core markets. Our backlog is -- remains strong. We burned through some backlog in Q3 and Q4, which is normal. We will add to backlog again in Q1 and Q2, our proposal funnel is very, very robust. And so I'm really optimistic about the end markets that we play in. And you're right, data centers, semiconductor, health care, all remain really robust. People see -- matter -- took a little bit of a step back in some of their expansion plans. It's mostly because they're going through a redesign the requirements for the products that they're producing now have higher cooling requirements. And so they're going through a redesign effort. The demand for their services hasn't changed at all. And so what they're going to continue to do is going to continue to be strong and robust. And I think that it's really healthy. I think the infrastructure bill will, for sure, be a tailwind to the services that we provide in safety or in specialty services. It's not necessarily that we're not going to be building a new bridge for $400 million and 5 years later. That's not the work we do, but a rising tide floats all boats. It will create opportunity for our competitors in the space and give us more room in the markets we serve. We should be able to take share, we should be able to raise prices. And I think that there's going to be a tremendous amount of opportunity there. So I'm really -- I'm feeling really good about where we're at as we move into 2023.

Russ, you've given out sort of the backlog metrics for the last few quarters. So I just want to -- think we're still kind of getting comfortable with them for you. I think you've said in the past that they go down in Q3 and Q4 and go back up in Q1 and Q, which you just said, again, they were $3.6 billion in Q3. I assume they're down a little backlog is down a little bit in Q4. Would you say that by the end of '23, you would still expect backlog to be up, or is there a supply chain normalization that impacts that?

No. I think our backlog will be back up. And if any of you listened to that first call where we started talking about our backlog, I said that's not the best metric to measure our business by because in all honesty, I would like to see that shrink a little bit, which would demonstrate to me that we're being more selective and disciplined in the work and the opportunities that we're taking. And in an environment where you have tight labor and some scarcity of labor, like you want to make sure you're putting your resources on the most profitable opportunities that are in front of you. So I don't get concerned -- I'm not concerned about our backlog at all. I think we're going to see our backlog increase as we move through the course of the year. And we're actually really trying to pull the reins back and make sure that we're bringing that element of discipline to it. And customer selection is probably the biggest component of that.

And just maybe one more sort of from my own notification, sort of understanding the U.S. market. You already mentioned inspection is strong. Is inspections or inspection stronger than service, for example, is fire stronger than HVAC, for example, like how do you -- any sort of taking a part where you're strong, just out of curiosity?

If we're speaking strictly towards North America, I mean, inspections is more primarily driven towards the fire business just in general. I mean, we're selling service work in the HVAC piece of our business, but that's not necessarily -- doesn't have the same statutory requirements from an inspection perspective, but we're seeing rock solid growth in our HVAC service business. We also are focused on growing the temperature control side of the HVAC, our HVAC businesses. And the margins in both of those disciplines are higher, but inspection growth has been really solid across the business, and it's about building out that inspection sales force.

Got it. And then you talked about specialty a little bit like infrastructure bill helping. Like I think when you talked -- maybe it was at this Investor Day in November, you mentioned that a lot of these mergers should be GDP plus, let's say, but it's more of a project-based business, as you know. So like visibility over the next year is obviously pretty telecom and utility focused. So pretty good in terms of visibility, would you say?

Yes. I think the visibility is really good. I mean you see other places where there's robust opportunity. I mean, the EV market is like super, super strong I mean, there's ample opportunity. I mean, we have businesses in our Specialty Services segment that are doing work for Meta. So I mean there is crossover there and the visibility into the project pipeline is good. We still have over 40% of the revenue in that segment comes from service as we define it, and that continues to be strong.

Got it. And I apologize for shifting quite a bit. But let me just go back to inspection, like competition. Like I think of -- obviously, the big guys can do inspection, but they'd rather sell products. So like who are you taking the share from? Is it still regional competitors? Is it some of the big guys, like how do we think about that?

Yes. So like as an example, EMCOR has fire, life safety component to their business. It's not that big and it's not nearly as big as ours, but they're more focused on project-related work than we are. So we don't bump into [ Chamber ] would be one of their companies or we don't bump into them in that space. So you are competing more with small local players, not even as much regional players, family-owned businesses and One of the things that it's a $15 million or $20 million shop that's family-owned business, it's easier for them to go pursue project-based work at, say, $750,000 a crack, $1 million at a crack than it is to sell $750,000 worth of inspections at $1,500 a crack. And then the back-end infrastructure that it takes to not only sell it, but then you have to dispatch the inspector or you got to have the inspector to actually do the inspections. And then the inspector is going to do a deficiency report. Oh, But we got to send them a bill and we got to collect the bill and then we got to put a service proposal and that all takes resources. And what typically happens with these smaller shops is because it's easier for them to do the contract or the installation work as soon as they get busy, they take the technicians that are doing the service and inspection work and they pull them over and they haven't new contract work. And until you can get disciplined to say, for us, it's really -- we have separate inspection departments. We have separate service departments and then we have separate installation departments, if you will. And we have separate resources that are committed to that. And it takes infrastructure to do that. And we've built -- we've been so focused on this for so long that we've built out that infrastructure. And we're really just getting to the point where that flywheel is going to start cranking.

So I want to shift gears and talk about price cost for a second. So like in general, you've averaged correct me if I'm wrong, 2/3 of your overall sales growth has been price, 1/3 volume. When you think about -- I think you guided to 10% and clearly, you did probably a little bit better than that in Q4. So when you think about '23 and your new guidance, like what's embedded on pricing? Is it still -- I'm sure it's not 2/3 anymore because you've got a comp there and -- but there's still probably some carryover price. And then how do you think about the stickiness of price, right? Obviously, we're going to talk about supply chain in a second. But as some of your procurement starts to come down, do you have to give back [indiscernible] at all in any respect?

No, I think I was going to say something different than that I pulled back. You got to remember I'm an old hockey player, so I've got some different words I use from time to time. But for us, no. I mean, like we're seeing good stickiness in the price that we've been taking I think that if I look -- when I look at Chubb's business, they've been very aggressive on price. Some of it is because they've had poor performing contracts with a number of their customers. And so it's -- from that perspective, it's either we're going to take price, or we're going to fire that customer, if you will. And so we've been really aggressively pursuing price. You'll see the 2/3, 1/3 start to normalize. And over the course of the year, I would expect it to get more towards like 50-50, but probably not in the short term because we're still battling some inflationary issues. But I think that we are getting better and better at taking price. And in North America, to a certain degree because we're union -- your union contracts come up at very specific times, and that's a very natural time for you to take price because that's when you know the contract increases from a labor rate are going to go into effect. And so that's a very natural, very easy time for you to, so to speak, adjust your pricing with your customers. And I think that just in general, we've continued to get better at taking price, and how we're managing price across the business.

So I mean you already said you're raising price at Chubb. But to be clear, in North America, you're still raising price also.

Of course, yes.

Okay. And maybe thinking about sort of that relationship to supply chain, right? Like it's been difficult at times because you've had to sort of procure steel and steel costs were high, but that stuff has started to come down. Maybe there's a little bit more availability. So how do you look at sort of supply chain? Like what's implied in your '23 guidance now, like is you've got margin expansion there, right? Like and then there's a 13% for '25. So what are the conditions that you need get to 13% margin in '25. And what's embedded in the guidance for '23 in terms of what the conditions are like.

From a supply chain perspective, I mean, like we don't make excuses for supply chain constraints and challenges that we have. We just deal with them, and we're forced to deal with them. So I mean I think that if you look at our track record, even going back to -- from the time we first went public and started dealing with the pandemic, we never once made an excuse about the conditions that the business was facing and dealing. We just deal with it. And I think that, that's kind of part of our DNA and really who we are. So like theoretically, we don't have any sort to speak, supply chain disruptions and issues built into our plan for next year. It's all just implied and embedded, and we have to go and deliver on our results. You talked about pipe prices and things like that. Pipe prices have come down, but I don't know if you -- how closely you're following up, but they have recently picked back up, and so we continue to monitor that because we buy so much pipe. But the biggest area from a supply chain issue that we're seeing is more on the like fire alarm panels and those types of things that you're still having more difficulty in procuring. We've got a gentleman sitting over here, Brian Rowe, who is a graduate of our leadership development program. He works in one of our businesses, and he was saying that as a supplier of services to our customers, we have to find alternative ways of delivering products and services to our customers. So if we can't get this particular panel, then we have to figure out a different way to meet our commitments and our obligations to our customers. And so I think when you have that kind of a mindset, you'll work your way through some of the supply chain challenges that are out there. But it's -- we're still battling and we're hopeful that by the third and fourth quarters that we see that alleviating and regulating.

If I could just add to that, early in the supply chain crisis kind of across the world, a lot of our issues with the supply chain where the contractor in front of us was doing something that was supposed to be done by Wednesday, but he had supply chain issues. And so we had people standing around impacting our margins because they weren't able to start at noon on Wednesday instead they started at 9:00 a.m. on Thursday. And so that's alleviated itself also as kind of a ghost issue within the supply chain.

Got it. And maybe one more before I get into Chubb specifically, and I do want to open it up to the audience, I will. Like when you think about sort of the margin expansion potential, it feels to me like it's more in safety, given job and such. But is it across both segments to get to 13%? Like what are the opportunities across both segments?

100%. Like every one of our businesses has to improve its performance, every one of them. So we have businesses that are in safety services that are performing at a 20% margin today. The expectation is that, that business is performing at 21% or 22%. They -- every one of our businesses has to improve their performance. And when we talk about margin expansion, we typically drop it into like 6 different buckets, right, disciplined project selection, customer selection, improving our mix from 50% of revenue for inspection service and monitoring to 60%. It's procurement, it's what we call business process transformation, which is really establishing the foundation for us to move to shared services. It's price. It's strategic M&A. It's buying small businesses and tucking them into our existing business that are accretive to our margin expansion goals. And lastly, we always say we have the opportunity to just be better and that's true. And obviously, Chubb at roughly a 10% EBITDA margin business that has to take some steps. We see those steps. We're taking on those challenges as it relates to rightsizing the business to establish that platform in that foundation that the business needs to really go forward and get on the path of accelerated growth. So that's -- and so it's singles and that we need to hit, not doubles, triples and home runs.

Got it. And I think at the beginning of our conversation, you mentioned that Chubb's organic growth improved sequentially. I think you told us at your Investor Day that it reached 7% year-over-year growth in Q3, and you forecast net organic of 3% to 5% for '25. So versus that 7% in Q3, is it continue to accelerate? Is it kind of where it is? And how are you thinking about the environment for Chubb in '23.

Well, I mean, I think that what we laid out in the Investor Day is what people should expect.

Very comprehensive.

And again, if you remember, and you go back to that bridge that we provided, there's an element of it that shows what we're going to go backwards on from a customer attrition perspective. So as we look at that 3% to 5% growth, and theoretically get through this period of time where we're firing customers, I guess, if you will, or that we should be able to get Chubb onto on organic growth path that is much more similar to our historic organic growth path which is about 7%.

Yes. So maybe I'll ask it to you like this, Russ. You did give us a revenue bridge, right, where you talked about pricing, sales force optimization, high-growth verticals, you mentioned firing customers in clothes. like so any of these tailwinds better or worse than you thought versus firing like how is it done? And it's been, call it, 4 months since your investor -- 3, 4 months Since your Investor Day, anything notable that's different? Now what you sort of updated us on?

I don't know that I would say that there's anything notable or different. I would say that we're further down the path in our plans in our execution. We continue to focus on doing the right things for the business. So there's a lot more to it than just so to speak, getting on this revenue growth path. And I kind of alluded to it, but I feel like in this type of business, in order to grow at a healthy clip with quality revenue, you need to get the business to a solid foundation. And that means that we're going to need to do some rightsizing in the business. Now over the course of last year, we basically took advantage of some low-hanging fruit from really more at the corporate cost level. And took cost out there, but we need to get into the individual countries and really make sure that those businesses are properly rightsized so that we establish the right foundation that we can take that business and really move it forward in a very healthy branch-led fashion. And as most of you would know and understand that some of those changes that we're going to make require a little bit of extra effort in certain Western European countries where we're going to have to go through social plans and those types of things. But I don't know if under previous ownership, they didn't have the stomach to take on those challenges or not. We do. And we're going to -- we're moving forward with those plans as we speak, and we're making the right structural changes in the business. We're making the right leadership changes in the business. And really, when we come out the other side, I mean I like -- I get super fired up, Andy, when I travel around the business. I was recently in both Hong Kong and Australia, and we've got a really dynamite team in Hong Kong. We've got some pieces of our Australian...

You're able to get there, you didn't get stuck there. But sorry, go on.

Yes. Well, I mean it was really intricate to tell you the story, but I'm flying -- I had to fly to Seoul, South Korea. And as we were -- so I've been on the plane with 400 of my closest friends for 12 or 13 hours already, but when somehow when we got the 10,000 feet, we had to put our mask on. And so like I was like -- really, I just been with this person for 13 hours and now I got to put a mask on and -- but -- then -- I spent time actually in Australia in Sydney, Melbourne and Brisbane. And there are some really good things going on in that piece of the business. There's some things that we need to fix in that part of the business. Every aspect of our business can be better. But like you move around and you see the opportunity. And the more we move around, the more I move around, I like, I know I personally like I get back from these trips and I'm like fired up. And because I can see it. And I can see what the potential and what the opportunity is. And these are people that are starving for like somebody who like as simple as this is going to sound like for somebody that actually cares. I mean, like the deal closed the first week of January last year, and our corporate office for the U.K. operation is in Blackburn, which is kind of right in the center of the country. And we have a lot of employees there. And I went -- we went there for a visit. I walked around I shook hands with every single person. And our guy that runs a business now told me just like -- just like 2 weeks ago, he goes, Yes, he goes, people are still talking about when you came and visited and you shook everybody's hand. And this is just like I -- I'm like that's like one on one. The actions care about people.

Yes, for sure. One related question then we'll open it to the audience. Like so with you in November were a little we -- the market was maybe a little worried that Chubb, he's going to go through a cold winter, Europe was going to go through a cold winter and just didn't seem to develop. Is that true kind of for your business is generally didn't see any more of a slowdown from.

Well, we really haven't seen a slowdown. I mean there's all sort of data points that are out there, and you can believe who you want to believe most recent information that I saw that they're predicting that EU would have 1% GDP growth this year versus moving into a recession. Chubb's business is 60% of the revenue comes from inspection service and monitoring. So built into that is resiliency, right? Their backlog is strong and is actually showing a little bit of growth. So we're very optimistic about the business. We're even more optimistic when we think about what it's going to look like when we have the right leadership in some of the changes that we need to continue to focus on from a leadership perspective. And in these businesses, like when you have branch-led businesses, if you don't have the right leader at the branch level, it's very difficult to not only achieve your goals, but much less have just good solid profitability. And so we are very, very focused on making sure that we've got the right leadership in our corporate entity there. We have the right leadership at the country level all right? And now really, the focus is moving into branch and branch leadership, branch optimization, we need to close some branches, and that will be part of our planning and our execution here in 2023. So...

Any questions from the audience, any questions?

Jeff Gates from Gates Capital Management. I have 2 questions. First, what do you do so much better in the U.S. in fire safety that accounts for the higher margins in the U.S. versus what the business you bought in Europe, that's number one. And number two, the Specialty Services business, is it readily separable operationally if you chose to sell or spend it?

So the -- what do we do better in, so to speak, the I would say, number one, is that we've been really -- this branch-led operating model is significant. And it's a significant change in philosophy. And it starts with really being focused on branch-level leadership and making sure that you have the right people running every one of those businesses. And if you can get focused on that then it allows you to simplify the business as you're looking at the business really keep problems and problem solving to where they really sit and where they really lie. And I think that our focus on leadership and leadership development has made a significant difference in our business results. And I think measuring what you expect we're very good. We know what good looks like from a branch operating perspective. We have very specific key metrics that we measure every single month on a branch by branch and a company-by-company basis. And we've brought that discipline to Chubb We stack rank every month. We report branch operating results, highest performance, the lowest performance, so we create competition. And we're not afraid to exit markets that we're not performing in. So I think that just our philosophy and how we look at branches and that operating model make a difference. Regarding specialty, the -- we continue to talk about all sorts of what's the best options for the business. We've looked at, is there options for us to continue to prune? We've never been able to prune across any one of the aspects of the company. It doesn't matter if it's safety. If we need to do some pruning, we'll do some pruning. If we chose to sell the specialty business, we would be able to separate the business. So we'll continue to look at what's best for our shareholders, and we'll make the appropriate decisions as we move it forward.

Any other questions? So I want to ask you maybe 2 more questions. So just one more on Chubb. You've got $100 million in synergies down and now but you've already raised cost so in terms of that. Like, first of all, what are the chances like can you update us on the progress of synergies? What is the chance you could raise again, we always want...

You sound like Jim, always rounding up. And you know what, I mean, I think that the way I would respond to that question, Andy, is that like let us get to the $100 million and let us deliver on that commitment. And then we'll talk about what we see next and everything else. And by the time we get to the $100 million, I mean, it's going to be -- we're going to be optimizing that business. I mean we'll be optimizing that business as we optimize our business in North America every day. And we continue to look at the ways for us to be more efficient. So let us live up to that commitment.

So let me ask 2 questions. One on Jim, one on you, Russ. Russ, the question that I'll have you think about for a second is one that I've been asking all of the companies. And it's just What are the top 2 or 3 innovations, megatrends or structural changes affecting your company or have affected your company -- affect your company over the next 5 years? And are there any emerging industry trends that are perhaps being overlooked, in the current discoursing. And Jim, I just want to ask you what you and Martin are doing lately as focusing on API. Like what's your role now? Like what do you do in over the next 6 to 12 months?

Do you want Russ answer his question first, or do you want me to answer mine?

You can answer.

Look, it's interesting. Russ and I in the beginning probably spoke 3 times a day. Now we speak 2 or 3 times a month. It's about the strategic direction of the business. It's the future opportunities for the business, executing on the promises that we made and making sure that we deliver on those promises. It's about looking down the road tactically about the team, the type of people that we need, not only for today but for tomorrow. Obviously, we talked about incremental M&A opportunities, understanding what is important, what the Street wants to hear, where their focus is. As we entered the Chubb Investor Day presentation, I think the world expected us to raise the number and deliver on Chubb. It didn't really care about it. But the focus really was about, okay, how much cash are you going to generate? How are you going to delever the business. And so I think the Chubb up in November was a given, but people really cared more about cash flow. And so I think our radar is up on some of those issues and helping Russ and Kevin and the rest of the team, let them run the business and us kind of think about where the tactical moves that the Street is expecting based on any given point on the calendar. But I think it's been an amazingly healthy partnership. We've learned a lot from Russ and the team. I think they've learned an equal amount from us. And we're here for the long haul, and we're rowing the boat together. We've got Russes back and we're just -- we're there to help.

And Russ, the innovation...

I think there's 2 things. From an innovation perspective, I think you've got kind of the Internet of Things and this whole idea of digitization and what does that look like in a business like ours. And I think in one of our one-on-one or two-on-one investor meetings, we had a similar question. We talked a little bit about being able to provide remote service work so that you don't have to dispatch technicians for every issue that your customers and clients may have and how do we evolve that capability What people are looking to how do we bring the fire alarm system with security systems and the building envelope, temperature controls and how do we bring in [ merry ] all of those components together and how do we participate in that is something that we need to continue to keep our eye on and make sure that we're understanding where the industry is going, so that we can participate and have understand what our role will be in that. From a trend perspective, I mean, I think the -- this whole idea of skilled labor and the impact of the shortage and the constrictions around skilled labor. I mean that's an advantage that we feel that we have. We have a highly skilled labor force that we need. Our people are highly compensated, and that's -- I think we feel like that's an advantage for us. We feel like our emphasis in built around our purpose of building great leaders and the fact that we're willing to invest in the growth of the men and the women that are in the field is something that helps us offset the challenges associated with the constraints with skilled labor. But I think you're going -- the companies that aren't doing anything on that front, I think, are going to continue to struggle because that problem is not going away.

Great. Well, Russ, Jim, thank you very much for joining us. Much appreciate it.

Thank you for having us. Thank you for being here.