APi Group Corporation (APG) Earnings Call Transcript & Summary

All right. Good morning, everybody. Our next session is with APi Group. I'm Josh Chan, business services analyst here. We're pleased to have APi Group join us. They inspect service and install building systems such as fire, security, HVAC and elevators. They also provide infrastructure services to utility and telecom markets. With us from the company are Russ Becker, CEO; Adam Fee from IR. We're going to do a fireside chat. So feel free to send in your questions or you can raise your hand as well, and we'll incorporate them as we go along. But with that, Russ, great to have you here.

Thanks for having us, Josh. Excited to be here. So it's a little nicer here than it is in Minnesota.

Yes, quite a bit warmer, I think. Yes. So yes, thanks for being here.

So to kind of level set everybody here, perhaps maybe you can give a brief intro about APi Group and talking about some recent developments, and then we can kind of go into different topics here.

You want to do that? Sure. Go ahead.

First, just thanks, everybody, for spending some time with us and learning more about APi and spending the next half an hour or so with us. I guess just quick history. APi about 20 years ago was $600 million in sales. And today, we're pushing $7 billion in revenue as a public company, and we go to market in Safety Services and Specialty Services as our two segments and 54% of our revenue today is in inspection service and monitoring with a goal of taking that to 60% in the medium term. Our core purpose as a company is building great leaders, and that's been a core purpose of our company for the last 20 years and a key factor to how we've grown our business over that time. And in a business where you're providing services, taking care of your people, we feel like investing in your people is a really important part of what we do at AP. In terms of recent developments, earlier this year, we closed on the acquisition of Elevated and entered the elevator and escalator space, which we're really excited about that space. It is accretive to our desire to become more service-oriented and reach that 60% target. And it's a space that we feel like has a lot of similarities to the existing fire protection space we're in, in terms of fragmentation and regulatory-driven demand for our services. So we feel good about where we're at as we turn our focus to 2025 and feel like we're going to be able to take the next step forward in the company and return to a more normalized organic growth and take another step forward in margins.

Great. Yes, that's a good overview. Thanks, Adam. So you talk -- often talk about the leading with inspection. And so could you give us an overview for why -- what benefit that brings you? Why do you want to go after the inspection business first?

Yes. Thanks. I would say that this whole idea of inspections first and selling inspections first is really a differentiator for us in the space. In the traditional sense, like if there's a 50,000 square foot office building being built and you're doing the fire protection work on that building, when the project gets to 95% complete, the installing firm makes a decision to try to go sell that customer a service and inspection contract. And at APi, we have flipped that model on its ear, and we are actually building out a sales team that is selling inspections first to the already built environment. So as an example, for those of you that are newer to the story, like, again, using this hotel would be is a more difficult example because it's just bigger and complicated. But a 50,000 square foot commercial office building, the fire protection system has two components to it. It has a sprinkler system and it has a fire alarm system. And those systems are required by law to be inspected for functionality and operability at least once a year and in some cases, more often than that. And so we have this mindset that we're going to sell that inspection first to the already built environment. And the reason we want to do that is that for every dollar of inspection revenue we generate, we know that we're going to generate some place between $3 and $4 on an annualized basis in service work from pull-through from that inspection client. And we also know that if we do a really good job of executing on that inspection and service work that when that customer has expansion needs in the future, that we're more likely than not going to win that project-related work, and we're not going to be competing just on price for the work. And so we'll get a higher gross margin on the project work. So it's a model that really works for us. We've been after it for a long period of time. So we've built out the infrastructure to support it. And I do think it's something that makes us unique.

Great. So as you go out and compete and try to win these inspection business, what are your competitive advantages? How is the sales process typically work for these types of contracts?

Well, the sales process is simple. It's like building a relationship with the property manager, and it's like actually having boots on the ground calling on customers, getting to know those folks and being in a position that you're ready to pounce when the opportunity presents itself. And I think that -- what most people don't understand is that the whole process of doing an inspection on a life safety system is a team sport. And so like it's very coordinated with the building owner like oftentimes, you're flowing water and you're flowing water into the parking lot, which means they have to rope off parts of the parking lot and all of the level of coordination, you're tripping fire alarms and all of that stuff that comes with it. And when you're doing that, if you're not doing it in a highly coordinated fashion with the customer, you can create problems for them, especially in occupied facilities and things like that. So oftentimes -- most of the time, our competitors in the space are family-owned -- small family-owned businesses. And the level of infrastructure that they have to support the work isn't the same as, say, a company like us who is committed and focused to it. Oftentimes, they're taking people from their project work and trying to have them do inspection work and that just does -- we found over from experience that, that just doesn't work. And we have dedicated people doing inspections. We have dedicated people doing service work. We have dedicated people doing project work. And if you try to intermix them, it gets to be really, really difficult. And so having that infrastructure to support that work is truly -- it makes us different and it makes it more scalable for us as we continue to build that piece of our business.

Sure. What are some of the typical hurdles you have to overcome to usually win the business? Is there a reluctance, do they have an existing provider? How do you kind of overcome those?

Well, it's going to sound really simple. Number one, you show up on time. And like you said, it's like highly coordinated. And if you tell the facility manager that you're going to be there at 7, ready to go. You need to be there at 7, ready to go. And then the other component of it that typically gets people in trouble is you do the inspection work. They have -- it's an NFPA form. It's called a deficiency report. And you fill out the deficiency report. And when you complete the deficiency report, like in our case, that deficiency report typically will go to the building owner or the buildings property manager, it will go to what they call the authority having jurisdiction, so like the fire marshal as an example. And then for us, it goes service department to prepare to as quickly as we can take that deficiency report and generate a service proposal to do the -- to make the repairs that are needed. And oftentimes, for us, it's all like on iPads and so people are filling it out and we have dedicated people then to take that deficiency report and turn it into that proposal. But like how quickly you submit that deficiency report matters. Like so if you do the inspection and as a customer, we don't give them the deficiency report for 3 months, 4 months, that's a problem. And so the timeliness of the deficiency report, the timeliness of the repairs, it all works kind of in conjunction with each other. And it's something that I think we have the recipe book and kind of down and know how we need to execute on that.

Great. Yes. So how do you measure this business in terms of metrics? Do you have retention, new business metrics that you strive towards each year? How do you think about that?

Well, we have a number of different -- we call them ODUs but that we [ measure ] our businesses by. I think the most important thing, like if I'm sitting in the audience today, and I'm thinking about what's important to me is like listening -- like if you've listened to any of our earnings calls or you [ read ] any of our transcripts, we're talking about double-digit inspection growth. And we've had double-digit inspection growth on a quarter-by-quarter basis what since the pandemic.

Yes. 17 quarters.

That's kind of the bellwether. And if I was an investor in Api, I'd be continuing to listen like how are they growing inspections because, again, knowing that for every dollar of inspection revenue that we generate, we're going to get $3 to $4 of service work coming from that. And so as we continue to grow that, that means we're growing our service business right alongside that inspection business. That's what's ultimately the most important for us. We're measuring probably too much stuff. And it's just -- so it's like you don't have to complicate it. But we have -- our customer retention rates are above 90%.

Okay. Yes, that's great. So how does the lead generation work at the branch level? Do you feel like you have an edge versus your competition in generating those leads that lead to inspection than then service?

Well, I think we do have an advantage because we have -- actually have a dedicated sales force that's out pounding the pavement. And most -- again, going back to this idea that the industry is highly fragmented. Most $10 million family-owned businesses, they don't have a dedicated sales team to go out and pursue the work. And so we have a woman who is our national sales leader -- well, North American sales leader and that's focused on helping our businesses build out that sales team, and she's got a playbook. I mean it's like -- number one, here's the profile of the type of person we want to hire. Number two, then here's what they should do year 1. Here's what they should do year 2. Here's what they should do year 3. She's just got it laid out like if you follow it, you're going to win. And it's -- literally, it's get out and pound the pavement and they have their high priority customers that they're focused on calling on and -- but it's actually having a dedicated sales team. And most of our peers do not.

That's right. That's right. So I guess, so how sustainable do you feel like high single-digit growth within life safety is -- how much share gain does that require you to generate to get those growth levels?

Yes. I mean high single-digit growth in Life Safety, we feel like is very sustainable from the great financial crisis of the pandemic. We grew the entire business to 7% organic. And Life Safety was a leader of the kind of growth algorithm then, and we expect it to continue to be. It's really led by the inspection service and monitoring part of the business, which we've been able to grow high single digits and led by the inspection part that's been coming in double digits consistently. That's really the stable piece that is really driving that growth every quarter in, quarter out. And the project piece of our business is usually coming in low to mid-single digits, and that's on purpose. We're controlling the growth there because as you drive more of the revenue towards inspection service and monitoring, you can be more selective on the project side. So that's how we think about the growth algorithm to get to kind of that mid-single-digit plus as a whole company, but high single digits within Safety Services.

Okay. That makes sense. So we talked about the inspection service monitoring business. There's also the project mix. And so as you think about your most profitable branches, what's the typical mix of projects? Is there a certain ideal percentage of projects that would make a branch profitable?

I don't know if I would say that there's an ideal mix. I mean we obviously have this goal that we want 60% of our revenue to come from inspection service and monitoring. So 40% come from project-related work. The reality of this is when we get to 60%, we're just going to move the goalpost to 65%, but the more important metric for us is really when our inspection service and monitoring business covers 100% of our SG&A in our branch, then that branch is like bulletproof. And what I think people maybe missed a little bit in the story is that this whole idea of customer and project selection and mix of inspection services and monitoring, they go hand in hand. So the more robust your inspection service and monitoring business is in the branch then it allows you to be more and more selective on the project work that you pursue and then your project gross margins go up as well. So they work really together, and you can't do one without the other. And so growing your inspection business is really important, but then being disciplined and your customer and your project selection goes right alongside it. And as you -- once you get that flywheel turning, then you're going to get a branch that is not only growing its top line, but it's growing its bottom line and it's growing EBITDA as a percentage of revenue right alongside it.

So what value do projects bring to the branch? Because I guess somebody could ask, why don't you just target 100% inspection service and monitoring.

Well, I think we're always going to do project work. I mean, I don't think -- I know we're always going to do project work. And when you have really good customers, you want to be able to do the project work. I mean it's kind of like inviting the enemy into your home, you know what I mean. And so like if we have a really good client, we want to be able to execute that project work to kind of keep our competitors at bay. And when you, again, go [indiscernible] comments earlier, when you have a robust inspection and service business that allows you to price your project work accordingly and then it works hand in hand and it's complementary. Your project work does absorb some of your SG&A as well.

Yes. That's right. That's right. Okay. So kind of zooming out a recently, there have been some project delays that have impacted your kind of total company growth. I guess, are delays an inherent part of the business? Or are we just seeing a higher-than-normal level of delays now?

Well, I think for us, I think that it was more about a confluence of events that just happened kind of simultaneously. And the projects that we've been calling out, so to speak, every one of them has boots on the ground. Every one of them is moving forward. They're just moving forward at a slower pace than necessarily anticipated. And one good example was there's a large infrastructure. It's actually a high-voltage line that's coming down from the Northeast through New York, New Jersey that we're involved with. And that originally started off with permitting issues. And once the permitting issues got resolved, then there was a conflict in the right of way, where there was an unanticipated conflict with the natural gas distribution system and where this duct bank was supposed to go. And so like in this particular situation, we were supposed to have five or six crews working and right now today, we have, I think, one, only one. So it's moving and it's moving forward, and it's going to go forward. It's just moving forward at a slower pace than what was anticipated. So we have really good confidence that we're just working our way through it. And -- but for us, it is -- it was just really kind of a confluence of events that just happened kind of simultaneously.

It's kind of a timing issue at the end of the day.

More or less, for sure.

Okay. So I guess, what's the confidence level that the delays will kind of lessen or maybe we can more normalize as we go into next year?

Well, the confidence level is high because we have boots on the ground. You know what I mean. So -- and as we move into next year and maybe kind of expanding my answer to your question is confidence level as it relates to 2025, starts with our backlog. Our backlog is up organically 5% year-on-year, and it's healthier. And so we feel really good. When you look at 54% of our revenue today comes from inspection service and monitoring. And that revenue is essentially booked and locked and loaded for next year. And then the fact that our backlog is up 5% and healthier, we typically burn our backlog in 9 to 12 months. So that gives confidence that we're in a really good place for our project work as we move into 2025. So we feel good about where our plan is rolling up and the outlook as we move into the end of the year and into next year.

Maybe that's a good segue to talk about kind of a sustainable growth. I think Adam mentioned a little bit earlier, but what do you feel like is the right growth -- organic growth rate for the company on an ongoing basis and -- is there any more pruning to do in the year ahead?

Yes. I think I touched on it a little bit earlier, but led by that high single-digit growth in the service side of Life Safety the total company growth expectation is a mid-single-digit plus type growth organically, and we'll supplement that with our ongoing bolt-on M&A strategy, which we've been executing on for the past 20 years or so or longer than that even. But -- and in terms of pruning, we've been doing some intentional pruning over the course of the last 18 months or so in specialty HVAC. And I guess, for different reasons in the international business, we inherited some contracts that weren't priced the way we would price them, inherited some loss-making branches that we've gone to work on. I would say all of those factors are largely in the rearview mirror as we turn our focus to 2025. So we feel like we'll take a step forward more that and more normalized organic growth in 2025 as we're still doing our planning, but that's kind of the way we think about it.

Yes. Well, that's great to hear.

The only thing I would add to that, Josh, is that we've guided our businesses to -- as they work on their 2025 plan that we want to see high single-digit growth in their inspection service and monitoring business, where we want to see the low single-digit growth in the project piece of their business, knowing that from a revenue mix, we're about 50-50. That gets you to kind of that mid-single digits organic growth. And I would say directionally what we're seeing as we kind of finalize our plans and move into our Board meeting next week, that's directionally what we're seeing.

Okay. That's really good color. So I guess from a cycle perspective, we're in kind of a mixed macro conditions, I suppose. So how would you characterize the cyclicality of your business as a whole? Which parts are more economically sensitive and which parts are more resilient?

Well, I think our business, in general, is resilient. If you go back and -- I joke about Adam's slide decks all the time. He's got like 78 of them out there someplace. If you go back and look in some of the presentation material we have on our website, in the IR section, you can see like back in 2008 and '09 when the great recession hit, maybe 20% of our revenue came from inspection service and monitoring. And today, with 54% of it coming from inspection service and monitoring, that's going to be there regardless of what the economic conditions are. So that element has really helped kind of the company from a resilience perspective. I would also tell you that the end markets that you play in matter. And you can't hardly open up a newspaper without reading about the next data center and how hot that market is. But there's other end markets that remain really robust as well, semiconductor advanced manufacturing, including pharma and things like that, they continue to provide opportunities, health care. And so if you're playing in the right space, your business, in general, will have a higher sense of resilience. We have never been -- like the high interest rate environment has had a negative effect on, say, developer-led projects, right? And we've never done well in developer-led projects because you have to compete on price. And so for us, as -- when rates went up, it didn't really affect our business like I say, did other companies because we just don't do well in those end markets, if that makes sense.

Yes. Yes, it does. So you mentioned the really attractive market is data center, semiconductors -- what's your exposure to however this group of like really attractive markets, I guess, roughly?

Well, I mean, Adam has probably got better actual finite financial data on how much data center. I mean, we don't do -- like we're not exposed to any one end market. We're not exposed to any one customer. I think from a customer concentration, I mean, I think our largest customer is probably 3% of revenue or something like that. So it's like we just don't have that kind of exposure. We've got really good diverse customer base and we have good diversity in our end markets. So that is not something that keeps me awake at night. I don't know if you have any more specific data points that you can share?

Yes. I mean, for like the data center specifically, we're somewhere -- a couple of years ago, we were about 5%, and we've grown it since then, but we don't have a freshly updated number. We're going to roll that up year and have something for next year. But it's been one of the -- and there's opportunity on both segments in that space, both installing the fire protection equipment for the data center and that system, which more complex than a normal system and only a few competitors can really propose on that work with us. And then on the specialty side, all these data centers you hear about the utility infrastructure that's needed to power them and there's opportunity for the specialty segment there to participate also.

Okay. And government exposure is fairly modest, would you say?

Yes. It's fairly modest, direct kind of government exposure on the specialty side is I think, right around 5% in terms of customer, less visibility on how customers want certain projects, and there's [ probably ] -- likely some of our customers are using some of the federal funding programs that are going to drive spend over the next handful of years that will benefit our business. But direct customer wise, it's right around 5%, I'd say.

Okay. Thank you. In terms of pricing, I guess how does pricing work in the business? And is this a business where you can usually price to cover your inflation?

Yes. we think about pricing on the inspection service and monitoring side of the business as an area where we think we can certainly take price in a sustainable way and cover our inflation. Take a step back to the inspection, which is required by law, is a really small percentage of the annual spend for a facility. So -- and it's a mission critical application fire and life safety. So typically, what the customers prioritize the most and what Russ kind of touched on earlier is being there when you say you're going to be there and kind of creating a frictionless experience for them. So getting them that deficiency report, getting them that service proposal, doing the follow-up service work. So they're back in compliance with their insurance company. That's what they care about the most. So if you give them a frictionless experience, pricing is not a hurdle that we're having to overcome. They're happy to pay us a fair price increase because they know we're also paying a fair wage increase to our men and women in field.

Sure. Absolutely. Yes. And on wages, what are you seeing in terms of wage inflation? And is there any key cost to call out other than wage or labor, I guess?

From an inflation perspective, it will vary depending on which union agreement is. But typically, it's ranging from 2% to 4% and probably more in the 3% to 4% range. And that's really our biggest input costs. Outside of that, it's materials. And those will vary by segment. But on the safety side, it's pipe -- we're a large buyer of pipe that is used in the sprinkler systems, but labor is really the biggest piece of our cost structure and that's kind of how we think about it [indiscernible] inflation.

Okay. So if I look at the portfolio, you're in a lot of different building systems, you're in fire, security, HVAC and you've got into elevators. How do you think about the relative attractiveness of those markets? Do they have slightly different growth rates or margins within your portfolio?

Well, I would say that if you look where we're investing in our business, so that will give you some idea of priorities. Fire, security and elevators are not -- they're tied for one. And we just recently got into the elevator and escalator space. The primary driver for that is they have the same statutory requirement elevators are required by law to be inspected at least annually, just like a fire protection system is. And so we've had our eye on entering the elevator space, and we did that with Elevated this year. Elevated is a relatively small business in the scheme of things, it's just north of $200 million in revenue for us. We think it's a $1 billion platform. So we think that there's opportunity for us to really invest and grow in the space. If you look at like our business, North America, like we don't have a significant security presence in North America. We're probably doing less than $100 million plus or minus, don't quote me on that. So there's a huge opportunity for us to grow in the security space in North America. While we continue to grow our fire business, and we don't have any shortage of opportunities there either. So then you look with the acquisition of Chubb in 2002. We've opened up the international market as well for us to grow. And Chubb's business was built a little bit differently. I originally started off as a security company and then added fire, like one aspect of their business, they don't do a lot of -- they don't do actually a lot of fire sprinkler work. And so there's a few things that are interesting for us in that space that we're kind of dabbling with and looking at now. And as we feel like we've got the business, for the most part, right-sized. We feel like we're now moving into a period of time where we can actually do some M&A internationally and that, that can support it. So that's something that's very important to us is that when we do, do M&A, the company that we're going to integrate the business with has to have the capacity to take it on. So -- and we feel like Chubb is kind of at that place today.

Yes. Maybe we can talk about -- a little bit about acquisitions then. How would you describe the acquisition pipeline as you stand here now? How reasonable are seller expectations to those kind of discussion points?

Robust.

That's good.

So lots of opportunity in the space. There's -- we look at M&A through kind of really two separate lenses. We look at it, I'll say first, and I'm not going to spend as much time on it, but we look at it more transformational M&A. That's your bigger -- bigger acquisitions like a Chubb fire and security would be more transformational, right? It was a $2 billion company when we bought it. I put Elevated in that bucket because it's a new platform for us. And obviously, the price of admission was higher, and that's more of a pure transaction than, say, our bolt-on activity. So then I look at bolt-on M&A. And where we have a really robust pipeline, we've -- I think through the third quarter, we spent roughly $200 million on bolt-on M&A with more to happen here in the fourth quarter as well. But there, we're looking for businesses that complement our footprint geographically. We're looking at businesses that complement the services that we offer. So we may have a robust fire sprinkler business but not a robust fire alarm business. And so if something came for sale, we would be interested in that in bolting it on. So services that are offered are they complementary? Can the business that we're going to bolt it on to handle it and integrate it. And then for us, it's culture values a fit. And so we're looking for sellers that are really their -- concern is not the right word, but they care about their legacy. They care about their employees and their employees finding the right home. And they care about who they sell their business to. And those types of sellers aren't as focused on price. They want a fair price, but they're not as focused on price. And if all they're focused on is the highest price and getting the hell out of the business, they're not for us. It's not going to align with us culturally. They should go sell their business to private equity. And so that's the reason that if you look at some of Adam's information, I think the average multiple that we've paid on our bolt-on M&A acquisitions this year is less than 6x.

That's right. Yes, that's pretty good. And so once you own the acquired businesses, how do you go by creating value? How does the combined business become worth more than they were separately?

Well, I would say that it goes back to this whole idea of inspections first. Most of these most of these -- whether it's fire and security, most of these businesses, when they tell you that -- if they tell you that 70% of revenue is project and 30% is service and inspection. It's probably 85% projects and 15% of the service inspections. It's like -- it's really -- it's never really that -- you very rarely do define something that's true, like, say, 50-50. Most of the time, it's heavy project weighted. And so for us, how you really get the value is like when you buy that business and its overweight projects is getting the focus growing inspections and service work. And we know what that recipe book looks like, and it's just going in and executing on that recipe. And I think you heard this morning when you said it in one of our meetings, we have a good example of a business that we bought in Boston that was like 85% project work and was a 7% business, and this was just 3 short years ago -- 3.5 years ago, that business, we've grown from $25 million of revenue at 7% EBITDA margin to $30 million in revenue at a 15% EBITDA margin, which doesn't include 3% in corporate allocation. So it's actually improved from 7% to 18% in 3.5 years. And that's a combination of finding the right business that culturally aligns with you. They have really good people who bought into this idea that we got to change how we do things. And then it's just going to work and building out a robust inspection service monitoring business. It's actually not trying to oversimplify it, but it's not that complicated.

That's good.

Not everybody listens, but it's not that complicated.

As long as you can run it well, then that's all it matters. So I guess for the existing businesses, do they have to meet certain criteria to remain in the portfolio? And any businesses that could become noncore over time?

Well, for sure. I mean we have 13% EBITDA margin goal by 2025. We're on pace to meet that. We were having an Investor Day for those who are interested on May 21, this next year at the New York Stock Exchange, where we're going to kind of lay out what kind of next level APi looks like with, again, setting some improved margin expectation goals. And we have to, every day evaluate whether businesses fit our portfolio or not. And you've seen us do some pruning over the past 18 months or so, we will continue to prune as necessary. But we're pruning all time. I mean it's not just like -- yes, we sold a couple of businesses in our specialty, but we've closed down branches in our fire protection business too because for whatever reason, can't make money, we don't have the right branch leader. We evaluate kind of every aspect of our business all the time.

Yes, you're about to kind of move past your 13% EBITDA margin target. So I guess what are some levers that remain in terms of driving further margin improvement? I know that the mix will continue to be a tailwind as you pursue that, but what are some levers that you have?

Yes. So I -- the way I would characterize that is that like it doesn't change, you know what I mean. So it is improving mix. It is a disciplined customer and project selection. It is continuing to rightsize Chubb and improve our international business's margin, and we have a 15% goal in our international business by 2025. We're on track to meet. That business -- if you look at our North American Safety business, that business should perform on par from a margin perspective. So you can see further improvement coming internationally. It's business process transformation, which is like shared services, it's procurement, it's pricing, it's accretive M&A. And then I always finish it by saying we have the opportunity to just be better. And I think some of that comes with just having high expectations and setting high expectations for your business and where you expect your businesses to perform. One of my favorite stories is back when we were a privately held company, I was up meeting with the owner, guy named Lee Anderson, and we're having a couple -- we got done talking about what we have to talk about, and I was going to spend the night at this place. And so we're having a couple of scotches. And I looked at him -- and believe it or not, APi's financial goals at the time were 5%. And I looked at him and I said, "How did you come up with 5%?" And he looks at me and he goes, "I don't know, I guess Jeff set that goal". And doesn't seem like enough. And for all the risks we take and everything we do, and he goes, well, what should it be? I said, I don't know, 10%. So we changed our goal from 5% to 10%, and I went back the next day, and I sent a note out probably by fax and said, here's our new goal. And everybody bitched, everybody is like can't be done, can't be done, can't be done. And then it's kind of like when Roger Bannister -- some of you are probably too young to know who Roger Bannister is, but he's the first person to break the 4-minute mile running. And nobody could do it. And then as soon as Roger Bannister got it, like 30 people did it in the next 3 months. And it was no different in our business. Like we had David Dixon, who runs Security fire for us, was the first company to get to 10% and then all of a sudden, people are looking around and it's just like boom, boom, boom. We publish financial results every month. So every one of our company is easy to always stack rank them, highest performance, the lowest performance. We do that with every one of our branches. And like as soon as he made it, boom, then we increase the goal again. And guess what? David Dixon is the first person. David's business is 20% every year for 10 years. And so when you compare notes and you share and you stack rank people, if you've got one competitive phone in your body, you don't want to be on the bottom 1/3 of the list, and we color code it too.

Look forward to seeing the increased goal. And with that, we're out of time. Please join me in thanking Russ and Adam for being here. Thanks for coming.