Brian Biros: Okay. Got it.
Kevin Krumm: I think what you wanted to talk about was the margin expansion on that side of the business, which we continue to purposely moderate growth while we continue to focus on higher margin work with the right customers in the right end markets.
Brian Biros: Okay. Got it. And then in the presentation deck, Slide 16, that visual shows that the branch growing margins. I think you guys touched on it on the prepared remarks. Can you just maybe bucket out how many branches are either closer to the beginning of that stage or closer to the end of that journey? Just trying to get a sense of how much impact this has going forward versus just the general push for more services.
Russell Becker: Well, I mean, I think it’s — I mean, if you look at it from — if you look at it across the entire breadth of the business, and you consider this branch, I’ll just say, fully mature, and then if you think about our international piece of our business, you would say that it’s premature. And so we stretch across the breadth of the business. And if you look inside even North America, where we’ve been focused on the strategy for the last decade or so, we have different levels of adoption inside different parts of our business. And what I can tell you — so it’d be really hard for me to say that on a scale of 1 to 10, we’re at 5 or 6 or at a 7 because in some places, we’re at 10. In some places, we’re probably at 3 or 4.
But what I can tell you is that basically every one of our businesses now understands and has embraced this philosophy. And we are actively working to build out that sales force. As we continue to build out that sales force, we need to continue to recruit, train and develop the inspectors that do — that can go out and actually inspect, do the inspection work, which is a key component of it. And we still have to then add service definitions to be able to support that work as well. So we’ve got the flywheel turning, I’d say, reasonably well in North America. And it’s just starting to turn and probably needs a little more grease in the — in our international business.
Brian Biros: Thank you.
Operator: Your next question comes from Andy Kaplowitz of Citigroup.
Andrew Kaplowitz: Hey good morning everyone. Russ, so you mentioned U.S. Life Safety still growing low double digits organic. And we talked about inspection market share gains. I know APi is quite nimble regarding its market focus, but could you give us more color into what end markets are driving that growth? And are there any markets that you are more concerned about in terms of slowing?
Russell Becker: Well, really — thank you. Really, our focus is on data centers, semiconductor, health care, I would say to a certain degree, higher institution, aviation has really shown some strength as well as critical infrastructure. And those are really the primary end markets that we keep consistently trying to steer our business leaders to. Obviously, we remain — commercial real estate, everybody is waiting for the shoe to drop there as all of these loans need to be refinanced over the course of the next 12 to 18 months, what kind of an impact that’s going to have. If you’re chasing basically developer-led commercial real estate projects, and that’s what you do, that is really dead in the water. And fortunately, for us, that’s a very, very small piece of our business and the work that we do.
And so I feel really good about the end markets that we’re in. We can always be better. We can always be more disciplined. But I feel good about where we’re at. And I can honestly tell you that the discipline that our business leaders are showing on project selection, customer selection and end market selection is probably at an all-time high. And I’m really, really proud of it. And the fact that we’re showing gross margin expansion is really a good demonstrator of that. And we could go out and take a lot more, so to speak, project-based work if we really wanted to, to accelerate revenue growth. But it would be most likely at the expense of gross margin expansion. And we have been beating and beating and beating the gross margin drop.
And it’s something that’s very important for us if we’re going to achieve this long-term target of 13% plus by 2025.
Andrew Kaplowitz: Yes, that’s helpful. And maybe the same question for Europe. You already mentioned customer attrition is lower. How would you characterize the European markets? And looks like the growth there is a little bit lower in general. Is it still sort of mid-single digits? And I think that’s what you told us at the Investor Day last November.
Russell Becker: Yes, I think that’s fair. And the one thing that I would just point you to and going all the way back to the Investor Day is that our international business is actually inspection service and monitoring makes up 60% of their revenue mix. And so just as a generalized statement, the resiliency of that business is really pretty high. And we have continued to see robust demand in the business. And we have seen minimal customer attrition, and the customer attrition we’re seeing, to be quite honest with you, is positive for the business. And it’s going to improve our margins and performance in the business. So we’re confident in the business and where the business is going.
Andrew Kaplowitz: Helpful. And then maybe one last one for Kevin. Just maybe on price versus cost. Kevin, I think you mentioned price and volume had about a 50-50 split in your revenue in Q2. Is that what you would expect moving forward? And with steel coming down maybe a little bit since the spring, does that help your margin at all in the second half of the year?
