APi Group Corporation (NYSE:APG) Q3 2023 Earnings Call Transcript

Russell A. Becker: I would say that there’s no question that the size and the magnitude and — it’s like I was on like one of our automotive customer site just a couple of weeks ago. And when I think about it from a complexity perspective, like, I didn’t think it was super complex, all right. I mean, I think that there’s other end markets that are more complex, but what it is it’s the scale is so great, and the resources that it takes to manage and lead those types of projects is just totally different than, what you would have seen say 10 years ago even. And so, the skill set that it takes to lead those types of project related opportunities, it’s just different and it takes different types of people. And, in a world where truly skilled labor is tight you have, they have the resources to be able to drop on in.

So, like in this particular opportunity, we had people from — this was, this project opportunity was in the Detroit area. And we had people that were coming up out of our south end Indiana office and we’re supporting our team’s efforts on this particular site. And so, you have to have some of those types of capabilities and the ability to, draw on and pluck the resources out of different components of your business to support those businesses. And the last thing that I would say there, Kathryn, is that we want to continue to have our project related opportunities to come from the inspection service and monitoring relationships that we that we develop. So, we want to be in a situation where the relationship matters and that when we’re proposing on these large programs, it’s not based on price because if they’re going to base it on price, that’s probably the fastest way you can get yourself in trouble on some of these larger project options.

I know I ran a little bit, I apologize.

Kathryn Thompson: Yes. No. That’s helpful. Thanks very much. I really appreciate it.

Operator: The next question comes from Jon Tanwanteng with CJS Securities.

Jon Tanwanteng: Hi, good morning. Thank you for taking my questions, and really nice quarter and guidance. My first one is, you mentioned strength in the number of end market data centers, EVs, etcetera, which is all great. I was wondering, did you see any weakness in any segments or end markets and have your consolidated growth expectation has changed, if at all, especially if you prune some of these lower quality projects out of the kind of the pipeline?

Russell A. Becker: Well, I mean, we’ve never really participated and played in real estate developer led type project opportunities. Obviously, those from a project perspective commercial office buildings, I mean, under a tremendous amount of pressure. And, again, for us, we’re just fortunate that we really don’t participate in those types of end markets. You hear stuff like that some of the, telecommunications, companies are pulling back a little bit on their capital spending and stuff. It doesn’t really impact us because, number one, we’re diverse geographically and number two, we don’t take these large, $500 million programs, we’re doing $30 million programs in different locations across the country. So, it doesn’t — it really hasn’t impacted our business.

One of our data center customers went through a fairly substantial, I mean, I talked about it as relates to impacting our fabrication business, but we also had the life safety work on that particular project. And so that, impacted that component of our business. And they went through a fairly significant redesign on a lot of their data center work just because the cooling requirements, have changed, as it relates to their facilities. So, I think that, in general, where the weakness is greatest is in the commercial real estate, marketplace. And, there’s going to be some weakness in retail in general. And, you’ve seen some pullback, from like Amazon with their distribution centers and things like that, but that’s again not areas that we’ve really had a high participation rate.

Jon Tanwanteng: Okay. Great. And then, just — should we expect a bigger focus on international M&A as you improve the structure itself? What will be the timing of that? Number one, is the pipeline of opportunities you see out there, as good as what you see domestically in terms of valuation of opportunities, all that stuff?