APi Group Corporation (NYSE:APG) Q4 2022 Earnings Call Transcript

But as we look forward to 2023 we still have 2022 working capital rate investment that we anticipate getting back. We are going to continue to focus on working capital and we expect to drive further improvement beyond that in 2023. When we think about stepping towards our 2025 goal of 80% free cash flow conversion related to stock November but the other drivers of that are obviously leverage interest associated with it and then continued focus on our service business and the growth in our service business needs to be our projects business.

Operator: Our next question is from Andy Wittmann of Baird. Your line is open.

Andy Wittmann: I guess I just wanted to dig in a little bit more on the top line guidance here. Heard your commentary for double digit inspection service monitoring growth in the safety segment, presumably that means the safety segment is up at least 5 single digits in total if not double digits which would imply that the specialty business would be closer to flat maybe low single digits. I guess I wanted to understand if that’s the correct assumption for your outlook on specialty and given that inflation is going to have a revenue of at least of low single digits I would guess, can you talk about the volume that should be going to your specialty business compared to last year and maybe any specific end market comments inside of specialty I think that would just be helpful context.

Kevin Krumm: This is Kevin. I will take a stat of this. You are right, as we look at 2023 and our full year guidance right now in underlying what we are expecting our safety business in service side continued double digit growth, the math that you laid out and implication of specialty business services seems directionally correct and what I would add what we are going to continue to focus in that business in 2023 on disciplined projects customer selection and end market where Russ talked about it a little bit on the chip side that its relevant in those specialty businesses too as they continue to see increased work opportunity from some of the infrastructure billing and some of the other earnings so we are going to continue to be disciplined in our project selection and I think you will see that through 2023 and the growth rates in that business.

Andy Wittmann: Got it. I guess there was a comment in the prepared remarks that talked about a robust sales pipeline in the fourth quarter. Can you maybe talk about some of the end market implications where you saw that level of strength?

Russell Becker: Specific to specialty Andy or are you talking about?

Andy Wittmann: Yes, specialty at the comment of robust sales in the fourth quarter.

Russell Becker: So if there was something in the script Andy I think it would have talked about specialty in Q4 prior year where we had in Q4 current year we had difficult comp. So if you look at Q4, 2021 I think specialty put up a growth rate north of 20% organic and generally what you are going to see is a step down in that business Q3 to Q4 in 2021 because its sort of run-out of covid and various other types of work that we are doing. We actually saw a sequential step up and so when you look at that operating more normally in Q4 2022 this year which it did, against that difficult comp in prior year you saw a reduced growth rate especially in Q4 down a little over 8%.

Andy Wittmann: Okay. I am sorry I must have misheard when I heard sales I didn’t think revenue, I thought new business sales so that was the confusion on my part so I apologize for that. I guess just one another clarification here. At the analyst day I think your restructuring expenses for 2023 were targeted at 30 million to 35 million. I am hearing $55 million to $65 million here. I am just wondering what was the change here that’s driving that?