APi Group Corporation (NYSE:APG) Q4 2025 Earnings Call Transcript

APi Group Corporation (NYSE:APG) Q4 2025 Earnings Call Transcript February 25, 2026

APi Group Corporation misses on earnings expectations. Reported EPS is $-1.1851 EPS, expectations were $0.4.

Operator: Welcome to APi Group Corporation’s 2025 Earnings Conference Call. Joining me on the call today are Russell A. Becker, our President and Chief Executive Officer, and Glenn David Jackola, our Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that certain statements made on this call, including those regarding our future performance, anticipated events or trends, and other matters that are not historical facts, are forward-looking statements. These statements are not a guarantee of future performance, and actual results may differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detail material risks that may cause our future results to differ from our expectations.

Our statements are as of today, February 25, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our fourth quarter financial performance on the Investor Relations page of our website. Comments today will also include non-GAAP financial measures and other key reporting metrics. The reconciliations of and other information regarding these items can be found in our press release and our presentation. It is now my pleasure to turn the call over to Russell A. Becker.

Russell A. Becker: Thank you, Adam. Good morning, everyone. Thank you for taking the time to join our call this morning. I want to start by thanking Adam Fee for his leadership of our Investor Relations function over the last three years. Adam has done an excellent job building trust with the investment community and we are excited to announce his transition into a finance leadership role within our elevator business. With this transition, Adam Walters, who previously served on our corporate development team, will take over leadership responsibilities of investor relations. We remain grateful for the hard work of our 29,000 leaders and their dedication to APi Group Corporation. The safety, health, and well-being of each of our leaders is our number one value.

We continue to prioritize investing in the men and the women in the field as human beings and aim to provide each of them with training, advancement opportunities, and leadership development. Once again, I am proud to announce that APi Group Corporation has been recognized as a Military Friendly Employer for 2026. We remain committed to providing opportunities for veterans and their spouses to build careers and develop as leaders. Back in 2021, we introduced our long-term 13-60-80 shareholder value creation framework. Since then, 13-60-80 has been our North Star, and I am proud of our team’s relentless focus and dedication to delivering on these commitments. Over the last several years, our journey has been marked by meaningful progress. We grew revenues from $3.9 billion in 2021 to $7.9 billion in 2025.

We increased our percentage of revenue coming from inspections, service, and monitoring from 40% in 2021 to 54% in 2025. We established a new adjacent vertical in the highly attractive elevator and escalator service market with the acquisition of Elevated. And we accelerated our bolt-on M&A strategy by deploying approximately $580 million across 33 bolt-on acquisitions from 2023 through 2025. Notably, as it relates to our 13-60-80 targets, we ended the year with adjusted EBITDA margins at 13.2%, above our 13% target and significantly above our 2021 adjusted EBITDA margin of 10.3%. Additionally, we ended 2025 with adjusted free cash flow conversion of 80%, right in line with our stated target of 80% and well above our 2021 adjusted free cash flow conversion of 55%.

Thank you to all of our teammates for helping us win for their focus, discipline, and commitment that made these results possible. In 2021, we set ambitious financial targets, and through our collective teamwork and belief we achieved these targets. This allowed us to set our new ambitious but achievable three-year long-term financial targets of $10-16-60+. I am grateful. Now I will dive into our record 2025 full-year results. The business continues to build momentum, delivering robust top-line growth while expanding margins. We continue to have strong growth in inspection, service, and monitoring revenues. We capitalized on a robust project environment. And finally, we continue to execute accretive bolt-on M&A at attractive multiples. For the year, net revenues increased by 13%, approximately 8% organically, with strong growth across both segments.

Our Safety Services segment revenues grew organically by approximately 7%, led by growth in inspection, service, and monitoring revenues. As expected, Specialty Services maintained the momentum and closed the year with strong growth, delivering 10% organic growth for the year. In line with our strategic initiatives, we continue to drive improvements in adjusted gross margin, which expanded 50 basis points for the year. The strong performance in gross margin led to our record full-year 2025 adjusted EBITDA margin, representing margin expansion of 50 basis points. We expect to see continued margin expansion in 2026 and beyond, largely driven by the same initiatives that we have been executing for the past several years, which include the following.

Consistent organic growth improved inspection, service, and monitoring revenue mix. Disciplined customer and project selection, pricing, branch and field optimization, procurement, systems and scale, accretive M&A, and a strong free cash flow with record adjusted free cash flow of $836 million, representing 80% conversion on adjusted EBITDA. Our consistent free cash flow growth and the strength of our balance sheet provides flexibility to pursue value-enhancing capital deployment alternatives including accretive M&A and opportunistic share repurchases. In 2025, we continue to execute our M&A plan, completing 14 acquisitions and building on our long track record of integrating businesses and supplementing growth through M&A at attractive multiples.

In addition, on February 2, 2026, we closed on the previously announced acquisition of CertiCyte, an inspection-first provider of comprehensive fire and life safety services in the Midwest. We are already pursuing the additional opportunities created by this acquisition and welcome our new CertiCyte team members to the APi Group Corporation family. Electronic security, elevator and escalator, and niche specialty services. Our team remains hard at work prioritizing the most attractive opportunities. We will continue to focus I want to take a moment to recognize a significant milestone for our company. In 2026, APi Group Corporation will celebrate its 100-year anniversary, marking a century of commitment to our customers. We have much to be grateful for.

A central part of our 100-year anniversary will be gratitude and giving back to the communities that have supported us along the way and entering 2026, we remain laser-focused ‘28 supported by consistent, mid financial results achieved in 2025. As we begin 2026, I have great confidence in on a daily basis. I would now like to hand the call over to David to discuss our fourth quarter financial results and 2026 guidance in more detail.

Glenn David Jackola: Thanks, Russ, and good morning, everyone. Reported net revenues for the three months ended December 31, 2025 were $2.12 billion, a 13.8% increase compared to $1.86 billion in the prior-year period. Organic growth of 11.1% was driven by continued growth in inspection, service, and monitoring revenues, strong growth in project revenues, and pricing improvements. Adjusted gross margin for the three months ended December 31 was 32.2%, representing a 110 basis point increase compared to the prior-year period, driven by disciplined customer and project selection and pricing improvements, partially offset by project revenue mix. Adjusted EBITDA increased by 21.9% for the three months ended December 31, with adjusted EBITDA margin coming in at 13.9%, representing a 90 basis point increase compared to the prior-year period.

Growth in adjusted EBITDA was driven by strong revenue growth and adjusted gross margin expansion. Adjusted diluted earnings per share for the three months ended December 31 was $0.44, representing a $0.10 or 29.4% increase compared to the prior-year period. The increase was driven by strong revenue growth, adjusted gross margin expansion, and a decrease in interest expense, partially offset by an increase in the share count. I will now discuss our results in more detail for the Safety Services segment. Revenues, sending a 110 basis point increase compared to the prior-year period, driven by disciplined customer and project as well as pricing improvements leading to margin expansion in inspection, service, and monitoring revenues as well as project 17.5%, representing a 110 basis point increase compared to the prior-year period primarily due to adjusted gross margin expansion.

I will now discuss our results in more detail for the Specialty Services segment. Specialty Services reported net revenues for the three months ended December 31 were $695 million, an increase of 20.7% compared to $576 million in the prior-year period, driven by strong growth in project revenues. Adjusted gross margin for the three months ended December 31 was 20.7%, representing a 190 basis point increase compared to the prior-year period, driven by an increase in project opportunities that align with our disciplined customer and project selection criteria and improved leverage of fixed overhead costs. Segment earnings increased 40.7% primarily due to adjusted gross margin expansion. Turning to cash flow. We to focus on driving strong free cash flow conversion.

Adjusted free cash flow conversion of 136%. The strong free cash flow in the fourth quarter drove adjusted free cash flow of $836 million for the full year 2025, up $168 million versus last year, and representing a conversion rate of 80%. I want to reiterate what Russ said earlier and express my gratitude to all our leaders and teammates for their role in helping us execute and achieve our 80% free cash flow conversion target in 2025. Our teams understand the importance of free cash flow generation, and our performance and progress reflect that focus. At the end of the fourth quarter, our net debt to adjusted EBITDA was approximately 1.6x, significantly below our long-term target six. And as a reminder, our long-term capital deployment upper priorities are maintaining net leverage at stated long-term targets, strategic M&A at attractive multiples, and opportunistic share repurchases.

To $8.66 billion, representing organic growth of 5% at the midpoint. We expect our organic revenue growth for the year algorithm, which as a reminder is mid- to high-single-digit growth in inspection, service, and monitoring revenues, and low- to mid-single-digit growth in project revenues. We expect full-year adjusted EBITDA of $1.14 billion to $1.20 billion, which represents adjusted EBITDA growth of approximately 8% to 13% on a fixed currency basis and adjusted EBITDA six adjusted free cash flow conversion expected to be at or above 10011515% of adjusted adjusted order for free cash flow conversion to seasonality. Turning to the first quarter, we expect reported net revenues of $1.875 billion to $1.975 billion, representing organic revenue growth of 4% to 10%.

We expect first quarter adjusted EBITDA EBITDA of two and it is adjusted EBITDA margin of a 11 expense to be approximately $130 million, depreciation to be approximately $90 million, capital expenditures to be approximately $105 million, and our adjusted effective tax rate to be approximately 23%. We expect corporate expenses to be approximately $35 million per quarter, with some timing variability throughout the year, and our adjusted diluted weighted average share count to be approximately 441 for the year. Lastly, we anticipate systems and business enablement expense for 20 begin 2026 with positive momentum and strong demand for our services across our global platform. Service, and monitoring revenues. We remain relentlessly focused on growing inspections, that, combined with the accelerating growth in our backlog, and robust M&A pipeline provides a solid foundation for strong organic and inorganic growth in 2026 while continuing to expand our margins.

We remain focused on creating sustainable shareholder value by delivering on our 10-16-60+ targets. With that, I would now like to turn the call back over to the operator and open the call up for Q&A.

Q&A Session

Operator: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Timothy Mulrooney with William Blair. Your line is open. Please go ahead.

Timothy Mulrooney: Russ, David, good morning. Doing well. Thanks. I just wanted to say congrats to Adam too on moving on to the next chapter. That was great to hear. Well deserved. My question is just a really high-level one. Your revenue guidance is calling for 6% growth at the low end of the range and 9% growth at the high end. Can you just talk about what kind of market condition assumptions that you are embedding in that low end versus that high end, or various swing factors that you are embedding to achieving the different ends of that range, please? Thank you.

Russell A. Becker: Yeah. So I can start, and David can add any color if he would like to, Tim. So, you know, we continue the message to our businesses that we want to see high single-digit growth in inspection, service, and monitoring component of their business, and low single-digit growth in the project piece of their business. We do happen to have a tailwind of certain end markets that are providing excellent project opportunities, which is evidenced by our backlog, which is north of $4 billion and continues to be very strong, robust, and healthy. Probably the most important aspect of it and we are reaping some of the benefits of the robust data center market, both on the inspection and service side, but also on the project side.

Advanced manufacturing continues to be robust. Semiconductors providing some opportunities. Health care, critical infrastructure. So we are seeing some strong tailwinds in certain end markets on the project side of our business that we are taking advantage of.

Glenn David Jackola: The only thing I would add to that, Tim, and I will reiterate a point that maybe I made during my comments was the 54% of our revenue that comes from recurring inspection and monitoring and monitoring that we expect to grow in our long-term organic growth algorithm of mid- to mid-upper single digits. And then it is going to be the project environment that could be from the low end to the high end of the range.

Timothy Mulrooney: Okay. Thank you.

Operator: Your next question comes from the line of Jonathan E. Tanwanteng with CJS Securities. Your line is open. Please go ahead.

Jonathan E. Tanwanteng: Hi. Thank you for taking my questions, and congrats to Adam also. I was wondering if you could expand on the data center opportunity. Growth in 2026.

Russell A. Becker: And can you—

Glenn David Jackola: —at the end, so data centers are an area that is contributing to our growth in 2025 and 2026. About 10% of our overall revenue. When we ended 2025, it was approximately 8% of our overall revenue. And we would expect data centers to comprise about 10% of our total revenue in 2026. So it is contributing a couple percentage points of growth in both 2025 and 2026, but we still have plenty of really good growth momentum in other parts of the business as well. It is a contributor, but it is not the primary driver of our growth in 2025 and 2026. And I would say the margin profile of the data center work is really, really strong. There are not many players in the market that can do the work that we are doing in data centers. And that is allowing us to leverage our relationships, propose its on gross margin and and execute against that. I do not know if there is anything else you would like to add, Russ.

Russell A. Becker: No. I think you—

Jonathan E. Tanwanteng: Going forward, from a tuck-in perspective and then also the opportunity for larger deals. Well, you—

Russell A. Becker: —beat the you may be under. We are wondering who is going to be the first person to ask more than one question, John. So, but, anyways, the M&A pipeline remains opportunities, robust, and we continue to see a lot of really good in the space, especially in North America, in fire, life safety, security space. We have really got some nice opportunities in the elevator and escalator space that we plan to execute on here in the second quarter. The good part is that we really have opened up the aperture to the international business and have some fantastic businesses that we are doing work on right now with the idea that we are going to be able to get these businesses closed in the second and third quarter and bring some of those folks into the APi Group Corporation family.

So there is just a tremendous amount of opportunities, and in my remarks, I talked about the idea of APi Group Corporation being a forever home for the sellers of this business. It continues to resonate with people, and it allows us to buy these businesses at the right price, which is a really good thing. So, but, yeah, we are really excited about our pipeline for 2026 and beyond.

Jonathan E. Tanwanteng: Got it. Thanks, Russ.

Operator: Your next question comes from the line of Julian C.H. Mitchell with Barclays. Your line is open. Please go ahead.

Julian C.H. Mitchell: Hi. Good morning. Just to circle back on the top line, if there was any color you could give us on how remaining performance obligations or backlog growth, how has that been developing? And I suppose allied to that, looking at the Q1 guide, there is a very, very wide range on the organic sales growth. Maybe help us understand how you see the two segments’ growth in the first quarter, please?

Glenn David Jackola: Sure. So I think you snuck in a two-part question as well, maybe. On the backlog, I would say the backlog as we 2025 and into 2026 is healthy. It is up across both segments, across a variety of end markets. And as Russ said in his comments, it is healthy, which means it is at a good margin and work that we feel really good about. In terms of Q1 and how that plays out across the segments, I would say the Safety segment is going to be a lot of the same, and so I will refer back to our organic growth algorithm. On the service side, we target mid- to upper-single-digit growth in that segment in service, and our Q1 outlook reflects that. On the project side, we reflect low to mid; our outlook reflects that as well, but it is probably closer to the mid. And in the Specialty Services segment, we are comparing against a down 2025, so I would expect growth to be in the double-digit revenue growth in 2026. Does that help?

Julian C.H. Mitchell: That is perfect. Thanks a lot, David.

Operator: Your next question comes from the line of Curtis Nagle with BofA Securities. Your line is open. Please go ahead.

Curtis Nagle: Great. Thanks so much for taking the question. Maybe if we just quickly go back to some of the trends in data center services revenue, how much of a pickup are you hopefully starting to see from project work converting to service and, hopefully, that turning into a long-standing durable base of high-margin press.

Russell A. Becker: Well, it for sure will. I mean, really, the reality of it is the project-related work that we are doing in the data center space is because of the relationships that have been established on the existing campuses of a lot of these hyperscalers, where we are already doing the inspection, service, and monitoring. The data center, the project side of it, the size of these projects is significantly higher than what we have seen in the past. And you are not going to see—we are going to win the inspection, service, and monitoring. There is no—I do not have any question about that, as we continue to move forward on some of this project work. But the size of the inspection, service, and monitoring account is significantly lower than the size of the project-related work.

And so you just need to continue to chip away and build your inspection, service, and monitoring business, which we continue to do. We continue to see really, really good growth on the inspection side of our business. If you recall, we generate someplace between $3 and $4 worth of service work for every dollar of inspection revenue that we generate. And that continues to grow at that high-single-digit clip. So the playbook is working, and we continue to execute on it, and we continue to see really good results. And that is no different in the data center space as the rest of our business.

Curtis Nagle: Okay. Thank you.

Operator: Your next question comes from the line of Andrew Alec Kaplowitz with Citi. Your line is open. Please go ahead.

Andrew Alec Kaplowitz: Hey, Russ. Hey, guys. How are you doing, Adam? Congratulations.

Adam Fee: Thank you.

Russell A. Becker: This is a going-away party for Adam. It is—

Adam Fee: There you go.

Andrew Alec Kaplowitz: Anyway, so good morning, Andy. This might be a bit nitpicky, but maybe you already said it. So, like, on inspection, I think you, last quarter, had over 20 quarters in a row of double digits. Did it still grow double digits this quarter? And if not, is it just kind of the law of large numbers starting to get to that segment still getting real high single digits plus? How is corn—

Russell A. Becker: Yeah. So we knew somebody was going to pick on that. But so it did grow double digit. But we are moving to the point where it will be the law of large numbers, and it will be tougher and tougher to comp against that. But we continue to see really good growth in our inspection business. So yes, it did grow double digits. You are just going to hear us—we are not going to talk about it as prevalently.

Andrew Alec Kaplowitz: Sounds good. Thank you.

Operator: Your next question comes from the line of Tomohiko Sano with JPMorgan. Your line is open. Please go ahead.

Tomohiko Sano: Hi, everyone. First of all, congratulations on your 100th anniversary. Thanks, Tomo. Good morning. Thank you. And so your 2026 guidance implies about 60 bps improvement in adjusted EBITDA margin at the midpoint. So what are the major drivers behind this margin expansion as you walk towards the 16%+ margin target for 2028, which initiatives do you plan to further strengthen or newly implement, please?

Glenn David Jackola: Hey. Good question, Tomo. Thanks for being on this morning. So, yeah, you are right, about 60 basis points at the midpoint. And really, the initiatives that are going to get us to 16% by 2028 are the initiatives that got us to 13% by 2025. And I would say as we get deeper into the 2028 period, we are going to start to see increased benefits from our investments that we are making as an organization in procurement, as well as some of the benefits from the system and technology investment that we are currently undergoing in our North America business. And accretive M&A will play a part in that as well.

Tomohiko Sano: Thank you.

Operator: Your next question comes from the line of Jasper James Bibb with Truist Securities. Your line is open. Please go ahead.

Jasper James Bibb: Hey. Good morning, guys. Just wanted to ask about the assumption for project demand in your guidance. I think you are projecting low- to mid-singles growth for the year, but there is a lot of strength in projects pipeline, data center, etcetera. I guess just how would you frame the assumption of low- to mid-single digit versus a strong pipeline there? Is that conservatism because it is earlier in the year? Is it harder comps? Just any detail there would be thanks.

Glenn David Jackola: I think you nailed all three of the reasons around that as a midpoint of our guide. I mean, we guide a range for a reason, and those are three very good reasons to start where we did for the year.

Jasper James Bibb: Fair enough. Thank you very much.

Glenn David Jackola: Thanks, Jasper.

Operator: Your next question comes from the line of Andrew John Wittmann with Baird. Your line is open. Please go ahead.

Andrew John Wittmann: Yeah. Thanks. A lot of my questions have been asked and answered, but I guess maybe, Russ, if you had to use the crystal ball a little bit with the balance sheet here, you are pretty significantly below your ranges. So, like, if you think about capital deployment in 2026, if you had to split up how it is going to go out and get invested, do you think that M&A is bigger than buyback? Or how much you think you can get done this year given that you got a lot of capital here. And do you think that the other way around? I guess I would want to just try to understand maybe as a sub question to that one-part question, is there something is there something chunkier in here? I mean, you guys have had the history of doing some larger deals. You know, you have not had a gigantic one for a year, but is this the year that comes back? Thank you.

Russell A. Becker: So, I mean, we will, I guess—good morning, and thanks, Andy. I appreciate the thoughtfulness of your questions. We are always looking from an M&A perspective and doing work on what I guess you classified as chunkier transactions. We see some opportunity for sure in the life safety and security space, as well as the elevator and escalator space. And so we are doing work all the time. So I would say yes, you could expect to see us do something chunkier. What would be Chubb-esque? I do not know. We really have not found anything that necessarily fits exactly what we are looking for that would be of that size and scale. But when you describe chunky, if you are thinking about things like the size of, say, Elevated or even CertiCyte, yeah, I think you are going to see us be active in that space.

And I would suggest that the priority would be M&A in front of share repurchases, especially with the performance of our stock over the last period of time. And we for sure see in the M&A space that we are going to continue to dig in on and do some work.

Andrew John Wittmann: Okay. Thank you very much.

Operator: Your next question comes from the line of Joshua K. Chan with UBS. Your line is open. Please go ahead.

Joshua K. Chan: Hi. Good morning, Russ, David, and congratulations, Adam. Just wanted to ask about how firm do you see the project environment currently? Because I think the low end of your guide may assume somewhat of a changing environment as you go through the year. So I just want to make sure that that is not what you are signaling or seeing and just ask about the performance of the environment. Thank you.

Russell A. Becker: Yeah. Well, I saw your prints that hit earlier this morning, Josh, and talking about organic growth in our Safety business. It is really good—both on the inspection and service side and on the project side. And we expect it to remain positive and strong as we work our way through the year. We do not see anything that suggests that it is not going to continue to be strong and robust.

Joshua K. Chan: Okay. That is great to hear, and thanks for the color.

Operator: Your next question comes from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead.

Greg (Jefferies): Great. This is Greg. Good morning. Thanks, everybody. So I wanted to ask maybe a bigger-picture question here. Especially based on what I think were very strong 2025 results across the board, but especially on the top line. So I wanted to ask maybe this question in a different way. I think given that the underlying industrial economy, based on most macro indicators, suggested 2025 was not a very great industrial year, but we are seeing some green shoots possibly to start 2026, notably given the PMI print for January and the like. So I wanted you to maybe touch a little bit on how much exposure you think you have to the near-term macro within the industrial economy? And then maybe asked another way, how insulated are you to that as well? So kind of a big-picture question and trying to get a sense of if the industrial economy does ultimately improve, how are you guys positioned? Thanks.

Russell A. Becker: Well, I think—you know what? I am not an economist by any stretch of the mean, Stephanie. I think we have hopefully demonstrated to the investment community the resilience in our business. Fifty-four percent of our revenue comes from inspection, service, and monitoring. That is going to be there regardless of what is going on in the macro. And I feel like we have done a nice job of leading the business through what you could argue is kind of a herky-jerky economic environment over the last period of time. So I guess I am maybe using too many words to get to the point where I feel like we are very well insulated from any noise that may come in the macros. And I also think that this is a business that, if things do improve, this business should see the benefits of that and be able to take advantage of that.

And I think about—I was joking around with a handful of our board members about this maybe three or four, maybe even six months ago. I do not remember. But the reality of it is that since the company has gone public, we really have not been in an economic environment where we have just had tailwinds behind us. It seems like it was—we go public and we get hammered with COVID. And then as soon as COVID, so to speak, goes away, we get hammered with inflationary times, and then it is tariffs. And it seems like there has always been some headwind that has been in front of this business. And yet we have continued to show really good resilience as we have grown the top line both inorganically and organically and expanded our margins through those headwinds.

So I feel like this is just a really strong, resilient business that has that 54% of our revenue kind of backbone from inspection, service, and monitoring that creates that protective moat around the company. So I feel really good about how we are positioned and how, if we do see tailwinds in the economy, we should be able to take advantage of that.

Adam Fee: We did not lose you, did we, Stephanie?

Operator: Your next question comes from the line of Kathryn Ingram Thompson with Thompson Research Group. Your line is open. Please go ahead.

Kathryn Ingram Thompson: Hi. Thank you for taking my question today. And I promise I will ask just one. And once again, it is stepping back and looking at the forest for the trees. So the cat is out of the bag with AI broadly in the U.S. market and the global market. But put more simply with the reinvest of the U.S. market, which is a bigger trend that includes AI, but it is a bigger trend. When you look at your APi Group Corporation end market of, say, light non-res versus more of that heavy or industrial—another slide I would put, like, the Boston field trip we did a few years ago to a commercial building versus the heavier, which would be a data center build-out or energy-supporting data build-out—where do you see that end market breakout today versus that light kind of heavy? And where do you see it five years from now based on what you are seeing in your crystal ball? And what does that mean for your margin goal? Thanks so much.

Russell A. Becker: Well, you did a great job of adding three questions in one question, Kathryn. So—

Adam Fee: Oh, you know, it was just heavy versus light.

Kathryn Ingram Thompson: You know? Let us see. How about you just ponder on that a little bit?

Adam Fee: Yeah. Well—

Russell A. Becker: —you know, it is a thought-provoking question. If you look at Specialty Services, a significant component of their revenue mix, a very significant component of their revenue mix, comes in what you would consider that heavy industrial based on your description of what is considered heavy industrial, including data centers and things like that. And you can see where that is going to continue to have good, strong organic growth, and that is evidenced right now in our backlog. I do not know that any one of us can sit here and tell you that we are going to have 60-40 heavy versus light in five years. What I can tell you is that our company is better situated for the more complex types of end markets. So whether that is advanced manufacturing, data centers, semiconductors, utility—those are complicated facilities that require a different level of expertise, not only on the inspection, service, and monitoring side, but also on the project side.

And we have always done well in there. If you go back and look at some of our end-market data that is included in either Adam or the other Adam—the spreadsheets that they have on our investor site—when you look at how much of our business comes from commercial, I would tell you that most of that is on the inspection and service side and not necessarily on the project side. And so we will continue to build our inspection and service business more so on the light side. Now I do not know that—I mean, you would put office space in the light side. We will continue to do that. As it relates to artificial intelligence, we are embracing it. We actually think that artificial intelligence is going to be an enabler for our business and not a job displacement tool, if you will.

We actually have stood up an AI team that is being led by a very smart individual in our company. The mandate that they have been given is to really focus our early efforts on enabling our field leaders and making the work of our field leaders more enjoyable, more efficient, hopefully freeing up more time so that they can spend more time on our customer sites. That is what they like to do, and that is the mandate that that team has been given. And we think that as we continue to adopt artificial intelligence in our business, it is going to free up people from doing—I will just say—more mundane tasks, and we can redeploy them into activities that are going to ultimately help us grow our inspection, service, and monitoring business. And you have heard us talk about that piece of our business.

It takes more infrastructure to run that part of our business than, say, the project side of our business. And we see artificial intelligence really enabling that aspect of our business, which is going to free up more people to help it grow. So it is a really good thing. But you had a very thought-provoking question, Kathryn.

Kathryn Ingram Thompson: Great. Thanks so much, and best of luck.

Unknown Analyst: Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Russell A. Becker, President and CEO, for closing remarks.

Russell A. Becker: Thank you. In closing, I would like to thank all of our teammates for their continued support and dedication to our business. We believe our people are the foundation on which everything else is built. Without them, we do not exist. I would also like to thank our long-term shareholders as well as those that have recently joined us for their support. We appreciate your ownership of APi Group Corporation and look forward to updating you on our progress throughout the remainder of the year. Thank you again. And, Adam, thank you for everything that you have done for us. I am very grateful. Thank you.