Good morning, ladies and gentlemen, and welcome to APi Group's Second Quarter 2020 Financial Results Conference Call. All participants are now in a listen-only mode. Later you will have the opportunity to ask a question during the question-and-answer session. Please note this call maybe recorded. I will be standing by should you need any assistance. I will now turn the call over to Olivia Walton, Vice President of Investor Relations at APi Group. Please go ahead.

Thank you. Good morning everyone, and thank you for joining our second quarter 2020 earnings conference call. Joining me on the call today are Sir Martin Franklin and Jim Lillie, our Board co-Chairs; Russ Becker, our President and CEO; and Tom Lydon, our Chief Financial Officer. Before we begin, I would like to remind you that certain statements in the company's earnings, press release announcement, and on this call are forward-looking statements, which are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts. These statements are not a guarantee of future performance, and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to 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, August 12, and we have no obligation to update any forward-looking statement we may make. As a reminder, we have posted a presentation detailing our second quarter 2020 financial performance on our Web site. Our comments today will also include non-GAAP financial measures and other key operating metrics. The reconciliation 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 Martin.

Thank you, Olivia. Since we completed the acquisition of APi on October 1, 2019, much has transpired in the world. However, I am happy to say that our original investment thesis remains intact. We believe that as a result of the evolution of the company towards building a recurring services focused business model following the recession that began in 2008, the company has built a more protective moat around itself. This focus on recurring revenue makes us more economically resilient when headwinds such as the COVID-19 pandemic hit the economy. I am grateful for the leadership and sacrifices across our organization during these unprecedented times. As we look to the future, we believe that APi is very well-positioned for success. While we don't know what the future impact of COVID-19 may be, we remain focused on our pre-COVID-19 objective and long-term opportunities in front of us. With that, I will hand the call over to Russ. Russ?

Thank you, Martin, and good morning everyone. Thank you for your continued interest in APi. I hope you and your families are staying healthy and safe. The safety, health, and wellbeing of all our employees and constituencies is our number one priority. I am proud of how are team has rallied together to combat the COVID-19 challenges and continued to serve our customers despite the headwinds they were facing. The resiliency, sacrifices, and commitment shown by our approximately 15,000 team members has been inspiring. I thank them for their focus and ongoing leadership efforts during these unprecedented times. I will start by providing a summary of our second quarter financial results and business update before turning it over to Tom, who will walk you through the results in more detail. As many of you know, in March, following the onset of the pandemic we initiated a cost reduction plan to counteract the potential negative impact on top line results. While the pandemic did have a negative impact on net revenues across our three segments as expected, our proactive approach to managing risk across our platform and the strength of our recurring revenue services focused business model yielded results. For the second quarter and the first-half of 2020, we exceeded Street consensus estimate for revenue, adjusted EBITDA, and earnings per share. Key highlights from our performance for the three months ended June 30, 2020 compared to the prior year include the following. Primarily due to the impact of COVID-19, adjusted net revenues declined by 14.2% or $141 million to $849 million compared to $990 million in the prior year period, continuing success in our ongoing evolution towards achieving a profile that is more acyclical in nature with a focus on growing recurring service revenue. We define service as inspection, testing, maintenance,…

Thanks, Russ, and good morning. I will start by reviewing our consolidated financial results, segment level performance as well as our strong balance sheet and liquidity and conclude with providing some color on expectations for the remainder of 2020. As Russ mentioned, adjusted net revenues for the three months ended June 30, 2020 declined $141 million or 14.2% to $849 million, compared to $990 million in the prior year period. The decline was primarily attributable to negative impacts of COVID-19 combined with improved project and customer selection, which led to a decrease in the volume of projects. For the six months ended June 30, 2020, total project net revenues declined by $162 million or 8.8% to $1.7 billion, compared to $1.8 billion in the prior year period, due to drivers I mentioned for the second quarter. Adjusted gross margin for the three months ended June 30, 2020 was 24%, representing a 383 basis point increase compared to prior year. The increase was primarily due to our strategic focus on improving margins, as opposed to growing the top line in our Industrial Services segment, combined with improved project management and favorable weather conditions. In our Safety and Specialty Services segments, margin expansion was driven by mix of work increased by labor productivity and improved pricing. For the six months ended June 30, 2020, adjusted gross margin was 23%, representing a 351 basis point increase, compared to prior year due to the drivers I mentioned for the second quarter. Adjusted EBITDA margin for the three months ended June 30, 2020 was 11.9%, representing 190 basis points increase compared to the prior year, aided primarily by gross margin expansion and early execution of our largely temporary SG&A cost containment efforts counteracting the negative impacts of COVID-19. For the six months ended June 30,…

Thanks, Tom. Good morning, everyone. We believe that API's early expense reduction actions, strong cash flow generation, conservative balance sheet and liquidity profile provide us with a stable foundation to continue to navigate the uncertain economic climates, while also providing us with flexibility to capitalize on the recovery and invest in strategic opportunities. Although market conditions as a result of COVID-19 remain uncertain, and visibility is still somewhat limited, we believe that we are well positioned to continue to execute on our long-term goals. The business has shown its resiliency and the leadership has shown us hands on approach to proactively and preemptively addressing challenges. It's a cultural approach to running the business that we are used to and proud of. We believe that for those of you getting to know the company, that it has to-date shown the strength of the proactive and protective moat, and that the business has shown its resiliency in a very challenging environment. While we have not expected the stress test this quickly as a public company, we believe that our results support the investment thesis we had when we first met Russ and the team. As you know, we're focused on making the right choices for the long-term health of the business, being opportunistic on M&A, and remaining focused on creating sustainable shareholder value by focusing on our long-term value creation targets, which are; one, delivering long-term organic revenue growth above the industry average; two, continue to leverage our SG&A; three, standing adjusted EBITDA margins to 12% plus by fiscal year 2023; four, adjusted free cash flow conversion of 80% plus; five, generating high single digit average earnings growth; and finally, number six, having long-term net debt-to-EBITDA ratio of two to two and a half times. With that update, we'll turn the call back over to the operator and open the call for Q&A.

Thank you. The floor is now open for questions. [Operator Instructions] Our first question comes from the line of Andrew Wittmann of Baird.

Great, thanks. Good morning to everyone, and thank you for taking my questions. Just to understand the business trends that happened during the quarter a little bit better, either Russ or Tom, I was hoping that you could talk about what you saw as the quarter progress. Obviously, you gave us the update, it's kind of halfway a little bit more to the quarter here, but just kind of want to see that the month-over-month cadence or an organic revenue trends, and then, certainly an update about what you've seen in July. You mentioned some deferrals in the quarter. Are those deferrals coming into action or they still deferred? I think some commentary around that, even by segment would be particularly helpful for everyone to understand what's happening with the business today?

Yes. So, thank you for your question. We have seen things, you know, we track man hours by business and we've seen man hours slowly continue to tick in an upward fashion really across most all of our business. If you look specifically at Safety Services, one of the things that we watch very closely, because we're so focused on the inspection and service component of the business as we watch our inspection man hours, and our inspection man hours are actually up year-to-date about 7% or 8%, which is a positive sign for us, and so, as building, the shelter in place orders will start to relax and business continues to open up, we expect that the service component of our work will closely follow. So, that's a good positive key indicator for us as it relates to the work in our Safety Services. Specialty Services, you know, the acyclical nature of that business continues to show itself. If we look at our contract backlog and the other work associated that we have in front of us, we continue to see positive results there as well, and we remain very optimistic about the opportunities that that are going to come. You still see like, we're still seeing some opportunities that we have slide to the right, but it seems to be normalizing and starting to -- that starting to flatten out, but I think that we're going to continue to see some of that volatility probably throughout the course of the next year, which I think most folks would concur with. And then, Industrial Services, which is our smallest piece of our business, we continue to focus our emphasis on the services side of the work that we're executing with that group, and that's just a continued effort that's going to push us forward, and something that we're going to need to continue to drive as the year progresses and moves on.

Great, that's helpful. Maybe just another way to add a little bit more color on that is my follow-up question, I wanted to touch on backlog, I think you mentioned that in your answer there in one of the segments, but in terms of bidding pace and ability to put awards into the backlog, has that slowed down as well? Are you still able to put things into backlog and not execute it? Could you talk maybe the best way to answer this would be to talk about kind of how the sequential performance in your backlog has held-up during the quarter from last quarter to this quarter, is it up, down? That would be helpful.

Yes. So, number one is that we do not use the word "Bid" at APi, and we propose on opportunities, because we do not want to be selected by any of our customers based on our price, and so, I don't say that with sarcasm, I say that with sincerity. I mean I have literally told our people that we do not have good work, and there's a difference in mindset when you think about that. So, to really answer your question, our contract, our backlog under contract is slightly ahead of where we were at this time last year, which is positive for us, and so, we continue to see robust opportunities in our pipeline and in our funnel. In some aspects, we've seen a slowing of, maybe, I'd call it decision-making from when that proposal gets to our client and that client makes a decision to move forward, but in general, our backlog has been very, very solid and been holding up very, very well, which is positive, and for us, I had alluded to in my remarks that we've implemented a more robust go, no-go process selection for the opportunities that we're going to pursue, and so, with seeing all that, I can comfortably tell you that the quality of our backlog has improved as well as just holding up. So, we're positive about that.

Great, thanks. I just wanted to ask one kind of technical question here for Tom before I jump off, and that was regarding the free cash flow; obviously very good in the quarter, and you mentioned kind of the working capital as a result of the revenues being down, that makes sense, but just curious as to how much free cash flow you were able to generate this quarter as a result of the Federal payroll tax deferral, and what your expectations are for the year on that amount just so that we can model that appropriately as it get paid back next year and the year after?

Yes, it's roughly about $12 million in the quarter, and you can ballpark that each quarter.

Thank you.

Our next question comes from the line of Markus Mittermaier of UBS.

Yes, hi, good morning everybody.

Good morning.

Good morning.

Maybe briefly, so I'll start with the guidance. Thanks for giving that, not many companies have done that. If I look at sort of the cadence first-half/second-half, I wonder what's your assumption sort of like on top line, because you did just under 1.7. So, the implied second-half top line number is roughly the same. So, is that selectivity around industrial, is that sort of conservatism you mentioned sort of the backlog is looking okay? I'm just trying to get a bit of a sense for the assumptions you took to come up with the second-half implied guide? Let's start there.

So, in building that guidance, we go out to our businesses and we build it up from the ground up, and based on what they were seeing at the time of putting that together and with still some of the headwinds with COVID and some of the spikes that are coming back up, we look at that and believe that that's a very appropriate place for us to be at this time, given the general macro economy.

Okay, got it, but ex-COVID, it would be fair to assume that sort of from an underlying seasonality, usually the second-half is better than the first-half, would that be fair?

Yes, that would be fair.

Okay, great, and then…

Markus, it's Jim. Basically the front-half in any given year is about 40% and the back-half is about 60%, give or take.

Yes, got it. Okay, great. And then, maybe on cash flow, just I get the point around sort of like the tax deferral and the impact on that, but even if I exclude that, obviously conversion is very strong was also like ahead of the 80% in the first quarter. How should we think about both this and also your longer-term margin guide because already now you're kind of in the quarter, very close to your sort of medium to long-term margin target, I understand but there's some cost coming back, but if we assume regular increments in the second-half and business stabilizing, how should we really think about that sort of like cash conversion, longer-term, is the 80% still a reasonable number and also in the margin side maybe think about whether there's a chance that we can get to 12% target earlier than what you have previously communicated?

I'll let Russ and Tom answer that, but I appreciate you're trying to change our long range guidance, Markus, we want to make sure that we deliver on the goals that I laid out in our comments, including getting to 12% plus by 2023. Nobody would have expected a pandemic when we initially gave out that guidance, and so, obviously we rather be in a position of under promising and over delivering, but we're not going to change the long range guidance that we've given, and with that, I'll let Russ and Tom respond to the micro part of the question.

So Markus on the EBITDA margin, we made progress in the quarter. We're happy with what we did in the quarter, but there were things that were temporary in there, and when we back those things out, we're back in the net 10% range versus the 11.9%. So I think it's fair for you to think about it that way and we'll continue to make the progress as planned to 2023. With regards to cash conversion, because we think that that revenue decline has happened, we wouldn't expect us to be in that 137% conversion in the second-half, but we're comfortable with 80% on a consistent and mid and long-term basis.

Okay, got it, thanks for that. I will get back in queue.

Our next question comes from the line of Andrew Kaplowitz of Citigroup.

Hey, good morning guys. Hope all are well.

Good morning.

Russ, I wanted to follow-up on the comments around inspection man hours up 7%, 8% as of now. Good to see the annual guidance out there. Can you talk about what you are assuming in the guidance for service and inspection in the second-half of the year? Because we don't have the second-half of '19 actuals, can you tell us approximately what you're assuming for organic revenue decline in the second-half of the year, versus the 14% decline you saw on Q2?

Yes, so like inspection man hours is going to ultimately drive our service revenue, and I think we've provided data in the past that specifically in our life safety businesses that approximately 45% of the revenue comes from inspection and service. So as we would be hopeful that we can get the service component of the inspection service piece of our business rocking and rolling in the second-half. We haven't provided any guidance about where we specifically see that revenue coming from, but we're optimistic because we've seen growth in the inspection component of the business that we will continue to see upward projections from a revenue perspective as associated with our service work.

All right, so I just want to follow-up also on the comment that you made around the sort of 10% underlying margin. Obviously, we know that you've had sort of temporary cost out, and you have to give some or maybe all of that back, but maybe you can talk about in a more normalized environment. You did very strong margins in specialty services, margin safety were good, industrial margins have been coming up over the last couple quarters, can you sustain these double-digit margins in Specialty Service and Industrial moving forward, and then how do we think about these temporary costs out in the sense that can any of this cost up be structural as you go forward?

Well, I mean, we shared that we've saved about $19 million in SG&A expenses associated with kind of our cost containment efforts, and which are part of that is some pruning that was done inside these businesses, and we haven't necessarily done the exact math to say how much of the pruning was the $19 million versus salary reductions and furloughs and some of the expenses that we expect to return. So, we're going to see a little bit of margin pressure as we move forward into the second-half, traditionally in the space you see whenever there is a potential economic downturn, you see pricing pressure that works its way into the market we have in so our discipline from our project selection and customer selection that go, no-go process that we've implemented, it's going to be very, very important for us to maintain the margins that we've been able to execute on. So, a big part of that comes from this whole concept of being disciplined around, who we work for, and in what projects that we pursue from as a company, but it's all possible, and it's all doable.

Great, and then, just one more follow-up from me, for Russ, maybe Jim and Martin, as you gives these temporary costs back, and you think about M&A then, I mean is it sort of a balance here, where in the second-half of the year you've talked about sort of dusting off some of the M&A plans, but you have to sort of be careful with the environment, obviously, valuations are all over the place. So what do you see out there in terms of M&A and the focus that you have on it, do we wait till all these costs come back or can you start to get going here on that?

So, I would say that we have -- I put it into two buckets, we have the ongoing M&A program that Russ and the APi team have executed on in the smaller if you like, bolt on opportunities, those are continuing, there is a pipeline, there was a slowdown really because of COVID that is now if you like back in gear, we had a session on that in the last couple of days, and then on sort of if you like more additive M&A for slightly larger businesses, that pipe is also back up and running. So, we are active in that process for opportunities from my perspective, there are opportunities out there. I don't think pricing for what we're doing has gotten if you like out of control and we are consistent with what we see, we spent a lot of time with the leadership organization and that's we've been together in Minnesota for the last few days going through that, so there'll be some opportunities. The good news is the business is well-positioned for it. The cash production and in the business and the conservative balance sheet, we have plenty of capacity to take advantage of opportunities that are in front of us.

Appreciate it, guys.

Thank you.

Thank you.

Our next question comes from the line of Kathryn Thompson of Thompson Research.

Hi, thank you for taking my questions today. I just wanted to follow-up just to dig a little bit deeper on this margin and just kind of the outlook. So we look at segments and really primarily safety and specialty, really want to parse out, what is more transitory, so what will likely come back with increase in volume and work versus more fundamental changes, you know you addressed a portion of this earlier in the call, but really I would like to get a better sense of some of the more fundamental changes that could have sustainable margin improvement? Thank you.

Well, Kathryn, thank you for participating, and I mean I don't want to oversimplify by any stretch of the imagination. All right, so as we march towards our long-term EBITDA goal of 12% by 2023, the areas that are going to have the greatest level of impact are number one disciplined project customer selection and reducing our loss rate. So if you recall, we had a published loss rate last year of 1.5%, we said that our goal this year was to cut that in half. We've made progress on that we need to continue to make progress on that, but that's a huge portion of the sustainability of the margins that's in my opinion that's the lowest hanging fruit that we potentially could have. We need to continue to drive the mix of our business and if we can continue to sustain 7% or 8% growth in our inspection business, we're going to continue to drive the growth of our service business, which drives that recurring revenue mix goal to closer to 50%, if you recall, the gross margins for that work are typically 10 points better, and that's going to be a big, big driver for us. And then I would say, increased execution inside our businesses and we still have businesses that we know, can be better and they must be better, and so, we need to evaluate each of those businesses and be making the choices and the decisions that we can to improve prove those businesses and that doesn't even talk about our business process transformation project, which we're hoping that that long-term effort is going to allow us to really truly move to a shared services model, and help us to reduce our SG&A on a longer-term perspective, and then, you couple that in with strategic M&A, so it's really is this that it is really truly hitting a bunch of singles versus stepping up to the plate and knocking it out of the park with one full scoop, and that's where our focus and that's where our priority is and that's why I think Jim made the comment earlier about we're not changing our guidance as it relates to our long-term objectives, because as we return some of these costs, we're going to have to continue to drive all of these other points, if we're going to be successful in achieving that goal.

Okay. Two follow-ups to that, if your loss rate was 1.5% last year where it is today, and then the second is it fair to say that the margin upside in the quarter was more driven by fundamental changes, and not just transitory events? So I know that was cutting your headcount.

Well, number one, I don't have what our loss rate is sitting at the tip of my tongue right now. I directionally know that it's improved, and that's just because most of those -- most of the times, if there's a problem that rises to my attention rises to my desk, and so from that perceptive, I am speaking more directionally and intuitively, and we need to evaluate that on a year-over-year basis regardless, but we are making progress as it relates to that goal, and I don't necessarily know when you talk about transitory, I…

So, headcount cuts. There are whole host of companies, services companies that reported where you are able to cut cost just by cutting headcount, and that this cost will come back as volumes improve. So, it's really separating that out from some of the fundamentals that you focused on as a company. Does that make sense?

Yes. So I mean that's the beauty of our business, right, is the ability for us to flex our workforce up and down based on our customer's needs and the demands that we see in the marketplace, and you know, I said this earlier, we took the opportunity to do some pruning, and any business that's been our really a positive eight to 10 year run, ends up with I will just say less than average performers in the business, and so, we wanted to make sure that we took advantage of the pandemic and made sure that we did pruning where that was appropriate, but we also were really focused on trying to first -- what's the right word? Preserve our workforce so that as the market return to a more normal time that we are able to be in a position where we could start rocking and rolling again, and so, we actually used salary reductions and furloughs and job sharing and things like that so that we would be able to maintain that workforce as best as we could as the market returned, and I think that's evidenced by the fact that we are seeing our man-hours on a business by business case start to tick up. Our field work force is primarily a union field force. We do have some non-union businesses as well, but we are primarily a union workforce, and that provides us with additional flexibility to flex, and because there are no trailing severance cost and such for the individuals that are members of the union, so as work needs flex up and down, it gives us a much more flexible model to work within. So, I hope that answers your question.

Yes, does. [Multiple Speakers]

Kathryn, maybe I could just jump in also, and we talked about it throughout the script, but the ongoing consolidation of back offices continues to evolve so that's a contributor. The mix of the business is also a contributor. You've got some things going against you. For example, we used to put two guys in a service van, but because of COVID, our expenses have gone up a bit because now two guys take two vans for COVID reasons, and so, there is business process improvement, there is mix improvement, there is continued leveraged scale and there're some headwinds, and then obviously the temporary salary reductions, including Russ not taking a salary, will need to come back in. The 401(k) will need to come back in, but ultimately we are comfortable with the levers that Russ and the team are pulling to drive the business forward and get us to those margin goals in 2023.

Okay. That's was helpful. Yes, thanks very much for passing beyond that. Stepping back and looking at a bigger picture question and looking at the opportunities in a post COVID world, what services or segments could see gains and what areas could be more at risk?

Well, we the opportunity for gains I guess essentially across the deck. Obviously, the opportunity to continue to grow inspection services and safety is -- like that's the number one priority for the company, and we see opportunities to grow the business primarily, and I think about Specialty Services and the race for 5G in the telecom industry, and there is tremendous opportunities in that space as well, and we are just trying to be disciplined in our approach as we look at some of these additional places where we can grow the business, and then in Industrial, there is an aspect where we have been very successful about going backwards before we go forward and being focused on margins, and you have seen that in our results, and part of that is also making sure that we are focused on the service side of that business, and so you'll see us continue to be very, very disciplined and focused less on revenue in industrial and more focused on margin. So the primary places that we're focused on growing are going to be in Safety Services first and Specialty Services second.

Okay. Are there any type of Specialty Services that you offer that specifically address some of the inevitable changes as we all adjust to a new world with COVID. So could you see increased inspections because of that, because we've seen that with other businesses too, just really trying to understand, but with those opportunities may be?

Well, I mean in Specialty Services, if we're talking specifically there, I'd say there is three probably areas that just come to the front of my mind. One of them I talked about, which is this race to 5G in Telecom.

Yes.

Obviously, when you have situations like what happened in Baltimore the other day where you had the residential neighborhood that had the explosion due to the existing natural gas distribution system and they've referenced right in a number of the articles that I read about it, the fact that the system is leaking as much as it is. That creates a lot of opportunity for us unfortunately, and that's a area of expertise it's highly complicated, work to do and it you need to have sophisticated protocols to be able to successfully do that work and so there is opportunities for us in that space as well, and COVID is driving some HVAC upgrades, it's not a huge part of our business, but we've seen some rising opportunities with our clients to upgrade and improve the quality of their air systems in their buildings primarily and secondary education type institutions.

Okay, great. Thank you for taking my questions today.

Thanks, Kathryn.

Ladies and gentlemen, we have time for one more question. Our final question will come from the line of John Tanwanteng of CJS Securities.

Hi, good morning guys. Congratulations on nice quarter. My first one maybe, Russ, I think you might have addressed this, but I just want to get a little more solid answer. How are trends in July versus June and maybe into August across the business line? And secondly, from a Q3 versus Q4 perspective, what would you do expect to be relatively stronger given the current activity and your assumptions around COVID resurgence and your normal seasonality?

John, directionally, we expect July to hold up, and we haven't seen anything that would send us any other sort of a mixed message and I guess I you know, the single biggest indicator for us is watching our man hours, and we watch man hours again by business and watching where the trends for those man hours go and there is nothing there that necessarily that sends us any sort of alarm. Our third quarter will be stronger than our fourth quarter.

Got it. That's helpful, and I just wanted to follow-up on the man hours comment, you said that inspection hours are up year-over-year, I get the implication that maybe the service that follows that where you generate I think it's like $4 to $5 on every inspection dollar that didn't quite catch up to that level. I'm wondering is that the case number one and number two? Is there a period of time where you've done inspection and maybe those results go stale and you have to do another inspection before you can actually generate the service talent of that, some color on that will be helpful?

Well, I mean it's possible that you can do an inspection and you could make a proposal to a client with the deficiencies and they would choose not to do it for whatever reason, that doesn't happen is very often with our book of business, because the end markets that we're serving in my opinion are in a much better position, I've said this before, we do not do a lot of business in the hospitality in the retail space, which has been harder hit end markets. So, I think that, the reason that you see a little bit of a bump for from us or when I say bump or drag, there is really a better way to put it from a service perspective. It's just because of all the different shelter in place orders and the difficulty it is in getting access to some buildings and the environment is still not easy to work in, and you're seeing the surge in the cases, and so, trying to be efficient as we do that work is the other part of the challenge and so -- we suspect that because we feel good about our customer base that work is all going to get done. It's just a matter of when. The other part of it is, is that we typically see $3 to $4 worth of service work driven off of every dollar of inspection work, not $4 to $5, and so, just to - I guess, provide better clarity and direction there for everybody that's on the call.

Got it. Thank you. I appreciate that correction. Lastly, from any comment on the competitive environment, I know you've remained disciplined, but I know new build activity is probably coming down. Are your peers and competitors in the field seeing your business model is more attractive, maybe competing on inspection side at this point in time or are there any other trends or puts and takes that we should be thinking about from a competitive aspect?

Yes. So you always see and times like this, you see people wake up one morning and think to themselves, you know, "Geez, we should be doing more inspection and service work and we should really get focused on that." And then they try to move into the space, the challenge for them is that they don't have the infrastructure developed that we have, and so, this selling inspections first model for us, I guess the intangible aspect of that is the ability to build better and stickier client relationships. So, we have developed and grown a inspection sales force that sits inside all of our branch offices across our business. In those individuals, they measure customer touches and how often they're engaged with their customers and things like that, and so, for somebody to just walk in off the street and say, "Hey, I want to do your inspections." It's just not going to happen. It's when you're dealing with reputable clients in with the right end markets, it's about the best value, and it's not about whether somebody can save them 220 bucks on their inspection, and if you look at that segment of our business, the average project size is under $10,000, and that's because we're doing a gazillion inspections at 1000 bucks a pop, and so even if somebody goes in and says, "I can do it for 950 bucks," people don't care about the 50 bucks, they care about the quality of the work and making sure that it's done properly and everything else, and so, when you have that infrastructure already built-in in place and functioning, it's very, very difficult for somebody to just walk in and take that work away from you. So, we feel good about the resiliency, and we actually have aggressive growth goals and are going to continue moving that forward.

Got it. Thanks a lot, Russ.

And ladies and gentlemen, that was our final question. I'd like to turn the floor back over to Russ Becker for any additional closing remarks.

Well, I would just like to take the opportunity to thank everybody for joining the call this morning, and for having continued interest in APi. We remain very proud of the leadership that each of our businesses has shown, and the personal sacrifices that each and every one of our employees is made on behalf of the company, and they truly have put APi first and themselves second, and I think that's a testament to the results that we were able to share with you this morning. So, thank you again, and we appreciate your long-term interest in the company.

Thank you, ladies and gentlemen, this does conclude today's conference call. You may now disconnect.