Margin Expansion in Safety Services
Q: What are the drivers of margin expansion in Safety Services, and will they continue into 2025?
A: The primary driver is the company's inspection-first strategy, leading to double-digit growth in inspection revenues in the core Life Safety business. This boosts service pull-through and allows for more selective project work, enhancing margins. On average, inspection, service, and monitoring provide 10% higher gross margins than project work. The international business is also improving by pruning poor-performing contracts and optimizing branches, reducing loss-making branches from 47 to single digits. These factors are expected to continue driving margin expansion into 2025.

Pricing Power Amid Moderating Inflation
Q: Can you maintain pricing power with moderating inflation?
A: Yes, the company continues to implement price increases, particularly in inspection and service businesses where labor costs are rising moderately. They experience good pricing stickiness, focusing on clients that value their services. This strategy is expected to continue contributing to margin improvement, even as inflation subsides.

2025 Organic Growth Expectations
Q: Will organic growth accelerate in 2025, and what will drive it?
A: The company anticipates a return to organic growth in 2025, seeing it as a "normal year." Project revenues are expected to grow in the low to mid-single digits, while service revenues should maintain mid- to high single-digit growth. Strong backlog and proposal activity support this outlook, with both projects and services contributing to growth.

Acquisition of Elevated—Integration Progress
Q: How is the integration of Elevated progressing, and is it meeting expectations?
A: Integration is progressing well, with strong retention of key leaders and positive reception of leadership development initiatives. Cross-selling opportunities are beginning, and there have been no significant surprises post-acquisition. The company is optimistic about building a broader platform in the elevator and escalator space, and Elevated's performance aligns with initial expectations.

Project Delays and Impact on Guidance
Q: Are project delays limited to 2024, and why are you confident in your full-year guidance?
A: Yes, the delays are seen as temporary and primarily limited to 2024 due to unforeseeable issues like permitting and engineering delays, and administrative challenges in federal programs. Despite these delays, projects are moving forward, albeit slower than anticipated. The company's backlog is up approximately 5% organically, providing confidence in returning to growth in 2025.

Outlook for Projects Business in Safety Services
Q: Can the projects business in Safety Services return to growth?
A: Yes, there is plenty of good work available. The company is focused on disciplined customer and project selection. Delayed projects, like large hospital projects in Asia, are now moving forward. The backlog in the Safety Services business is at $2 billion, the highest ever, indicating strong future growth prospects.

Backlog Growth and Market Opportunities
Q: Is the backlog still growing, and how are core markets performing?
A: The backlog continues to grow and is healthier than before, providing great confidence for 2025. Core end markets like data centers, semiconductor, healthcare, and critical infrastructure offer ample opportunities. The only notable challenge is in the telecom space due to administrative issues with federal programs.

M&A Pipeline and Timing
Q: Can you provide color on the M&A pipeline and timing of opportunities?
A: The company has a robust M&A pipeline and expects continued bolt-on acquisitions throughout the year. While timing can vary due to factors beyond control, the goal is consistent deal activity. Significant transactions like the next Elevated acquisition may occur in 2025, as the company remains disciplined in valuation and fit.

Adjustments Between GAAP and Adjusted Results
Q: What is the outlook for convergence between GAAP and adjusted results?
A: The largest adjustments are from restructuring expenses related to Chubb value capture, expected to conclude by end of 2025, and business process transformation costs associated with integrations. These adjustments will subside as integration work diminishes, leading to convergence between GAAP and adjusted results in the future.

Timeline to $1 Billion Adjusted EBITDA
Q: What is the timeline to reach $1 billion in adjusted EBITDA?
A: The company expects to achieve $1 billion in adjusted EBITDA in the near term, though no specific date is provided. The current guidance for 2024 adjusted EBITDA is $890 million to $900 million, and there is momentum to reach this benchmark soon.