What changed in this filing

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Item 1. Business

2025-02-26 compared with 2024-02-28 · 41 added, 40 removed, 204 unchanged (28% of the section changed)

We are a global, market-leading business services provider of safety and specialty services in over 500 locations worldwide.

We are a global, market-leading business services provider of fire and life safety, security, elevator and escalator, and specialty services with a substantial recurring revenue base and over 500 locations worldwide.

We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries.

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It also allows each of our businesses to remain highly focused on best positioning itself within the categories in which it competes and reinforces strong accountability for operational and financial performance.

We operate our business under two primary operating segments, which are also our reportable segments:

• Safety Services – A leading provider of safety services in North America, Europe, and Asia Pacific, focusing on end-to-end integrated occupancy systems (fire protection solutions, Heating, Ventilation, and Air Conditioning (“HVAC”), and entry systems), including design, installation, inspection, and service of these integrated systems.

We operate our business under three primary operating segments, which aggregate to our two reportable segments:

• Safety Services – A leading provider of safety services in North America, Europe, and Asia-Pacific, focusing on end-to-end integrated occupancy systems (fire protection solutions, Heating, Ventilation, and Air Conditioning (“HVAC”), entry systems, and elevators and escalators), including design, installation, inspection, and service of these integrated systems.

The work performed within this segment spans across industries and facilities and includes commercial, education, healthcare, high tech, industrial, and special-hazard settings.

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Customers within this segment vary from private and public utilities, communications, healthcare, education, transportation, manufacturing, industrial plants and governmental agencies throughout North America.

After reviewing the businesses in our portfolio, we have made the decision to realign our segments beginning in 2025 by moving our HVAC business from Safety Services to Specialty Services.

The industries in which we operate are highly fragmented and comprised of national, regional, and local companies that provide services to customers across various end markets and geographies.

We believe the following industry trends are affecting, and will continue to affect, demand for our services.

Increased Regulation.

The life safety industry is highly regulated at the federal, state, and local levels and continuous regulatory changes, including mandated building codes and inspections and maintenance requirements, continue to generate increasing demand for our services, often on a recurring basis.

Specifically, the Uniform Building Codes written by the National Fire Protection Association and the International Code Council regulate fire suppression and sprinkler systems.

Evolving Regulation.

The life safety and elevator industries are highly regulated at the federal, state, and local levels and continuous regulatory changes, including mandated building codes and inspections and maintenance requirements, continue to generate increasing demand for our services, often on a recurring basis.

For example, the Uniform Building Codes written by the National Fire Protection Association and the International Code Council regulate fire suppression and sprinkler systems.

Among other things, these codes require testing, inspections, repair, maintenance and specific retrofits of building fire suppression and sprinkler systems, which generates recurring revenue related to those services.

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The Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, includes $550 billion of newly authorized infrastructure spending through 2026.

In addition, the growing strategic importance of semiconductor technology in industries like defense, automotive, and telecommunications has caused the U.S.

to boost domestic semiconductor production and reduce reliance on foreign supply chains.

The CHIPS and Science Act, passed in 2022, allocates funds for semiconductor research, development, and manufacturing, including $39 billion for building new U.S.

facilities and equipment.

Our Competitive Strengths

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Leading Market Positions in Diverse Set of Niche Industries.

We believe that we are one of the go-to-market leaders in each of the niche industries we serve, including the industry leader in fire protection and sprinkler services, among the top five specialty contractors in North America, and a large provider of fire and security solutions in many of

the international markets we serve.

We believe that we are one of the go-to-market leaders in each of the niche industries we serve, including the industry leader in life safety and security services, among the top five specialty contractors in North America, and a premier provider of services for elevator and escalator equipment.

We believe that our revenue diversification across customers, end markets, geographies and projects, combined with our go-to-market strategy of selling inspection work first, regional approach to operating our businesses, operations in niche industries with strong cross-selling opportunities and recurring revenue potential, strong commitment to leadership development, long-standing customer relationships with a robust reputation in the industries we serve, and strong safety track record differentiates us from our competitors.

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In most cases, our inspection work is covered by statutory or insurance requirements.

Nearly all facilities that have existing life safety systems are required by law to have that system inspected on an annual basis.

This strategy differentiates us from our peers and ultimately creates a stickier client relationship that we believe leads to recurring revenue, higher margins, and growth opportunities.

Nearly all facilities that have existing life safety systems are required by law to have that system inspected on at least an annual basis.

This strategy differentiates us from our peers and we believe ultimately creates a stickier client relationship that we believe leads to recurring revenue, higher margins, and growth opportunities.

Attractive Industry Fundamentals.

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Our average project duration is relatively short, which helps mitigate inflationary exposure to cost of goods sold or changes in labor expense that some peers may experience in an inflationary environment.

Historically, we have managed inflationary pressure through cost efficiency and cost saving actions, when needed.

Historically, we have managed inflationary pressure through cost efficiency, cost saving actions, and price increases, when needed.

We believe that our broad mix of customers across many sectors and strong recurring revenue streams help us mitigate the impact of economic downturns on our business.

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We believe that we can continue to grow our businesses organically and capture additional market share across each of our segments by focusing on growing maintenance, inspection, monitoring, and service revenue and maximizing cross-selling opportunities.

• Grow Maintenance, Inspection, and Service Revenue - We believe that we can drive substantial organic growth by focusing on growing our maintenance, inspection, and service revenue, which is a component of our business in each of our segments.

We plan to capitalize on our broad base of installed projects, cross-selling opportunities, and customer relationships to continue to grow maintenance, inspection, and service revenue.

• Grow Maintenance, Inspection, Monitoring, and Service Revenue - We believe that we can drive substantial organic growth by focusing on growing our maintenance, inspection, monitoring, and service revenue, which is a component of our business in each of our segments.

We plan to capitalize on our broad base of installed projects, cross-selling opportunities, and customer relationships to continue to grow maintenance, inspection, monitoring, and service revenue.

• Maximize Cross-Selling Opportunities - With diverse businesses, a broad reach across a variety of different industries, geographies, and end markets, and a culture of collaboration, we believe that we have significant cross-selling opportunities to service more of the project life cycle and, once a project is completed, to continue to grow attractive recurring revenue streams.

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We have a well-established acquisition platform with a track record of executing accretive acquisitions through our selective approach to targeting and assessing potential acquisitions that we believe align with our values and strategic priorities.

We believe that the markets in which we operate, which are expanding internationally, are fragmented and lend themselves to continued opportunistic acquisitions.

We believe that the global markets and platforms in which we operate are fragmented and lend themselves to continued opportunistic acquisitions.

We have grown, and plan to continue to drive growth, through accretive acquisitions targeting businesses in our existing segments and those complementary to our service offerings.

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Our business activities are subject to regional, national, state, and local laws and regulations in each country in which we conduct business.

These laws and regulations involve matters including compliance with codes or regulations governing our services, licensing and certification requirements, environmental and substance control, workplace safety, privacy, data use, data security and protection of personal information, data storage and retention, biometrics, intellectual property, advertising, marketing, distribution, electronic contracts and other communications, competition, taxation, economic or other trade prohibitions or sanctions, anti-corruption and political law compliance, securities law compliance, and financial services.

and financial services.

In some cases, laws and regulations outside of the U.S.

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In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations.

Our contracts with customers may also impose liabilities on us regarding environmental issues that arise through the performance of our

Our contracts with customers may also impose liabilities on us regarding environmental issues that arise through the performance of our services.

Additionally, under some legal theories of recovery applicable to claims for personal injury or property damage, liability could be imposed in connection with allegedly hazardous substances on a market share basis, eliminating the need for claimants to prove a direct relationship between the injury and our business operations.

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Seasonal variations can be influenced by weather conditions impacting customer spending patterns, contract award seasons, and project schedules, as well as the timing of holidays.

Consequently, net revenues for our businesses are typically lower during the first and second quarters due to the prevalence of unfavorable weather conditions within our North America companies, which can cause project delays and affect productivity.

Consequently, net revenues for our businesses are typically lower during the first and second quarters due to the prevalence of unfavorable weather conditions within our North American companies, which can cause project delays and affect productivity.

Additionally, the industries we serve can be cyclical.

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We compete based on a variety of factors, including price, service, technical expertise and experience, quality, safety record, response time, and reputation for customer service.

A portion of our revenue is derived from agreements with customers that contain fixed price or per unit terms, and price is often an important factor in the contract award process for such work.

A portion of our revenue is derived from agreements with

customers that contain fixed price or per unit terms, and price is often an important factor in the contract award process for such work.

However, we believe our customers also consider a variety of other factors, including those described above, when selecting a service provider, and we believe that our technical capabilities, broad geographic reach, and skilled labor force enable us to compete against our larger competitors.

We have multiple supply sources in various markets at competitive pricing for substantially all of our raw material and installed components.

The raw materials and various purchased components we use such as piping, steel, sheet metal, fire suppression/detection components, and HVAC equipment have generally been available in sufficient quantities in a timely manner.

The raw materials and various purchased components we use such as piping, steel, sheet metal, fire suppression/detection, elevator/escalator components, and HVAC equipment have generally been available in sufficient quantities in a timely manner.

We rely on multiple third-party manufacturers as a source for pre-fabricated goods or system components.

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Our culture of collaboration across our businesses provides significant cross-selling opportunities to leverage our current project base, existing relationships and professional expertise to provide additional services to our existing customers.

enhances our understanding of customers on a national scale and allows us to build more meaningful relationships with our customers.

In North America, we provide a single point of contact for customers with a regional or national portfolio of properties through our National Service Group (“NSG”) team within our Safety Services segment, which enhances our understanding of customers on a national scale and allows us to build more meaningful relationships with our customers.

Through our NSG team, we are able to quickly and efficiently allocate resources to meet customer needs.

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Growing and Developing our People

Our number one value and priority is the safety, health and well-being of all of our team members.

Our team members are critical to the execution of our strategies and achieving business success.

As of December 31, 2023, we had approximately 29,000 team members, of which approximately 14,000 were represented by unions or were subject to various collective bargaining agreements.

We have not experienced and do not expect any significant strikes or work stoppages and believe our relations with team members covered by collective bargaining agreements are in good standing.

Our number one value and priority is the safety, health and well-being of all of our approximately 29,000 team members, all of whom are critical to the execution of our strategies and achieving business success.

Talent Development and Engagement

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Our field-based leadership has the opportunity to participate in a development program focused on building foundational leadership skills.

In addition, we offer structured tools and opportunities for development, including individual development plans, executive coaching, strategic leadership advisory services and on-demand learning opportunities hosted on our learning management platform, our intranet site and through podcasts.

We believe that a culture where every team member can grow, thrive, and feel they belong is a differentiator and enables us to attract and retain people who also build inclusive relationships with our customers.

We are committed to all dimensions of diversity including gender identity, race, sexual orientation, ability, backgrounds, and beliefs.

We are building and evolving our culture of inclusion through our day-to-day work through our leadership, learning and development.

We are committed to equity and inclusion and are building and evolving our culture of inclusion through our day-to-day work through our leadership, learning and development.

We monitor team member engagement through annual engagement assessments and provide recommendations for follow up based on this assessment.

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The aim of these programs is to ensure that all employees are aware of and comply with safety standards we have established and all applicable laws, regulations and other requirements in the countries and jurisdictions in which we operate.

We have implemented our safety program, STEPS (Striving Toward Excellence and Professionalism in Safety), within North America which promotes safety culture awareness throughout our operations.

We have implemented our safety program, STEPS (Striving Toward Excellence and Professionalism in Safety), globally, which promotes safety culture awareness throughout our operations.

Outside of North America, we have established a security program, SAFE (Scan, Assess, Fix, Execute) which is linked to the need for preventive actions before starting work.

In addition, we have multiple programs geared towards increasing everyone’s

awareness of our safety culture and to empower employees to stop work if risks are unmanageable.

In addition, we have multiple programs geared towards increasing everyone’s awareness of our safety culture and to empower employees to stop work if risks are unmanageable.

We are very focused on improving our fleet performance through defensive driver training, fleet technology, and company fleet assessments.

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Our rate of incidents recordable under the standards of the U.S.

Occupational Safety and Health Administration ("OSHA") per one hundred employees per year, also known as the OSHA recordable rate, was 0.96 during 2023 and 1.0 during 2022, respectively.

Occupational Safety and Health Administration ("OSHA") per one hundred employees per year, also known as the OSHA recordable rate, was 0.97 during 2024 and 0.96 during 2023.

Our rate of 0.97 is considerably less than the most recently published OSHA rate for our industry of 2.3.

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Becker 59 Chief Executive Officer and President

Krumm 49 Executive Vice President and Chief Financial Officer

Glenn David Jackola 45 Interim Chief Financial Officer

Lambert 49 Senior Vice President, General Counsel and Secretary

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Becker served as a project manager for Ryan Companies from 1993 to 1995 and as a field engineer with Cherne Contracting from 1991 to 1993.

Since July 2017, Mr.

Becker has served on the board of directors of Liberty Diversified Industries and since January 2019 has served on the board of directors for Marvin Companies, each a private company.

Since January 2019, Mr.

Becker has served on the board of directors for Marvin Companies, a private company.

Becker also serves on the advisory board for the Construction Management Program at Michigan Technical University.

Krumm has served as Executive Vice President and Chief Financial Officer of the Company since September 2021.

Glenn David Jackola has served as Interim Chief Financial Officer since December 2024 and previously served as the Chief Financial Officer and Vice President of Transformation at APi International since November 2022.

Prior to his current role, he held the position of Vice President, Controller and Chief Accounting Officer at the Company from March 2022 to November 2022, and as Vice President, Corporate Planning and Analysis since joining the Company in October 2021.

Prior to joining the Company, Mr.

Krumm served as Corporate Treasurer and Senior Vice President of Global Business Services for Ecolab Inc.

During his 15-year tenure there, he also held roles leading the Industrial segment finance team, regional finance teams in Europe, the Middle East and Africa, Asia and Latin America and leading international integration efforts for a major acquisition.

Krumm began his career in public accounting working for consulting firms PwC, Arthur Andersen and Deloitte with a heavy emphasis on M&A/corporate finance.

Krumm earned his bachelor’s degree from the University of Northern Iowa and his master’s degree in Business Administration from the University of Chicago Booth School of Business.

Jackola was the Vice President of Finance of James Hardie Building Products where he served as head of finance for the North American business.

Prior to that, Mr.

Jackola was Vice President of Finance – Europe for Ecolab and also held other roles of significant responsibility within Ecolab since joining in July 2008.

Jackola received his bachelor’s degree in Economics from Carleton College and his Master of Business Administration in Finance from the University of Chicago Booth School of Business.

Lambert has served as Senior Vice President, General Counsel and Secretary of the Company since July 2022.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business