Good morning, ladies and gentlemen, and welcome to APi Group’s First Quarter 2022 Financial Results Conference Call. All participants are now in a listen-only mode until the question-and-answer session. Please note this call is being 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 first quarter 2022 earnings conference call. Joining me on the call today are Russ Becker, our President and CEO; Kevin Krumm, our Executive Vice President and Chief Financial Officer; and Sir Martin Franklin and Jim Lillie, our Board Co-Chairs. 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, May 4, and we have no obligation to update any forward-looking statement we may make. As a reminder, we have posted a presentation detailing our fourth quarter financial performance on the Investor Relations page of our website. 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. Also as a reminder, there is a presentation containing supplemental information relative to prior periods and other useful information for investors available in the Presentation section of our website. It is now my pleasure to turn the call over to Martin.

Thank you, Olivia. We are proud of the approximately 26,000 leaders of APi focus and effort they put forth in navigating another complicated backdrop to the quarter. It was just over three years ago that we first met Russ and discussed building a business together, primarily based on our view that a statutorily required services strategy is economically resilient, and that these activities were necessary no matter what the economic climate might be. Throughout the challenges since that initial meeting, from navigating the COVID-19pandemic, to dealing with supply chain disruptions and inflation, to acquiring and integrating the Chubb platform, the team has never lost sight of serving our customers safely and efficiently. We're grateful for their unwavering commitment. The integration of Chubb is off to a good start and the strategic rationale for the transaction is proving even stronger than initially anticipated. Our belief when acquiring the business was that the acquisition would not only position API well for continued success, and improve the protective moat surrounding the business, but that it would also create significant upside for shareholders and employees. We believe that the combined business will offer customers more customized and proprietary offerings through our uniquely trained technicians, as they are called in the U.S., or engineers as they're called in Europe. We believe that the skills of our technicians and engineers, combined with our suite of offerings is a distinct competitive advantage. In addition, we believe that our scale will drive synergies and savings that can be redeployed back into the business to accelerate growth while enhancing margin expansion. We have great confidence in the business and the direction we're heading. We're excited about the opportunities for the company in the years ahead and look forward to updating you on our progress throughout the course of the year. With that, I'll hand over to Russ.

Thank you, Martin and good morning everyone. Thank you for taking the time to join our call this morning. I will begin my remarks by commenting on our strong start to 2022, the positive momentum we have across the entire business, and the key factors that we believe support the resilience of our business. I will then provide an update on our ongoing integration at Chubb before turning it over to Kevin to discuss our financial results and guidance in more detail. We saw continued robust demand in the first quarter across our key end markets. For the three months ended March 31, 2022 net revenues increased on an organic basis by approximately 16%, driven strategically by healthy growth in inspection and service revenue across the majority of our markets in Safety Services, as well as general market recovery in Safety and Specialty Services, compared to the prior year period, which was negatively impacted by the COVID-19 pandemic. We estimate that approximately two thirds of this growth was driven by price and pass through of material and labor costs, and one third was driven by volume, which we measure through labor hours. It is important to note that this shift -- that this will shift over time, based on our mix of work and macro economic factors such as inflation. This growth is tactical as we focus on margin expansion because on average, inspection and service revenues generate 10% plus higher gross margins, and monitoring revenues generate 20% plus higher gross margins in contract revenue. Going forward on an annual basis, we intend to provide detail on our consolidated backlog. While this metric has less relevance to APi, given our focus on inspection and service revenue and our goal of reducing our contract loss rate, it does provide a barometer…

Thanks Russ. Good morning to those who have joined online. I'll begin my remarks by reviewing our consolidated results and segment level operating performance before turning to our guidance. As a reminder, the Chubb business is reported within our Safety Services segment and will be excluded from our organic net revenues until 2023. Reported net revenues increased by 83% to $1.5 billion compared to $803 million in the prior year period. This was driven by acquisitions completed in Safety Services and strong organic growth in Safety and Specialty Services. Adjusted gross margins grew to 26.4%, representing a 371 basis point increase driven by an improved mix of inspection and service revenue resulting from recent acquisitions completed in the Safety Services, as well as organic growth and improved productivity in Specialty Services. These factors were partially offset by supply chain disruptions and inflation, which caused downward pressure on margins. Adjusted EBITDA margin was 8.7%, representing a 111 basis point increase compared to prior year period, driven by an improved mix of inspection and service revenue resulting from acquisitions completed in Safety Services, as well as strong organic growth. This was partially offset by supply chain disruptions and inflation which caused downward pressure on margins. As Russ mentioned earlier on the call, net revenues increased on an organic basis by approximately 16% compared to the prior year period, excluding the impact of acquisitions completed and Safety Services over the past 12 months, both gross profit margin and EBITDA margin improved on a year-over-year basis. Adjusted diluted earnings per share for the first quarter was $0.23 representing a $0.13 per share increase compared to the prior year period. The increase was driven primarily by strong organic growth in Safety and Specialty Services and the accretion from the acquisition of Chubb. Our adjusted free…

Thank you, Kevin. Good morning, everyone. As everyone has said, we are grateful for the efforts of our leaders who navigated a complicated backdrop and drove strong results in the first quarter. We are pleased that the business has what we believe struck a strong momentum despite a choppy macroeconomic environment. Clearly Russ and Kevin and the entire leadership team are focused on operational performance, and successfully navigating all the macro turbulence since we became a public company two years ago. We couldn't be more pleased with the performance of the business to date and the trajectory of APi. As Co-Chairs, Martin and I view our role as providing our unique resources and the benefit of our shared experiences to help APi perform at the highest level and thereby drive shareholder value. From our perspective, the company is doing what it needs to do and is positioned well for success, having added new leaders to the bench with unique global skills to help drive performance. Additionally, new resources and tools are being added each month to improve efficiency and performance. We are pleased to provide the investment community new insights into the business on this call to help you understand the business better. We intend to continue to evolve the detailed information provided quarterly and look forward to providing more color on our strategic activities related to the acquisition of Chubb later in the year. We intend to maintain a relentless focus on growing recurring service revenue, disciplined project and customer selection, pricing opportunities, leveraging our spend, driving operational excellence, and realizing synergies from the acquisition of Chubb as we work towards our adjusted EBITDA margin goal of 13% plus by 2025. We will continue to remain responsive to opportunities within our business and to the macroeconomic environment in which we compete. We continually assess how best to deploy our resources against our three primary growth drivers, optimizing the performance of our existing businesses, effectively managing our capital structure and investing capital in our business, including evaluating opportunistic acquisitions. And with that, I'd now like to turn the call back over to the operator and open the call for Q&A.

[Operator Instructions] We'll take our first question from Andy Kaplowitz from Citigroup. Your line is open.

Close. Good morning, everyone.

We'll just stick with Andy.

Andy is fine. I've been called worse. So maybe first question, I know you just raised organic guidance to 8% to 9% versus the 6% to 7% that you had Russ. Maybe you could talk about the assumptions in that increase, is that all pass through in pricing or is there at all volume increase in there? And then obviously, you grew mid teens in Q1 and again you talked about pass through in pricing being two thirds of that. It was still higher than our forecast, but again, was that all pricing and pass through or were there areas of your business that are outperforming your own expectations?

So Andy in my remarks, I said that two thirds of that was pricing pass through and one third of that was volume. We track man hours by business units actually on a weekly basis and that's really how we keep our eye on the ball as it relates to the differing trends that we are seeing in the business. And so, we've been really, I guess forward in our conversations with our different business unit leaders as it relates to price and making sure that we're trying to stay out on the forefront on price, but it's really it's about two thirds of that is price.

Okay, and then Russ maybe asking you about sort of Chubb in this context, obviously going to $40 million of synergies looks good. Can you give us more color into where you're seeing the extra synergies as you're now on the ground? And then maybe talk about the probability that that $40 million could move higher over time? And has the timeline changed at all when you get these synergies, I think you had said 18 to 36 months?

Well, I think the 18 to 36 months is realistic. I mean, as we look at some of the different countries that we operate in, the processes that you have to go through to make some of the changes that will ultimately need to be made, in these business takes more time than it would potentially in the U.S. And so I think thinking about things in that timeframe is really realistic. And it's not all going to happen in day one and ultimately looking at having probably two phases of some of the changes. I would say that, as we spend more time in the business, and we start to focus on driving the business really towards a similar branch built model that we currently have in our really core life safety business, that's where you start to see, you get more visibility into some of the changes and what needs to be done to empower the branches and empower the branch leaders versus having the business served from corporate. And so as we spend time in the business, and we've had a number of different visits to Western Europe, we can see it. Like you can really see what needs to be done in this business that actually gets me really excited because you have more and more clarity around what needs to be done, as we continue to try to drive towards this branch led operating model which is exciting. We also get very excited when we look at the procurement opportunities. There's -- we felt like we weren't scratching the surface just as a core APi from a procurement perspective, and now as we're continuing to build out our procurement team here, we see combined synergies between the scale of both businesses coming together, and we see really a nice opportunity for us to take advantage of that. And really when we were talking a little bit about this yesterday, Kevin used to use the frame, we're scratching the surface on commercial opportunities and we're just really getting going there. And there's going to be a number of opportunities for us to cross sell with the existing business, take advantage of some of these multinational customers that we have that were already starting to have some dialogue with trying to tap into Blackstone's real estate portfolio. So, there's a number of things that really give us great confidence that that $40 million is there, and it will continue to evolve and we'll continue to keep you informed in that process.

Andy, if I could chime in, I mean one of the things that I think what Ross and Kevin and the team are doing is that I think is different than what has historically occurred under prior ownership is, Russ is out there pounding the pavement, visiting places where senior leaders have never visited before. And he's working with the leaders in individual countries, and having them build bottom up plans, rather than being told top down what to do. And from those bottom up plans, you're getting ownership from country managers on what to do, how to do it. It's their plan, rather than someone in some other country just telling them what to do. And so, there's a lot of buy in on what needs to happen when it needs to happen, who's accountable, and what the economic return is and we're in early days of that, but it's really a team effort that Russ is driving rather than an administrative directive.

I appreciate all the color guys.

Our next question comes from Markus Mittermaier from UBS.

Yes, hi good morning, everyone. Maybe I, good morning hi. Maybe I'll followup on the discussion you just had there, sort of what's the cadence then to get to the bottom up branch slip platform, what has to happen between now and then sort of, like if you are seeing forward two years? So is it kind of ripping out the old IT platform? Or what's the process to get there? Can you give us a bit more color on that?

Well, Marcus, good morning. Thank you for your question and thanks for participating this morning. First and foremost we have to carve this business out from Carrier and that has to be our number one priority and there is a lot of work to do there. You know, specifically I would say probably the two key -- the two biggest workstreams would be in the area of IT and HR and that needs to be the primary driver and the focus. Okay? So, that is -- that takes some resources and it takes the right talent, both from the Chubb side and our side, and we are prioritizing that. Right? So it starts there and that doesn't mean you can't make some changes that you need to be making and we've already started to execute on that, where it's appropriate, in some of the different countries. And so, I mean, it's just one of those things, it's like an ore freighter in Lake Superior. You don’t change the direction of that ore freighter, you know, matter of minutes, it takes some time. And our branch led business model, operating model is somewhat different than the way the Chubb business has been built over the many, many years with under, UTC and Carrier ownership and leadership. And so changing that and finding the right mix between their model and where we are from an operating perspective is ultimately going to take some time. And the other aspect of it too, that we don't, most of us don't think about is that we still don't have access to Hong Kong, we still don't have access to China, as those countries continue to suffer from lockdowns associated with COVID. So, we are diligently building plans. We are focused on being prepared to make -- execute on our, so to speak, our Phase One changes that we need to make and are already trying to take advantage of some of the procurement opportunities that are going to happen there. So, I just go back to 18 to 36 months is a realistic timeframe. And we want to be realistic with you and what we share with you, but trust me, we are very active in the business and we'll be attacking all fronts as we see that opportunity present itself.

That's very helpful. Thank you. And maybe one more on backlog the $3.6 billion, I appreciate the update to the guidance here for the rest of the year. How should I think about the $3.6 billion obviously a lot of projects in there. What's your ability to reprice once you put that into the backlog? And then what's your visibility there on margin across that 3.6? Thank you.

So, number one, that that is our contract and that includes our contract installation backlog. It also includes larger time and material projects with our industrial maintenance customers, it would also include our anticipated work under certain master service agreements and blanket contracts. So it's not just sort of speak fixed price lump sum contract related work, and so there is a variety of opportunities that's included in that $3.6 billion. And margins vary based on segment and based on individual company to be totally honest with you Marcus inside that. We have confidence in the margins there. We've been preaching price. We've been preaching, protecting yourself in your contract languages, which goes back to your original proposal to make sure that that you're protecting yourself from inflationary pressures associated with it. So we have really good confidence in the quality of the backlog that we have, but it would be extremely difficult for us to come to give you an exact margin percentage based on it would vary by segment and by business.

Got it, okay, great. Thanks for the color. I'll get back in queue.

And next question comes from Julian Mitchell from Barclays.

Hi, this is Kiran Patel-O'Connor on for Julian. You know, I'm just looking at this 60% plus in a new target for inspection service revenues. When do you think you'll be able to achieve that and what actions are you guys taking to reach that goal?

Well, I mean, the reality of it is, I can't tell you if we're going there in three or four years to be totally honest with you Kiran. So, it's really driven by our relentless focus on growing the inspections. And our inspections we're up again on a year-over-year basis for this quarter, which really gets us excited. We had really solid growth in that piece of the business. We need to drive that inspection first mindset into the Chubb business so that their thinking about things in a very, similar fashion that we are. And as long as we continue to grow the inspection piece of the business, we know that we're going to grow the service piece of the business, which is the recurring revenue portion of it. And we're going to incrementally make gains on it each and every year and that's what's positive for us. And, that's what's where we're driving the business to and that's what is our biggest focus. We still have work to do as we continue to build out our inspection sales team, and that is happening and ongoing every single day. And that's really our number one strategic priority across the business.

Got it, thanks. And I have one followup, just looking at the $40 million synergies in a number that you talked about, for the cost to achieve that, should we assume some sort of similar timeline or how should we think about that?

Well, I guess, we said that we believe that we're going to capture those synergies over an 18 to 36-month period of time. And, and that's where our focus is. As I said earlier in my remarks, our number one focus right now is the separation from Carrier and that needs to continue to be our priority. But we believe that we see opportunities up to $40 million and hopefully that's going to continue to evolve, but it's going to take us that period of time to capture.

Got it, thank you.

Our next question comes from [indiscernible] from RBC Capital Markets.

Hi, this is John Mazzoni filling in for Ashish. Congratulations on the strong results. Given the higher international tensions, and I think you mentioned this previously on Hong Kong and China, could you just walk us through how you are navigating international risks, and any of the actions you're doing, perhaps in Europe, on knock on effects or any other things you're seeing in terms of just kind of the overall business environment? Thanks?

Well, I think when I think about navigating risk, obviously we continue to watch how things continue to evolve into the Ukraine with Russia. We have very little exposure to that. Our legal team has stayed on top of that looking at areas where we may have customer ties to Russia, and what sort of impact that may or may not have on the business. But it is then it's very, very low and it's been extremely small. As it relates to how things potentially evolve with China in the position China takes, that's something that we continue to keep our eye on. Our exposure in China is small. The majority of our business in Asia is focused in Hong Kong. And we continue to really just keep our eye on it and have open dialogue about any sort of risks and what sort of action planning that we may have to take if there is potentially additional problems and challenges there.

I think, you know, from Martin and I were talking the other day, it's kind of funny that since we've been a public company, we've known nothing but headwinds. We went public, and so did COVID. And then we've had supply chain issues and it will be interesting when the world just calms down a little bit. But this company has performed amazingly well and put up the numbers that it has put up in what has been a crazy couple of years. And so, it's just going to be interesting when the waters smoothed out and you get a bit of a tailwind in what's going on in the macros. But look at how well we've performed over the last couple of years with global headwinds that have nothing to do with the business. I really think you really see the resiliency of how the business is set up and what we call the protective moat. And so, we look forward for the day when the world just takes a breath.

Great, thank you for the color. And maybe quickly, could you just remind us on labor and how the union workforce in the United States and the subcontracted workforce actually helps? It sounds like the color around the $30 million spent over the past five years on leadership development is helpful, but just maybe around what you're seeing in the hiring environment and how you think you can pretty much navigate that as well, just because the issue of kind of the tough labor market today? Thanks.

Yes, so there was a lot there in that, in your question. So first, just to tackle the union component of it. So the majority of our workforce is union. That does a couple of things for us, it gives us really good visibility into their wage rates and the cost structure associated with that. And even going through this, kind of a challenging time from a people perspective, in our collective bargaining agreements that have come up for renegotiation, I would tell you that they've all been resolved and settled at very fair basically wage packages and escalation in those wage packages. I've been actually very impressed with the leadership of the Union, and how they have been reasonable in their expectations and haven't tried to take advantage of the hot labor market and situation there. The other aspect of the Union aspect of it is, when you have, when Friday afternoon comes and we don't have work for that individual on Monday, we can basically lay them off and send them to the Union Hall without any trailing severance costs. That's all built into their wage packages. And so that gives us much more flexibility to flex up and down as we need. What you see commonly in Western Europe, specifically around installation work is the use of a lot of subcontract labor, instead of having permanent employees, and that allows them greater flexibility to flex up and down based on what their needs are. And so, you'll see the new subcontract labor more often than they would have saved, having full time employees. Regarding the $30 million investment in leadership development over a number of years, I would just tell you that we have believed for almost 20 years now that investing in our people, investing in…

Great, thank you so much for the color.

Next question comes from Jon Tanwanteng from CJS Securities.

Hi, good morning. Thanks for taking my question. My first one is what gives you the confidence in reaching the market -- target margin just given the pace of the inflationary environment we're seeing? I understand that you can grow profit dollars in line with expectations or maybe a little bit better, but getting to the margin percentage just in this environment, what's driving that and is it maybe an expectation moderate inflation, more synergies or is there something else that we should be thinking about?

Jon, hey it's Kevin, I'll take that one. You know, when we look at what's going on this year with the significant pasture that Russ talked about, when you think about some of our businesses, if you take one of our businesses in the Specialty Services segment as a proxy, fabrication, you know, they're obviously seeing a significant run up in revenue due to what we're pushing through from a price standpoint related to steel, that's going to compress margins this year. All that said, they continue to focus and you can use that company really as a proxy for our contract work in specialty and broadly, they continue to focus on productivity initiatives, and continue to push more and more of our offerings to that service and recurring revenue. So in a year like this, where we see the run up, of course, it's going to compress margins. But as we continue to focus on the long-term levers that we've talked about for the last couple of years, and this inflationary pressures subside, we expect there to be a higher ramp, let's say next year in the following year, in our margins, as we see that work start to show up and as the material or inflationary impacts due to material costs subside.

Okay, great. I appreciate that. And then, second Kevin, this is actually for you. What is your expected interest expense for the year just given the expectation of rising rates? And are you comfortable keeping that at a floating rate at this point?

Yes, our expected full year interest expense right now is $120 million. And we're comfortable with that, if that's your question. You know, we're forecasting as we do, based on sort of the mix of fixed and floating.

Thank you.

Yep.

Our next question comes from Kathryn Thompson from Thompson Research.

Hi, thank you. Hey how is it going? Thanks for taking my questions today. Just in terms of this is just a bigger picture, understanding you are more services focused, but against that backdrop, how are you thinking about managing inventories and just basic goods as the world shifts from a just in time to more of adjusting case? And how relevant is this trend really for APi?

Kevin, do want to talk about that [indiscernible] a little on a cash basis?

Yes. So yes Kathryn, I think in the remarks I mentioned this as well, you see, you saw the impact of and I think you said it well, instead of just in time, we're trying to get in this world where availability started get you on defense a little bit. We're doing what we can to get materials in our businesses into our jobs in time to do the work that we need, and noting the growth rates that we're seeing that's become really, really important. Ultimately, in my mind, we saw that as a working capital investment here in the first quarter. Obviously, as we move through the year, we expect for that to work itself through and have less of an impact as we move through sort of Q2, Q3, and into Q4. So we think the most significant impact we're going to see really is in the first half of the year, and we expect to work a lot of that off in the back half of the year.

Okay, and what are you seeing in terms of supply chain timings from others in the construction cycle? And with your next goal of 60% of your revenues coming from service, how much of this is organic growth versus acquired?

Well, the majority, and Kathryn this is Russ, good morning. The majority of your growth in inspection and services is going to be organic. You know, you might have some small M&A activity associated with buying customer accounts, et cetera, that will be additive on to that, but essentially, you can count on most of that being organic by nature. And when you think about inspection and service, the lion's share of the work that's being done there is labor and so from a supply chain perspective, as we continue to grow them we become less and less susceptible to supply chain related issues. I mean, you have component issues from a fire alarm perspective in security, on the security side of the business, that has been seeing some challenges in the last number of months and pipes is also an item that we continue to keep a close eye on. Pipe is a big part of what we do in all aspects of our businesses. So we continue to monitor not only cost, but availability. But as we continue to grow the inspection service side of the business, we become less and less susceptible to those issues and challenges.

Okay, and what sequential trends are you seeing in terms of types of projects that are in kind of in the proposal pipeline? And then I guess importantly, who you taking market share from?

Well, I think that, you know, I think to try to address the first part of your question I think the end markets that we serve continued to be very strong and very robust. If you think about the data center space, and what companies like Facebook, Microsoft, Google, what they're doing and the investment that they're continuing to make, is really positive for us from both a installation, but more importantly, an inspection and service space, semiconductor, the Intels of the world continue to provide robust opportunities for us. And I think that that's something that we need to continue to stay focused on is being in the right end markets and the opportunities from both an inspection and service perspective and ultimately, an installation perspective will continue to be robust. What was the second half of your question Kathryn, I'm sorry?

Just really, who are you taking market share, I mean, who are the big buckets in terms of taking market share, because one of the things that's happening post COVID world is, the bigger getting bigger, but also it gets down to service. So we see this as an opportunity to take share, which appears that you are from others that are just don't have as good access to products and people? So it's really, what are the big buckets where you're seeing market share gains?

Yes, well, I mean, the industry is so fragmented. And I think that we're going to be taking share from a lot of smaller, more family owned type businesses in the regional and local communities that we serve, and that's where our scale and technical capabilities are going to be ultimately a big advantage for us and something that we continue to stay focused on. And it's like anything, you know, you are right, it's about service, and it's about your commitment to serving your customers with flexibility, safely, efficiently, and everything else associated with that. And so, I mean, this is also very much still a relationship based industry and space. I think that our inspection first in the strategy that we've employed as it relates to how we sell inspections into the marketplace allows us to create more solid, sticky relationships with our customers. So that's a driver for us. And our customers continue to consolidate and that's an advantage for us as our customers continue to consolidate and grow their businesses that's going to create opportunities for us. If we're delivering and we're executing and we're maintaining those key relationships.

Thank you, very much.

And we have time for one more question from Andrew Wittmann from Baird.

Great, excuse me, thanks for taking my questions. I guess, I wanted to ask a little bit on the integration maybe from two perspectives. The first one I guess is, I think I heard in the prepared remarks obviously the $20 million to $40 million synergy, but I also heard that there is going to be a level of reinvestment. So I was wondering what the expectation is for the net savings to EBITDA would be after the reinvestments? And may be for Kevin, if you could talk a little bit about what this year's budget is for like acquisition and integration costs? I know this quarter an adjusted reconciliation is large numbers for the acquisition expenses which make sense in the quarter where you actually closed the deal. But the integration and reorganization expense were actually fairly modest. So I was hoping to understand how that [indiscernible] I would expect the integration and reorganization expenses to maybe go up and the acquisition expenses to go down. But what's the net budget maybe for the year? So those type of items, just so we have an order of magnitude to what they'll cost this year.

Yes, I can take both those. I'll start on the latter Andrew and then you'll have to remind me. I think the first one was the $20 million to $40 million, but we'll have to come back to clarify that question. So on the acquisition, the one-time cost, yes you're right. We saw about $24 million related to just closing the deal in the quarter and then you should have seen somewhere around, you know I'll say $15 million to $20 million, I think it was close to $17 million on just ongoing costs. The majority of that cost that we saw in the quarter was related to our continued investment in carving out the Chubb business from the Carrier infrastructure. Okay, there's various things in there, but also that was largely always in there. We are still working through the full year use of that, so we're not ready to guide on it. I think you asked for a budgeted number, but we have two buckets there, one will be cost to capture the value opportunities that we're talking about and the other is cost that we’re going to continue to see for the year as we carve this business out of the Carrier platform. Okay so the costs you saw in Q1, I think you can, those will step up slightly as we move through the year, but we are still in the planning phase of all that and looking to conclude that here in the second quarter.

Yes and then the first part of the question was if you're going to $40 million of gross synergies what's a realistic expectation for the net benefit for EBITDA from cost synergies?

I'll jump in on that one and tell you that will be part of the update later in the year.

Okay, and then I guess, I was just curious with what is softening demand or what was seen as softening demand from some of the large warehouses, customers and you look at what Amazon's results were for the quarter, clearly there was a pre-billed in COVID related to home delivery services and it's not just Amazon, it's probably others as well. I guess Russ, given that this has been to my understanding a fairly large driver of your growth over the last couple of years, are you seeing any signs or changing any expectations around what the longer-term outlook might be or like at least the intermediate-term outlook over the next couple years could be on the specific end market?

Yes, so we do play in this space, but it's not a significant component of our revenue mix by any stretch of the imagination. And I think that if you go back and look I've often commented that our focus is on capturing the inspection and service work on the embers, from the Amazons of the world after the facilities are up. And some of our competitors would rather chase those around and make them a chase around the original installation work where it's just the right opportunity for us with the right customers, the right relationships then we're going to be interested and willing to participate in that. So I think that the diversity that we have Andy with our customer base not only from the individual customers, but also from an end market perspective, gives me, I'm not worried about it at all. And we've been keeping an eye on it. You know, our manufacturing business and Specialty Services does some Amazon work, but they've got -- they are, number one, they have a great backlog as we continue through 2022 and they also have great customer diversification, so that if Amazon does pull back and we do you know say miss out on one of their, so to speak, project related opportunities, it won't have any impact on our business and our results. So we will keep on it, we track it, but we're more interested in the ultimate service and inspection work than we are on the original bills.

And hey Andrew, going back to the $20 million to $40 million, I mean while we'll give you color when we do the more fall presentation in the back half of the year. The reinvestment really is one-time event, whereas the synergy savings are perpetual. So you have to look at it in that way as well.

Got it, we'll look forward to see updates later this year on that. Thanks guys for the perspective.

Yes, so thank you, Andy and nice to hear from you. So I'll wrap things up here and in closing I would be remiss if I did not take the opportunity to thank all of our APi and Chubb team members who have remained focused on not only supporting our company, but company and customers, but also the communities in which we serve. The safety, health and well-being of each of our leaders remains our number one priority. I want to thank everybody for taking the time to join the call this morning. Thank you for your continued interest in APi. We truly are excited about the opportunities that lie ahead and really look forward to updating you on our progress throughout the course of the year and as we continue to cross key milestones. So thank you and have a great day.