10-Q 1 apg-20240331.htm 10-Q apg-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________
FORM 10-Q
___________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to
Commission File Number 001-39275
____________________________________________________________
APi Group Corporation
(Exact Name of Registrant as Specified in its Charter)
____________________________________________________________
Delaware98-1510303
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1100 Old Highway 8 NW
New Brighton, Minnesota
55112
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (651) 636-4320
____________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareAPGNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
xAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 274,286,981 shares of common stock as of April 25, 2024.


TABLE OF CONTENTS
2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APi Group Corporation
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)
March 31,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents$247 $479 
Accounts receivable, net of allowances of $5 and $5 at March 31, 2024 and December 31, 2023, respectively
1,256 1,395 
Inventories148 150 
Contract assets458 436 
Prepaid expenses and other current assets123 122 
Total current assets2,232 2,582 
Property and equipment, net375 385 
Operating lease right of use assets234 233 
Goodwill2,471 2,471 
Intangible assets, net1,549 1,620 
Deferred tax assets115 113 
Pension and post-retirement assets106 111 
Other assets110 75 
Total assets$7,192 $7,590 
Liabilities, Redeemable Convertible Preferred Stock, and Shareholders’ Equity
Current liabilities:
Short-term and current portion of long-term debt$105 $5 
Accounts payable382 472 
Contingent consideration and compensation liabilities21 22 
Accrued salaries and wages241 363 
Contract liabilities542 526 
Operating and finance leases75 75 
Other accrued liabilities288 344 
Total current liabilities1,654 1,807 
Long-term debt, less current portion2,624 2,322 
Pension and post-retirement obligations48 50 
Contingent consideration and compensation liabilities17 11 
Operating and finance leases173 172 
Deferred tax liabilities236 233 
Other noncurrent liabilities139 127 
Total liabilities4,891 4,722 
Commitments and contingencies (Note 14)
5.5% Series B Redeemable Convertible Preferred Stock, $0.0001 par value, 800,000 authorized shares, 0 and 800,000 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
 797 
Shareholders’ equity:
Series A Preferred Stock, $0.0001 par value; 7,000,000 authorized shares; 4,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023
  
Common stock; $0.0001 par value, 500,000,000 authorized shares, 261,636,951 shares and 235,575,316 shares issued at March 31, 2024 and December 31, 2023, respectively (excluding 8,281,148 shares declared for stock dividend at December 31, 2023)
  
Additional paid-in capital2,814 2,572 
Retained earnings (accumulated deficit)10 (11)
Accumulated other comprehensive loss(523)(490)
Total shareholders’ equity2,301 2,071 
Total liabilities, redeemable convertible preferred stock, and shareholders’ equity$7,192 $7,590 
                
See notes to condensed consolidated financial statements.
3

APi Group Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended March 31,
20242023
Net revenues$1,601 $1,614 
Cost of revenues1,109 1,189 
Gross profit492 425 
Selling, general, and administrative expenses392 352 
Operating income100 73 
Interest expense, net34 37 
Loss on extinguishment of debt, net 3 
Investment expense (income) and other, net3 (5)
Other expense, net37 35 
Income before income taxes63 38 
Income tax provision18 12 
Net income$45 $26 
Net (loss) income attributable to common shareholders:
Stock dividend on Series B Preferred Stock$(7)$(11)
Conversion of Series B Preferred Stock(372) 
Net (loss) income attributable to common shareholders$(334)$15 
Net (loss) income per common share:
Basic$(1.34)$0.05 
Diluted(1.34)0.05 
Weighted average shares outstanding:
Basic250234
Diluted250267
See notes to condensed consolidated financial statements.
4

APi Group Corporation
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)
Three Months Ended March 31,
20242023
Net income$45 $26 
Other comprehensive income:
Fair value change - derivatives, net of tax (expense) benefit of $(5), and $3, respectively
13 (13)
Foreign currency translation adjustment(42)14 
Comprehensive income$16 $27 
See notes to condensed consolidated financial statements.
5

APi Group Corporation
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(In millions, except share amounts)

Preferred Stock Issued
and Outstanding
Common Stock Issued
and Outstanding
Additional
Paid-In
Capital
(Accumulated
Deficit) Retained Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmountShares Amount
Balance, December 31, 20234,000,000$ 235,575,316$ $2,572 $(11)$(490)$2,071 
Net income— — — 45 — 45 
Fair value change - derivatives— — — — 13 13 
Foreign currency translation adjustment— — — — (42)(42)
Gain on dedesignated derivatives amortized from AOCI into income— — — — (4)(4)
Series A Preferred Stock dividend— 7,944,104— — — — — 
Series B Preferred Stock dividend— 620,240— 7 (7)—  
Conversion of Series B Preferred Stock, net— 16,260,163— 214 (17)— 197 
Profit sharing plan contributions— 510,319— 18 — — 18 
Share-based compensation and other, net— 726,809— 3 — — 3 
Balance, March 31, 20244,000,000$ 261,636,951$ $2,814 $10 $(523)$2,301 
Preferred Stock Issued
and Outstanding
Common Stock Issued
and Outstanding
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmountShares Amount
Balance, December 31, 20224,000,000$ 233,403,912$ $2,558 $(164)$(267)$2,127 
Net income— — — 26 — 26 
Fair value change - derivatives— — — — (13)(13)
Foreign currency translation adjustment— — — — 14 14 
Series B Preferred Stock dividend— 1,082,877— — — — — 
Share repurchases— (541,316)— (12)— — (12)
Profit sharing plan contributions— 631,194— 14 — — 14 
Share-based compensation and other, net— 636,233— 9 — — 9 
Balance, March 31, 20234,000,000$ 235,212,900$ $2,569 $(138)$(266)$2,165 
See notes to condensed consolidated financial statements.
6

APi Group Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net income$45 $26 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation19 19 
Amortization50 55 
Restructuring charges, net of cash paid(8) 
Share-based compensation expense8 5 
Profit-sharing expense6 5 
Non-cash lease expense26 18 
Net periodic pension cost (benefit)4 (3)
Loss on extinguishment of debt, net 3 
Other, net(13)(5)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable128 96 
Contract assets(26)(30)
Prepaid expenses and other current assets(7)(15)
Accounts payable(86)(47)
Accrued liabilities and income taxes payable(128)(112)
Contract liabilities19 5 
Other assets and liabilities(30)(21)
Net cash provided by (used in) operating activities7 (1)
Cash flows from investing activities:
Acquisitions, net of cash acquired(23)(10)
Purchases of property and equipment(22)(21)
Proceeds from sales of property and equipment23 4 
Net cash used in investing activities(22)(27)
Cash flows from financing activities:
Net short-term debt100  
Proceeds from long-term borrowings300  
Payments on long-term borrowings(2)(202)
Repurchases of common stock (12)
Conversion of Series B Preferred Stock(600) 
Restricted shares tendered for taxes(11)(2)
Net cash used in financing activities(213)(216)
Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash(4)2 
Net decrease in cash, cash equivalents, and restricted cash(232)(242)
Cash, cash equivalents, and restricted cash, beginning of period480 607 
Cash, cash equivalents, and restricted cash, end of period$248 $365 
Supplemental cash flow disclosures:
Cash paid for interest, net of interest income$36 $27 
Cash paid for income taxes, net of refunds35 19 
Accrued consideration issued in business combinations5 1 
Shares of common stock issued to profit sharing plan18 14 
Shares of common stock issued for conversion of Series B Preferred Stock569  
See notes to condensed consolidated financial statements.
7

APi Group Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in millions, except shares and where noted otherwise)
NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business
APi Group Corporation (the “Company” or “APG”) is a global, market-leading business services provider of life safety, security and specialty services with a substantial recurring revenue base and over 500 locations worldwide.
Principles of consolidation
The accompanying interim unaudited condensed consolidated financial statements (the “Interim Statements”) include the accounts of the Company and of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These Interim Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements. The condensed consolidated balance sheets as of December 31, 2023 were derived from audited financial statements for the year then ended but do not include all of the information and footnotes required by U.S. GAAP with respect to annual financial statements. In the opinion of management, the Interim Statements include all adjustments (including normal recurring accruals) necessary for a fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for the dates and periods presented. It is recommended that these Interim Statements be read in conjunction with the Company’s audited annual consolidated financial statements and accompanying footnotes thereto for the year ended December 31, 2023. Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period.
Cash, cash equivalents, and restricted cash
The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Restricted cash is reported as other current assets in the condensed consolidated balance sheets. Restricted cash reflects collateral against certain bank guarantees.
Investments
The Company holds investments in joint ventures, the majority of which are accounted for under the equity method of accounting as the Company does not exercise control over the joint ventures. The Company exercises control over one joint venture that is consolidated into the Company's financial statements and the results for that joint venture for the three months ended March 31, 2024 were immaterial. The Company’s share of earnings from the non-consolidated joint ventures was $2 and $2 during the three months ended March 31, 2024 and 2023, respectively. The earnings are recorded within investment expense (income) and other, net in the condensed consolidated statements of operations. The investment balances were $5 and $4 as of March 31, 2024 and December 31, 2023, respectively, and are recorded within other assets in the condensed consolidated balance sheets.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
See the discussion below for information pertaining to the effects of recent accounting pronouncements as updated from the discussion in the Company’s 2023 audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed on February 28, 2024.

In March 2024, the SEC adopted final rules on the enhancement and standardization of climate-related disclosures, which requires disclosure of material climate-related risks, material Scope 1 and Scope 2 greenhouse gas emissions, and other matters. As it pertains to the financial statements, subject to certain materiality thresholds, the final rules require the financial statement footnotes to include certain disclosures regarding the amounts of expenses (or capitalized costs) incurred that relate to severe weather events and other natural conditions, as well as other disclosures regarding the material impact on financial estimates and assumptions of severe weather events and other natural conditions or disclosed targets or transition plans, and
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amounts related to carbon offsets and renewable energy credits. The disclosures will be required at the earliest in the annual financial statements for the year ended December 31, 2025. The company is currently evaluating the impact of this on its consolidated financial statements.
NOTE 3. BUSINESS COMBINATIONS
The Company regularly evaluates potential acquisitions that strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. Acquisitions are accounted for as business combinations using the acquisition method of accounting. As such, the Company makes a preliminary allocation of the purchase price to the tangible assets and identifiable intangible assets acquired and liabilities assumed. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Purchase price is allocated to acquired assets and liabilities assumed based upon their estimated fair values, with limited exceptions as permitted pursuant to U.S. GAAP, as determined based on estimates and assumptions deemed reasonable by the Company. The Company engages third-party valuation specialists to assist with preparation of critical assumptions and calculations of the fair value of acquired tangible and intangible assets in connection with significant acquisitions. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill. Goodwill is attributable to the workforce of the acquired businesses, the complementary strategic fit and resulting synergies these businesses bring to existing operations, and the opportunities in new markets expected to be achieved from the expanded platform.
2024 Acquisitions
During the three months ended March 31, 2024, the Company completed three individually immaterial acquisitions for aggregate consideration transferred of $28, made up of cash paid at closing of $23 and accrued consideration of $5. The results of operations of these acquisitions are included in the Company’s condensed consolidated statements of operations from their respective dates of acquisition and were not material.
2023 Acquisitions
During 2023, the Company completed an acquisition included within the Safety Services segment ("Acquisition A23"). The results of the A23 business are reported within the Company's Safety Services segment. Consideration for Acquisition A23 included cash paid at closing of $30, cash deposited into escrow for future deferred payments of $5, and accrued consideration of $3.
During 2023, the Company completed an acquisition included within the Safety Services segment ("Acquisition B23"). The results of the B23 business are reported within the Company's Safety Services segment. Consideration for Acquisition B23 included cash paid at closing of $27 and accrued consideration of $5.
During 2023, the Company completed five individually immaterial acquisitions for aggregate consideration transferred of $24, made up of cash paid at closing of $22 and accrued consideration of $2.
The results of operations of these acquisitions are included in the Company’s condensed consolidated statement of operations from their respective dates of acquisition and were not material.
The Company has not finalized its accounting for the acquisitions and will make appropriate adjustments to the purchase price allocation prior to completion of the measurement periods, as required. Based on preliminary estimates, the total amount of goodwill from acquisitions expected to be deductible for tax purposes is $47. See Note 6 - "Goodwill and Intangibles" for the provisional goodwill assigned to each segment.
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The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition:
Acquisition A23Acquisition B23Other 2023 acquisitions
Cash paid at closing$30 $27 $22 
Cash deposited into escrow5   
Accrued consideration3 5 2 
Total net consideration$38 $32 $24 
Cash and cash equivalents 1  
Accounts receivable6 7  
Contract assets1 2  
Other current assets  1 
Intangible assets13 11 9 
Goodwill21 15 16 
Other accrued liabilities (2) 
Contract liabilities(3)(2)(2)
Net assets acquired$38 $32 $24 

Accrued consideration
The Company’s acquisition purchase agreements typically include deferred payment provisions, often to sellers who become employees of the Company or its subsidiaries. The provisions are made up of three general types of arrangements, contingent compensation and contingent consideration (both of which are contingent on the future performance of the acquired entity) and deferred payments related to indemnities. Contingent compensation arrangements are typically contingent on the former owner’s future employment with the Company, and the related amounts are recognized over the required employment period, which is typically one to four years. Contingent consideration arrangements are not contingent on employment and are included as part of purchase consideration at the time of the initial acquisition and are paid over a one to four year period. The liability for deferred payments is recognized at the date of acquisition based on the Company’s best estimate and is typically payable over a one to three year period. Deferred payments are not contingent on any future performance or employment obligations and can be offset for working capital true-ups, and representations and warranty items.
The total contingent compensation arrangement liability was $11 and $9 as of March 31, 2024 and December 31, 2023, respectively. The maximum payout of these arrangements upon completion of the future performance periods was $15 and $15, inclusive of the $11 and $9, accrued as of March 31, 2024 and December 31, 2023, respectively. The contingent compensation liability is included in contingent consideration and compensation liabilities in the condensed consolidated balance sheets for all periods presented. The Company primarily determines the contingent compensation liability based on forecasted cumulative earnings compared to the cumulative earnings target set forth in the arrangement. Compensation expense associated with these arrangements is recognized ratably over the required employment period.
The contingent consideration obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings. For additional considerations regarding the fair value of the Company's contingent consideration liabilities, see Note 7 - "Fair Value of Financial Instruments."
The total liability for deferred payments was $21 and $17 as of March 31, 2024 and December 31, 2023, respectively, and is included in contingent consideration and compensation liabilities in the condensed consolidated balance sheets for all periods presented.
NOTE 4. RESTRUCTURING
During 2022, the Company announced its multi-year Chubb restructuring program designed to drive efficiencies and synergies and optimize operating margin. The Chubb restructuring program includes expenses related to workforce reductions, lease termination costs, and other facility rationalization costs through fiscal year 2025.
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During the three months ended March 31, 2024, the Company incurred pre-tax restructuring costs within the Safety Services segment of $1 in connection with the Chubb restructuring program. Since the Chubb Acquisition, the Company has incurred aggregate restructuring costs of $68. As of March 31, 2024, the Company had $24 in restructuring liabilities recorded in other accrued liabilities on the condensed consolidated balance sheets for this plan. In addition, the Company has incurred $4 of related costs which include lease impairment charges, asset write-downs, and consulting fees.
In total, the Company estimates that it will recognize approximately $125 of restructuring and other costs related to the Chubb restructuring program by the end of fiscal year 2025.
For the restructuring program, employee-related costs consist of termination benefits provided to employees who have been involuntarily terminated and voluntary early retirement benefits. Program related costs include costs incurred as a direct result of the restructuring program such as consulting fees and facility relocation costs.

The following table summarizes the Company's restructuring program for the three months ended March 31, 2024 and 2023:

Employee termination benefitsProgram related costsAsset write-downsTotal
December 31, 2023$32 $ $6 $38 
Charges1 4  5 
Payments(8)(4) (12)
Currency translation adjustment(1)  (1)
March 31, 2024$24 $ $6 $30 
Employee termination benefitsProgram related costsAsset write-downsTotal
December 31, 2022$22 $ $ $22 
Charges    
Payments(5)  (5)
March 31, 2023$17 $ $ $17 
NOTE 5. NET REVENUES
Contracts with customers
The Company derives net revenues primarily from contracts with a duration of less than one week to three years (with the majority of contracts with durations of less than six months), which are subject to multiple pricing options, including fixed price, unit price, time and material, or cost plus a markup. Net revenues are primarily recognized by the Company over time utilizing the cost-to-cost measure of progress. Net revenues recognized at a point in time primarily relate to distribution contracts and short-term time and material contracts. The Company also enters into fixed-price service contracts related to monitoring, maintenance, and inspection of safety systems.
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The Company disaggregates its net revenues primarily by segment, service type, and country from which revenues are invoiced, as the nature, timing, and uncertainty of cash flows are relatively consistent within each of these categories. The following tables provide disclosure of disaggregated net revenues by segment for the three months ended March 31, 2024 and 2023. Disaggregated net revenues information is as follows:
Three Months Ended March 31, 2024
Safety
Services
Specialty
Services
Consolidated
Life Safety$1,103 $ $1,103 
Heating, Ventilation, and Air Conditioning ("HVAC")111  111 
Infrastructure/Utility 205 205 
Fabrication 50 50 
Specialty Contracting 134 134 
Corporate and Eliminations— — (2)
Net revenues$1,214 $389 $1,601 
Three Months Ended March 31, 2023
Safety
Services
Specialty
Services
Consolidated
Life Safety$1,068 $ $1,068 
HVAC123  123 
Infrastructure/Utility 240 240 
Fabrication 55 55 
Specialty Contracting 135 135 
Corporate and Eliminations— — (7)
Net revenues$1,191 $430 $1,614 
Three Months Ended March 31, 2024
Safety
Services
Specialty
Services
Corporate and
Eliminations
Consolidated
United States$581 $384 $(2)$963 
France162  — 162 
Other471 5 — 476 
Net revenues$1,214 $389 $(2)$1,601 
Three Months Ended March 31, 2023
Safety
Services
Specialty
Services
Corporate and
Eliminations
Consolidated
United States$560 $417 $(7)$970 
France156  — 156 
Other475 13 — 488 
Net revenues$1,191 $430 $(7)$1,614 
For in-process contracts, the aggregate amount of transaction price allocated to the unsatisfied performance obligations at March 31, 2024 was $2,894. The Company expects to recognize revenue on approximately 86% of the remaining performance obligations over the next twelve months.
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Contract assets and liabilities
Contract assets and contract liabilities are classified as current in the condensed consolidated balance sheets as all amounts are expected to be relieved within one year. The balances of accounts receivable, net of allowances, contract assets, and contract liabilities from contracts with customers as of March 31, 2024 and December 31, 2023 are as follows:
Accounts
receivable,
net of
allowances
Contract
assets
Contract
liabilities
Balance at March 31, 2024$1,256 $458 $542 
Balance at December 31, 20231,395 436 526 
The Company did not recognize significant revenues associated with the final settlement of contract value for any projects completed in prior periods. In accordance with industry practice, accounts receivable includes retentions receivable, a portion of which may not be received within one year. At March 31, 2024 and December 31, 2023, retentions receivable were $146 and $156, respectively, while the portions that may not be received within one year were $30 and $25, respectively.
NOTE 6. GOODWILL AND INTANGIBLES
Goodwill
The following table provides disclosure of goodwill by segment as of March 31, 2024 and December 31, 2023. The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2024 are as follows:
Safety
Services
Specialty
Services
Total
Goodwill
Goodwill as of December 31, 2023$2,294 $177 $2,471 
Acquisitions21 7 28 
Foreign currency translation and other, net (1)
(28) (28)
Goodwill as of March 31, 2024$2,287 $184 $2,471 
(1) Other includes measurement period adjustments recorded during the three months ended March 31, 2024 related to acquisitions for which the measurement period ended during the three months ended March 31, 2024 (see Note 3 - "Business Combinations").
Intangibles
The Company’s identifiable intangible assets are comprised of the following as of March 31, 2024 and December 31, 2023:
March 31, 2024
Weighted Average Remaining
Useful Lives
(in Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortized intangibles:
Contractual backlog0.0$154 $(154)$ 
Customer relationships9.21,536 (553)983 
Trade names and trademarks11.9713 (147)566 
Total$2,403 $(854)$1,549 
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December 31, 2023
Weighted Average Remaining
Useful Lives
(in Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortized intangibles:
Contractual backlog0.5$155 $(154)$1 
Customer relationships9.41,552 (518)1,034 
Trade names and trademarks12.1722 (137)585 
Total$2,429 $(809)$1,620 
Amortization expense recognized on identifiable intangible assets is as follows:
Three Months Ended March 31,
20242023
Cost of revenues$ $7 
Selling, general, and administrative expenses50 48 
Total intangible asset amortization expense$50 $55 
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
U.S. GAAP defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance discusses valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:
Level 1:Observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2:Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3:Unobservable inputs that reflect the Company's own assumptions.
Recurring fair value measurements
The Company’s financial assets and liabilities (adjusted to fair value at least quarterly) are derivative instruments and contingent consideration obligations. In the condensed consolidated balance sheets, derivative instruments are primarily included in other assets and other noncurrent liabilities, and contingent consideration obligations are primarily included in contingent consideration and compensation liabilities.
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The following tables summarize the fair values and levels within the fair value hierarchy in which the measurements fall for assets and liabilities measured on a recurring basis as of March 31, 2024 and December 31, 2023:
Fair Value Measurements at March 31, 2024
Financial assets:Level 1Level 2 Level 3 Total
Derivatives designated as hedge instruments
Cash flow hedges - interest rate swaps$ $22 $ $22 
Cash flow hedges - cross currency contracts 11  11 
Cash flow hedges - foreign currency forward contracts    
Net investment hedges - cross currency contracts 22  22 
Fair value hedges - cross currency contracts 30  30 
Derivatives not designated as hedge instruments
Foreign currency forward contracts    
Total$ $85 $ $85 
Financial liabilities:
Derivatives not designated as hedge instruments
Foreign currency forward contracts    
Contingent consideration obligations  (6)(6)
Total$ $ $(6)$(6)
Fair Value Measurements at December 31, 2023
Financial assets:Level 1Level 2Level 3 Total
Derivatives designated as hedge instruments
Cash flow hedges - interest rate swaps$ $7 $ $7 
Cash flow hedges - cross currency contracts 10  10 
Net investment hedges - cross currency contracts 20  20 
Fair value hedges - cross currency contracts 17  17 
Derivatives not designated as hedge instruments
Foreign currency forward contracts    
Total$ $54 $ $54 
Financial liabilities:
Derivatives not designated as hedge instruments
Foreign currency forward contracts    
Contingent consideration obligations  (6)(6)
Total$ $ $(6)$(6)
The Company determines the fair value of its derivative instruments designated as hedge instruments using standard pricing models and market-based assumptions for all inputs such as yield curves and quoted spot and forward exchange rates. Accordingly, the Company’s derivative instruments are classified as Level 2.
Contingent consideration obligations
The value of the contingent consideration obligations is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows, and a discount rate. Depending on the
15

contractual terms of the purchase agreement, the probabilities of achieving future cash flows or earnings generally represent the only significant unobservable inputs. The contingent consideration obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.
The table below presents a reconciliation of the fair value of the Company’s contingent consideration obligations that use unobservable inputs (Level 3), as well as other information about the contingent consideration obligations:
Three Months Ended
March 31, 2024
Balance as of December 31, 2023$6 
Issuances 
Settlements 
Balance as of March 31, 2024$6 
Number of open contingent consideration arrangements at the end of the period2 
Maximum potential payout at the end of the period$6 
At March 31, 2024, the remaining open contingent consideration arrangements are set to expire at various dates through 2025. Level 3 unobservable inputs were used to calculate the fair value adjustments shown in the table above. The fair value adjustments and the related unobservable inputs were not considered significant for the three months ended March 31, 2024.
Fair value estimates
The following table presents the carrying amount and fair value of the Company’s variable and non-variable interest rate debt (instruments defined in Note 10 – “Debt”), including current portions and excluding unamortized debt issuance costs. Fair value is estimated by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The interest rates of the variable interest rate long-term debt instruments are generally reset monthly. During the three months ended March 31, 2024, the Company upsized the 2021 Term Loan by an aggregate principal amount equal to $300.

March 31, 2024December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
2019 Term Loan$330 $330 $330 $331 
2021 Term Loan1,707 1,711 1,407 1,407 
4.125% Senior Notes
337 302 337 305 
4.750% Senior Notes
277 254 277 257 
NOTE 8. DERIVATIVES
The Company uses foreign currency forward contracts, cross-currency swaps, and interest rate swap agreements to manage risks associated with foreign currency exchange rates, net investments in foreign operations, and interest rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the condensed consolidated balance sheets at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge under ASC 815, Derivatives and Hedging. Cash flows from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the cash flows from items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.
The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts, cross currency swaps, and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major global banks and financial institutions as counterparties. The Company does not enter into derivative transactions for trading purposes, and is not party to any derivatives that require collateral to be posted prior to settlement.
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Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements do not call for collateral and no cash collateral had been received or pledged related to the underlying derivatives as of March 31, 2024.
The following table presents the fair value of derivative instruments:
March 31, 2024December 31, 2023
Outstanding Gross
Notional Amount
Other AssetsOther
Noncurrent liabilities
Outstanding Gross
Notional Amount
Other AssetsOther
Noncurrent liabilities
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swaps$1,120 $22 $ $1,120 $7 $ 
Cross currency contracts120 11  120 10  
Foreign currency forward contracts8      
Fair value hedges:
Cross currency contracts721 30  721 17  
Net investment hedges:
Cross currency contracts230 22  230 20  
Total derivatives designated as hedging instruments2,199 85  2,191 54  
Derivatives not designated as hedging instruments:
Foreign currency forward contracts121   73  1 
Total derivatives not designated as hedging instruments121   73  1 
Total derivatives$2,320 $85 $ $2,264 $54 $1 
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The following table presents the after tax effect of derivatives on the condensed consolidated statements of operations:
Amount of income (expense) recognized in income
DerivativesLocation of income (expense) recognized in the condensed consolidated statements of operationsThree Months Ended March 31,
20242023
Cash flow hedging relationships:
Interest rate swapsInterest expense, net$9 $2 
Cross currency contractsInvestment expense (income) and other, net2 (1)
Cross currency contractsInterest expense, net1 1 
Foreign currency forward contractsInvestment expense (income) and other, net  
Fair value hedging relationships:
Cross currency contractsInvestment expense (income) and other, net12 (8)
Cross currency contractsInterest expense, net1 1 
Net investment hedging relationships:
Cross currency contractsInterest expense, net1 1 
Not designated as hedging instruments:
Foreign currency forward contractsInvestment expense (income) and other, net  
Currency Effects
The income (expense) from derivatives designed to offset foreign currency exposure and recorded in investment expense (income) and other, net were offset by foreign currency transaction gains and losses resulting in a net (loss) gain of $(1) and $0 for the three months ended March 31, 2024 and 2023, respectively.
The following table presents the effect of cash flow and fair value hedge accounting on accumulated other comprehensive income (loss) ("AOCI"):
Amount of gain (loss)
recognized in other
comprehensive income
Location of gain (loss) reclassified from
AOCI into income
Amount of gain (loss)
reclassified from
AOCI into income
Three Months Ended March 31,Three Months Ended March 31,
Derivatives2024202320242023
Cash flow hedging relationships:
Interest rate swaps$11 $(13)Interest expense, net$4 $(4)
Cross currency contracts(1)1 Investment expense (income) and other, net2 1 
Forward currency forward contracts  Investment expense (income) and other, net  
Fair value hedging relationships:
Cross currency contracts  Investment expense (income) and other, net13 7 
Net investment hedging relationships:
Cross currency contracts2 (1)Interest expense, net(1)(3)
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Cash flow hedges
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.
Interest rate swaps
The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company uses interest rate swap contracts to separate interest rate risk management from the debt funding decision. The Company elected a method that does not require continuous evaluation of hedge effectiveness.
During 2022, the Company terminated the previously outstanding $720 notional amount interest rate swap with a maturity date in October 2024 ("2024 Interest Rate Swap"). The present value as of the date of termination of the 2024 Interest Rate Swap is recorded in AOCI on the condensed consolidated balance sheets. The fair value previously recognized in AOCI related to interest rate movements of the 2024 Interest Rate Swap is being amortized to interest expense on a straight-line basis through October 2024. As of March 31, 2024, approximately $10 of unrealized pre-tax gains remained in AOCI.
The Company has an aggregate $720 notional amount interest rate swap ("2026 Interest Rate Swap") and aggregate $400 notional swaps ("2028 Interest Rate Swap"), each amended on May 19, 2023 in connection with the transition to the Secured Overnight Financing Rate ("SOFR"). Refer to Note 10 - "Debt" for additional information. The 2026 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.59% over the term of the agreement, which matures in October 2026. The 2028 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.41% over the term of the agreements, which mature in January 2028.
As of March 31, 2024, the Company had $1,120 notional amount outstanding in the 2028 Interest Rate Swap and the 2026 Interest Rate Swap. The Company has designated these swaps as cash flow hedges of the interest rate risk attributable to forecasted variable interest (SOFR) payments for its SOFR based term loans of $2,037. As of March 31, 2024, the weighted average fixed rate of interest on these swaps was approximately 3.52%. Variations in the assets and liability balances are primarily driven by changes in the applicable forward yield curves related to SOFR.
Cross-currency swaps
The Company enters into cross-currency exchange contracts utilized to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to hedge exposures of certain intercompany loans subject to changes in foreign currency exchange rates. The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.
During 2021, the Company entered into two cross-currency swaps designated as cash flow hedges with gross notional U.S. dollar equivalent amounts of $26 and $94 with maturity dates of September 2027 and 2030, respectively.
Foreign currency forward contracts
The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany charges and other payments. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in other comprehensive income until the hedged items affect earnings, at which time the hedge gain or loss is reclassified into current earnings.
The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.
Fair value hedges
The Company has certain intercompany loans subject to changes in foreign currency exchange rates. In 2022, to hedge these exposures, the Company entered into three cross-currency swaps each with maturity dates of January 2027 and are designated
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as fair value hedges with gross notional U.S. dollar equivalents of $271, $241, and $209 in GBP, CAD, and EUR, respectively. The Company measures the effectiveness of fair value hedges on a spot-to-spot basis. Accordingly, the spot-to-spot change in the derivative fair values are recorded in the condensed consolidated statements of operations and perfectly offset the spot-to-spot change in the underlying intercompany loans, and as such, these hedges are deemed highly effective. The excluded component of the fair values of these derivatives is reported in AOCI within shareholders’ equity in the condensed consolidated balance sheets. Any cash flows associated with these instruments are included in operating activities in the condensed consolidated statements of cash flows.
Net investment hedges
The Company has net investments in foreign subsidiaries subject to changes in foreign currency exchange rates. During 2021, the Company entered into a $230 notional foreign currency swap designated as a net investment hedge for a portion of the Company’s net investments in Euro-denominated subsidiaries. Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and are included in AOCI in the condensed consolidated balance sheets.
During 2021, the Company amended the critical terms of the foreign currency swap by extending the maturity date to July 2029 and modifying the U.S. dollar and Euro coupons. The amended swap was redesignated as a net investment hedge and is recorded at fair value with changes recorded in AOCI. The initial net investment hedge was dedesignated. The amended net investment hedge reduces the Company’s interest expense by approximately $3 annually and reduces its overall effective interest rate by approximately 24 basis points.
The fair value previously recognized in AOCI related to interest rate movements of the dedesignated swap is being amortized to interest expense on a straight-line basis through the third quarter of 2029.
Foreign currency contracts
The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on confirmed foreign currency transactions, including inventory purchases and intercompany charges and other payments. These forward contracts are undesignated for hedge accounting purposes. The changes in fair value of these contracts are recorded in investment expense (income) and other, net.
NOTE 9. PROPERTY AND EQUIPMENT, NET
The components of property and equipment as of March 31, 2024 and December 31, 2023 are as follows:
Estimated
Useful Lives
(In Years)
March 31,
2024
December 31,
2023
LandN/A$21 $27 
Building39101 105 
Machinery, equipment, and office equipment
1-20
359 353 
Autos and trucks
4-10
112 112 
Leasehold improvements
1-15
33 35 
Total cost626 632 
Accumulated depreciation(251)(247)
Property and equipment, net$375 $385 
Depreciation expense related to property and equipment, including finance leases, was $19 and $19 during the three months ended March 31, 2024 and 2023, respectively. Depreciation expense is included within cost of revenues and selling, general, and administrative expenses in the condensed consolidated statements of operations.
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NOTE 10. DEBT
Debt obligations consist of the following:
Maturity DateMarch 31,
2024
December 31,
2023
Term loan facility
2019 Term LoanOctober 1, 2026$330 $330 
2021 Term LoanJanuary 3, 20291,707 1,407 
Revolving Credit FacilityOctober 1, 2026100  
Senior notes
4.125% Senior Notes
July 15, 2029337 337 
4.750% Senior Notes
October 15, 2029277 277 
Other obligations5 5 
Total debt obligations2,756 2,356 
Less: unamortized deferred financing costs(27)(29)
Total debt, net of deferred financing costs2,729 2,327 
Less: short-term and current portion of long-term debt(105)(5)
Long-term debt, less current portion$2,624 $2,322 
Term loan facility
During the three months ended March 31, 2024, the Company completed its Fifth Amendment to its credit agreement, upsizing its 2021 Term Loan by an aggregate principal amount equal to $300. The loan proceeds were directed as consideration for a portion of the purchase price for the Series B Preferred Stock Conversion. For additional information regarding the Series B Preferred Stock Conversion, see Note 15 - "Shareholders' Equity and Redeemable Convertible Preferred Stock."
As of March 31, 2024, the Company had $330 of principal outstanding under the $1,200 term loan (the "2019 Term Loan") with a maturity date of October 1, 2026. The interest rate applicable to the 2019 Term Loan is, at the Company's option, either (a) a base rate plus an applicable margin equal to 1.25% or (b) Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a credit spread adjustment ("CSA").
As of March 31, 2024, the Company had $1,707 of principal outstanding under the incremental term loan used to finance the Chubb acquisition (the "2021 Term Loan") with a maturity date of January 3, 2029. The interest rate applicable to the 2021 Term Loan is, at the Company's option, either (1) a base rate plus an applicable margin equal to 1.50% or (2) Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.50% plus a CSA.
As of March 31, 2024, the Company had $100 outstanding under the $500 five-year senior secured revolving credit facility (the “Revolving Credit Facility”). The interest rate applicable to the Revolving Credit Facility is, at the Company’s option, either (1) a base rate plus an applicable margin equal to 1.25%, or (2) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a CSA.
Swap activity
As of March 31, 2024, the Company had the 2026 Interest Rate Swap with $720 of notional value, exchanging one-month SOFR for a fixed rate of 3.59% per annum, and the 2028 Interest Rate Swap with aggregate $400 notional value, exchanging one-month SOFR for a rate of 3.41%. Accordingly, the Company's fixed interest rate per annum on the first swapped $400 notional value of the term loans is 3.41% and the second swapped $720 notional value of the term loans is 3.59% through their maturity. The remaining $917 of the term loans balance will bear interest based on one month SOFR plus CSA plus 225 basis points or SOFR plus CSA plus 250 basis points, but the rate will fluctuate as SOFR fluctuates. Refer to Note 8 - "Derivatives" for additional information.
As of March 31, 2024 and December 31, 2023, the Company had $100 and $0 outstanding under the Revolving Credit Facility, respectively, and $396 and $495 was available at March 31, 2024 and December 31, 2023, respectively, after giving effect to $4 and $5 of outstanding letters of credit, respectively.
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As of March 31, 2024 and December 31, 2023, the Company was in compliance with all applicable debt covenants.
Senior notes
4.125% Senior Notes
During 2021, the Company completed a private offering of $350 aggregate principal amount of 4.125% Senior Notes (the “4.125% Senior Notes”) issued under an indenture dated June 22, 2021. The 4.125% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company’s subsidiaries. The balance as of March 31, 2024 was $337.
4.750% Senior Notes
During 2021, the Company completed a private offering of $300 aggregate principal amount of 4.750% Senior Notes due 2029 (the "4.750% Senior Notes") issued under an indenture dated October 21, 2021, as supplemented by a supplemental indenture dated January 3, 2022. The 4.750% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company's subsidiaries. The balance as of March 31, 2024 was $277.
The Company was in compliance with all covenants contained in the indentures for the 4.125% Senior Notes and 4.750% Senior Notes as of March 31, 2024, and December 31, 2023.
Other obligations
As of March 31, 2024 and December 31, 2023, the Company had $5 and $5 in notes outstanding, respectively, for working capital purposes and the acquisition of equipment and vehicles.
NOTE 11. INCOME TAXES
The Company’s quarterly income tax provision is measured using an estimate of its consolidated annual effective tax rate, adjusted in the current period for discrete income tax items, within the periods presented. The comparison of the Company’s income tax provision between periods may be impacted by the level and mix of earnings and losses by tax jurisdiction, foreign income tax rate differentials, and discrete items. The Company’s effective tax rate was 28.0% and 30.6% for the three months ended March 31, 2024 and 2023, respectively. The difference between the effective tax rate and the statutory U.S. federal income tax rate of 21.0% for the three months ended March 31, 2024 and 2023 is due to nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, and state taxes.
As of March 31, 2024, the Company’s deferred tax assets included a valuation allowance of $110 primarily related to certain net operating loss, capital loss, and tax credit carryforwards of the Company’s foreign subsidiaries. The factors used to assess the likelihood of realization were the past performance of the related entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.
As of March 31, 2024, the Company had gross federal, state, and foreign net operating loss carryforwards of approximately $0, $19, and $112, respectively. The state net operating losses have carryforward periods of five to twenty years and begin to expire in 2027. The foreign net operating losses have carryback periods of three years, carryforward periods of twenty years, or are indefinite, and begin to expire in 2036.
The Company’s liability for unrecognized tax benefits is recorded within other noncurrent liabilities in the condensed consolidated balance sheets and recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes in the condensed consolidated statements of operations. As of March 31, 2024, and December 31, 2023, the total gross unrecognized tax benefits were $8 and $7, respectively. The Company had accrued gross interest and penalties as of each of March 31, 2024 and December 31, 2023 of $3 and $2. During the three months ended March 31, 2024 and 2023, the Company did not recognize net interest expense.
If all of the Company’s unrecognized tax benefits as of March 31, 2024, were recognized, $10 would impact the Company’s effective tax rate. The Company does not expect any unrecognized tax benefits to expire in the next twelve months.
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The Company files income tax returns in the U.S. federal jurisdiction, and various state, local, and foreign jurisdictions. As of March 31, 2024, with few exceptions, neither the Company nor its subsidiaries are subject to examination prior to tax year 2014. There are various other audits in state and foreign jurisdictions, including an ongoing IRS exam related to the 2019 final S Corporation return. No adjustments have been proposed and the Company does not expect the results of the audits to have a material impact on the Interim Statements.
NOTE 12. EMPLOYEE BENEFIT PLANS
Defined benefit pension plans
The Company sponsors both funded and unfunded foreign defined benefit pension plans that cover a portion of the Company's employees, and the largest plans are closed to new participants and frozen for accrual of future service.
The components of the net periodic pension cost (benefit) for the defined benefit pension plans are as follows:
Three Months Ended March 31,
20242023
Service cost$1 $1 
Interest cost15 15 
Expected return on plan assets(10)(18)
Net periodic pension cost (benefit)$6 $(2)
Multiemployer pension plans
Certain subsidiaries of the Company contribute amounts to multiemployer pension plans and other multiemployer benefit plans and trusts, which are recorded as a component of employee wages and salaries within cost of revenues on the condensed consolidated statements of operations. Contributions are generally based on fixed amounts per hour per employee for employees covered under these plans. Multiemployer plan contribution rates are determined annually and assessed on a pay-as-you-go basis based on union employee payrolls. Union payrolls cannot be determined for future periods because the number of union employees employed at a given time and the plans in which they participate vary depending upon the location, the number of ongoing projects, and the need for union resources in connection with those projects. Total consolidated contributions to multiemployer plans were $19 and $23 during the three months ended March 31, 2024 and 2023, respectively.
Profit sharing plans
The Company has a trustee-administered profit-sharing retirement plan covering substantially all of the Company's employees in the U.S. not covered by collective bargaining agreements and a profit sharing plan for employees in Canada (collectively, “Profit Sharing Plans”). The Profit Sharing Plans provide for annual discretionary contributions in amounts based on a performance grid as determined by the Company’s directors, which may be settled in shares of the Company's common stock or in cash. In connection with these plans, the Company recognized $6 and $5 in expense for shares distributed to eligible employees during the three months ended March 31, 2024 and 2023, respectively.
Employee stock purchase plan
Most of the Company’s employees in the U.S. and Canada, including named executive officers, are eligible to participate in the Company’s Employee Stock Purchase Plan (the “ESPP”). Sales of shares of the Company’s common stock under the ESPP are generally made pursuant to offerings that are intended to satisfy the requirements of Section 423 of the Internal Revenue Code. The ESPP permits employees of the Company to purchase common stock at a price equal to 85% of the lesser of (i) the market value of the common stock on the first day of the offering period, or (ii) the market value of the common stock on the purchase date, whichever is lower. Participants are subject to eligibility requirements and may not purchase more than 500 shares in any offering period or more than ten thousand dollars of common stock in a year under the ESPP. The Company recognized $1 and $2 of expense during the three months ended March 31, 2024 and 2023, respectively.
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NOTE 13. RELATED-PARTY TRANSACTIONS
The Company incurred advisory fees of $1 during both the three months ended March 31, 2024 and 2023, in each case payable to Mariposa Capital, LLC, an entity owned by a co-chair of the Company’s Board of Directors. In addition, dividends for Series A Preferred Stock were declared as of December 31, 2023 and settled in 7,944,104 shares issued during January 2024. The shares were issued to Mariposa Acquisition IV, LLC, a related entity that is controlled by a co-chair of the Company's Board of Directors.
During 2022, the Company issued and sold 800,000 shares of the Company’s 5.5% Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) for an aggregate purchase price of $800. Of the 800,000 shares issued and sold, 200,000 shares were sold to Viking Global Equities Master Ltd. and Viking Global Equities II LP ("Viking Purchasers"), which is the aggregate owner of more than 5% of the Company's outstanding stock, for an aggregate purchase price of $200. During the three months ended March 31, 2024, the Company issued dividends of 155,059 shares of common stock on the Series B Preferred Stock held by Viking Purchasers, with 70,798 shares declared in February 2024 and 84,261 shares declared in December 2023. The Company declared and issued dividends of 124,573 shares of common stock on the Series B Preferred Stock held by the Viking Purchasers during the three months ended March 31, 2023.
During the three months ended March 31, 2024, the Company executed an agreement with the Viking Purchasers which allowed the exercise of their right to convert all of their Series B Preferred Stock into common stock. For additional information regarding the Series B Preferred Stock Conversion, see Note 15 - "Shareholders' Equity and Redeemable Convertible Preferred Stock."
From time to time, the Company also enters other immaterial related-party transactions.
NOTE 14. COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation matters and is subject to claims from time to time from customers and various government entities. While it is not feasible to determine the outcome of any of these uncertainties, it is the opinion of management that their outcomes will not have a material adverse effect on the financial position, results of operations, or cash flows of the Company.
Environmental obligations
The Company's operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to, investigatory, remediation, operating and maintenance costs, and performance guarantees, and periodically reassess these amounts. Management believes that the likelihood of incurring losses materially in excess of the amounts accrued is remote.
The outstanding liability for these obligations was $16 and $17, and was included in other noncurrent liabilities on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.
NOTE 15. SHAREHOLDERS’ EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK
Shareholders' equity
Series A Preferred Stock
The Company had 4,000,000