Tyco International's CEO Presents at DbAccess Global Industrials and Basic Materials Conference (Transcript)

| About: Tyco International (TYC)

TYCO International Ltd. (NYSE:TYC)

DbAccess Global Industrials and Basic Materials Conference

June 14, 2013 10:20 am ET

Executives

Antonella Franzen

George R. Oliver - Chief Executive Officer and Director

Unknown Analyst

It gives me great pleasure to introduce the management of Tyco. George Oliver has been with the firm for 7 years prior obviously to the spin-off. Now he's the present CEO of the current entity; and Antonella Franzen, who is a longtime IR and

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Antonella Franzen

3 years.

Unknown Analyst

3 years. So with that, let me introduce George.

George R. Oliver

All right. Thanks, John [ph], for the introduction, and good morning, everyone. It's great to be here with you today. What I thought I'd do is talk a little bit about my background and then lay out the strategy that we put together for the new Tyco. I'll give you an update on the progress that we're making in executing that strategy. Then I look forward to any questions that you might have.

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7 years. Prior to that, 23 years within GE, having led a number of the large operations as well as businesses within GE over that period. And then in the 7 years I've been at Tyco, I came in to run -- it was the Tyco Safety Products portfolio made up of the Fire & Security product businesses.

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Businesses, strong brands. We're underinvested and so the strategy that we outlined at that time was to accelerate the investment in R&D, being able to accelerate our new product introductions, as well as we restructured the footprint of those businesses and drove Lean/Six Sigma throughout the process.

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7 years we've been able to continue to accelerate growth. The last couple of years, we've actually achieved double-digit growth and very high teens margins on returns. Back in 2009, I started to take on the responsibility for the Tyco Fire Protection side of businesses, and if you

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Flow Control, so I maintained the responsibility that I had for the Fire Product businesses but then began to assume the Installation and Service, the Fire and Installation Service businesses in EMEA as well as APAC.

And if you think back 3 years ago, that's when we really started project selectivity as we thought about standardizing our processes across the installation and service, right from how we design projects to how we fulfill our service to our customer. And with that, we're really focused on end markets

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that really positioned us to be able to accelerate our service growth and where we could execute on those projects profitably.

And so we made some significant turnaround with the fundamentals within those businesses. In EMEA, we went from single-digit returns to today having fundamentals that are very similar to what we achieved across all of the new Tyco, as well as we made continued progress within the AsiaPac region.

In 2010, it was the last piece that we put together to form the Tyco Fire Protection business, which was SimplexGrinnell, which is our $2 billion Fire Installation and Service business in North America. At that time it was operating with high single-digit returns, and deployed the same strategy around project selectivity. And although we've been in a low-growth mode, the business has been able to outperform the market from a growth standpoint, and the margin rates that we've been able to achieve in SimplexGrinnell today are almost 400 basis points better.

So when you think about the separation of Tyco, it really is as we planned the separation, bringing together the Commercial Security business, which was part of ADT, coming together with what I had responsibility within Fire Protection. And the way you want to think about it, it is a merger of 2 very large businesses that were being independently run within the old Tyco that now have come together to form the new Tyco. So it's a $5.6 billion Commercial Security business, which was part of ADT, combined with the $4.8 billion Fire Protection business. And think about it now as being able to put together an operating company structure and being able to develop the systems behind that structure that enables us to be able to leverage the breadth and depth, to be able to create speed in how we support our customers and drive growth and be able to drive efficiency across the combination of infrastructure that came together with those 2 segments.

Now what we're excited about is the $100 billion market that we compete in. And so when you think about that market, it's very fragmented although very attractive with some significant growth potential going forward. And you break down that market into about a $30 billion Product segment, a $30 billion Installation segment and a $40 billion Services segment. And today, we have -- we're an industry leader across all 3 of the segments, and I think it does uniquely position us to be able to leverage that combined strength to really lead the industry going forward, as we are the world's largest pure-play fire and security company today with revenues short of $11 billion.

Now as we think about the growth, the market itself presents a lot of growth opportunity for us now with the combination of capabilities and in spite of the macroeconomic environment. But we would be positioned -- as the commercial construction recovery begins to rebound, we'll be positioned to be able to also capitalize on that recovery.

Now the strategy that we outlined back in September for the new Tyco was really focused on 3 priorities. The first priority is to accelerate organic growth, and that really ties to being able to accelerate service growth, being able to continue to invest in technology and new products to continue to drive strong product growth, as well as making sure that we've got the right geographical footprint to capitalize on the higher growth markets.

The second priority was to complement that organic growth with strategic bolt-on acquisitions that are focused on technology, strengthening our technology, expanding our product portfolio, expanding our service capabilities, as well as our geographic

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Now when you think about the business segments that we operate in today, let me start with our Global Products. Global Products represent about 20% of our revenues, and this is made up of 3 key platforms. Our Fire Protection products platform really has 3 key technologies: Fire suppression, both chemical and water suppression, as well as the electronic fire detection. And we're a leader in all 3 of those spaces. The second is security products, which is really made up of access technology, intrusion and video technologies. Again, a leader across all 3 of those technologies. And the third is Life Safety, which is made up of our self-contained breathing apparatus, gas detection, as well as thermal imaging. All of the businesses are leaders in the space that they're in, very strong brands with a very strong global footprint.

Our Installation & Service business makes up about 80% of our revenue. And if you look at that revenue, about 45% is Installation and 55% is Service. And what's important is that about 2/3 of the service revenue is contractually recurring revenue, very attractive. Again, there's no one positioned with the scale that we have, the position that we have globally to be able to be able to capitalize on both the Installation & Service market.

Now we have a very strong balance sheet. We deliver very solid cash flow, and we have a very disciplined capital allocation that's balanced between supporting our growth, as well as returning cash to our shareholders. Our priorities for the capital, as we've discussed back at our Investor Day was focusing on supporting the organic growth, as well as complementing the organic growth with strategic bolt-on acquisitions that we have been very successful with over the last couple of years, generating some very nice returns. And then when you think about the plan that we've laid out, the 3 priorities, accelerating organic growth, strategic bolt-on acquisitions, and then the third is the driving operational and productivity performance. And that's where we're going to be able to fund the investments that we're making in organic growth and being able to continue to expand our margin by about 80 to 100 basis points a year.

And with the plan, when the plan that we have there is really focused on 2 big buckets of cost, which we've identified as being the sourcing, the $4 billion of sourcing, where we procure materials globally to be able to support both our Products and Installation & Service business, as well as the second is streamlining our Installation & Service footprint globally with the merger that we have a between Commercial Security and Fire Protection. So the combination of the organic growth, the strategic bolt-on, as well as driving very strong cost out and productivity will be able to support revenue increases of 4% to 5% CAGR over the 3-year plan that we outlined and being able to deliver EPS growth of 15% CAGR over that same 3 years.

As I've said, I'm very pleased with the progress we've made over the first 6 months within the new company, being able to streamline the company into an operating company structure, developing the systems to be able to support the execution of the growth, as well as being able to execute on the cost out and productivity. A significant amount of the value-creating initiatives is well within our control that we know how to execute on, and I'd say that with the systems and the leadership that we put into place are going to be well positioned to be able to deliver on the plan that we've outlined.

So on that, what I'd like to do is open it up for any questions that you might have.

Question-and-Answer Session

Unknown Analyst

Yes, George, let me pick it off here. So obviously, cost out and margin expansion, big pieces of the story. $4 billion of sourcing. Can you provide a little bit more color around what exactly are those buckets? I'm assuming a lot of it is sort of commodity type of products. And kind of the obvious question I realize this wasn't under your watch, but why wasn't Tyco doing this before? I thought Tyco well, we all knew Tyco had one sourcing, one Tyco type of strategies. Is it -- are you continuing what the company did or is this all sort of brand-new, and why is there a big opportunity?

George R. Oliver

So when you think about the progress that's been made in the last 3 years in these set of businesses that were really being operated independently, we achieved on an annual basis about 80 to 100-basis-point improvement. It was a lot of work that was being done within the segments in improving the operations being able to deliver very strong margin improvement. And so now -- and so we were making a lot of improvements. Now we have the same opportunity with the merger of these 2 very large independently run segments to be able to deliver similar type improvements over the next 3 years. And so although there are a lot of things that were being done, we now are positioned to be able to accelerate that to be able to generate similar-typed savings over the next 3 years.

Unknown Analyst

So there are obviously cost synergies -- I understand that -- between Fire & Security, but historically Fire & Security just, I mean, the market segments and channels are different. So are there revenue synergies in any context that you'd think could be emerging because of the combination of the 2 entities?

George R. Oliver

Yes; when we look at the revenue synergies, when you think about the customer base that we serve globally, there is an overlap with the customer base that we have within Commercial Security, as well as what we have in Fire Protection. And although there are some uniqueness, it's the same customer base that we support. So what we've done is making sure that from a technology standpoint, we're working to really lead the industry in the integration of our technologies that position us to be able to accelerate the value that we deliver for our customers while we're positioned to grow. And then the other is making sure that from a structure standpoint, as we create our operating company structure, that we align the Commercial Security capabilities that we have in the field with what we had within Fire Protection. And that as we're serving that customer, we're leveraging the combined strengths. And that's what we've done short-term as we think about Branch in a Box. A big element of Branch in a Box is getting the regional structure aligned with the regional leadership and then the resources aligned within that regional leadership to be able to support the customers and be able to accelerate growth. So we're making a lot of progress, both on the technology front, as well as the integration of the Commercial Security and Fire Protection capability to be able to do just that, and that's going to be a contributor to our growth going forward.

Unknown Analyst

And are there incremental costs associated with -- I've realized there's cost out. Is there incremental cost associated with the 2 companies combined? I realized you've given the 80 to 100-basis-point targets, but how should we think about it?

George R. Oliver

The way you want to think about our cost structure. So we have a $9.5 billion -- $9.3 billion cost structure within the new company, a combination of the cost structure that was part of the $5.6 billion Commercial Security segment combined with the cost structure that we had within the $4.8 billion Fire Protection segment. When you look at that, that's $4 billion of that cost that we buy. And so now being able to take that buy that was being executed with multiple sourcing organizations around the globe. What we've done is put that all together into one buy with one big strategic sourcing leader, have combined the resources and now we're strategizing that buy by category, which allows us to be able to leverage the scale and be much more strategic in being able to deliver savings. That's a big part of it. The other part of it is the Branch in a Box. We have over 1,000 real estate locations within our Installation & Service business, which is a combination of the footprint that we have combined from Commercial Security with Fire Protection. When you think about that, our real estate pretty much overlaps with those 2 structures. And so the ability to be able to synergize the square footage required regionally to be able to support the existing customer base, as well as be positioned to grow while we're streamlining the cost structure that comes together with that combined structure enables us to be able to free up a lot of resource which not only supports the reinvestment in growth but also supports the expansion of margin.

Unknown Analyst

If I think of the way, say, Honeywell streamlined, it has, I mean, it's taken a number of years and they got initial benefits, but they're still getting benefits. In some respects, the benefits move faster as you get into it. It sounds like this is a multiyear opportunity for Tyco. Is that true or are there some obvious low-hanging fruit that you can pick off and then you sort of are in a pausing phase but I would think that rationalizing 1,000 real estate locations, that's going to take probably several years. Is that a fair assessment?

George R. Oliver

So when you look at all of our cost out and productivity, a lot being driven by our sourcing initiatives, as well as Branch in a Box, we deliver -- we will deliver over $150 million of cost out on an annualized basis, and that $150 million then supports that offset the inflation that we see with our labor escalation, supports the $50 million of increased investments that we make into our organic growth and that's through R&D, as well as expanding our sales and marketing efforts to support the growth and then deliver about $50 million of

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Across to 15% EPS CAGR over the 3-year period.

Unknown Analyst

No, it makes sense. Can we talk about installation? So legacy Tyco had always positioned its installation business as a source of one, differentiation and second, competitive advantage. One, you concur with that, and perhaps why? And secondarily, any time you have one of those kinds of business structures, that's not a manufacturing business so it's somewhat tough to get some scale leverage. Can you talk a bit about how we can drive efficiencies in the installed base business and just the strategy going forward?

George R. Oliver

Sure. I mean, with projects selectivity, I mean, it starts with understanding what activity is happening in each of the markets that we compete in, and understanding the end markets that play to our strengths, making sure that we're now applying the skill sets that we have on designing systems, being able to inspect systems that then lead to being able to execute projects profitably, and in creating a larger installed base. So that is the fundamental strategy of the installation space. Now what we've done with the scale that we generate across these sets of businesses, making sure we're creating design centers of excellences, leveraging those skill sets, leveraging the best practices so that as we execute projects, we execute them better than the competition, being able to deliver more profitability not only on the installation, but again, positioning to achieve the service. And so as we think about the Installation segment, it's 35% of the total Tyco revenues. And when you think about the decline of the nonresidential estate, that has declined about 50% since the downturn and without a significant amount of recovery since. Our installation business dropped about 15% to 20%. And so as we position the business going forward, we're going to have much better capabilities as we have put these strengths together to be able to capitalize on the recovery within the nonresidential market going forward.

Unknown Analyst

And, George, these projects last sort of how long? How do you manage cost over the course of the project that perhaps don't get away from you versus the initial bid? Like maybe you could flesh out a little bit more of the project selectivity and how that actually works and why it's going to lead to margin upside?

George R. Oliver

Well, when we think about project selectivity, we do projects that are small projects to having multimillion, multiyear-type projects that we support. And so it's always making sure that we're leveraging the depth and the expertise that's required to be able to execute on that full spectrum of projects. And so as we think about going forward positioning to do that in a much more consistent manner, with the discipline that we've instilled now with the project selectivity strategy, we're going to be much better position to be able to leverage the efficiency that we have within that structure, which is going to be a big contributor to not only driving growth and getting the right projects that then lead to the service revenue but being able to drive margin improvement because of leveraging the scale.

Unknown Analyst

But For instance, software tools that you've been rolling out or -- I mean, how at the end of the day do you execute on project selectivity? That's what's not clear.

George R. Oliver

All of this is being supported. We're putting together a business system behind the operating company structure that we've set up. And so as we think about our business processes right from how we design new products and new services, how we install projects to how we fulfill those projects, how we provide customer support and service, we've now defined all of our key business processes, driving standardization, understanding the metrics and then doing that much more consistently across the enterprise. And so I think as we position to do that going forward, we're going to be able to drive a lot more efficiency and then that in itself is going to be able to enable us to be able to accelerate growth.

Unknown Analyst

It makes sense. Is there channel conflict with your, in some manner, with perhaps it still provides net benefit, but is there some form of channel conflict you have the work around by having this fairly large installation component of your business?

George R. Oliver

When you think about our product business, so our global product platform, the global businesses. We have distribution not only internally supporting our Installation business but also externally, and the strategy to make sure that we're positioned to be able to capitalize on a full market, getting the maximum return in the position globally no matter what market we compete in. And so obviously we work to minimize that conflict and being able to leverage our technology to enable the installations and the integrated solutions that we provide to our customer base through our direct channel, which position us, give us an advantage and positioning us to be able to drive the recurring service revenue that is tied to those installed projects.

Unknown Analyst

And when you think of margin upside across the company, where geographically? I mean, I'm assuming Europe cannot be as profitable as the United States. Like how do you -- it's one thing to sort of say this, but there's been a practicality of the matter being able to try and work through obviously the inefficiencies of just having multiple countries, multiple languages, multiple regulatory standards and so forth. How can you do this? To do have a backbone of ERP that's somehow fleshing out more efficiencies or what?

George R. Oliver

All of the system that we're creating is going to be supported with system. So on the front end, whether it be mobility applications, supporting our service team and how we service our customers with design applications, with how we leverage our standard practices and best practices and how we design new products and then the ERP system that we utilize to be able to fulfill the product and service that we provide to our customers. And so behind the operating system that we've designed is the system supports is going to be required to be executed within that system. And it's all around the system is all around defining process, driving simplification of process, standardization of process and then enabling that process with IT systems to be able to support the growth, as well as being able to execute more efficiently within the infrastructure.

Unknown Analyst

So am I correct? Is Europe more of an opportunity than South America?

George R. Oliver

Well, if you look at the fundamentals of our businesses today across-the-board, whether it be our product fundamentals or our Installation & Service fundamental, they're very consistent across the globe. And so as we think about the strategy that we've outlined in accelerating organic growth, driving the bolt-on acquisitions as well as driving accelerated cost out and productivity to support that, that happens across the entire enterprise, being able to free up the resources, to be able to reinvest and be able to deliver very strong margin expansion.

Unknown Analyst

So when you say so, George, when you say the fundamentals, you mean the opportunities set to drive your margin higher?

George R. Oliver

The margin fundamentals that we have within our businesses, when you look at our 3 product businesses or if you look at the Installation & Service franchise across the globe, very similar margin structures and returns today. So as we drive improvement in sourcing, we drive improvement within the field, within our Installation and Service business, then the benefits that we derive from that cost out and productivity has a consistent impact across the entire enterprise.

Unknown Analyst

Okay. I think I understand. But are your European margins lower?

George R. Oliver

The European margins are very consistent with what [indiscernible].

Unknown Analyst

Okay. I'm just making sure I'm understanding what you're saying.

George R. Oliver

The margin story in Europe, when we go back 4 or 5 years ago, we really had a focus on Europe in fixing what I called the fundamentals in Europe, where we have low single-digit returns. We did a significant amount of restructuring. We implemented project selectivity that really got us focused on the end market that play to our strengths. We had high probability that the projects that we develop were going to lead to service, and that the project that we did take on, we could execute profitability. And then when you look at the business today, so that has got us to double-digit returns across our entire European business. And when you look at the economic environment that we're competing in today, we've actually been performing pretty well. When you look at our European performance in the second quarter, we had -- the Service revenue was up 3%. We had Products business that was up 2% or 3%. Install was down similar to what we've seen in the other more mature markets. But overall,

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The economic environment that we're competing in today.

Unknown Analyst

And how much of Tyco's revenue would you say is tied to global, maybe U.S. and then global nonresidential construction markets? And a follow-up question is, are you seeing anything sequentially? Because there are still pockets of what could be hopeful signs juxtaposed against what's been the bad, which is government. So how are you seeing kind of the landscape for nonresi and how significant it is to Tyco?

George R. Oliver

So if you look at the company, 35% of our revenues are Installation-based revenues. And so as I said, during the downturn with a 50% downturn or so, we saw about a 15% to 20% downturn in our Installation business. So that being said, when you look at the current indicators of what's happening within the nonresidential

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The Architectural Billings Index, that was trending favorable for about 7 or 8 months. On the last month or so, we've seen a little bit of a downturn. I think it was actually negative in the last month. Although I think there are -- and we're seeing -- because of that, we were seeing activity in the market. Now that leaves our business anywhere from 6 to 9 months, mainly within the starts within the Fire business, the Fire Protection business. And so we're seeing that activity within the market. But at the end of the day, the lead indicator is ABI, and the last couple of data points suggest that it has begun to decline again.

Unknown Analyst

And your fuel checks, are those somewhat paralleling with what you've seen in the API data in the last couple of months? I realize that may not be significant in terms of kind of the net profitability of Tyco, but people are curious because obviously there's everyone's looking for green shoots, right?

George R. Oliver

I wouldn't hang your head on one data point. At the end of the day -- I mean, I think it is a little bit lumpy, but at the end of the day, I mean, I think the trend that we've seen over the last 7 or 8 months, we would say

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We're hoping that this is just one or 2 data points that are somewhat soft, and it's going to come back, but...

Unknown Analyst

Maybe weather-related?

George R. Oliver

You can't predict at the end of the day.

Unknown Analyst

And then how big is government in terms of your business, George? And has that been a source of pressure or has it been more resilient?

George R. Oliver

The total municipal or government spending that we see is about 7% of our revenues.

Unknown Analyst

7%, okay.

George R. Oliver

That breaks out into federal, as well as some of the state government that we support. And so overall, you've got to think about what we do to support those customers that's very critical with the type of service

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we've been able to really maintain that business pretty well during the current period.

Unknown Analyst

Question?

Unknown Analyst

Could you review your ownership percentage of ADT and whether you want to increase or decrease that in the future?

George R. Oliver

Could you repeat?

Unknown Analyst

Ownership of ADT.

Unknown Analyst

Ownership of ADT, what is it? Would like to increase it or decrease it over time?

Antonella Franzen

I mean, the companies are completely separated since that time of separation, so there is -- Tyco has no ownership of ADT. So we are 3 independent publicly traded companies at this time.

Unknown Analyst

But you use their name still or you use the brand name?

George R. Oliver

We retained the use of the ADT name outside of North America. That stayed with Tyco.

Unknown Analyst

But it's just the brand name? There's no business activity that would have associated with the [indiscernible].

Antonella Franzen

The use of the ADT brand name remains with us, and the residential small business outside of North America remains with Tyco at the time of separation.

George R. Oliver

Yes, the separation that occurred, as I said, was that ADT Residential business North America. We separated. We took that Flow Control business and merged with Pentair. Then the remaining Commercial Security and Commercial Fire businesses came together to form the new Tyco.

Unknown Analyst

And are you still selling product to ADT?

George R. Oliver

Yes, we are. . .

Unknown Analyst

How big is that?

George R. Oliver

When you think -- I mean, our intrusion, it's mainly intrusion type product that we support ADT, as well as their dealers. We've developed a lot of new technologies and new products in that space, and that's the product that we're serving that channel. So we're a supplier to ADT.

Unknown Analyst

But you're not captive to ADT? They could theoretically source from anyone?

George R. Oliver

Like in any separation, there is separation agreements and then at a point in time, then certainly there's other players that can potentially participate.

Unknown Analyst

Right. So are you in a framework of supply agreement today that expires at some point?

George R. Oliver

Yes. I mean, we have a supply agreement that's part of the separation.

Unknown Analyst

Okay. When does that expire?

George R. Oliver

Well, the separation -- the agreement that we have with ADT was over a 2-year period.

Unknown Analyst

Okay. Can we talk about regulation? And in particular, I'm interested in regulation in China. How big, George, is your China business? And we all have a perspective, I suppose, around Chinese construction standards. How is this an opportunity for Tyco and how are you positioned there?

George R. Oliver

So our China business is relatively small today, and a lot of reasons for that is we have been expanding in China. A big focus there for us is making sure that we've got all of the fundamentals in place locally to be able to successful and being able to execute within that market. And so we've been localizing our product. We've created an R&D center in Shanghai, developing a new product and leveraging the technology that we have globally to be able to localize the products required to be successful within that market. That's continuing to accelerate. The second is, in the Installation & Service space, you have to have a great

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To be able to design systems, both in Fire, as well as Security. So the strategy that we had outlined in Fire was last year, we executed an acquisition. It was the #3 player within China that had a Grade A license that we didn't have to be able to complement the capabilities that we were developing locally to be more successful in being able to accelerate our growth in China. That acquisition has gone extremely well. We're positioned now to be able to accelerate on being able to capitalize in the growth in that market. This year, we've announced that we're acquiring Beijing Master Systems, which similarly in the Security space provides us with a Grade A license to design security systems. And so we're now in a position to be able to, again, take the organic investments that we're making combined with what we get with the acquisition to be much better positioned to be able to design projects and then be able to build the service base in China. So we're starting from a relatively small base, but the market is developing with the codes and standards. We put play a role because of the strength that we bring in the industry locally that we can influence the codes and standards development. And then as a result, make sure that we are positioned with our local capabilities to be able to fulfill those codes and standards. And so, we're seeing nice strong double-digit growth with the strategy that we're executing on, and I think we're going to be positioned to be able to continue that growth going forward.

Unknown Analyst

So this market is not going to be impossible to crack? It sounds like you wouldn't be making this investment if you didn't think [indiscernible] .

George R. Oliver

Not at all. With the business that we have there, we are operating very profitably. We're expanding our presence with the acquisitions we made, and we are definitely -- we definitely believe with the increasing codes and standards, that's going to play to our strengths in being able to fulfill and deliver on those standards going forward.

Unknown Analyst

Question?

Unknown Analyst

A quick follow-up question on the gross rate projected for the Rest of the World, and you project the 5% to 6% CAGR. How much of that you think will be coming from the acquisition?

George R. Oliver

Yes, the 5% to 6% CAGR was tied to the acquisitions that were in the pipeline that had already been completed, as well as the organic investments we're making. When we laid out our plan back in September, it was tied to what was already in the pipeline. It was already completed. So any incremental acquisition that are made positions us to be able to do a little bit better than that going forward. So it was -- there's not a significant amount from that acquisition that was tied to the 4% to 5%.

Unknown Analyst

And what do you expect to spend on acquisitions kind of on average a year over the course of the coming years?

George R. Oliver

Well, this year, we've spent to date, we've spent -- let me go back to last year. Last year, we had about $400 million of our revenue, which was tied to the strategic bolt-ons that have been completed the year prior. This year, we've been able to complete 4 acquisitions, right in line with our strategy as far as expanding technology, expanding our product portfolio, strengthening our service capabilities and expanding our geographic footprint. And so the 4 that have been done relatively small, but all very strategic. The First City Care in the U.K. strengthened our banking capabilities not only for the U.K. market, but we can leverage that globally. We've been able to do the National Fire Solutions in Australia, very attractive fire market for us, very strong service footprint, complements what we do there very well. We've completed that. We've got the Beijing Masters Systems, which is a Grade A license within security within China. And then we did a small service bolt-on with North America. That was about $110 million. We've got a very nice pipeline of very strategic bolt-ons similar to those going forward, a couple of we're getting pretty close on that are in that type of range that we're very excited about. So I think if you look at the historical impact, it's been roughly $300 million or $400 million.

Unknown Analyst

And that seems to be run rate going forward.

George R. Oliver

Yes, based on the type of acquisitions we're doing, we're being very disciplined relative to the financial hurdles. I mean, we actually recently walked away from a strategic acquisition that didn't meet our financial hurdles. So we're being very disciplined in making sure we're getting very nice returns on the acquisitions that are being done. And with the pipeline that we're working, we'll be in a similar range.

Unknown Analyst

And do you think there'll be more deals internationally versus the U.S. or how. . .

George R. Oliver

The pipeline that we're working is -- again, it's a global pipeline. I would tell you, there's a bias to technology, strengthening our product and then strengthening our footprint in the high-growth regions, right, when you think about the priority ones that we've been able to complete. And so because of that, the expansion into the high-growth regions tend to obviously be outside of the U.S. And so there's a bias towards making sure because what we've learned is that we're making organic investments in developing the depth and expertise within both Security and Fire, and it's a critical element to our success locally. And what happens is, not only are we investing organically, but we complement those organic investments with the local acquisitions. And so, at times we get additional brands that are recognized locally, we get capacity that would be more difficult to be able to build organically and the combination of what we're doing becomes an accelerator in our ability to be able to capitalize on those high-growth markets. High-growth markets today represent about 12% of our revenues. And today, when you look at our performance, we're generating very strong double-digit growth within those growth markets. And so it's a critical area of growth for us as we're prioritizing our reinvestment and making sure that we're developing the local capabilities, making sure we're supplementing that with acquisitions, which then creates the footprint that we need to be able to sustain profitable growth going forward.

Unknown Analyst

Perfect. We're out of time. Thanks so much, George and Antonella.

George R. Oliver

Thank you.

Antonella Franzen

Thank you.

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