-Record first quarter net income of $45
million, representing year-over-year growth of 73%-
-Record first quarter adjusted EBITDA of $175
million, representing year-over-year growth of 19%-
-Simplifies capital structure by retiring all
outstanding Series B Preferred Stock-
-Enters new, adjacent service market with
agreement to acquire Elevated Facility Services Group-
APi Group Corporation (NYSE: APG) (“APi” or the “Company”) today
reported its financial results for the three months ended March 31,
2024.
Russ Becker, APi’s President and Chief Executive Officer stated:
“The start of 2024 has been significant as we are off to another
solid start. First and most importantly, the team has made
continued progress executing on our margin expansion initiatives as
we push towards our 13% or more adjusted EBITDA margin target in
2025. I would like to thank our approximately 29,000 leaders for
their unwavering commitment to APi.
We recently completed the Series B transaction, and announced
the agreement to acquire Elevated Facility Services Group. Elevated
has the same attractive characteristics as APi, including scale in
a highly fragmented market, regulatory-driven demand, a loyal
customer base, an experienced leadership team, a highly skilled
workforce, and an unwavering focus on culture and developing its
teammates throughout the organization.
As we move forward, we remain focused on delivering both the
2024 plan and our long-term '13/60/80' targets. We are excited
about our robust pipeline of opportunities for life safety,
security, and elevator and escalator services businesses and will
continue to be thoughtful as we look for high quality, margin
accretive businesses to join the APi family."
First Quarter
2024 Consolidated Results:
Three Months Ended March
31,
2024
2023
Y/Y
Y/Y (FFX) (a)
Net revenues
$
1,601
$
1,614
(0.8
)%
(1.2
)%
Organic net revenue growth (b)
(1.4
)%
GAAP
Gross profit
$
492
$
425
15.8
%
Gross margin
30.7
%
26.3
%
+ 440 bps
Net income
$
45
$
26
73.1
%
Diluted EPS
$
(1.34
)
$
0.05
NM
Adjusted non-GAAP comparison
Adjusted gross profit
$
492
$
432
13.9
%
Adjusted gross margin
30.7
%
26.8
%
+ 390 bps
Adjusted EBITDA
$
175
$
147
19.0
%
19.0
%
Adjusted EBITDA margin
10.9
%
9.1
%
+ 180 bps
Adjusted net income
$
94
$
69
36.2
%
Adjusted diluted EPS
$
0.34
$
0.25
36.0
%
NM = Not meaningful
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
(a)
Amount represents the year-over-year change when comparing both
years after eliminating the impact of fluctuations in foreign
exchange rates by translating foreign currency denominated results
at fixed foreign currency ("FFX") rates for both periods, as
further discussed under the heading "Non-GAAP Financial Measures"
below.
(b)
Organic change in net revenues provides a consistent basis for a
year-over-year comparison in net revenues as it excludes the
impacts of material acquisitions, divestitures, and the impact of
changes due to foreign currency translation.
- Reported net revenue declined by 0.8% (1.4% organic decline)
due to a decline in project revenues driven by disciplined project
and customer selection, partially offset by growth in inspection,
service, and monitoring revenue in the Safety Services
segment.
- Reported and adjusted gross margin increased 440 and 390 basis
points, respectively, compared to prior year period due to price
increases, outsized growth in higher margin service revenue as well
as significant margin expansion in project revenues across both
segments.
- Reported record net income was $45 million and diluted EPS was
$(1.34). Adjusted net income was $94 million and adjusted diluted
EPS was $0.34, representing a $0.09 increase from prior year period
driven by significant adjusted gross margin expansion and decreased
interest expense, partially offset by an increase in adjusted
diluted weighted average shares outstanding.
- Adjusted EBITDA increased by 19.0% (19.0% on a fixed currency
basis) compared to the prior year period and adjusted EBITDA margin
increased 180 basis points to a first quarter record of 10.9%,
primarily due to the increase in gross margins, partially offset by
investments to support profitable growth and the investment in
building our global capabilities and infrastructure.
First Quarter
2024 Segment Results:
Safety Services
Three Months Ended March
31,
2024
2023
Y/Y
Y/Y (FFX) (a)
Safety Services
Net revenues
$
1,214
$
1,191
1.9
%
1.5
%
Organic net revenue growth (b)
0.2
%
GAAP
Gross profit
$
423
$
368
14.9
%
Gross margin
34.8
%
30.9
%
+ 390 bps
Operating income
$
125
$
96
30.2
%
Operating margin
10.3
%
8.1
%
+ 220 bps
Adjusted non-GAAP comparison
Adjusted gross profit
$
423
$
375
12.8
%
Adjusted gross margin
34.8
%
31.5
%
+ 330 bps
Adjusted EBITDA
$
174
$
147
18.4
%
17.6
%
Adjusted EBITDA margin
14.3
%
12.3
%
+ 200 bps
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
(a)
Amount represents the year-over-year change when comparing both
years after eliminating the impact of fluctuations in foreign
exchange rates by translating foreign currency denominated results
at fixed foreign currency ("FFX") rates for both periods, as
further discussed under the heading "Non-GAAP Financial Measures"
below.
(b)
Organic change in net revenues provides a consistent basis for a
year-over-year comparison in net revenues as it excludes the
impacts of material acquisitions, divestitures, and the impact of
changes due to foreign currency translation.
- Reported net revenue growth of 1.9% (0.2% organic) driven by
improved business mix of inspection, services and monitoring, and
price increases, partially offset by disciplined customer and
project selection driving a decline in project revenues in the HVAC
and international businesses.
- Reported and adjusted gross margin increased 390 and 330 basis
points, respectively, compared to prior year period driven by price
increases, improved business mix of higher margin inspection,
services and monitoring revenue as well as significant margin
expansion in project revenues.
- Operating income increased by 30.2% compared to the prior year
period. Operating margin was 10.3%, representing a 220 basis point
increase compared to the prior year period.
- Adjusted EBITDA increased by 18.4% (17.6% on a fixed currency
basis) compared to the prior year period. Adjusted EBITDA margin
was 14.3%, representing a 200 basis point increase compared to
prior year period, primarily due to the increase in adjusted gross
margins, partially offset by growth investments.
Specialty Services
Three Months Ended March
31,
2024
2023
Y/Y
Y/Y (FFX) (a)
Specialty Services
Net revenues
$
389
$
430
(9.5
)%
(9.5
)%
Organic net revenue growth (b)
(7.4
)%
GAAP
Gross profit
$
69
$
57
21.1
%
Gross margin
17.7
%
13.3
%
+ 440 bps
Operating income
$
7
$
—
NM
Operating margin
1.8
%
NM
NM
Adjusted non-GAAP comparison
Adjusted gross profit
$
69
$
57
21.1
%
Adjusted gross margin
17.7
%
13.3
%
+ 440 bps
Adjusted EBITDA
$
34
$
28
21.4
%
21.4
%
Adjusted EBITDA margin
8.7
%
6.5
%
+ 220 bps
NM = Not meaningful
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
(a)
Amount represents the year-over-year change when comparing both
years after eliminating the impact of fluctuations in foreign
exchange rates by translating foreign currency denominated results
at fixed foreign currency ("FFX") rates for both periods, as
further discussed under the heading "Non-GAAP Financial Measures"
below.
(b)
Organic change in net revenues provides a consistent basis for a
year-over-year comparison in net revenues as it excludes the
impacts of material acquisitions, divestitures, and the impact of
changes due to foreign currency translation.
- Reported net revenue declined by 9.5% (7.4% organic decline)
due to planned disciplined customer and project selection including
the exiting of a customer relationship.
- Reported and adjusted gross margin each increased 440 basis
points compared to prior year period due to margin improvement in
services revenues and disciplined customer and project selection
driving margin improvement in project revenues.
- Operating income was $7 million and operating margin was
1.8%.
- Adjusted EBITDA increased by 21.4% compared to the prior year
period. Adjusted EBITDA margin was 8.7%, representing a 220 basis
point increase compared to prior year period, primarily due to the
increase in gross margins, partially offset by investments to
support our service model and increases in certain legal expenses,
including those associated with the completed divestiture.
Guidance
APi Group continues to expect full year net revenue, adjusted
EBITDA and adjusted free cash flow conversion in line with initial
full year guidance. This guidance has not been adjusted to include
the impact of the agreement to acquire Elevated, the divestiture
announced this quarter, and the headwind from foreign exchange
movements since our initial guidance announced on February 28,
2024. We will update our full year guidance following the close of
the Elevated transaction.
- Net Revenues of $7,050 to $7,250 million
- Adjusted EBITDA of $855 to $905 million
- Adjusted Free Cash Flow Conversion of approximately 70%
EBITDA
APi Group announces guidance for the second quarter of 2024.
- Net Revenues of $1,750 to $1,800 million
- Adjusted EBITDA of $220 to $235 million
Conference Call
APi will hold a webcast/dial-in conference call to discuss its
financial results at 8:30 a.m. (Eastern Time) on Thursday, May 2,
2024. Participants on the call will include Russell A. Becker,
President and Chief Executive Officer; Kevin S. Krumm, Executive
Vice President and Chief Financial Officer; and James E. Lillie and
Sir Martin E. Franklin, Co-Chairs.
To listen to the call by telephone, please dial 800-715-9871 or
646-307-1963 and provide Conference ID 3173140. You may also attend
and view the presentation (live or by replay) via webcast by
accessing the following URL:
https://events.q4inc.com/attendee/476817474
A replay of the call will be available shortly after completion
of the live call/webcast via the webcast link above.
About APi:
APi 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. APi
provides statutorily mandated and other contracted services to a
strong base of long-standing customers across industries. We have a
winning leadership culture driven by entrepreneurial business
leaders to deliver innovative solutions for our customers. More
information can be found at www.apigroupcorp.com.
Forward-Looking Statements and
Disclaimers
Please note that in this press release the Company may discuss
events or results that have not yet occurred or been realized,
commonly referred to as forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of APi Group
Corporation (“APi” or the “Company”). Such discussion and
statements may contain words such as “expect,” “anticipate,”
“will,” “should,” “believe,” “intend,” “plan,” “estimate,”
“predict,” “seek,” “continue,” “pro forma” “outlook,” “may,”
“might,” “should,” “can have,” “have,” “likely,” “potential,”
“target,” “indicative,” “illustrative,” and variations of such
words and similar expressions, and relate in this press release,
without limitation, to statements, beliefs, projections and
expectations about future events. Such statements are based on the
Company’s expectations, intentions and projections regarding the
Company’s future performance, anticipated events or trends and
other matters that are not historical facts.
These statements are not guarantees of future performance and
are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements,
including: (i) economic conditions, competition, political risks,
and other risks that may affect the Company’s future performance,
including the impacts of inflationary pressures and other
macroeconomic factors on the Company’s business, markets, supply
chain, customers and workforce, on the credit and financial
markets, on the alignment of expenses and revenues and on the
global economy generally; (ii) supply chain constraints and
interruptions, and the resulting increases in the cost, or
reductions in the supply, of the materials and commodities the
Company uses in its business and for which the Company bears the
risk of such increases; (iii) risks associated with the Company’s
expanded international operations; (iv) failure to realize the
anticipated benefits of the acquisition of the Chubb fire and
security business and our ability to successfully execute the
Company’s bolt-on acquisition strategy to acquire other businesses
and successfully integrate them into its operations; (v) failure to
fully execute the Company’s inspection first strategy or to realize
the expected service revenue from such inspections; (vi) risks
associated with the Company’s decentralized business model and
participation in joint ventures; (vii) improperly managed projects
or project delays; (viii) adverse developments in the credit
markets which could impact the Company’s ability to secure
financing in the future; (ix) the Company’s substantial level of
indebtedness; (x) risks associated with the Company’s contract
portfolio; (xi) changes in applicable laws or regulations; (xii)
the possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors; (xiii) the impact
of a global armed conflict; (xiv) the trading price of the
Company’s common stock, which may be positively or negatively
impacted by market and economic conditions, the availability of the
Company’s common stock, the Company’s financial performance or
determinations following the date of this press release to use the
Company’s funds for other purposes; (xv) geopolitical risks and
(xvi) other risks and uncertainties, including those discussed in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2023 under the heading “Risk Factors.” Given these
risks and uncertainties, you are cautioned not to place undue
reliance on forward-looking statements. Additional information
concerning these risks, uncertainties and other factors that could
cause actual results to vary is, or will be, included in the
periodic and other reports filed by the Company with the Securities
and Exchange Commission. Forward-looking statements included in
this press release speak only as of the date hereof and, except as
required by applicable law, the Company does not undertake any
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or circumstances after the date of this press release.
Non-GAAP Financial
Measures
This press release contains non-U.S. GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The Company uses certain non-U.S. GAAP
financial measures that are included in this press release and the
additional financial information both in explaining its results to
shareholders and the investment community and in its internal
evaluation and management of its businesses. The Company’s
management believes that these non-U.S. GAAP financial measures and
the information they provide are useful to investors since these
measures (a) permit investors to view the Company’s performance
using the same tools that management uses to evaluate the Company’s
past performance, reportable business segments and prospects for
future performance, (b) permit investors to compare the Company
with its peers and (c) determine certain elements of management’s
incentive compensation (d) provide consistent period-to-period
comparisons of the results. Specifically:
- The Company’s management believes that adjusted gross profit,
adjusted selling, general and administrative (“SG&A”) expenses,
adjusted net income, and adjusted earnings per share, which are
non-GAAP financial measures that exclude business transformation
and other expenses for the integration of acquired businesses, the
impact and results of businesses classified as assets held-for-sale
and businesses divested, and one-time and other events such as
impairment charges, restructuring costs, transaction and other
costs related to acquisitions, amortization of intangible assets,
and non-service pension cost or benefit are useful because they
provide investors with a meaningful perspective on the current
underlying performance of the Company’s core ongoing
operations.
- The Company discloses fixed currency net revenues and adjusted
EBITDA (“FFX”) on a consolidated basis or segment specific basis to
provide a more complete understanding of underlying revenue and
adjusted EBITDA trends by providing net revenues and adjusted
EBITDA on a consistent basis. Under U.S. GAAP, income statement
results are translated in U.S. Dollars at the average exchange
rates for the period presented. Management believes that the fixed
currency non-GAAP measures are useful in providing period-to-period
comparisons of the results of the Company’s operational
performance, as it excludes the translation impact of exchange rate
fluctuations on our international results. Fixed currency amounts
included in this release are based on translation into U.S. dollars
at the fixed foreign currency exchange rates established by
management at the beginning of 2024.
- The Company also presents organic changes in net revenues on a
consolidated basis or segment specific basis to provide a more
complete understanding of underlying revenue trends by providing
net revenues on a consistent basis as it excludes the impacts of
material acquisitions, completed divestitures, and changes in
foreign currency from year-over-year comparisons on reported net
revenues, calculated as the difference between the reported net
revenues for the current period and reported net revenues for the
current period converted at fixed foreign currency exchange rates
(excluding material acquisitions and divestitures). The remainder
is divided by prior year fixed currency net revenues, excluding the
impacts of completed divestitures.
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) is the measure of profitability used by management to
manage its segments and, accordingly, in its segment reporting. The
Company supplements the reporting of its consolidated financial
information with certain non-U.S. GAAP financial measures,
including EBITDA and adjusted EBITDA, which is defined as EBITDA
excluding the impact of certain non-cash and other specifically
identified items (“adjusted EBITDA”). Adjusted EBITDA margin is
calculated as adjusted EBITDA divided by net revenues. The Company
believes these non-U.S. GAAP measures provide meaningful
information and help investors understand the Company’s financial
results and assess its prospects for future performance. The
Company uses EBITDA and adjusted EBITDA to evaluate its
performance, both internally and as compared with its peers,
because it excludes certain items that may not be indicative of the
Company’s core operating results. Consolidated EBITDA is calculated
in a manner consistent with segment EBITDA, which is a measure of
segment profitability.
- The Company presents free cash flow, adjusted free cash flow
and adjusted free cash flow conversion, which are liquidity
measures used by management as factors in determining the amount of
cash that is available for working capital needs or other uses of
cash, however, it does not represent residual cash flows available
for discretionary expenditures. Free cash flow is defined as cash
provided by (used in) operating activities less capital
expenditures. Adjusted free cash flow is defined as cash provided
by (used in) operating activities plus or minus events including,
but not limited to, transaction and other costs related to
acquisitions, business transformation and other expenses for the
integration of acquired businesses, payments on acquired
liabilities, payments made for restructuring programs, impacts of
businesses classified as assets held-for-sale and businesses
divested, one-time and other events such as post-measurement period
purchase accounting adjustments for acquisitions and public
offerings, and COVID-19 related payroll tax deferral and relief
items. Adjusted free cash flow conversion is defined as adjusted
free cash flow as a percentage of adjusted EBITDA.
- The Company calculates its leverage ratio in accordance with
its debt agreements which include different adjustments to EBITDA
from those included in the adjusted EBITDA numbers reported
externally.
While the Company believes these non-U.S. GAAP measures are
useful in evaluating the Company’s performance, this information
should be considered as supplemental in nature and not as a
substitute for or superior to the related financial information
prepared in accordance with U.S. GAAP. Additionally, these non-U.S.
GAAP financial measures may differ from similar measures presented
by other companies. A reconciliation of these non-U.S. GAAP
financial measures is included later in this press release.
The Company does not provide reconciliations of forward-looking
non-U.S. GAAP adjusted EBITDA and growth in organic net revenues to
GAAP due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that could be made for acquisitions and
divestitures, business transformation and other expenses for the
integration of acquired businesses, one-time and other events such
as impairment charges, transaction and other costs related to
acquisitions, restructuring costs, amortization of intangible
assets, and other charges reflected in the Company’s reconciliation
of historic numbers, the amount of which, based on historical
experience, could be significant.
APi Group Corporation
Condensed Consolidated Statements
of Operations (GAAP)
(Amounts in millions, except per
share data)
(Unaudited)
Three Months Ended March 31,
2024
2023
Net revenues
$
1,601
$
1,614
Cost of revenues
1,109
1,189
Gross profit
492
425
Selling, general, and administrative
expenses
392
352
Operating income
100
73
Interest expense, net
34
37
Loss on extinguishment of debt, net
—
3
Investment expense (income) and other,
net
3
(5
)
Other expense, net
37
35
Income before income taxes
63
38
Income tax provision
18
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:
Basic
250
234
Diluted
250
267
APi Group Corporation
Condensed Consolidated Balance
Sheets (GAAP)
(Amounts in millions)
(Unaudited)
March 31, 2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
247
$
479
Accounts receivable, net
1,256
1,395
Inventories
148
150
Contract assets
458
436
Prepaid expenses and other current
assets
123
122
Total current assets
2,232
2,582
Property and equipment, net
375
385
Operating lease right of use assets
234
233
Goodwill
2,471
2,471
Intangible assets, net
1,549
1,620
Deferred tax assets
115
113
Pension and post-retirement assets
106
111
Other assets
110
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 payable
382
472
Accrued liabilities
550
729
Contract liabilities
542
526
Operating and finance leases
75
75
Total current liabilities
1,654
1,807
Long-term debt, less current portion
2,624
2,322
Pension and post-retirement
obligations
48
50
Operating and finance leases
173
172
Deferred tax liabilities
236
233
Other noncurrent liabilities
156
138
Total liabilities
4,891
4,722
Total redeemable convertible preferred
stock
—
797
Total shareholders’ equity
2,301
2,071
Total liabilities, redeemable convertible
preferred stock, and shareholders’ equity
$
7,192
$
7,590
APi Group Corporation
Condensed Consolidated Statements
of Cash Flows (GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities:
Net income
$
45
$
26
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
69
74
Restructuring charges, net of cash
paid
(8
)
—
Share-based compensation expense
8
5
Profit-sharing expense
6
5
Non-cash lease expense
26
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
(130
)
(124
)
Net cash provided by (used in) operating
activities
$
7
$
(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
equipment
23
4
Net cash used in investing activities
$
(22
)
$
(27
)
Cash flows from financing
activities:
Net short-term debt
$
100
$
—
Proceeds from long-term borrowings
300
—
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 period
480
607
Cash, cash equivalents, and restricted
cash, end of period
$
248
$
365
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Organic Change in Net Revenues
(non-GAAP)
(Unaudited)
Organic change in net
revenues
Three Months Ended March 31,
2024
Net revenues
Foreign
Net revenues
Organic
change
currency
change
Acquisitions and
change in
(as reported)
translation (a)
(fixed currency) (b)
divestitures, net (c)
net revenues (d)
Safety Services
1.9
%
0.4
%
1.5
%
(1.3
)%
0.2
%
Specialty Services
(9.5
)%
—
%
(9.5
)%
2.1
%
(7.4
)%
Consolidated
(0.8
)%
0.4
%
(1.2
)%
(0.2
)%
(1.4
)%
Notes: (a)
Represents the effect of foreign currency
on reported net revenues, calculated as the difference between
reported net revenues and net revenues at fixed currencies for both
periods. Fixed currency amounts are based on translation into U.S.
Dollars at fixed foreign currency exchange rates established by
management at the beginning of 2024.
(b)
Amount represents the year-over-year
change when comparing both years after eliminating the impact of
fluctuations in foreign exchange rates by translating foreign
currency denominated results at fixed foreign currency ("FFX")
rates for both periods.
(c)
Adjustment to exclude net revenues from
material acquisitions from their respective dates of acquisition
until the first year anniversary from date of acquisition and net
revenues from divestitures for all periods for businesses divested
as of March 31, 2024.
(d)
Organic change in net revenues provides a
consistent basis for a year-over-year comparison in net revenues as
it excludes the impacts of material acquisitions, divestitures, and
the impact of changes due to foreign currency translation.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Gross profit and adjusted gross
profit (non-GAAP)
SG&A and adjusted SG&A
(non-GAAP)
(Amounts in millions)
(Unaudited)
Adjusted gross profit
Three Months Ended March
31,
2024
2023
Gross profit (as reported)
$
492
$
425
Adjustments to reconcile gross profit to
adjusted gross profit:
Backlog amortization
(a)
—
7
Adjusted gross profit
$
492
$
432
Net revenues
$
1,601
$
1,614
Adjusted gross margin
30.7
%
26.8
%
Adjusted SG&A
Three Months Ended March
31,
2024
2023
Selling, general, and administrative
expenses ("SG&A") (as reported)
$
392
$
352
Adjustments to reconcile SG&A to
adjusted SG&A:
Amortization of intangible assets
(b)
(50
)
(48
)
Contingent consideration and
compensation
(c)
(2
)
(2
)
Business process transformation
expenses
(d)
(6
)
(4
)
Acquisition related expenses
(e)
(1
)
(4
)
Restructuring program related costs
(f)
(5
)
—
Other
(g)
9
12
Adjusted SG&A expenses
$
337
$
306
Net revenues
$
1,601
$
1,614
Adjusted SG&A as a % of net
revenues
21.0
%
19.0
%
Notes: (a)
Adjustment to reflect the addback of
amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the addback of
amortization expense.
(c)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(d)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(e)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(f)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(g) Adjustment includes various miscellaneous non-recurring items,
such as the gain on the sale of a building, costs associated with
the Series B Preferred Stock conversion, elimination of changes in
fair value estimates to acquired liabilities, and impairment
recorded on disposed assets.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
EBITDA and adjusted EBITDA
(non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Net income (as reported)
$
45
$
26
Adjustments to reconcile net income to
EBITDA:
Interest expense, net
34
37
Income tax provision
18
12
Depreciation and amortization
69
74
EBITDA
$
166
$
149
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
2
2
Non-service pension cost (benefit)
(b)
4
(3
)
Business process transformation
expenses
(c)
6
4
Acquisition related expenses
(d)
1
4
Loss on extinguishment of debt, net
(e)
—
3
Restructuring program related costs
(f)
5
—
Other
(g)
(9
)
(12
)
Adjusted EBITDA
$
175
$
147
Net revenues
$
1,601
$
1,614
Adjusted EBITDA margin
10.9
%
9.1
%
Notes: (a)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(b)
Adjustment to reflect the elimination of
non-service pension cost (benefit), which consists of interest
cost, expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(c)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(d)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(e)
Adjustment to reflect the elimination of
loss on extinguishment of debt resulting from early repayments and
repurchases of long-term debt.
(f)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(g) Adjustment includes various miscellaneous non-recurring items,
such as the gain on the sale of a building, costs associated with
the Series B Preferred Stock conversion, elimination of changes in
fair value estimates to acquired liabilities, and impairment
recorded on disposed assets.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Income (loss) before income tax,
net income (loss) and EPS and
Adjusted income before income
tax, net income (loss) and EPS (non-GAAP)
(Amounts in millions, except per
share data)
(Unaudited)
Three Months Ended March
31,
2024
2023
Income before income tax provision (as
reported)
$
63
$
38
Adjustments to reconcile income before
income tax provision to adjusted income before income tax
provision:
Amortization of intangible assets
(a)
50
55
Contingent consideration and
compensation
(b)
2
2
Non-service pension cost (benefit)
(c)
4
(3
)
Business process transformation
expenses
(d)
6
4
Acquisition related expenses
(e)
1
4
Loss on extinguishment of debt, net
(f)
—
3
Restructuring program related costs
(g)
5
—
Other
(h)
(9
)
(12
)
Adjusted income before income tax
provision
$
122
$
91
Income tax provision (as reported)
$
18
$
12
Adjustments to reconcile income tax
provision to adjusted income tax provision:
Income tax provision adjustment
(i)
10
10
Adjusted income tax provision
$
28
$
22
Adjusted income before income tax
provision
$
122
$
91
Adjusted income tax provision
28
22
Adjusted net income
$
94
$
69
Diluted weighted average shares
outstanding (as reported)
250
267
Adjustments to reconcile diluted weighted
average shares outstanding to adjusted diluted weighted average
shares outstanding:
Dilutive impact of shares from GAAP net
loss
(j)
1
—
Dilutive impact of Series A Preferred
Stock
(k)
4
4
Dilutive impact of conversion of Series B
Preferred Stock
(l)
22
—
Adjusted diluted weighted average shares
outstanding
277
271
Adjusted diluted EPS
$
0.34
$
0.25
Notes: (a)
Adjustment to reflect the addback of
pre-tax amortization expense related to intangible assets.
(b)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(c)
Adjustment to reflect the elimination of
non-service pension cost (benefit), which consists of interest
cost, expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(d)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(e)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(f)
Adjustment to reflect the elimination of
loss on extinguishment of debt resulting from early repayments and
repurchases of long-term debt.
(g) Adjustment to reflect the elimination of expenses associated
with restructuring programs and related costs. (h) Adjustment
includes various miscellaneous non-recurring items, such as the
gain on the sale of a building, costs associated with the Series B
Preferred Stock conversion, elimination of changes in fair value
estimates to acquired liabilities, and impairment recorded on
disposed assets. (i) Adjustment to reflect an adjusted effective
tax rate of 23% which reflects the Company's estimated expectations
for taxes to be paid on its adjusted non-GAAP earnings. (j)
Adjustment to add the dilutive impact of options and RSUs which
were anti-dilutive and excluded from the diluted weighted average
shares outstanding (as reported). (k) Adjustment for the three
months ended March 31, 2024 and 2023 reflect the addition of the
dilutive impact of 4 million shares associated with the deemed
conversion of Series A Preferred Stock. (l) Adjustment for the
weighted average impact of the Series B Preferred Stock that were
convertible into approximately 33 million common shares and were
outstanding for two months of the first quarter. On February 28,
2024, all Series B Preferred Stock was converted to common stock
and there is no longer any dilutive impact from the Series B
Preferred Stock.
APi Group Corporation
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024 (a)
2023 (a)
Safety Services
Net revenues
$
1,214
$
1,191
Adjusted gross profit
423
375
Adjusted EBITDA
174
147
Adjusted gross margin
34.8
%
31.5
%
Adjusted EBITDA margin
14.3
%
12.3
%
Specialty Services
Net revenues
$
389
$
430
Adjusted gross profit
69
57
Adjusted EBITDA
34
28
Adjusted gross margin
17.7
%
13.3
%
Adjusted EBITDA margin
8.7
%
6.5
%
Total net revenues before corporate and
eliminations
(b)
$
1,603
$
1,621
Total adjusted EBITDA before corporate and
eliminations
(b)
208
175
Adjusted EBITDA margin before corporate
and eliminations
(b)
13.0
%
10.8
%
Corporate and Eliminations
Net revenues
$
(2
)
$
(7
)
Adjusted EBITDA
(33
)
(28
)
Total Consolidated
Net revenues
$
1,601
$
1,614
Adjusted gross profit
492
432
Adjusted EBITDA
175
147
Adjusted gross margin
30.7
%
26.8
%
Adjusted EBITDA margin
10.9
%
9.1
%
Notes: (a)
Information derived from non-GAAP reconciliations included
elsewhere in this press release.
(b)
Calculated from results of the Company's operating segments
shown above, excluding Corporate and Eliminations.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March 31,
2024
Three Months Ended March 31,
2023
As Reported
Adjustments
As Adjusted
As Reported
Adjustments
As Adjusted
Safety Services
Net revenues
$
1,214
$
—
$
1,214
$
1,191
$
—
$
1,191
Cost of revenues
791
—
791
823
(7
)
(a)
816
Gross profit
$
423
$
—
$
423
$
368
$
7
$
375
Gross margin
34.8
%
34.8
%
30.9
%
31.5
%
Specialty Services
Net revenues
$
389
$
—
$
389
$
430
$
—
$
430
Cost of revenues
320
—
320
373
—
373
Gross profit
$
69
$
—
$
69
$
57
$
—
$
57
Gross margin
17.7
%
17.7
%
13.3
%
13.3
%
Corporate and Eliminations
Net revenues
$
(2
)
$
—
$
(2
)
$
(7
)
$
—
$
(7
)
Cost of revenues
(2
)
—
(2
)
(7
)
—
(7
)
Total Consolidated
Net revenues
$
1,601
$
—
$
1,601
$
1,614
$
—
$
1,614
Cost of revenues
1,109
—
1,109
1,189
(7
)
(a)
1,182
Gross profit
$
492
$
—
$
492
$
425
$
7
$
432
Gross margin
30.7
%
30.7
%
26.3
%
26.8
%
Notes: (a)
Adjustment to reflect the addback of amortization expense
related to backlog intangible assets.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Safety Services
Safety Services EBITDA
$
163
$
146
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
2
—
1
Non-service pension cost (benefit)
(b)
4
—
(3
)
Acquisition related expenses
(c)
—
—
3
Business process transformation
expenses
(d)
1
—
Restructuring program related costs
(e)
5
—
Other
(f)
(1
)
—
Safety Services adjusted EBITDA
$
174
$
147
Specialty Services
Specialty Services EBITDA
$
33
$
27
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
—
1
Other
(f)
1
—
—
Specialty Services adjusted EBITDA
$
34
$
28
Corporate and Eliminations
Corporate and Eliminations EBITDA
$
(30
)
$
(24
)
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Business process transformation
expenses
(d)
5
—
4
Acquisition related expenses
(c)
1
—
1
Loss on extinguishment of debt, net
(g)
—
—
3
Other
(f)
(9
)
—
(12
)
Corporate and Eliminations adjusted
EBITDA
$
(33
)
$
(28
)
Notes: (a)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(b)
Adjustment to reflect the elimination of
non-service pension cost (benefit), which consists of interest
cost, expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(c)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(d)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(e)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(f)
Adjustment includes various miscellaneous
non-recurring items, such as the gain on the sale of a building,
costs associated with the Series B Preferred Stock conversion,
elimination of changes in fair value estimates to acquired
liabilities, and impairment recorded on disposed assets.
(g) Adjustment to reflect the elimination of loss on extinguishment
of debt resulting from early repayments and repurchases of
long-term debt.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Change in adjusted EBITDA
(non-GAAP)
(Unaudited)
Change in adjusted
EBITDA
Three Months Ended March 31,
2024
Change in
Adjusted EBITDA
(public rates) (a)
Foreign
currency
translation (b)
Change in
Adjusted EBITDA
(fixed currency) (c)
Safety Services
18.4
%
0.8
%
17.6
%
Specialty Services
21.4
%
—
%
21.4
%
Consolidated
19.0
%
—
%
19.0
%
Notes: (a)
Adjusted EBITDA derived from non-GAAP
reconciliations included elsewhere in this press release.
(b)
Adjusted to eliminate the impact of
foreign currency on adjusted EBITDA amounts, calculated as the
difference between adjusted EBITDA at public currency rates and
adjusted EBITDA at fixed currency rates for both periods. Fixed
currency amounts are based on translation into U.S. Dollars at
fixed foreign currency exchange rates established by management at
the beginning of 2024.
(c) Amount represents the year-over-year change when comparing both
years after eliminating the impact of fluctuations in foreign
exchange rates by translating foreign currency denominated results
at fixed foreign currency ("FFX") rates for both periods.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Free cash flow and adjusted free
cash flow and conversion (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Net cash provided by (used in) operating
activities (as reported)
$
7
$
(1
)
Less: Purchases of property and
equipment
(22
)
(21
)
Free cash flow
$
(15
)
$
(22
)
Add: Cash payments related to following
items:
Contingent compensation
(a)
5
—
Business process transformation
expenses
(b)
6
5
Acquisition related expenses
(c)
1
4
Restructuring program related payments
(d)
12
5
Payroll tax deferral
(e)
—
8
Other
(f)
$
3
$
—
Adjusted free cash flow
$
12
$
—
Adjusted EBITDA
(g)
$
175
$
147
Adjusted free cash flow conversion
6.9
%
—
%
Notes: (a)
Adjustment to reflect the elimination of
deferred payments to prior owners of acquired businesses not
expected to continue or recur.
(b)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(c)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(d)
Adjustment to reflect payments made for
restructuring programs and related costs.
(e)
Adjustment reflects the elimination of
operating cash for the impact of the Coronavirus Aid Relief and
Economic Security (CARES) Act. During the first quarter of 2020,
the CARES Act was passed, allowing the Company to defer the payment
of the employer's share of Social Security taxes until December
2021 and December 2022. The final payments were made on the amount
deferred in 2020 during the first half of 2023.
(f)
Adjustment includes various miscellaneous
non-recurring items, such as elimination of payments made on the
Series B Preferred Stock conversion.
(g) Adjusted EBITDA derived from non-GAAP reconciliations included
elsewhere in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502351740/en/
Investor Relations and Media
Inquiries: Adam Fee Vice President of Investor Relations
Tel: +1 651-240-7252 Email: investorrelations@apigroupinc.us
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