APi Group Corporation · Q1 2024 earnings

Briefing

APi Group reported record first quarter net income with year-over-year growth, simplifies capital structure by retiring all outstanding Series B Preferred Stock, and enters new, adjacent service market with agreement to acquire Elevated Facility Services Group.

APi Group reported a solid start to 2024, with continued progress on margin expansion initiatives, aiming for a 13% or more adjusted EBITDA margin in 2025. The company completed the Series B transaction and announced an agreement to acquire Elevated Facility Services Group, focusing on delivering the 2024 plan and long-term targets.

• Net revenues 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.

Headline financials

Revenue & EPS history

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. APi Group announces guidance for the second quarter of 2024.