-Reported net revenue growth of 9.7% and
organic net revenue growth of 12.1% - -Reported net income of $26
million and adjusted EBITDA of $147 million, representing
year-over-year adjusted EBITDA margin expansion of 40 basis points-
-Raising full year guidance for both net revenues and adjusted
EBITDA-
APi Group Corporation (NYSE: APG) (“APi” or the “Company”) today
reported its financial results for the three months ended March 31,
2023.
Russ Becker, APi’s President and Chief Executive Officer stated:
“We delivered record first quarter results to start 2023 including
margin accretive, double-digit organic growth highlighted by Safety
Services at over 14% organic growth, with organic growth in U.S.
Life Safety remaining strong at approximately 20%. Our entire
business continues to perform well, our consolidated backlog
remains near record highs, and business activity across both Safety
and Specialty services remains robust.
Our strong financial results speak to consistent efforts of our
approximately 27,000 leaders and to the strength of APi’s recurring
revenue, statutorily required services business model. While
successfully growing the business with an inspection first mindset,
the team has never lost sight of serving our customers safely and
efficiently and we are grateful for their commitment. We have great
confidence in the business and the direction we are heading despite
the macroeconomic environment, allowing us to raise our full year
guidance for the business."
First Quarter 2023 Consolidated
Results:
For the Three Months Ended
March 31,
2023
2022
Y/Y
Y/Y (FFX) (a)
Net revenues
$
1,614
$
1,471
9.7
%
12.1
%
Organic net revenue growth (b)
12.1
%
GAAP
Gross profit
$
425
$
376
13.0
%
Gross margin
26.3
%
25.6
%
+ 70 bps
Net income (loss)
$
26
$
(7
)
NM
Diluted EPS
$
0.05
$
(0.08
)
NM
Adjusted non-GAAP comparison
Adjusted gross profit
$
432
$
388
11.3
%
Adjusted gross margin
26.8
%
26.4
%
+ 40 bps
Adjusted EBITDA
$
147
$
128
14.8
%
17.6
%
Adjusted EBITDA as a % of net revenues
9.1
%
8.7
%
+ 40 bps
Adjusted net income
$
69
$
62
11.3
%
Adjusted diluted EPS
$
0.25
$
0.23
8.7
%
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 growth of 9.7% compared to the prior year
period driven by double-digit growth in services revenues in both
Safety and Specialty Services, partially offset by the unfavorable
impact of foreign currency rates
- Organic net revenue growth of 12.1% compared to the prior year
period
- Reported and adjusted gross margin increased 70 and 40 basis
points, respectively, compared to prior year period, driven by
outsized growth in Safety Services and overall service work, as
well as disciplined project and customer selection, partially
offset by inflation
- Reported net income was $26 million and diluted EPS was $0.05.
Adjusted net income was $69 million and adjusted diluted EPS was
$0.25, representing a $0.02 increase from prior year period driven
by organic growth in Safety and Specialty Services and an increase
in adjusted gross margin and adjusted EBITDA margin
- Adjusted EBITDA increased by 14.8% (17.6% on a fixed currency
basis) compared to the prior year period and adjusted EBITDA margin
increased 40 basis points to 9.1%, driven by gross margin accretive
organic growth
First Quarter 2023 Segment
Results:
Safety Services
For the Three Months Ended
March 31,
2023
2022
Y/Y
Y/Y (FFX) (a)
Safety Services
Net revenues
$
1,191
$
1,074
10.9
%
14.1
%
Organic net revenue growth (b)
14.1
%
GAAP
Gross profit
$
368
$
327
12.5
%
Gross margin
30.9
%
30.4
%
+ 50 bps
Operating Income
$
96
$
63
52.4
%
Operating margin
8.1
%
5.9
%
+ 220 bps
Adjusted non-GAAP comparison
Adjusted gross profit
$
375
$
338
10.9
%
Adjusted gross margin
31.5
%
31.5
%
─
Adjusted EBITDA
$
147
$
127
15.7
%
18.5
%
Adjusted EBITDA as a % of net revenues
12.3
%
11.8
%
+ 50 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 10.9% driven by double-digit
growth in inspection, service, and monitoring, and pricing
improvements
- Organic net revenue growth of 14.1% compared to the prior year
period
- Operating income increased by 52.4% compared to the prior year
period. Operating margin was 8.1%, representing a 220 basis point
increase compared to the prior year period
- Adjusted EBITDA increased by 15.7% (18.5% on a fixed currency
basis) compared to the prior year period. Adjusted EBITDA margin
was 12.3%, representing a 50 basis point increase compared to prior
year period, driven by strong organic growth and a reduction in
SG&A expense as a percentage of net revenues
Specialty Services
For the Three Months Ended
March 31,
2023
2022
Y/Y
Y/Y (FFX) (a)
Specialty Services
Net revenues
$
430
$
412
4.4
%
4.4
%
Organic net revenue growth (b)
4.4
%
GAAP
Gross profit
$
57
$
49
16.3
%
Gross margin
13.3
%
11.9
%
+ 140 bps
Operating Income
$
—
$
(7
)
NM
Operating margin
NM
(1.7) %
NM
Adjusted non-GAAP comparison
Adjusted gross profit
$
57
$
50
14.0
%
Adjusted gross margin
13.3
%
12.1
%
+ 120 bps
Adjusted EBITDA
$
28
$
23
21.7
%
21.7
%
Adjusted EBITDA as a % of net revenues
6.5
%
5.6
%
+ 90 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 growth of 4.4% driven by increased
activity in the infrastructure and utility markets
- Operating income was $0 million, an increase of $7 million
compared to the prior year period
- Adjusted EBITDA increased by 21.7% compared to the prior year
period. Adjusted EBITDA margin was 6.5%, representing a 90 basis
point increase compared to prior year period, driven by strong
organic growth, an improved mix of service revenue, and disciplined
project and customer selection
Guidance
APi Group is raising its full year net revenue and adjusted
EBITDA guidance originally announced on February 21, 2023
- Net Revenues of $6,875 to $7,025 million, up from $6,800 to
$6,950 million
- Adjusted EBITDA of $740 to $780 million, up from $735 to $775
million
- Adjusted Free Cash Flow Conversion at or above 65% remains
unchanged
APi Group announces guidance for the second quarter of 2023
- Net Revenues of $1,750 to $1,780 million
- Adjusted EBITDA of $195 to $205 million
APi Co-Chair James E. Lillie concluded: “In 2022, APi became the
world’s leading life safety and security services provider with a
global platform serving our customers in over 20 countries while
delivering record financial performance. We are pleased with the
momentum APi is building with an outstanding quarter to start 2023
and have great confidence in the business and the direction we’re
heading.
As we look at our roadmap for sustainable shareholder value
creation, we believe that we can achieve outsized investor returns
in the years ahead by focusing on our long-term “13/60/80” value
creation targets which include organic revenue growth above the
industry average, adjusted EBITDA margin of 13%, driven by our
continued focus on generating 60% of our revenue from inspection,
service, and monitoring, adjusted free cash flow conversion of 80%,
and a target net leverage ratio of 2.0-2.5x. The team continues its
relentless focus on operational improvements across our global
platform which has allowed us to deliver results above expectations
despite a variety of macro continued headwinds. We look forward to
updating you on our progress as we move through the year.”
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 4,
2023. 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 800-343-4136 or
203-518-9856 and provide Conference ID 5208760. You may also attend
and view the presentation (live or by replay) via webcast by
accessing the following URL:
https://event.on24.com/wcc/r/4080945/D6D59A6F2DCC2DE2195E0B02B73E1D8D
A replay of the call will be available shortly after completion
of the live call/webcast via telephone at 800-723-0532 or
402-220-2655 or via the webcast link above.
About APi:
APi was founded in 1926 and has since grown to be the world’s
premier life safety, security, monitoring, and specialty services
business with $6.6 billion in revenue, operating in over 20
countries, with ~27,000 team members. Our core purpose of Building
Great Leaders defines who we are. This focus and other foundational
priorities provide the platform from which we can continue to
enhance shareholder value. We operate two business segments: Safety
Services and Specialty Services. In our Safety Services segment,
our mission is to protect our customer’s people, property and
high-value assets. We design, install, service, and monitor fire
detection and suppression systems and security systems for a wide
range of end customers in a broad range of industries. In our
Specialty Services segment, we provide specialized industrial
services, which include maintenance and repair of critical
infrastructure such as underground electric, gas, water, sewer, and
telecommunications infrastructure. We believe our growth is
sustainable and resilient for the long-term because our business is
increasingly driven by statutorily required, recurring service
revenue, because we operate in highly diversified end-markets, and
because our teams deliver industry-leading performance for our
customers. More information can be found at www.apigroup.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 acquire other
businesses and successfully integrate acquired businesses into our
operations; (v) risks associated with the Company’s decentralized
business model and participation in joint ventures; (vi) improperly
managed projects or project delays; (vii) adverse developments in
the credit markets which could impact the Company’s ability to
secure financing in the future; (viii) the Company’s substantial
level of indebtedness; (ix) risks associated with the Company’s
contract portfolio; (x) changes in applicable laws or regulations;
(xi) the possibility that the Company may be adversely affected by
other economic, business, and/or competitive factors; (xii) the
impact of the conflict between Russia and Ukraine; (xiii) 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; and (xiv) other risks and uncertainties, including those
discussed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2022 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,
net COVID-19 relief, non-service pension benefit, severance related
costs related to corporate leadership changes and certain tax
benefits from the acquisition of APi Group, Inc. (the “APi
Acquisition”) 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 2023.
- 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, and one-time and other events such as post-measurement
period purchase accounting adjustments for acquisitions, 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.
Beginning with the first quarter of 2023, the Company simplified
the presentation of the non-GAAP reconciliations, by combining
certain adjustment line items. Certain prior year amounts have been
reclassified to conform to this presentation and the information in
the tables below has been retroactively adjusted to reflect these
changes in adjustment categories. Specifically, amounts previously
classified as “integration and reorganization” have been
reclassified and included with “business process transformation,”
and prior period amounts classified as “acquisition expenses” and
“recent acquisition transition expenses” have been combined and
categorized as “acquisition related expenses.”
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, net COVID-19 relief, and certain tax benefits from the APi
Acquisition, 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)
For the Three Months Ended
March 31,
2023
2022
Net revenues
$
1,614
$
1,471
Cost of revenues
1,189
1,095
Gross profit
425
376
Selling, general, and administrative
expenses
352
383
Operating income (loss)
73
(7
)
Interest expense, net
37
27
Loss on extinguishment of debt, net
3
—
Non-service pension benefit
(3
)
(11
)
Investment income and other, net
(2
)
—
Other expense, net
35
16
Income (loss) before income taxes
38
(23
)
Income tax provision (benefit)
12
(16
)
Net income (loss)
$
26
$
(7
)
Net income (loss) attributable to common
shareholders:
Stock dividend on Series B Preferred
Stock
(11
)
(11
)
Net income (loss) attributable to common
shareholders
$
15
$
(18
)
Net income (loss) per common
share
Basic
$
0.05
$
(0.08
)
Diluted
0.05
(0.08
)
Weighted average shares
outstanding
Basic
234
232
Diluted
267
232
APi Group Corporation
Condensed Consolidated Balance
Sheets (GAAP)
(Amounts in millions)
(Unaudited)
March 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
363
$
605
Accounts receivable, net
1,221
1,313
Inventories
163
163
Contract assets
490
459
Prepaid expenses and other current
assets
127
112
Total current assets
2,364
2,652
Property and equipment, net
412
407
Operating lease right of use assets
209
222
Goodwill
2,405
2,382
Intangible assets, net
1,734
1,784
Deferred tax assets
111
108
Pension and post-retirement assets
404
392
Other assets
127
144
Total assets
$
7,766
$
8,091
Liabilities, Redeemable Convertible
Preferred Stock, and Shareholders’ Equity
Current liabilities:
Short-term and current portion of
long-term debt
$
6
$
206
Accounts payable
442
490
Accrued liabilities
560
689
Contract liabilities
469
463
Operating and finance leases
72
73
Total current liabilities
1,549
1,921
Long-term debt, less current portion
2,588
2,583
Pension and post-retirement
obligations
38
40
Operating and finance leases
155
166
Deferred tax liabilities
344
340
Other noncurrent liabilities
130
117
Total liabilities
4,804
5,167
Total redeemable convertible preferred
stock
797
797
Total shareholders' equity
2,165
2,127
Total liabilities, redeemable convertible
preferred stock, and shareholders’ equity
$
7,766
$
8,091
APi Group Corporation
Condensed Consolidated Statements
of Cash Flows (GAAP)
(Amounts in millions)
(Unaudited)
For the Three Months Ended
March 31,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
26
$
(7
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
74
76
Deferred taxes
—
(10
)
Share-based compensation expense
5
3
Profit-sharing expense
5
3
Non-cash lease expense
18
16
Net periodic pension benefit
(3
)
(11
)
Loss on extinguishment of debt, net
3
—
Other, net
(4
)
5
Pension contributions
(1
)
(27
)
Changes in operating assets and
liabilities, net of effects of acquisitions
(124
)
(166
)
Net cash used in operating activities
(1
)
(118
)
Cash flows from investing
activities:
Acquisitions, net of cash acquired
(10
)
(2,875
)
Purchases of property and equipment
(21
)
(12
)
Proceeds from sales of property,
equipment, and businesses
4
3
Net cash used in investing activities
(27
)
(2,884
)
Cash flows from financing
activities:
Proceeds from long-term borrowings
—
1,101
Payments on long-term borrowings
(202
)
(30
)
Payments of debt issuance costs
—
(25
)
Repurchases of common stock
(12
)
(11
)
Proceeds from equity issuances
—
797
Restricted shares tendered for taxes
(2
)
(1
)
Net cash (used in) provided by financing
activities
(216
)
1,831
Effect of foreign currency exchange rate
on cash, cash equivalents, and restricted cash
2
(2
)
Net decrease in cash, cash equivalents,
and restricted cash
(242
)
(1,173
)
Cash, cash equivalents, and restricted
cash, beginning of period
607
1,491
Cash, cash equivalents, and restricted
cash, end of period
$
365
$
318
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Organic change in net revenues
(non-GAAP)
(Unaudited)
Organic change in net
revenues
For the Three Months Ended
March 31, 2023
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
10.9
%
(3.2
)%
14.1
%
—
14.1
%
Specialty Services
4.4
%
─
4.4
%
—
4.4
%
Consolidated
9.7
%
(2.4
)%
12.1
%
—
12.1
%
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 2023.
(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, 2023.
(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
For the Three Months Ended
March 31,
2023
2022
Gross profit (as reported)
$
425
$
376
Adjustments to reconcile gross profit to
adjusted gross profit:
Backlog amortization
(a)
7
3
Inventory step-up
(b)
—
9
Adjusted gross profit
$
432
$
388
Net revenues
$
1,614
$
1,471
Adjusted gross margin
26.8
%
26.4
%
Adjusted SG&A
For the Three Months Ended
March 31,
2023
2022
Selling, general, and administrative
expenses ("SG&A") (as reported)
$
352
$
383
Adjustments to reconcile SG&A to
adjusted SG&A:
Amortization of intangible assets
(c)
(48
)
(54
)
Contingent consideration and
compensation
(d)
(2
)
(4
)
Business process transformation
expenses
(e)
(4
)
(8
)
Acquisition related expenses
(f)
(4
)
(38
)
Other
(g)
12
—
Adjusted SG&A expenses
$
306
$
279
Net revenues
$
1,614
$
1,471
Adjusted SG&A as a % of net
revenues
19.0
%
19.0
%
Notes:
(a)
Adjustment to reflect the addback
of amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the
elimination of costs related to the fair value step-up of acquired
inventory.
(c)
Adjustment to reflect the addback
of amortization expense.
(d)
Adjustment to reflect the
elimination of the expense attributable to deferred consideration
to prior owners of acquired businesses not expected to continue or
recur.
(e)
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.
(f)
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.
(g)
Adjustment to reflect the
elimination of changes in fair value estimates to acquired
liabilities.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
EBITDA and adjusted EBITDA
(non-GAAP)
(Amounts in millions)
(Unaudited)
For the Three Months Ended
March 31,
2023
2022
Net income (loss) (as reported)
$
26
$
(7
)
Adjustments to reconcile net income (loss)
to EBITDA:
Interest expense, net
37
27
Income tax provision (benefit)
12
(16
)
Depreciation and amortization
74
76
EBITDA
$
149
$
80
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
2
4
Non-service pension benefit
(b)
(3
)
(11
)
Inventory step-up
(c)
—
9
Business process transformation
expenses
(d)
4
8
Acquisition related expenses
(e)
4
38
Loss on extinguishment of debt, net
(f)
3
—
Other
(g)
(12
)
—
Adjusted EBITDA
$
147
$
128
Net revenues
$
1,614
$
1,471
Adjusted EBITDA as a % of net revenues
9.1
%
8.7
%
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 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 costs related to the fair value step-up of acquired
inventory.
(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 changes in fair value estimates to acquired
liabilities.
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)
For the Three Months Ended
March 31,
2023
2022
Income (loss) before income tax provision
(benefit) (as reported)
$
38
$
(23
)
Adjustments to reconcile income (loss)
before income tax provision (benefit) to adjusted income before
income tax provision:
Amortization of intangible assets
(a)
55
57
Contingent consideration and
compensation
(b)
2
4
Non-service pension benefit
(c)
(3
)
(11
)
Inventory step-up
(d)
—
9
Business process transformation
expenses
(e)
4
8
Acquisition related expenses
(f)
4
38
Loss on extinguishment of debt, net
(g)
3
—
Other
(h)
(12
)
—
Adjusted income before income tax
provision (benefit)
$
91
$
82
Income tax provision (benefit) (as
reported)
$
12
$
(16
)
Adjustments to reconcile income tax
provision (benefit) to adjusted income tax provision:
Income tax provision adjustment
(i)
10
36
Adjusted income tax provision
$
22
$
20
Adjusted income before income tax
provision
$
91
$
82
Adjusted income tax provision
22
20
Adjusted net income
$
69
$
62
Diluted weighted average shares
outstanding (as reported)
267
232
Adjustments to reconcile diluted weighted
average shares outstanding to adjusted diluted weighted average
shares outstanding:
Dilutive impact of Series A Preferred
Stock
(j)
4
4
Dilutive impact of Series B Preferred
Stock
(k)
—
33
Adjusted diluted weighted average shares
outstanding
271
269
Adjusted diluted EPS
$
0.25
$
0.23
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 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 costs related to the fair value step-up of acquired
inventory.
(e)
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.
(f)
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.
(g)
Adjustment to reflect the
elimination of loss on extinguishment of debt resulting from early
repayments and repurchases of long-term debt.
(h)
Adjustment to reflect the
elimination of changes in fair value estimates to acquired
liabilities.
(i)
Adjustment to reflect an adjusted
effective cash tax rate of 24% for the three months ended March 31,
2023 and 2022.
(j)
Adjustment for the three months
ended March 31, 2023 and 2022 reflects addition of the dilutive
impact of 4 million shares associated with the deemed conversion of
Series A Preferred Stock.
(k)
Adjustment for the three months
ended March 31, 2022 reflects addition of the GAAP dilutive impact
of 33 million shares associated with the deemed conversion of
Series B Preferred Stock.
APi Group Corporation
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
For the Three Months Ended
March 31,
2023 (a)
2022 (a)
Safety Services
Net revenues
$
1,191
$
1,074
Adjusted gross profit
375
338
Adjusted EBITDA
147
127
Adjusted gross margin
31.5
%
31.5
%
Adjusted EBITDA as a % of net revenues
12.3
%
11.8
%
Specialty Services
Net revenues
$
430
$
412
Adjusted gross profit
57
50
Adjusted EBITDA
28
23
Adjusted gross margin
13.3
%
12.1
%
Adjusted EBITDA as a % of net revenues
6.5
%
5.6
%
Total net revenues before corporate and
eliminations
(b)
$
1,621
$
1,486
Total adjusted EBITDA before corporate and
eliminations
(b)
175
150
Adjusted EBITDA as a % of net revenues
before corporate and eliminations
(b)
10.8
%
10.1
%
Corporate and Eliminations
Net revenues
$
(7
)
$
(15
)
Adjusted EBITDA
(28
)
(22
)
Total Consolidated
Net revenues
$
1,614
$
1,471
Adjusted gross profit
432
388
Adjusted EBITDA
147
128
Adjusted gross margin
26.8
%
26.4
%
Adjusted EBITDA as a % of net revenues
9.1
%
8.7
%
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)
For the Three Months Ended
March 31, 2023
For the Three Months Ended
March 31, 2022
As Reported
Adjustments
As Adjusted
As Reported
Adjustments
As Adjusted
Safety Services
Net revenues
$
1,191
$
—
$
1,191
$
1,074
$
—
$
1,074
Cost of revenues
823
(7
)
(a)
816
747
(2
)
(a)
736
(9
)
(b)
Gross profit
$
368
$
7
$
375
$
327
$
11
$
338
Gross margin
30.9
%
31.5
%
30.4
%
31.5
%
Specialty Services
Net revenues
$
430
$
—
$
430
$
412
$
—
$
412
Cost of revenues
373
—
373
363
(1
)
(a)
362
Gross profit
$
57
$
—
$
57
$
49
$
1
$
50
Gross margin
13.3
%
13.3
%
11.9
%
12.1
%
Corporate and Eliminations
Net revenues
$
(7
)
$
—
(7
)
$
(15
)
$
—
$
(15
)
Cost of revenues
(7
)
—
(7
)
(15
)
—
(15
)
Total Consolidated
Net revenues
$
1,614
$
—
$
1,614
$
1,471
$
—
$
1,471
Cost of revenues
1,189
(7
)
(a)
1,182
1,095
(3
)
(a)
1,083
(9
)
(b)
Gross profit
$
425
$
7
$
432
$
376
$
12
$
388
Gross margin
26.3
%
26.8
%
25.6
%
26.4
%
Notes:
(a)
Adjustment to reflect the addback
of amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the
elimination of costs related to the fair value step-up of acquired
inventory.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
For the Three Months Ended
March 31,
2023
2022
Safety Services
Safety Services EBITDA
$
146
$
123
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
1
1
Non-service pension benefit
(b)
(3
)
(11
)
Inventory step-up
(c)
—
9
Acquisition related expenses
(d)
3
5
Safety Services adjusted EBITDA
$
147
$
127
Specialty Services
Specialty Services EBITDA
$
27
$
20
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
1
3
Specialty Services adjusted EBITDA
$
28
$
23
Corporate and Eliminations
Corporate and Eliminations EBITDA
$
(24
)
$
(63
)
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Business process transformation
expenses
(e)
4
8
Acquisition related expenses
(d)
1
33
Loss on extinguishment of debt, net
(f)
3
—
Other
(g)
(12
)
—
Corporate and Eliminations adjusted
EBITDA
$
(28
)
$
(22
)
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 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 costs related to the fair value step-up of acquired
inventory.
(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 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.
(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 changes in fair value estimates to acquired
liabilities.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Change in adjusted EBITDA
(non-GAAP)
(Unaudited)
Change in adjusted
EBITDA
For the Three Months Ended
March 31, 2023
Change in
Foreign
Change in
Adjusted EBITDA
currency
Adjusted EBITDA
(public rates) (a)
translation (b)
(fixed currency) (c)
Safety Services
15.7
%
(2.8
)%
18.5
%
Specialty Services
21.7
%
—
21.7
%
Consolidated
14.8
%
(2.8
)%
17.6
%
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 2023.
(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)
For the Three Months Ended
March 31,
2023
2022
Net cash used in operating activities (as
reported)
$
(1
)
$
(118
)
Less: Purchases of property and
equipment
(21
)
(12
)
Free cash flow
$
(22
)
$
(130
)
Add: Cash payments related to following
items:
Contingent compensation
(a)
$
—
$
1
Pension contributions
(b)
—
27
Business process transformation
expenses
(c)
5
8
Acquisition related expenses
(d)
4
47
Restructuring payments
(e)
5
—
Payroll tax deferral
(f)
8
—
Adjusted free cash flow
$
—
$
(47
)
Adjusted EBITDA
(g)
$
147
$
128
Adjusted free cash flow conversion
—
(36.7
)%
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 initial pension contribution payment related to the
Chubb acquisition not expected to continue or recur.
(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 payments
made for restructuring programs.
(f)
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. In January 2023, the final
payments were made on the amount deferred in 2020.
(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/20230504005427/en/
Investor Relations
Inquiries: Adam Fee Vice President of Investor Relations
Tel: +1 651-240-7252 Email: investorrelations@apigroupinc.us
Media Contact: Liz Cohen
Kekst CNC Tel: +1 212-521-4845 Email: Liz.Cohen@kekstcnc.com
APi (NYSE:APG)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
APi (NYSE:APG)
Historical Stock Chart
Von Mai 2023 bis Mai 2024