APi Group Reports First Quarter 2025 Financial Results

-Record first quarter net revenues of $1.7 billion, representing accelerating year-over-year growth of 7.4% with continued double-digit inspection revenue growth in North American Safety Services-

-First quarter reported net income of $35 million and record first quarter adjusted EBITDA of $193 million with year-over-year adjusted EBITDA margin expansion of 30 basis points-

-Repurchased $75 million of common stock and authorized new $1 billion share repurchase program-

-Plans to announce new long-term financial targets at Investor Day on May 21 in New York City-

APi Group Corporation (NYSE:APG) ("APi" or the "Company") today reported its financial results for the three months ended March 31, 2025.

Russ Becker, APi's President and Chief Executive Officer stated: "We are off to a strong start in 2025, with a return to traditional levels of organic growth after our thoughtful and selective pruning of certain customer accounts in 2024. We've also continued to expand margins and deploy capital on M&A and share repurchases to drive shareholder value. Our robust backlog, variable cost structure, the statutorily-driven demand for our services, and the diversity of the global end markets we serve combine to provide a protective moat around the business. We believe this positions us well to navigate the dynamic tariff variables in the marketplace.

We remain focused on creating sustainable shareholder value by delivering on our "13/60/80" targets, with a near-term focus on generating adjusted EBITDA margins of 13% or more this year. As a reminder, we will be hosting an investor day on May 21 in New York for professional investors, where we will be detailing new, meaningfully higher, long-term financial targets and updates to our strategic plan."

First Quarter 2025 Consolidated Results:

• Reported net revenue increased by 7.4% (1.9% organic) driven by acquisitions, pricing improvements, strong growth in inspection, service, and monitoring revenues and project revenues in the Safety Services segment, partially offset by an anticipated decrease in Specialty Services revenues.
• Reported and adjusted gross margin increased 80 and 100 basis points, respectively, compared to prior year period due to disciplined customer and project selection, pricing improvements, and value capture initiatives in the Safety Services segment.
• Reported net income was $35 million and diluted EPS was $0.11. Adjusted net income was $104 million and adjusted diluted EPS was $0.37, representing an 8.8% increase compared to prior year period driven by strong adjusted EBITDA growth, partially offset by an increase in interest expense and adjusted weighted average diluted shares outstanding.
• Adjusted EBITDA increased by 10.3% (11.5% on a fixed currency basis) compared to the prior year period and adjusted EBITDA margin increased 30 basis points to 11.2%, primarily due to the increase in gross margin, partially offset by lower fixed cost absorption in the Specialty Services segment.

First Quarter 2025 Segment Results:

Safety Services

• Reported net revenue growth of 13.4% (5.6% organic) driven by acquisitions completed in the last year, pricing improvements, and strong growth in inspection, service and monitoring revenues as well as project revenues.
• Reported and adjusted gross margin increased 70 and 90 basis points, respectively, compared to prior year period driven by disciplined customer and project selection, pricing improvements, and value capture initiatives.
• Reported segment earnings increased by 20.6% (21.6% on a fixed currency basis) compared to the prior year period. Segment earnings margin was 15.7%, representing a 90 basis point increase compared to prior year period, primarily due to the increase in adjusted gross margin.

Specialty Services

• Reported net revenue decreased by 6.8% (6.6% organic decrease) driven by an anticipated decrease in project and service revenues and adverse weather impacts.
• Reported and adjusted gross margin each decreased by 150 basis points compared to prior year period driven by lower fixed cost absorption due to lower net revenues, partially offset by the favorable impact of planned disciplined customer and project selection.
• Reported segment earnings decreased by 32.6% compared to prior year period. Segment earnings margin was 6.4%, representing a 240 basis point decrease compared to prior year period, primarily driven by lower fixed cost absorption due to lower net revenues.

Guidance

APi increases its full year 2025 guidance for net revenue and adjusted EBITDA to reflect current foreign currency exchange rates.

• Net Revenues of $7,400 to $7,600 million, up from $7,300 to $7,500 million
• Adjusted EBITDA of $985 to $1,035 million, up from $970 to $1,020 million
• Adjusted Free Cash Flow Conversion of approximately 75%

APi announces its guidance for the second quarter of 2025.

• Net Revenues of $1,875 to $1,925 million
• Adjusted EBITDA of $260 to $270 million

New Share Repurchase Authorization

The Company announced that its Board of Directors has authorized a new share repurchase program to purchase up to $1 billion of shares of the Company's common stock. The timing, amount and manner of any repurchases under the new repurchase program will be determined at the discretion of the Company's leadership based on a number of factors, including the availability of capital, capital allocation alternatives, and market conditions for the Company's common stock. The share repurchase program is open-ended and does not require the Company to acquire any specific number of shares. It may be modified, suspended, extended, or terminated by the Company at any time without prior notice and may be executed through open-market purchases, privately negotiated transactions or otherwise. We may enter into Rule 10b5-1 trading plans in connection with such repurchases. This new authorization replaces the Company's previous share repurchase authorization announced in February of last 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 1, 2025. Participants on the call will include Russell A. Becker, President and Chief Executive Officer; David Jackola, 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 4836166. You may also attend and view the presentation (live or by replay) via webcast by accessing the following URL:

https://events.q4inc.com/attendee/107956282

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 fire and life safety, security, elevator and escalator, 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.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 our acquisitions and restructuring program, 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) failure to realize expected benefits from the Company's other business strategies, including the Company's disciplined approach to customer and project selection, the Company's asset-light, services-focused business model and its expected impact on future capital expenditures, and the expected efficiencies from the realignment of the Company's safety services segment; (vii) risks associated with the Company's decentralized business model and participation in joint ventures; (viii) improperly managed projects or project delays; (ix) adverse developments in the credit markets which could impact the Company's ability to secure financing in the future; (x) the Company's substantial level of indebtedness; (xi) risks associated with the Company's contract portfolio; (xii) changes in applicable laws or regulations; (xiii) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (xiv) the impact of a global armed conflict; (xv) 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; (xvi) geopolitical risks; and (xvii) other risks and uncertainties, including those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 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, (c) in the case of adjusted EBITDA, determines certain elements of management's incentive compensation, and (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 systems and business enablement expenses, business process transformation expenses, 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 are useful because they provide investors with a meaningful perspective on the current underlying performance of the Company's core ongoing operations.

• The Company supplements the reporting of its consolidated financial information with certain financial measures, including adjusted EBITDA, a non-GAAP financial measure, which is defined as earnings before interest, taxes, depreciation and amortization, excluding the impact of certain non-cash and other specifically identified items, and segment earnings. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenues. Segment earnings, which is defined as earnings before interest, taxes, depreciation and amortization, excluding the impact of certain non-cash and other specifically identified items, is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. Segment earnings margin is calculated as segment earnings divided by net revenue. The Company believes these measures provide meaningful information and help investors understand the Company's financial results and assess its prospects for future performance. The Company uses adjusted EBITDA and segment earnings to evaluate its performance, both internally and as compared with its peers, because these measures exclude certain items that may not be indicative of the Company's core operating results.

• The Company discloses fixed currency net revenues and adjusted EBITDA on a consolidated basis and segment earnings on a segment specific basis to provide a more complete understanding of underlying revenue, adjusted EBITDA, and segment earnings trends by providing net revenues, adjusted EBITDA, and segment earnings 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 2025.

• 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.

• 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, systems and business enablement expenses, business process transformation expenses, 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, debt repricing fees, and public offerings. 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, systems and business enablement expenses, business process transformation expenses, 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.

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