APi Group Corporation (NYSE:APG) Q3 2023 Earnings Call November 2, 2023 8:30 AM ET Company Participants Adam Fee - Vice President of Investor Relations Russell A. Becker - President and Chief Executive Officer Kevin Krumm - Executive Vice President and Chief Financial Officer Martin E. Franklin - Board Co-Chairs James E. Lillie - Board Co-Chairs Conference Call Participants Andrew Wittmann - Baird Kathryn Thompson - Thompson Research Group Jon Tanwanteng - CJS Securities Parth Patel - JP Morgan Operator Goo ...

Q3 2023 Earnings Call Forward ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ___________________________________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |------------------------- ...

APi Group Corporation. (NYSE:APG) Q2 2023 Earnings Conference Call August 3, 2023 8:30 AM ET Company Participants Adam Fee - Vice President of Investor Relations Russell Becker - President and CEO Kevin Krumm - Executive Vice President and Chief Financial Officer Martin Franklin - Board Co-Chairs James Lillie - Board Co-Chairs Conference Call Participants Jonathan Tanwanteng - CJS Securities Kiran Patel-O’Connor - Barclays Brian Biros - Thompson Research Group Andy Kaplowitz - Citigroup Christopher Snyder - ...

Q2 2023 Earnings Call Forward ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39275 APi Group Corporation (Exact Name of Registrant as Specified in its Charter) Delaware 98-1510303 (State or other jurisdicti ...

APi Group Corporation (NYSE:APG) Q1 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants Adam Fee - Vice President of Investor Relations Jim Lillie - Co-Chair Russ Becker - President and Chief Executive Officer Kevin Krumm - Executive Vice President and Chief Financial Officer Conference Call Participants Andy Kaplowitz - Citigroup Kiran Patel-O'Connor - Barclays Kathryn Thompson - Thompson Research Group Andy Wittmann - Baird Chris Snyder - UBS David Paige - RBC David Ridley-Lane - Ban ...

Q1 2023 Earnings Call May 4, 2023 Forward Looking Statements and Disclaimers Please note that in this presentation 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, ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2023 results show a 9.7% revenue increase to $1,614 million and a shift to a $26 million net income from a prior-year loss [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets were $7.77 billion as of March 31, 2023, with total liabilities decreasing to $4.80 billion and shareholders' equity slightly increasing to $2.17 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $2,364 | $2,652 | | **Total Assets** | **$7,766** | **$8,091** | | **Total Current Liabilities** | $1,549 | $1,921 | | **Total Liabilities** | **$4,804** | **$5,167** | | **Total Shareholders' Equity** | $2,165 | $2,127 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a net income of $26 million in Q1 2023, a significant turnaround from a $7 million net loss in Q1 2022, driven by revenue and gross profit growth Statements of Operations Summary (in millions, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Revenues | $1,614 | $1,471 | | Gross Profit | $425 | $376 | | Operating Income (Loss) | $73 | $(7) | | Net Income (Loss) | $26 | $(7) | | Diluted EPS | $0.05 | $(0.08) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved significantly to $1 million in Q1 2023 from $118 million in Q1 2022, while financing activities used $216 million for debt and stock repurchases Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1) | $(118) | | Net cash used in investing activities | $(27) | $(2,884) | | Net cash (used in) provided by financing activities | $(216) | $1,831 | | **Net decrease in cash** | **$(242)** | **$(1,173)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Chubb acquisition, a $105 million restructuring program, revenue disaggregation, and debt structure, with growth shown in both company segments - The company completed its acquisition of the Chubb fire and security business in 2022 for a total net consideration of **$2,893 million**, resulting in **$1,367 million of goodwill**[27](index=27&type=chunk)[29](index=29&type=chunk) - A multi-year Chubb restructuring program is underway, estimated to cost approximately **$105 million** by fiscal year-end 2024, with **$30 million** in costs incurred as of March 31, 2023[34](index=34&type=chunk) Net Revenues by Segment (Q1 2023, in millions) | Segment | Net Revenues | | :--- | :--- | | Safety Services | $1,191 | | Specialty Services | $430 | | Corporate and Eliminations | $(7) | | **Total** | **$1,614** | Total Debt Obligations (in millions) | Date | Total Debt Obligations | | :--- | :--- | | March 31, 2023 | $2,632 | | December 31, 2022 | $2,832 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 9.7% revenue growth, improved gross margin of 26.3%, reduced SG&A expenses, and strong liquidity position of $809 million [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q1 2023 net revenues rose 9.7% to $1,614 million, gross margin expanded by 70 basis points, and SG&A expenses fell, reversing a prior-year operating loss Consolidated Results of Operations (in millions) | Metric | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $1,614 | $1,471 | $143 | 9.7% | | Gross Profit | $425 | $376 | $49 | 13.0% | | SG&A Expenses | $352 | $383 | $(31) | (8.1)% | | Operating Income (Loss) | $73 | $(7) | $80 | NM | - The increase in net revenues was primarily driven by growth in inspection, service, and monitoring revenue within both the Safety Services and Specialty Services segments[162](index=162&type=chunk) - The decrease in SG&A expenses was mainly due to lower acquisition and integration-related expenses incurred in Q1 2023 compared to the same period in the prior year[168](index=168&type=chunk) [Operating Segment Results](index=35&type=section&id=Operating%20Segment%20Results) The Safety Services segment revenue grew 10.9% with higher margins, while the Specialty Services segment revenue increased 4.4% with significantly expanded margins Segment Performance (Q1 2023 vs Q1 2022, in millions) | Segment | Net Revenues (2023) | Net Revenues (2022) | EBITDA (2023) | EBITDA (2022) | | :--- | :--- | :--- | :--- | :--- | | Safety Services | $1,191 | $1,074 | $146 | $123 | | Specialty Services | $430 | $412 | $27 | $20 | - The increase in Safety Services operating margin was primarily the result of disciplined project and customer selection and lower acquisition and integration related expenses[181](index=181&type=chunk) - The increase in Specialty Services revenue was primarily driven by increased activity in the infrastructure and utility markets for emergency service work[182](index=182&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position of $809 million, significantly improved operating cash flow, and executed debt repayments and stock repurchases - Total liquidity as of March 31, 2023 was **$809 million**, comprising **$363 million in cash** and **$446 million available** under the Revolving Credit Facility[193](index=193&type=chunk) - Net cash used in operating activities **improved to $1 million** for Q1 2023 from **$118 million** in Q1 2022, primarily due to higher net income and lower working capital needs[198](index=198&type=chunk) - During Q1 2023, the company **repaid an aggregate of $200 million** on its term loans and **repurchased 541,316 shares** of common stock for approximately **$12 million**[207](index=207&type=chunk)[194](index=194&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from interest rates, foreign currency, and commodity prices, which it mitigates using various hedging instruments - The company mitigates interest rate risk on its term loans through interest rate swaps; a hypothetical **100-basis point increase** in rates would have **increased interest expense by approximately $4 million** for Q1 2023[215](index=215&type=chunk)[216](index=216&type=chunk) - Revenues from foreign operations represented approximately **40% of consolidated net revenues** for Q1 2023, exposing the company to foreign currency translation risk[217](index=217&type=chunk) - The company is exposed to supply chain risks, including price fluctuations for materials like copper and steel, and increases in energy prices for its vehicle fleet[221](index=221&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were not effective as of March 31, 2023, due to material weaknesses in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of March 31, 2023, due to existing **material weaknesses** in internal control over financial reporting[224](index=224&type=chunk) - The material weaknesses relate to user access controls for an IT system and ineffective process-level controls over revenue recognition stemming from insufficient training[227](index=227&type=chunk) - Management has made progress on its multi-year remediation plan and believes full remediation of the material weaknesses can be achieved by the end of the year[230](index=230&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2022 Annual Report on Form 10-K - There have been **no material changes** to the company's risk factors from those contained in the Form 10-K for the year ended December 31, 2022[233](index=233&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2023, the company repurchased 541,316 shares for approximately $12 million, with $195 million remaining under its repurchase authorization Share Repurchases (Q1 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2023 | 32,754 | $18.73 | | Feb 2023 | 0 | N/A | | Mar 2023 | 508,562 | $21.63 | | **Total** | **541,316** | **$21.45** | - As of March 31, 2023, approximately **$195 million remained available** for repurchase under the company's stock repurchase program, which expires on February 29, 2024[235](index=235&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters is provided in Exhibit 95.1 of this report - Disclosures related to mine safety are included in Exhibit 95.1 to this quarterly report[236](index=236&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required Sarbanes-Oxley certifications and Inline XBRL data files - The report includes certifications from the CEO and CFO as required by Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)

Financial Data and Key Metrics Changes - Reported net revenues for Q4 2022 increased by 53.1% to $1.7 billion compared to $1.1 billion in the prior year period, driven by acquisitions in Safety Services [17] - For the full year 2022, reported net revenues increased by 66.4% to $6.6 billion compared to $3.9 billion in the prior year, with organic growth of 12.2% [18] - Adjusted diluted earnings per share for Q4 was $0.36, a $0.07 increase from the prior year, and for the full year, it was $1.33, a $0.30 increase [20] Business Line Data and Key Metrics Changes - Safety Services reported net revenues for Q4 2022 increased by 111% to $1.2 billion, with organic growth of 18.1% [20] - Specialty Services saw a decline in net revenues for Q4 2022 by 8.9% to $510 million, but for the full year, revenues increased by 6.4% to $2 billion [23][24] Market Data and Key Metrics Changes - The backlog as of December 2022 was up approximately 9% compared to December 2021, indicating strong demand [14] - The company noted that end markets such as data centers, semiconductors, and healthcare remain strong, with minimal exposure to retail and hospitality sectors [46][47] Company Strategy and Development Direction - The company aims for a net debt to adjusted EBITDA ratio of 2 to 2.5x by year-end 2023, focusing on cash generation and deleveraging [27] - The strategy includes building a global inspection sales force and enhancing cross-selling opportunities to drive organic growth and margin expansion [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience and growth prospects despite potential macroeconomic challenges, citing a strong backlog and diverse end markets [14][15] - The company anticipates net revenues for 2023 to range between $6.8 billion to $6.95 billion, with organic growth in line with historical performance [28] Other Important Information - Adjusted free cash flow for 2022 was $412 million, representing an 84.8% increase compared to the prior year [10] - The company expects to incur between $55 million to $65 million in restructuring costs related to the Chubb restructuring program in 2023 [29] Q&A Session Summary Question: What is the outlook for pricing in 2023? - Management indicated that pricing has been sticky and sustainable, with expectations to continue taking price adjustments, especially in the spring when union agreements reset [36][37] Question: Have there been any changes in customer behavior due to recession concerns? - Management noted no significant changes in customer behavior, supported by a strong backlog and ongoing opportunities [39][40] Question: How has supply chain performance been recently? - Supply chain disruptions remain, but improvements in productivity are expected as issues moderate in 2023 [42][44] Question: What is the demand outlook among major end markets? - Demand remains strong in sectors like data centers and healthcare, with minimal exposure to negatively impacted areas [46][47] Question: What are the expectations for Chubb synergies in 2023? - Management anticipates realizing $5 million to $10 million in savings from restructuring actions taken in 2022, with further savings expected in 2023 [49] Question: How is the backlog expected to change throughout 2023? - Management expects to burn through backlog in Q4 and build it up in the first half of the year, indicating a disciplined approach to project selection [51][52] Question: What are the drivers for margin expansion post-2023? - Key drivers include continued delivery of value capture opportunities, stickiness of pricing, and recovery of gross margins as inflationary pressures ease [54]