PART I This section details APi Group's business operations, industry context, competitive advantages, strategic initiatives, and key operational aspects. [Item 1. Business](index=3&type=section&id=Item%201.%20Business) APi Group is a global leader in safety and specialty services, driving growth through recurring revenue, strategic acquisitions, and a strong leadership culture across its Safety and Specialty Services segments. - APi Group is a global, market-leading business services provider of safety and specialty services in over **500 locations worldwide**, offering statutorily mandated and other contracted services to a strong base of long-standing customers[22](index=22&type=chunk) - The company operates under two primary segments: Safety Services (end-to-end integrated occupancy systems including fire protection, HVAC, and entry systems) and Specialty Services (infrastructure services and specialized industrial plant services)[25](index=25&type=chunk)[26](index=26&type=chunk) - Key competitive strengths include leading market positions, repeat revenue from diverse customers, a differentiated business model focused on selling inspection work first, attractive industry fundamentals, a disciplined acquisition platform (over **90 acquisitions since 2005**), and a distinct leadership culture[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Our Business](index=5&type=section&id=Our%20Business) APi Group provides global safety and specialty services, focusing on organic growth, strategic acquisitions, and leveraging its scale across two primary segments. - APi Group is a global, market-leading business services provider of safety and specialty services in over **500 locations worldwide**[22](index=22&type=chunk) - The company's core strategies include driving organic growth, growth through accretive acquisitions, promoting best practice sharing, and leveraging scale and service offerings[23](index=23&type=chunk) - APi Group operates under two primary segments: Safety Services (fire protection, HVAC, entry systems) and Specialty Services (infrastructure and industrial plant services)[25](index=25&type=chunk)[26](index=26&type=chunk) [Our Industry](index=6&type=section&id=Our%20Industry) The company operates in highly fragmented industries, benefiting from increased regulation and deferred infrastructure investment driving demand for its services. - The industries in which APi Group operates are highly fragmented, comprising national, regional, and local companies[27](index=27&type=chunk) - Increased regulation, particularly in life safety (e.g., NFPA and International Code Council building codes), continuously generates demand for recurring inspection and maintenance services[28](index=28&type=chunk) - Deferred infrastructure investment in the U.S., including the **$550 billion** Infrastructure Investment and Jobs Act, is spurring demand for maintenance, repair, and retrofit services[29](index=29&type=chunk) [Our Competitive Strengths](index=7&type=section&id=Our%20Competitive%20Strengths) APi Group maintains leading market positions through diverse niche industries, recurring revenue, and a differentiated "inspection work first" strategy. - APi Group holds leading market positions in diverse niche industries, including fire protection and sprinkler services, and is among the **top five specialty contractors in North America**[31](index=31&type=chunk) - The company benefits from repeat revenue from a diverse base of long-standing, high-creditworthiness customers, with service inspections often mandated by legislation or insurance[32](index=32&type=chunk) - A key differentiator is the **'inspection work first'** go-to-market strategy in life safety, which leads to subsequent service work, recurring revenue, and higher margins[33](index=33&type=chunk) [Our Business Strategy](index=8&type=section&id=Our%20Business%20Strategy) The company aims for organic growth by increasing recurring service revenue and cross-selling, accelerating growth through accretive acquisitions, and investing in leadership development. - The company aims to drive organic growth by focusing on increasing maintenance, inspection, monitoring, and service revenue, and maximizing cross-selling opportunities[40](index=40&type=chunk)[41](index=41&type=chunk) - APi Group plans to accelerate growth through accretive acquisitions, leveraging its established platform and targeting fragmented markets[41](index=41&type=chunk) - A continuous investment in leadership development through the **'Building Great Leaders®'** platform supports the decentralized operating model and fosters innovation[42](index=42&type=chunk) [Customers](index=9&type=section&id=Customers) APi Group serves a diverse, long-term customer base in both public and private sectors, with no single customer representing more than 5% of total net revenues. - APi Group serves a diverse customer base in both public and private sectors, including Fortune 500 companies, with no single customer accounting for more than **5% of total net revenues in 2022**[45](index=45&type=chunk) - Customer relationships are long-term, often under multi-year master service agreements, providing recurring revenue for inspection, maintenance, and monitoring services[46](index=46&type=chunk) [Government Regulation and Environmental Matters](index=9&type=section&id=Government%20Regulation%20and%20Environmental%20Matters) The company's operations are subject to extensive regulations, with non-compliance potentially leading to significant liabilities, fines, or license revocations. - Business activities are subject to extensive regional, national, state, and local laws and regulations covering compliance, licensing, environmental, workplace safety, data privacy, and anti-corruption[48](index=48&type=chunk) - Failure to comply with these regulations can result in civil and criminal liability, substantial fines, or revocation of operating licenses[49](index=49&type=chunk) - The company is also subject to environmental laws imposing liability for hazardous substance releases, which could lead to cleanup costs, penalties, and damages[52](index=52&type=chunk) [Effect of Seasonality and Cyclical Nature of Business](index=10&type=section&id=Effect%20of%20Seasonality%20and%20Cyclical%20Nature%20of%20Business) The company's revenues and operations are subject to seasonal variations and cyclical industry demand, particularly due to weather conditions and end-user fluctuations. - Net revenues and results of operations are subject to seasonal variations, with lower revenues typically in the first and second quarters due to unfavorable weather conditions in North America[53](index=53&type=chunk) - The industries served are cyclical, and fluctuations in end-user demand or service supply can affect demand for APi Group's services, potentially leading to delays in new projects[54](index=54&type=chunk) [Competitive Environment](index=10&type=section&id=Competitive%20Environment) APi Group operates in highly competitive and fragmented industries with low barriers to entry, competing on factors like price, service, and technical expertise. - APi Group operates in highly competitive and fragmented industries with relatively few barriers to entry, competing with a range of companies from small local businesses to large national/international firms[55](index=55&type=chunk) - Competition is based on factors such as price, service, technical expertise, quality, safety record, response time, and reputation[56](index=56&type=chunk) [Supply](index=10&type=section&id=Supply) The company maintains multiple supply sources for raw materials and components, mitigating commodity cost exposure through early purchasing and contract provisions. - The company has multiple supply sources for raw materials (e.g., piping, steel, HVAC equipment) and components, which have generally been available in sufficient quantities[57](index=57&type=chunk) - Commodity cost exposure is mitigated by purchasing or price locking commodities early and using escalation provisions in contracts[57](index=57&type=chunk) [Sales and Marketing](index=11&type=section&id=Sales%20and%20Marketing) Success relies on long-term customer relationships, high-quality service, and leveraging cross-selling opportunities through a collaborative culture and national service teams. - Success depends on developing and maintaining long-term relationships with key customers by providing reliable, high-quality service[59](index=59&type=chunk) - The company leverages cross-selling opportunities through its collaborative culture and provides a single point of contact for national/regional customers via its National Service Group (NSG) team in North America[59](index=59&type=chunk) [Insurance and Legal Proceedings](index=11&type=section&id=Insurance%20and%20Legal%20Proceedings) APi Group is effectively self-insured for many liabilities due to large deductibles and has accrued losses based on estimates, including those from the Chubb Acquisition. - APi Group is effectively self-insured for many potential liabilities due to large deductibles or retentions, with losses accrued based on estimates and third-party actuaries[60](index=60&type=chunk) - The company assumed risk on certain pending and incurred but not reported (IBNR) claims related to the Chubb Acquisition, with an associated purchase price adjustment and accruals[60](index=60&type=chunk) [Human Capital Management](index=11&type=section&id=Human%20Capital%20Management) The company focuses on talent development, employee engagement, health and safety, and competitive compensation to attract and retain a skilled workforce. [Talent Development and Employee Engagement](index=11&type=section&id=Talent%20Development%20and%20Employee%20Engagement) The company offers accelerated development programs and fosters a diverse, inclusive culture, monitoring employee engagement through periodic assessments. - The company offers multiple accelerated development programs, field-based leadership training, and on-demand learning to attract and retain qualified employees[62](index=62&type=chunk) - APi Group is committed to a culture of diversity and inclusion, monitoring employee engagement through periodic assessments[63](index=63&type=chunk) [Health & Safety](index=12&type=section&id=Health%20%26%20Safety) APi Group maintains a strong safety culture with a "zero incidents" commitment, implementing training and inspection programs, achieving an OSHA recordable rate significantly below the industry average. - The company maintains a safety culture grounded in a **'zero incidents'** commitment, with established safety standards, specific training programs (STEPS in North America, SAFE internationally), and inspection programs[64](index=64&type=chunk) - APi Group's OSHA recordable rate was **1.0 in 2022**, significantly lower than the industry average of **2.5**[65](index=65&type=chunk) [Competitive Pay, Benefits and Total Rewards and Practices](index=12&type=section&id=Competitive%20Pay,%20Benefits%20and%20Total%20Rewards%20and%20Practices) The company's total rewards philosophy aligns employee compensation with financial results and individual performance, offering comprehensive health, financial, and well-being benefits. - The total rewards philosophy aligns employee compensation with company financial results and individual performance, offering a comprehensive portfolio of health, financial, and well-being benefits[66](index=66&type=chunk) [Executive Officers](index=12&type=section&id=Executive%20Officers) This section lists the names, ages, and titles of APi Group's executive officers. | Name | Age | Title | | :--------------- | :-- | :------------------------------------- | | Russell A. Becker | 57 | Chief Executive Officer and President | | Kevin S. Krumm | 48 | Executive Vice President and Chief Financial Officer | | Louis B. Lambert | 47 | Senior Vice President, General Counsel and Secretary | | Kristina M. Morton | 48 | Senior Vice President and Chief People Officer | [Available Information](index=13&type=section&id=Available%20Information) APi Group provides its annual, quarterly, and current reports, along with proxy statements, free of charge on its website and through the SEC. - APi Group makes its annual reports (Form 10-K), quarterly reports (Form 10-Q), current reports (Form 8-K), and proxy statements available free of charge on its website (www.apigroupcorp.com) and through the SEC (www.sec.gov)[73](index=73&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including international expansion, acquisition integration, financial instability, operational hazards, litigation, and cybersecurity threats, all impacting financial performance. - The Chubb Acquisition significantly expanded international operations, with approximately **38% of 2022 revenue** from outside the U.S., exposing the company to economic, political, regulatory, and foreign currency risks[74](index=74&type=chunk) - The company carries substantial indebtedness, totaling **$2,212 million** in credit facilities and **$614 million** in senior notes as of December 31, 2022, which increases vulnerability to interest rate increases and limits financial flexibility[99](index=99&type=chunk) - Material weaknesses in internal control over financial reporting (user access controls, revenue recognition) were identified, posing a reasonable possibility of material misstatement in financial statements[96](index=96&type=chunk)[103](index=103&type=chunk)[585](index=585&type=chunk) [Risks Related to Our Business](index=13&type=section&id=Risks%20Related%20to%20Our%20Business) Expanded international operations, a decentralized business model, and joint venture participation expose the company to various economic, political, and operational risks. - Expanded international operations, particularly after the Chubb Acquisition, subject the company to economic, political, regulatory, and foreign currency risks, with **38% of 2022 revenue** derived from outside the U.S[74](index=74&type=chunk) - The decentralized business model carries risks of misalignment with overall strategy and non-compliance with integrated policies[77](index=77&type=chunk) - Participation in joint ventures exposes the company to liabilities and reputational harm from partner failures, as well as potential requirements for additional investments or services[78](index=78&type=chunk)[79](index=79&type=chunk) [Risks Related to Acquisitions](index=15&type=section&id=Risks%20Related%20to%20Acquisitions) The company's growth strategy relies on acquisitions, but the inability to successfully integrate acquired businesses, particularly Chubb, could adversely affect financial results and lead to impairment charges. - The company's business strategy relies on acquisitions, but the inability to successfully identify, complete, or integrate acquired businesses could adversely affect operating results and lead to impairment charges[83](index=83&type=chunk)[84](index=84&type=chunk) - Realizing the expected benefits of the Chubb Acquisition is uncertain due to potential integration and transition difficulties, unanticipated issues, and non-recurring costs[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Financial Risks](index=16&type=section&id=Financial%20Risks) The company faces financial risks from credit market volatility, substantial indebtedness, potential goodwill impairment, and identified material weaknesses in internal control over financial reporting. - Adverse developments in credit markets could reduce funding for significant projects, impacting demand for services and the company's ability to secure financing or achieve growth objectives[89](index=89&type=chunk)[90](index=90&type=chunk) - A significant portion of revenue is recognized over time based on estimates, carrying the risk of reduction or reversal of previously recorded revenue or profits if actual costs vary from estimates[91](index=91&type=chunk) - The company has substantial goodwill (**$2,382 million** as of December 31, 2022) and identifiable intangible assets, which are subject to impairment charges that could adversely affect financial results[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Material weaknesses in internal control over financial reporting (user access controls, revenue recognition) were identified, creating a reasonable possibility of material misstatement in financial statements[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Substantial indebtedness (**$2,212 million** in credit facilities, **$614 million** in senior notes as of December 31, 2022) increases exposure to interest rate fluctuations, reduces cash flow for operations, and imposes restrictive covenants[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The company is effectively self-insured for many potential liabilities due to large deductibles, making future expense estimation difficult and increasing financial risks if estimates are undervalued[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Risks Related to Our Contracts](index=19&type=section&id=Risks%20Related%20to%20Our%20Contracts) Inaccurate cost estimates for fixed-price contracts, unrecoverable price increases, government contractor regulations, and backlog uncertainty pose significant contractual risks. - Inaccurate cost estimates for fixed-price contracts can lead to reduced profitability or losses if actual costs exceed original estimates[110](index=110&type=chunk)[111](index=111&type=chunk) - A portion of contracts allocates the risk of price increases in supplies (e.g., copper, steel) and energy (e.g., gasoline) to the company, which may not be recoverable, especially in fixed-price agreements[112](index=112&type=chunk) - As a government contractor, subsidiaries are subject to complex rules and audits; violations could result in fines, contract termination, or debarment from future government contracts[114](index=114&type=chunk)[115](index=115&type=chunk) - The company's backlog is subject to reduction or cancellation, making it an uncertain indicator of future revenues and earnings[116](index=116&type=chunk) [Risks Related to Our Workforce](index=20&type=section&id=Risks%20Related%20to%20Our%20Workforce) A significant unionized workforce, pension commitments, and potential labor shortages or underutilization pose risks to management discretion, financial liabilities, and profitability. - Approximately **49% of the workforce is unionized**, which limits management discretion, carries a risk of strikes or work stoppages, and may impact customer relationships or future acquisitions[117](index=117&type=chunk) - Pension commitments, including multiemployer and defined benefit plans, expose the company to potential liabilities from underfunding, increased contributions, and market/actuarial performance risks[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Underutilization of the workforce due to delayed contract awards or a significant reduction in services, or shortages of skilled labor, could lead to significant costs and reduced profitability[122](index=122&type=chunk)[123](index=123&type=chunk) [Risks Related to Our Customer Base](index=21&type=section&id=Risks%20Related%20to%20Our%20Customer%20Base) Dependence on capital expenditures in the energy industry and public/private infrastructure investments exposes the company to risks from reduced spending and adverse market developments. - The energy and infrastructure businesses depend on capital expenditures in the energy industry; adverse developments or reduced demand for oil/natural gas could materially affect results[124](index=124&type=chunk) - Future growth is partly based on public and private investments in infrastructure; reduced or delayed spending could defer projects and impact cash flows and margins[126](index=126&type=chunk) [Risks Related to Our Occupational Hazards](index=22&type=section&id=Risks%20Related%20to%20Our%20Occupational%20Hazards) Challenging project conditions and the inherent operational risks of services can lead to delays, unanticipated costs, and severe legal or financial consequences. - Projects are performed under challenging conditions (e.g., difficult terrain, material delays, weather), which can lead to project delays, cancellations, unanticipated costs, and potential liquidated damages[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - The nature of services involves a high degree of operational risk (e.g., electricity, fires, explosions, injuries, fatalities), potentially resulting in substantial penalties, civil litigation, or criminal prosecution[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) [Claims and Litigation Risks](index=23&type=section&id=Claims%20and%20Litigation%20Risks) The company faces periodic litigation, including complex disputes and class actions, which can incur significant costs, management attention, and reputational harm. - The company is subject to periodic litigation, including class actions and complex legal disputes, which can require significant management attention, attorney fees, and settlement costs[135](index=135&type=chunk)[136](index=136&type=chunk) - Exposure to workmanship warranty, casualty, negligence, construction defect, breach of contract, and product liability claims, which, if adversely determined, could affect financial condition and reputation[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[154](index=154&type=chunk) - Regulatory proceedings, such as Fair Labor Standards Act (FLSA) and state wage and hour class action lawsuits, could result in significant attorney fees and settlement costs[141](index=141&type=chunk)[142](index=142&type=chunk) [Risks Related to the Industries in Which We Operate](index=24&type=section&id=Risks%20Related%20to%20the%20Industries%20in%20Which%20We%20Operate) Operating in competitive, fragmented, and cyclical industries, coupled with environmental liabilities and potential system failures, poses significant risks to financial performance and reputation. - Operating in highly competitive and fragmented markets, with low barriers to entry, could reduce market share and harm financial performance, especially on price-sensitive projects[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - Demand for services is impacted by construction activity levels; economic downturns in the cyclical construction industry could materially and adversely affect the business[146](index=146&type=chunk)[147](index=147&type=chunk) - The industries served are seasonal and cyclical, and adverse weather conditions can negatively impact business operations, demand for services, and project efficiency[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Failure in constructed/installed systems (e.g., alarm and fire safety) due to errors or faulty workmanship may subject the company to significant professional or product liability, personal injury claims, and reputational harm[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Failure to comply with environmental laws (e.g., hazardous substances, waste disposal) could result in significant liabilities, increased costs, and fines[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - The company is party to personal injury litigation related to alleged exposure to hazardous materials (e.g., asbestos, PFAS), which could adversely affect financial condition and results[159](index=159&type=chunk)[160](index=160&type=chunk) [Risks Related to Our Organizational Structure and Ownership of Our Stock](index=27&type=section&id=Risks%20Related%20to%20Our%20Organizational%20Structure%20and%20Ownership%20of%20Our%20Stock) As a holding company, APi Group's cash generation depends on subsidiaries, while outstanding equity instruments and anti-takeover provisions could dilute common stock and affect its market price. - As a holding company, APi Group's ability to generate cash and pay dividends is highly dependent on the earnings and funds received from its subsidiaries[162](index=162&type=chunk)[163](index=163&type=chunk) - The existence of outstanding equity instruments (Series A and B Preferred Stock, equity awards) and potential future issuances could lead to significant dilution of common stock ownership and adversely affect the stock price[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - Delaware law and the company's organizational documents contain anti-takeover provisions that could limit stockholder actions and delay or discourage takeover attempts[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The market price of the common stock may be volatile due to various factors, including operating performance, industry volatility, strategic actions, and general economic conditions[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [General Risk Factors](index=29&type=section&id=General%20Risk%20Factors) Cybersecurity incidents, data privacy compliance, and the loss of key personnel pose significant risks to operations, financial performance, and reputation. - Cybersecurity incidents pose a risk of operational interruptions, substantial costs, legal/regulatory proceedings, and damage to reputation despite established security policies[177](index=177&type=chunk)[178](index=178&type=chunk) - Compliance with data privacy, identity protection, and information security laws (e.g., GDPR, CCPA) requires significant resources, and breaches can result in fines, litigation, and reputational harm[180](index=180&type=chunk)[181](index=181&type=chunk) - The loss of key senior management personnel or the inability to hire and retain highly skilled personnel could negatively affect the business due to intense competition for talent[183](index=183&type=chunk) [Item 1B. Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report. [Item 2. Properties](index=31&type=section&id=Item%202.%20Properties) APi Group operates globally from its Minnesota headquarters and over 500 owned and leased facilities, supporting both Safety and Specialty Services segments. - APi Group owns its corporate headquarters in New Brighton, Minnesota, and operates globally from approximately **55 owned and 515 leased facilities** across over **20 countries**[187](index=187&type=chunk) - Facilities are utilized for operations in both reportable segments, including offices, warehouses, storage, fabrication manufacturing, maintenance shops, and training facilities[187](index=187&type=chunk) [Item 3. Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, which management believes will not materially impact its financial position or operations. - The company is subject to various lawsuits, administrative proceedings, and claims in the ordinary course of business, including workmanship warranty, casualty, negligence, construction defect, breach of contract, product liability, and wage and hour claims[188](index=188&type=chunk) - Management believes that the ultimate resolution of these legal matters will not have a material adverse effect on the company's financial position, results of operations, or cash flows[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters, as required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, is included in Exhibit 95.1 of this Annual Report. - Information on mine safety violations and other regulatory matters is provided in Exhibit 95.1 to this Annual Report, as required by the Dodd-Frank Act and Regulation S-K[189](index=189&type=chunk) PART II This section covers APi Group's market for common equity, financial performance, market risks, and financial statements. [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) APi Group's common stock trades on the NYSE, with the company prioritizing reinvestment over common stock dividends, while executing a **$250 million** stock repurchase program. - APi Group's common stock is listed on the NYSE under the symbol **'APG'**[192](index=192&type=chunk) - The company has historically not paid cash dividends on common stock and intends to retain future earnings for reinvestment, but pays quarterly dividends on Series B Preferred Stock in common shares[194](index=194&type=chunk) - In March 2022, the Board authorized a **$250 million** stock repurchase program (SRP) expiring February 29, 2024. During 2022, **2,505,723 shares** were repurchased for approximately **$44 million**, with **$206 million** remaining authorized[195](index=195&type=chunk) [Market and Dividend Information](index=32&type=section&id=Market%20and%20Dividend%20Information) APi Group's common stock is listed on the NYSE, with the company not anticipating cash dividends on common stock, but paying quarterly dividends on Series B Preferred Stock. - APi Group's common stock is listed on the NYSE under the symbol **'APG'**[192](index=192&type=chunk) - As of February 22, 2023, there were **15 holders of record** of the company's common stock[193](index=193&type=chunk) - The company does not currently anticipate paying a cash dividend on its common stock, intending to retain future earnings for reinvestment, but pays quarterly dividends on Series B Preferred Stock in common shares[194](index=194&type=chunk) [Stock Repurchase Program](index=32&type=section&id=Stock%20Repurchase%20Program) The Board authorized a **$250 million** stock repurchase program in March 2022, under which **$44 million** of shares were repurchased in 2022, leaving **$206 million** authorized. - On March 9, 2022, the Board authorized a stock repurchase program (SRP) to purchase up to **$250 million** of common stock, expiring February 29, 2024[195](index=195&type=chunk) - During 2022, the company repurchased **2,505,723 shares** for approximately **$44 million** under the SRP, leaving approximately **$206 million** of authorized repurchases[195](index=195&type=chunk) [Issuer Purchases of Equity Securities](index=32&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This table details the company's common stock repurchases during the fourth quarter of 2022 under its publicly announced program. | During the Three Months Ended December 31, 2022 | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approximate Value of Shares Yet to Be Purchased Under the Plans or Programs (in millions) | | :---------------------------------------------- | :----------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | October 1, 2022 - October 31, 2022 | — | — | — | — | | November 1, 2022 - November 30, 2022 | — | — | — | — | | December 1, 2022 - December 31, 2022 | 554,391 | 18.74 | 554,391 | 206 | | Total | 554,391 | $18.74 | 554,391 | $206 | [Performance Graph](index=33&type=section&id=Performance%20Graph) The performance graph illustrates the cumulative return on **$100** invested in APG's common stock compared to market indices and a selected peer group. - The performance graph summarizes the cumulative return on **$100** invested in APG's common stock, the S&P 500, the Russell 2000 Stock Index, and a selected peer group from October 1, 2019, to December 31, 2022[199](index=199&type=chunk) - The peer group includes Cintas Corporation, Comfort Systems USA, Inc., EMCOR Group Inc., Jacobs Engineering Group Inc., Johnson Controls International plc, MasTec Inc., Otis Worldwide, and Quanta Services, Inc., with Carrier removed after the Chubb Acquisition[200](index=200&type=chunk) [Item 6. [Reserved]](index=33&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information. [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The Chubb Acquisition significantly boosted 2022 revenues and gross profit, though integration costs and higher interest expenses impacted net income, while liquidity remains strong despite increased acquisition-related cash usage. - Net revenues for 2022 increased by **$2,618 million (66.4%)** to **$6,558 million**, primarily driven by acquisitions within the Safety Services segment and growth in inspection, service, and monitoring revenue[220](index=220&type=chunk) - Net income for 2022 was **$73 million**, an increase of **$26 million (55.3%)** from 2021, while EBITDA increased by **$181 million (53.1%)** to **$522 million**, largely due to acquisitions and an improved service mix[228](index=228&type=chunk)[229](index=229&type=chunk) - Cash flows from operating activities increased to **$270 million** in 2022, but net cash used in investing activities surged to **$2,901 million**, primarily due to the **$2,839 million** Chubb Acquisition[254](index=254&type=chunk)[255](index=255&type=chunk) [Overview](index=34&type=section&id=Overview) APi Group is a global leader in safety and specialty services, focusing on predictable, recurring revenues from diversified, long-standing customers through contractual arrangements. - APi Group is a global, market-leading business services provider of safety and specialty services, focusing on growing recurring revenues and repeat business from diversified, long-standing customers[203](index=203&type=chunk) - Maintenance and service revenues are generally more predictable due to contractual arrangements (typically days to three years) and consistent renewal rates[203](index=203&type=chunk) [Certain Factors and Trends Affecting our Results of Operations](index=34&type=section&id=Certain%20Factors%20and%20Trends%20Affecting%20our%20Results%20of%20Operations) This section discusses key factors and trends, including acquisitions, restructuring, resegmentation, and economic conditions, that impact APi Group's financial performance. [Acquisitions](index=34&type=section&id=Acquisitions) The Chubb Acquisition, completed in January 2022 for **$2,893 million**, significantly expanded the Safety Services segment and is expected to drive future value creation through complementary growth. - On January 3, 2022, APi Group completed the Chubb Acquisition for a total net consideration of **$2,893 million**, integrating a globally recognized fire safety and security services provider into its Safety Services segment[204](index=204&type=chunk) - The Chubb Acquisition is expected to provide meaningful opportunities for future value creation through complementary revenue growth and cross-selling[204](index=204&type=chunk) [Restructuring](index=34&type=section&id=Restructuring) APi Group initiated a multi-year Chubb restructuring program in Q2 2022, with estimated total costs of **$105 million**, primarily incurring **$30 million** in pre-tax costs related to workforce reductions to date. - In Q2 2022, APi Group announced a multi-year Chubb restructuring program to drive efficiencies and optimize operating margin, with estimated total costs of approximately **$105 million** by the end of fiscal year 2024[205](index=205&type=chunk) - To date, **$30 million** in pre-tax restructuring costs have been incurred within the Safety Services segment, primarily related to workforce reductions[205](index=205&type=chunk)[206](index=206&type=chunk) [Resegmentation](index=35&type=section&id=Resegmentation) Effective 2022, the legacy Industrial Services segment was combined with Specialty Services, forming a new operating segment, with prior-year financial information retroactively adjusted. - Beginning in 2022, the legacy Industrial Services segment was combined with the legacy Specialty Services segment to form a new operating and reportable segment called Specialty Services[208](index=208&type=chunk) - Financial information for prior years has been retroactively adjusted to reflect these changes in reporting segments[208](index=208&type=chunk) [Economic, Industry and Market Factors](index=35&type=section&id=Economic,%20Industry%20and%20Market%20Factors) The company monitors economic conditions impacting customer demand and pricing, while supply chain disruptions, labor shortages, and foreign currency fluctuations affect profitability. - The company monitors economic and market conditions, which can affect customer demand, capital/maintenance budgets, and pricing pressure on materials[209](index=209&type=chunk) - Supply chain disruptions, increased competition for skilled labor, and higher labor costs have negatively impacted profitability and service delivery[209](index=209&type=chunk) - Fluctuations in foreign currencies may impact financial position, though exposure to transactional gains/losses is limited as foreign operations primarily invoice and collect in local currencies[209](index=209&type=chunk) [Description of Key Line Items](index=35&type=section&id=Description%20of%20Key%20Line%20Items) This section defines key financial statement line items, including net revenues, cost of revenues, and selling, general, and administrative expenses. - Net revenues are generated from contracted services, fabrication, and distribution, primarily recognized over time using the cost-to-cost method for fixed-price agreements or as services are provided for time and material contracts[210](index=210&type=chunk) - Cost of revenues includes direct labor, materials, subcontract costs, and indirect costs related to contract performance[211](index=211&type=chunk) - Selling, general, and administrative (SG&A) expenses comprise compensation for sales/marketing and executive/administrative personnel, facility leases, professional fees, and other corporate overhead[213](index=213&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes APi Group's financial performance, comparing results for the years ended December 31, 2022, 2021, and 2020, including consolidated and operating segment results. [Year ended December 31, 2022 versus year ended December 31, 2021](index=37&type=section&id=Year%20ended%20December%2031,%202022%20versus%20year%20ended%20December%2031,%202021) Net revenues increased by **66.4%** to **$6,558 million** in 2022, driven by acquisitions and service growth, while gross profit improved by **82.5%** to **$1,714 million**, despite higher SG&A and interest expenses. Consolidated Financial Performance (2022 vs 2021) | ($ in millions) | 2022 | 2021 | Change $ | Change % | | :-------------- | :--- | :--- | :------- | :------- | | Net revenues | 6,558 | 3,940 | 2,618 | 66.4 % | | Gross profit | 1,714 | 939 | 775 | 82.5 % | | Operating income | 162 | 136 | 26 | 19.1 % | | Net income | 73 | 47 | 26 | 55.3 % | | EBITDA (non-GAAP) | 522 | 341 | 181 | 53.1 % | - Net revenues increased by **$2,618 million (66.4%)** to **$6,558 million**, primarily due to acquisitions in the Safety Services segment and growth in inspection, service, and monitoring revenue[220](index=220&type=chunk) - Gross profit increased by **$775 million (82.5%)** to **$1,714 million**, with gross margin improving by **230 basis points** to **26.1%**, driven by acquisitions and an improved mix of higher-margin inspection, service, and monitoring revenue[221](index=221&type=chunk) - SG&A expenses increased by **$749 million** to **$1,552 million (23.7% of net revenues)**, mainly due to additional expenses from acquisitions, integration costs, and a **$75 million** increase in amortization expense[222](index=222&type=chunk) - Interest expense, net, more than doubled to **$125 million** (from **$60 million**), primarily due to increased debt from the Chubb Acquisition and higher interest rates on floating-rate debt[223](index=223&type=chunk) - The company recognized a net gain on extinguishment of debt of **$5 million** in 2022 from repurchasing senior notes, contrasting with a **$9 million** net loss in 2021[224](index=224&type=chunk) - A non-service pension benefit of **$42 million** was recognized in 2022, solely due to the acquisition of pension plans as part of the Chubb Acquisition[225](index=225&type=chunk) - The income tax provision decreased by **$12 million** to **$20 million** in 2022, with the effective tax rate falling to **22.0%** from **40.0%** in 2021, partly due to a **$9 million** benefit from asserting permanent reinvestment of foreign earnings[227](index=227&type=chunk) [Operating Segment Results](index=39&type=section&id=Operating%20Segment%20Results) Safety Services net revenues increased by **120.0%** due to acquisitions, while Specialty Services revenues grew by **6.4%** from increased activity and pricing, with varying impacts on operating margins. Operating Segment Net Revenues (2022 vs 2021) | ($ in millions) | 2022 | 2021 | Change $ | Change % | | :----------------------- | :--- | :--- | :------- | :------- | | Safety Services | 4,575 | 2,080 | 2,495 | 120.0 % | | Specialty Services | 2,030 | 1,907 | 123 | 6.4 % | | Corporate and Eliminations | (47) | (47) | — | — | | Total | 6,558 | 3,940 | 2,618 | 66.4 % | Operating Segment EBITDA (2022 vs 2021) | ($ in millions) | 2022 | 2021 | Change $ | Change % | | :----------------------- | :--- | :--- | :------- | :------- | | Safety Services | 492 | 287 | 205 | 71.4 % | | Specialty Services | 206 | 205 | 1 | 0.5 % | | Corporate and Eliminations | (176) | (151) | (25) | 16.6 % | | Total | 522 | 341 | 181 | 53.1 % | - Safety Services net revenues increased by **$2,495 million (120.0%)** to **$4,575 million**, primarily due to acquisitions and increased inspection, service, and monitoring revenue. Its operating margin declined to **5.6%** (from **10.0%**) due to supply chain disruptions, inflation, and increased amortization[235](index=235&type=chunk) - Specialty Services net revenues increased by **$123 million (6.4%)** to **$2,030 million**, driven by increased activity in contracting, infrastructure, utility, and fabrication markets, and strategic pricing improvements. Its operating margin improved to **4.8%** (from **4.1%**) due to higher productivity and sales volumes[236](index=236&type=chunk)[238](index=238&type=chunk) [Year ended December 31, 2021 versus year ended December 31, 2020](index=40&type=section&id=Year%20ended%20December%2031,%202021%20versus%20year%20ended%20December%2031,%202020) For a discussion of 2021 results of operations compared to 2020, refer to Part I, Item 7 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2021. - For a discussion of 2021 results of operations compared to 2020, refer to Part I, Item 7 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[239](index=239&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures, including SG&A expenses (excluding amortization) and EBITDA, used by management and investors. [SG&A expenses (excluding amortization)](index=40&type=section&id=SG%26A%20expenses%20%28excluding%20amortization%29) SG&A expenses (excluding amortization) is a non-GAAP measure used by management and investors to assess core operating costs, excluding acquisition-related amortization. - SG&A expenses (excluding amortization) is a non-U.S. GAAP measure used by management and investors to understand core operating costs, excluding acquisition-related amortization expense[242](index=242&type=chunk) SG&A Expenses Reconciliation (2022 vs 2021) | ($ in millions) | 2022 | 2021 | | :--------------------------------------- | :--- | :--- | | Reported SG&A expenses | 1,552 | 803 | | Amortization expense | (197) | (122) | | SG&A expenses (excluding amortization) | 1,355 | 681 | [EBITDA](index=41&type=section&id=EBITDA) EBITDA is a non-GAAP measure used by management to evaluate segment profitability and overall performance, excluding non-core operating items. - EBITDA (Earnings before interest, taxes, depreciation, and amortization) is a non-U.S. GAAP measure used by management to evaluate segment profitability and overall performance, excluding items not indicative of core operating results[245](index=245&type=chunk) EBITDA Reconciliation (2022 vs 2021) | ($ in millions) | 2022 | 2021 | | :------------------------------- | :--- | :--- | | Reported net income | 73 | 47 | | Interest expense, net | 125 | 60 | | Income tax provision | 20 | 32 | | Depreciation | 77 | 75 | | Amortization | 227 | 127 | | EBITDA | 522 | 341 | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity through operating cash flows and credit facilities, sufficient for near-term needs, despite increased cash usage for acquisitions. [Overview](index=41&type=section&id=Overview) APi Group's primary liquidity sources, including cash flows, cash equivalents, a **$500 million** revolving credit facility, and debt offerings, are deemed sufficient for the next twelve months. - Primary liquidity sources include cash flows from operations, available cash and cash equivalents, a **$500 million** revolving credit facility, and proceeds from debt offerings, which are believed sufficient for the next twelve months[247](index=247&type=chunk) - As of December 31, 2022, total liquidity was **$1,051 million**, comprising **$605 million** in cash and cash equivalents and **$446 million** of available borrowings under the Revolving Credit Facility[248](index=248&type=chunk) - Financing for the Chubb Acquisition included the issuance of **800,000 shares** of Series B Preferred Stock for **$800 million** and a **$1,100 million** seven-year incremental term loan[248](index=248&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) Operating cash flows increased to **$270 million** in 2022, while investing activities saw a significant increase in cash usage to **$2,901 million** primarily due to the Chubb Acquisition, and financing activities provided **$1,756 million**. Net Cash Flows (2022 vs 2021) | ($ in millions) | 2022 | 2021 | | :--------------------------------------------------------------------------- | :----- | :--- | | Net cash provided by operating activities | 270 | 182 | | Net cash used in investing activities | (2,901) | (121) | | Net cash provided by financing activities | 1,756 | 917 | | Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash | (9) | (2) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | (884) | 976 | | Cash, cash equivalents, and restricted cash, end of period | 607 | 1,491 | - Net cash provided by operating activities increased to **$270 million** in 2022, primarily due to higher net income, partially offset by working capital needs, acquisition/integration costs, increased debt costs, and a **$27 million** pension contribution[254](index=254&type=chunk) - Net cash used in investing activities significantly increased to **$2,901 million** in 2022, mainly driven by **$2,839 million** for the Chubb Acquisition and other immaterial acquisitions[255](index=255&type=chunk) - Net cash provided by financing activities increased to **$1,756 million** in 2022, primarily from **$1,104 million** in new debt and **$797 million** from Series B Preferred Stock issuance, partially offset by debt and common stock repurchases[256](index=256&type=chunk) [Financing Activities](index=43&type=section&id=Financing%20Activities) The company's financing activities include a **$1,200 million** 2019 Term Loan, a **$1,100 million** 2021 Term Loan, a **$500 million** Revolving Credit Facility, and the issuance of **$800 million** in Series B Preferred Stock. - The Credit Agreement includes a **$1,200 million** 2019 Term Loan, a **$1,100 million** 2021 Term Loan (for Chubb Acquisition), and a **$500 million** Revolving Credit Facility[259](index=259&type=chunk) - As of December 31, 2022, outstanding indebtedness included **$1,127 million** on the 2019 Term Loan and **$1,085 million** on the 2021 Term Loan, with **$446 million** available under the Revolving Credit Facility[263](index=263&type=chunk) - The company issued **$350 million** of **4.125%** Senior Notes and **$300 million** of **4.750%** Senior Notes, both due 2029, and repurchased **$13 million** and **$23 million**, respectively, in 2022[264](index=264&type=chunk)[265](index=265&type=chunk) - **800,000 shares** of **5.5%** Series B Redeemable Convertible Preferred Stock were issued for **$800 million** to fund a portion of the Chubb Acquisition, with holders entitled to dividends and conversion rights[266](index=266&type=chunk)[267](index=267&type=chunk) [Material Cash Requirements from Known Contractual and Other Obligations](index=44&type=section&id=Material%20Cash%20Requirements%20from%20Known%20Contractual%20and%20Other%20Obligations) Material cash requirements, primarily for leases, debt, taxes, and pensions, are expected to be met by operating cash flows, with capital expenditures projected at **1.5%** of annual net revenues. - Material cash requirements primarily relate to operating and finance leases, debt obligations, tax obligations, and pension obligations, expected to be satisfied by cash generated from operations[269](index=269&type=chunk) - Capital expenditures are expected to be approximately **1.5% of annual net revenues**[269](index=269&type=chunk) [Recently Issued Accounting Pronouncements](index=44&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company adopted ASU 2020-04, ASU 2020-06, and ASU 2021-08 on January 1, 2022, none of which materially impacted its consolidated financial statements. - The company adopted ASU 2020-04 (Reference Rate Reform), ASU 2020-06 (Debt Conversion), and ASU 2021-08 (Business Combinations) on January 1, 2022, none of which had a material impact on its consolidated financial statements[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates for revenue recognition, business combinations, goodwill impairment, and income taxes involve significant management judgment, with potential for material impact from changes in assumptions. - Revenue recognition from contracts with customers involves significant estimates, particularly for fixed-price construction projects using the cost-to-cost method, where changes in estimates can materially affect results[273](index=273&type=chunk)[276](index=276&type=chunk)[278](index=278&type=chunk) - Business combinations require significant estimates and assumptions for fair value determination of acquired assets and liabilities, including intangible assets and contingent consideration, which can lead to future impairment charges[282](index=282&type=chunk)[284](index=284&type=chunk) - Goodwill is annually tested for impairment (October 1) at the reporting unit level using market and income approaches; while no impairment was found in 2022, significant deterioration in economic conditions could trigger future charges[285](index=285&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[290](index=290&type=chunk) - Income tax provision relies on estimates of pre-tax income, statutory rates, and tax planning, with inherent uncertainty in quantifying tax positions that could result in significant costs or benefits[291](index=291&type=chunk)[292](index=292&type=chunk) [Item 7A. Qualitative and Quantitative Disclosures About Market Risk](index=49&type=section&id=Item%207A.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate, foreign currency, and other market risks through derivative instruments, though full elimination of these exposures is not possible. - The company is exposed to interest rate risk on its variable interest rate debt, including the 2019 Term Loan (**$1,127 million** outstanding) and 2021 Term Loan (**$1,085 million** outstanding) as of December 31, 2022[295](index=295&type=chunk) - To mitigate interest rate risk, APi Group uses interest rate swaps; a **100-basis point** increase in applicable interest rates would have increased interest expense by approximately **$21 million** in 2022[295](index=295&type=chunk)[296](index=296&type=chunk) - Foreign currency risk has increased due to the Chubb Acquisition, with **38% of 2022 consolidated net revenues** from foreign operations, resulting in translation losses of approximately **($164) million** in 2022[297](index=297&type=chunk) - Other market risks include impacts on accounts receivable from customer creditworthiness, supply chain risks (commodity price fluctuations, availability), and increases in energy prices[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) [Interest Rate Risk](index=49&type=section&id=Interest%20Rate%20Risk) The company is exposed to variable interest rate risk on its term loans, mitigating this with interest rate swaps, but faces potential impacts from LIBOR discontinuation. - As of December 31, 2022, the company had **$1,127 million** outstanding on the 2019 Term Loan and **$1,085 million** on the 2021 Term Loan, both subject to variable interest rates[295](index=295&type=chunk) - Interest rate swaps are used to mitigate variable interest rate increases; a **100-basis point** increase in applicable rates would have increased 2022 interest expense by approximately **$21 million**[295](index=295&type=chunk)[296](index=296&type=chunk) - The discontinuation of one-month LIBOR after June 30, 2023, and its replacement with the Secured Overnight Financing Rate (SOFR) may adversely impact interest rates and interest expense[296](index=296&type=chunk) [Foreign Currency Risk](index=49&type=section&id=Foreign%20Currency%20Risk) Foreign operations, constituting **38%** of 2022 consolidated net revenues, expose the company to foreign currency fluctuations, resulting in **($164) million** in translation losses in 2022, managed through hedging strategies. - Revenues from foreign operations constituted approximately **38% of consolidated net revenues** for 2022, increasing exposure to foreign currency exchange rate fluctuations, particularly after the Chubb Acquisition[297](index=297&type=chunk)[298](index=298&type=chunk) - Foreign currency translation losses totaled approximately **($164) million** in 2022, recorded in accumulated other comprehensive loss[297](index=297&type=chunk) - The company manages foreign currency exposure by minimizing net asset/liability positions in non-functional currencies and using cross-currency swaps for hedging intercompany loans[298](index=298&type=chunk) [Other Market Risk](index=50&type=section&id=Other%20Market%20Risk) The company faces market risks from customer creditworthiness, supply chain disruptions (commodity prices), and energy price increases, which could impact profitability and project viability. - Exposure to market risks impacting the customer base, potentially affecting accounts receivable or contract assets if customers' ability to pay is negatively impacted by economic conditions[300](index=300&type=chunk) - Supply chain risks include fluctuations in availability and prices of commodities (e.g., copper, steel, cable optic fiber) and increases in energy prices (e.g., gasoline for vehicle fleet)[301](index=301&type=chunk) - Significant declines in market prices for oil and gas could lead to project delays or cancellations, impacting profitability for certain businesses[302](index=302&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section provides APi Group's audited financial statements, with KPMG issuing an unqualified opinion on financials but an adverse opinion on internal controls due to material weaknesses. - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2022[307](index=307&type=chunk) - KPMG LLP issued an adverse opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022, due to material weaknesses in user access controls and process level controls over revenue recognition[319](index=319&type=chunk)[321](index=321&type=chunk) - The Chubb Fire & Security business, acquired in 2022, was excluded from management's assessment of internal control over financial reporting, representing **47% of total assets** and **31% of total revenues**[322](index=322&type=chunk) [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](index=51&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The index provides a comprehensive list of APi Group's consolidated financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, cash flows, and accompanying notes. - The index lists the Consolidated Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Shareholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[305](index=305&type=chunk) [Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)](index=52&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on APi Group's consolidated financial statements for the three-year period ended December 31, 2022, highlighting critical audit matters related to cost estimates and acquired intangible asset valuation. - KPMG LLP issued an unqualified opinion on the consolidated financial statements of APi Group Corporation and subsidiaries as of December 31, 2022 and 2021, and for the three-year period ended December 31, 2022[307](index=307&type=chunk) - Critical audit matters included the assessment of total estimated costs for certain fixed-price projects recognized over time and the fair value measurement of certain acquired intangible assets in the Chubb Fire and Security acquisition[311](index=311&type=chunk)[312](index=312&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) [Report of Independent Registered Public Accounting Firm (Internal Control Over Financial Reporting)](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an adverse opinion on the effectiveness of APi Group's internal control over financial reporting as of December 31, 2022, due to material weaknesses in user access controls and revenue recognition processes. - KPMG LLP expressed an adverse opinion on the effectiveness of APi Group's internal control over financial reporting as of December 31, 2022[319](index=319&type=chunk) - Material weaknesses identified include ineffective user access controls related to an information technology system and ineffective operation of process level controls over revenue recognition[321](index=321&type=chunk) - The audit of internal control over financial reporting excluded an evaluation of Chubb Fire & Security's internal control, which represented **47% of total assets** and **31% of total revenues**[322](index=322&type=chunk) [Consolidated Balance Sheets](index=56&type=section&id=Consolidated%20Balance%20Sheets) This table presents APi Group's consolidated balance sheets as of December 31, 2022, and 2021, detailing assets, liabilities, and equity. Consolidated Balance Sheet Highlights (in millions) | Item | December 31, 2022 | December 31, 2021 | | :------------------------------------ | :---------------- | :---------------- | | Cash and cash equivalents | $605 | $1,188 | | Total current assets | $2,652 | $2,626 | | Property and equipment, net | $407 | $326 | | Goodwill | $2,382 | $1,106 | | Intangible assets, net | $1,784 | $882 | | Total assets | $8,091 | $5,159 | | Short-term and current portion of long-term debt | $206 | $1 | | Total current liabilities | $1,921 | $867 | | Long-term debt, less current portion | $2,583 | $1,766 | | Total liabilities | $5,167 | $2,836 | | 5.5% Series B Redeemable Convertible Preferred Stock | $797 | — | | Total shareholders' equity | $2,127 | $2,323 | [Consolidated Statements of Operations](index=57&type=section&id=Consolidated%20Statements%20of%20Operations) This table presents APi Group's consolidated statements of operations for the years ended December 31, 2022, 2021, and 2020, detailing revenues, expenses, and net income. Consolidated Statements of Operations Highlights (in millions) | Item | 2022 | 2021 | 2020 | | :------------------------------------ | :--- | :--- | :--- | | Net revenues | $6,558 | $3,940 | $3,587 | | Gross profit | $1,714 | $939 | $756 | | Selling, general, and administrative expenses | $1,552 | $803 | $725 | | Operating income (loss) | $162 | $136 | $(166) | | Interest expense, net | $125 | $60 | $52 | | Income (loss) before income taxes | $93 | $79 | $(184) | | Income tax provision (benefit) | $20 | $32 | $(31) | | Net income (loss) | $73 | $47 | $(153) | | Net income (loss) attributable to common shareholders | $29 | $(137) | $(375) | [Consolidated Statements of Comprehensive (Loss) Income](index=58&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) This table presents APi Group's consolidated statements of comprehensive (loss) income for the years ended December 31, 2022, 2021, and 2020, detailing net income and other comprehensive income components. Consolidated Statements of Comprehensive (Loss) Income Highlights (in millions) | Item | 2022 | 2021 | 2020 | | :------------------------------------ | :--- | :--- | :----- | | Net income (loss) | $73 | $47 | $(153) | | Other comprehensive (loss) income: | | | | | Fair value change - derivatives, net of tax | $62 | $25 | $(26) | | Defined benefit pension plans adjustment, net of tax | $(165) | — | — | | Foreign currency translation adjustment | $(164) | $(11) | $9 | | Comprehensive (loss) income | $(194) | $61 | $(170) | [Consolidated Statements of Shareholders' Equity](index=59&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) The Consolidated Statements of Shareholders' Equity detail changes in Preferred Stock, Common Stock, Additional Paid-In Capital, Accumulated Deficit, and Accumulated Other Comprehensive Loss for the years ended December 31, 2022, 2021, and 2020. - The Consolidated Statements of Shareholders' Equity detail changes in Preferred Stock, Common Stock, Additional Paid-In Capital, Accumulated Deficit, and Accumulated Other Comprehensive Loss for the years ended December 31, 2022, 2021, and 2020[338](index=338&type=chunk) [Consolidated Statements of Cash Flows](index=60&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This table presents APi Group's consolidated statements of cash flows for the years ended December 31, 2022, 2021, and 2020, detailing cash flows from operating, investing, and financing activities. Consolidated Statements of Cash Flows Highlights (in millions) | Item | 2022 | 2021 | 2020 | | :---------------------------------------------------------------- | :----- |

Q3 2022 Performance Highlights - Record net revenues of $1.7 billion[15] - Net revenues increased on an organic basis by approximately 16.5%, driven by a double-digit increase in inspection, service and monitoring revenue[15] - Adjusted gross margin of 26.3%, representing a 208 basis point increase compared to prior year[15] - Record adjusted EBITDA of $186 million, representing a 10.7% margin[15] - Record adjusted diluted earnings per share of $0.37, representing a $0.02 increase from prior year period[15] - Adjusted free cash flow of $166 million, representing a 159% increase compared to the prior year period[15] 2022 Financial Results Overview - Net revenues increased by 16.4% on an organic basis for the three months ended September 30, 2022[17] - Adjusted gross margin was 26.3% for the three months ended September 30, 2022, a 208 basis point increase[17] - Adjusted EBITDA was $186 million with a 10.7% margin for the three months ended September 30, 2022[17] - Adjusted diluted EPS was $0.37 per share for the three months ended September 30, 2022, a $0.02 increase[17] - Net revenues increased by 14.7% on an organic basis for the nine months ended September 30, 2022[18] - Adjusted gross margin was 26.5% for the nine months ended September 30, 2022, a 280 basis point increase[18] - Adjusted EBITDA was $490 million with a 10.1% margin for the nine months ended September 30, 2022[18] - Adjusted diluted EPS was $0.96 per share for the nine months ended September 30, 2022, a $0.22 increase[18] 2022 Guidance - The company expects full year revenue outlook to range between $6.45 billion to $6.5 billion[31] - The company expects adjusted EBITDA will range between $660 million to $675 million[31] - The company now expects growth in net revenues on an organic basis at constant currencies of 10%+[31] - Q4 net revenues are expected to be $1.602 billion to $1.652 billion[33] - Q4 adjusted EBITDA is expected to be $170 million to $185 million[33] - Q4 adjusted Free Cash Flow is expected to be $190 million to $210 million[33] - Full year adjusted Free Cash Flow is expected to be $372 million to $392 million[33] - Full year adjusted Free Cash Flow Conversion is expected to be 55%+[33]

Financial Data and Key Metrics Changes - Net revenues for Q3 2022 increased by 65.7% to $1.7 billion compared to $1 billion in the prior year period, driven by acquisitions and strong organic growth [20] - Adjusted gross margin grew by 208 basis points to 26.3%, despite inflation and supply chain disruptions [21] - Adjusted diluted earnings per share increased by approximately 6% or $0.02, driven by strong operational performance and acquisition accretion [12][22] - Adjusted free cash flow was $166 million, exceeding the guided range and representing a 159% increase compared to the prior year [14][25] Business Line Data and Key Metrics Changes - Safety Services reported net revenues increased by 117% to $1.1 billion, primarily driven by acquisitions, with organic growth of 19.7% [22][23] - Specialty Services net revenues increased by 12% to $590 million, driven by increased service revenue and improved pricing [24] Market Data and Key Metrics Changes - Approximately 2/3 of organic revenue growth was driven by price and pass-through of material and labor costs, with the remaining 1/3 from volume [22] - The backlog stood at approximately $3.6 billion, slightly down from $3.7 billion, which is typical for the season [50] Company Strategy and Development Direction - The company aims for long-term organic growth above industry average, targeting an adjusted EBITDA margin of 13% by 2025 and a net leverage ratio of 2x to 2.5x [32] - The integration of Chubb remains a top priority, with plans to enhance operational efficiencies and drive organic growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2023 goals, supported by a strong backlog and resilient end markets [36][37] - The company is focused on mitigating margin pressures through high-margin inspection, service, and monitoring revenue [31][32] Other Important Information - The company expects to provide updates on the ongoing integration of Chubb and its strategic plans at the upcoming investor update [19] - Management highlighted the importance of disciplined customer and project selection to enhance margins [58] Q&A Session Summary Question: Visibility on 2023 goals - Management feels confident due to a strong backlog of approximately $3.6 billion and continued growth in inspection revenue [36] Question: Performance of Chubb by region - Chubb's revenue is resilient, with over 60% coming from inspection service and monitoring, providing stability amid potential recessions [39] Question: Cash flow improvement and conversion - The company expects continued improvement in cash flow conversion, aiming to return to traditional levels in 2023 [42] Question: Organic growth performance - Strong performance was noted in data centers, semiconductors, and healthcare, with limited exposure to retail and hospitality [46] Question: Supply chain disruptions - Mixed improvements were observed, with some costs decreasing while others, like semiconductors, remain challenging [48] Question: Backlog trends - The backlog is slightly down but remains strong, with a year-over-year increase of 8% [50][52] Question: Pricing strategies - The company continues to push for price increases and utilize fuel surcharges to manage inflationary pressures [52] Question: Integration costs for Chubb - Integration costs are expected to carry into 2023, but the company aims for a cost-neutral transition [84]

Financial Performance - Net revenues for Q3 2022 were $1,735 million, a 65.7% increase from $1,047 million in Q3 2021, primarily driven by acquisitions in the Safety Services segment [229]. - Cost of revenues for Q3 2022 was $1,295 million, up 62.9% from $795 million in Q3 2021 [229]. - Gross profit for Q3 2022 increased to $440 million, representing a 74.6% increase from $252 million in Q3 2021 [229]. - Selling, general, and administrative expenses rose to $379 million in Q3 2022, a 79.6% increase from $211 million in Q3 2021 [229]. - Operating income for Q3 2022 was $61 million, up 48.8% from $41 million in Q3 2021 [229]. - Net income for Q3 2022 was $28 million, compared to $19 million in Q3 2021, reflecting a 47.4% increase [229]. - EBITDA for the same period was $152 million, up $56 million or 58.3% from $96 million in 2021 [241]. - Net revenues for the nine months ended September 30, 2022, were $4,855 million, an increase of $2,027 million or 71.7% compared to $2,828 million in 2021, primarily driven by acquisitions and market recoveries [251]. - Gross profit for the same period was $1,251 million, up $586 million or 88.1%, with a gross margin of 25.8%, an increase of 230 basis points from 2021 [252]. - Operating income for the nine months ended September 30, 2022, was $113 million, an increase of $27 million or 31.4% compared to $86 million in 2021 [261]. - Net income for the period was $51 million, an increase of $19 million or 59.4%, with net income as a percentage of net revenues remaining at 1.1% [260]. - EBITDA for the nine months ended September 30, 2022, was $380 million, an increase of $137 million or 56.4% compared to $243 million in 2021 [260]. Segment Performance - Safety Services net revenues increased by $621 million or 116.5% to $1,154 million, primarily due to recent acquisitions [245]. - Specialty Services net revenues rose by $63 million or 12.0% to $590 million, driven by increased activity in infrastructure and utility markets [247]. - Safety Services segment net revenues increased by $1,863 million or 123.3% to $3,374 million, driven by acquisitions and market recoveries [264]. - Specialty Services segment net revenues rose by $173 million or 12.8% to $1,520 million, reflecting growth in service offerings [261]. - Specialty Services operating margin improved to approximately 4.6% for the nine months ended September 30, 2022, compared to 2.7% in the same period of 2021, attributed to higher productivity levels [267]. Expenses and Margins - Gross margin improved to 25.4%, up 130 basis points from 24.1% in the prior year, driven by acquisitions and a better revenue mix [231]. - SG&A expenses rose to $379 million, an increase of $168 million or 79.6% from $211 million in 2021, with SG&A as a percentage of net revenues at 21.8% [234]. - Operating margin decreased to 3.5% for the three months ended September 30, 2022, down from 3.9% in the same period of 2021 [233]. - Selling, general, and administrative (SG&A) expenses rose to $1,138 million, an increase of $559 million or 96.5%, with SG&A as a percentage of net revenues at 23.4% compared to 20.5% in 2021 [255]. Debt and Interest - Interest expense, net, increased to $33 million in Q3 2022, a 135.7% rise from $14 million in Q3 2021 [229]. - Interest expense increased to $88 million from $43 million, primarily due to increased debt from the Chubb Acquisition and higher interest rates [256]. - The first lien net leverage ratio as of September 30, 2022 was 2.72:1.00, below the maximum allowable ratio of 4.00:1.00 for fiscal quarters ending in 2021 [290]. - The company is exposed to a potential increase in interest expense of approximately $11 million for a 100-basis point increase in applicable interest rates [302]. Tax and Effective Rates - The effective tax rate for the three months ended September 30, 2022 was 40.5%, compared to 38.5% in the same period of 2021 [240]. - The effective tax rate for the nine months ended September 30, 2022, was 24.2%, down from 31.3% in the same period of 2021, influenced by discrete and nondeductible permanent items [259]. Cash Flow and Liquidity - Net cash provided by operating activities was $82 million for the nine months ended September 30, 2022, compared to $68 million for the same period in 2021, primarily due to an increase in net income [284]. - Net cash used in investing activities was $(2,931) million for the nine months ended September 30, 2022, significantly higher than $(81) million in the same period of 2021, mainly due to the Chubb Acquisition [285]. - Net cash provided by financing activities was $1,773 million for the nine months ended September 30, 2022, compared to $629 million in the same period of 2021, driven by proceeds from debt issuances [286]. - As of September 30, 2022, total liquidity was $819 million, consisting of $395 million in cash and cash equivalents and $424 million available under the Revolving Credit Facility [278]. Acquisitions and Restructuring - The acquisition of the Chubb fire and security business was completed for $2,893 million, expected to enhance revenue growth opportunities within the Safety Services segment [211]. - The company initiated a multi-year restructuring program in 2022, incurring total restructuring costs of $25 million, primarily related to workforce reductions [209]. - The company issued 800,000 shares of 5.5% Series B Redeemable Convertible Preferred Stock for an aggregate purchase price of $800 million to fund a portion of the Chubb Acquisition [294]. Stock Repurchase and Shareholder Returns - The company authorized a stock repurchase program of up to $250 million, with approximately $217 million remaining for future repurchases as of September 30, 2022 [281]. - During the three months ended September 30, 2022, the company purchased a total of 738,572 shares at an average price of $14.89 per share [321]. - The company has authorized a stock repurchase program to buy up to $250 million of its common stock, set to expire on February 29, 2024 [323]. Internal Controls and Remediation - The company is executing remediation plans to address material weaknesses in internal control over financial reporting, with no material changes reported during the quarter ended September 30, 2022 [317]. - Management has seen improved results in remediation efforts compared to December 31, 2021, but full remediation is expected to take a couple of years [318]. - The company is enhancing its internal control environment by hiring additional qualified personnel and refining existing controls [319]. - The company is implementing additional training programs for personnel responsible for newly implemented processes and controls [319]. - The company is enhancing controls over critical processes, including revenue recognition and financial reporting [318]. - The company is monitoring the effectiveness of its remediation plans and will make necessary adjustments as determined by management [318]. - The company is committed to improving its financial systems and enhancing information and communication controls [319]. Foreign Operations and Currency - Revenues from foreign operations represented approximately 35% and 38% of consolidated net revenues for the three and nine months ended September 30, 2022, respectively [304]. - Foreign currency translation losses totaled approximately $86 million and $311 million for the three and nine months ended September 30, 2022, respectively [304]. Capital Expenditures - The company expects capital expenditures to be approximately 1.5% of annual net revenues [299]. - The company had no amounts outstanding under the Revolving Credit Facility, with $424 million available after accounting for $76 million of outstanding letters of credit [291].

Financial Data and Key Metrics Changes - Reported net revenues for Q2 2022 increased by 68.6% to $1.6 billion compared to $978 million in the prior year period, driven by acquisitions and strong organic growth [24] - Adjusted gross margin for Q2 2022 was 26.7%, a 282 basis point increase year-over-year, attributed to an improved mix of inspection and service revenue [24][25] - Adjusted diluted earnings per share increased by 27.6% to $0.37, driven by strong operational performance and the acquisition of Chubb [15][26] Business Line Data and Key Metrics Changes - Safety Services reported net revenues increased by 124% to $1.1 billion, with organic growth of 16% driven by a 20%-plus increase in inspection, service, and monitoring revenue [26] - Specialty Services net revenues increased by 8.8% to $518 million, driven by increased service revenue and demand in infrastructure and utility businesses [28] - Adjusted gross margins for Safety Services were 30.6%, a 121 basis point decline due to inflationary pressures on longer-duration contracts [27] Market Data and Key Metrics Changes - Approximately 40% of net revenues are generated outside the United States, with continued growth in international segments, particularly in Western Europe [31][67] - The company anticipates that infrastructure spending from the U.S. Infrastructure Stimulus Bill will begin to impact business in 2023, with some early benefits seen in rural broadband projects [69] Company Strategy and Development Direction - The company aims to increase the proportion of revenue from inspection, service, and monitoring to over 60%, currently at approximately 52% [22][63] - Ongoing integration efforts at Chubb are progressing well, with a focus on developing an empowered leadership culture and capturing value opportunities estimated at $40 million [19][70] - The company is focused on deleveraging, targeting a net leverage ratio below 3.5x by year-end 2022 and approximately 2.5x by the end of 2023 [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the business model despite macroeconomic challenges, highlighting strong demand in key markets such as data centers and healthcare [49][64] - The company remains focused on maintaining operational efficiency and capturing savings through restructuring initiatives [20][37] - Management believes the business is well-positioned to navigate potential recessionary pressures due to a strong backlog and a diversified service portfolio [39][64] Other Important Information - Adjusted free cash flow for Q2 2022 was strong at $63 million, with expectations for recovery in the second half of the year [29][30] - The company has entered into a forward-starting swap arrangement to adjust the mix of fixed versus floating debt, aiming for approximately 70% fixed by January 2023 [30] Q&A Session Summary Question: How is Chubb's organic growth performing against internal plans? - Management is optimistic about Chubb's performance, noting strong recurring revenue that supports the business through macro challenges, with some regional variances due to COVID impacts [44][45] Question: How are inflationary pressures trending? - Management indicated that they have effectively managed inflation, with margin improvements across the portfolio, although some long-term contracts have faced challenges [46][47] Question: What are the biggest areas of strength driving organic growth? - Key markets such as data centers, semiconductor, healthcare, and telecommunications are driving strong organic growth, with a robust backlog for 2023 [49] Question: What is the expected impact of the U.S. Infrastructure Stimulus Bill? - Significant impacts from the Infrastructure Bill are not expected until 2023, but early benefits are being seen in rural broadband projects [69] Question: What are the plans for the restructuring program? - The restructuring program is expected to yield $40 million in value-capture opportunities, with an initial charge of $11 million taken in Q2 [77][79]

APi Group Corporation (NYSE:APG) Q1 2022 Earnings Conference Call May 4, 2022 8:00 AM ET Company Participants Olivia Walton - Vice President of Investor Relations Martin Franklin - Co-Chairman Russ Becker - President and Chief Executive Officer Kevin Krumm - Executive Vice President and Chief Financial Officer Jim Lillie - Independent Co-Chairman Conference Call Participants Andy Kaplowitz - Citigroup Markus Mittermaier - UBS Kiran Patel-O'Connor - Barclays John Mazzoni - RBC Capital Markets Jon Tanwanteng ...

Acquisition and Growth - The company completed the acquisition of the Chubb fire and security business for $2,935 million, enhancing its Safety Services segment and providing opportunities for cross-selling products and services [188]. - Net revenues for the three months ended March 31, 2022 were $1,471 million, an increase of $668 million or 83.2% compared to $803 million in the same period in 2021, driven by acquisitions and market recoveries [210]. - Safety Services segment revenues increased by $608 million or 130.5% to $1,074 million, driven by acquisitions and market recoveries [221]. - Specialty Services segment revenues rose by $68 million or 19.8% to $412 million, reflecting growth in inspection and service revenue [221]. Financial Performance - Gross profit for the same period was $376 million, up $195 million or 107.7%, with a gross margin of 25.6%, an increase of 310 basis points year-over-year [212]. - Operating loss for the three months ended March 31, 2022 was $(7) million, compared to $(2) million in the same period in 2021, reflecting a 250.0% increase in losses [219]. - Net loss for the period was $(7) million, an improvement of $1 million from $(8) million in the prior year, with net loss as a percentage of net revenues at (0.5)% compared to (1.0)% [219]. - EBITDA for the three months ended March 31, 2022 was $80 million, an increase of $29 million or 56.9% compared to $51 million in the same period in 2021 [219]. - Consolidated EBITDA for Q1 2022 was $80 million, compared to $51 million in Q1 2021, reflecting improved operational performance [233]. Expenses and Margins - Selling, general, and administrative (SG&A) expenses rose to $383 million, an increase of $200 million or 109.3%, representing 26.0% of net revenues compared to 22.8% in the prior year [214]. - Safety Services operating margin for Q1 2022 was approximately 5.9%, down from 9.7% in Q1 2021, primarily due to supply chain disruptions and inflation [225]. - Specialty Services operating margin improved to approximately (1.7)% in Q1 2022 from (5.2)% in Q1 2021, attributed to higher productivity levels [227]. Market Conditions and Challenges - Economic and market conditions, including the Russia-Ukraine conflict, have increased direct costs and created uncertainty in demand for services [195]. - The company has experienced supply chain disruptions affecting material availability and skilled labor resources, impacting project execution [193]. - Seasonal variations typically result in lower net revenues during the first and second quarters due to unfavorable weather conditions [196]. - The company continues to monitor the impacts of COVID-19, with ongoing uncertainty regarding future disruptions to operations [194]. Liquidity and Financing - Total liquidity as of March 31, 2022, was $713 million, consisting of $315 million in cash and cash equivalents and $398 million available under the Revolving Credit Facility [237]. - Net cash used in investing activities was $2,884 million for Q1 2022, primarily due to the Chubb Acquisition [242]. - Net cash provided by financing activities was $1,831 million for Q1 2022, driven by proceeds from the issuance of the 2021 Term Loan and Series B Preferred Stock [243]. - The company completed a private offering of $350 million aggregate principal amount of 4.125% Senior Notes due 2029, with interest payable semi-annually [248]. - The company also completed a private offering of $300 million aggregate principal amount of 4.750% Senior Notes due 2029, used to finance a portion of the Chubb Acquisition [249]. Shareholder Actions - The company repurchased 531,431 shares of common stock for approximately $11 million under its stock repurchase program during Q1 2022 [238]. - The Board of Directors authorized a stock repurchase program with a maximum value of $250 million, which may be executed until February 29, 2024 [273]. - The total number of shares purchased as part of publicly announced plans or programs was 531,431 shares [273]. Debt and Leverage - The first lien net leverage ratio as of March 31, 2022, was 2.93:1.00, indicating the company's leverage position [246]. - As of March 31, 2022, the company had $1,127 million and $1,085 million of indebtedness outstanding on the 2019 Term Loan and 2021 Term Loan, respectively [247]. - A 100-basis point increase in applicable interest rates would have increased the company's interest expense by approximately $5 million for the three months ended March 31, 2022 [255]. Foreign Operations - Revenues from foreign operations represented approximately 40% of consolidated net revenues for the three months ended March 31, 2022 [257]. - The company reported foreign currency translation losses of approximately $(59) million for the three months ended March 31, 2022 [257]. Internal Controls - The company is executing remediation plans to address material weaknesses in internal control over financial reporting, with improvements noted since December 31, 2021 [269]. - The company plans to continue enhancing its internal control over financial reporting and risk assessment processes over the next couple of years [270].