Financial Data and Key Metrics Changes - Adjusted net revenues for Q3 2020 declined by $93 million or 8.9% to $953 million compared to $1 billion in the prior year period, primarily due to the negative impacts of COVID-19 [22] - Adjusted gross margins for Q3 2020 were 24.3%, representing a 159 basis point increase compared to the prior year, driven by strategic focus on improving margins [23] - Adjusted EBITDA margins, excluding corporate, for Q3 2020 were 15%, representing a 183 basis point increase compared to the prior year [24] Business Line Data and Key Metrics Changes - Safety Services net revenues for Q3 2020 declined by 14.4% or $68 million to $404 million compared to $472 million in the prior year period, primarily due to COVID-19 impacts [28] - Specialty Services net revenue for Q3 2020 declined by 1.7% or $7 million to $400 million compared to $407 million in the prior year [32] - Industrial Services adjusted net revenues for Q3 2020 declined by 11.6% or $20 million to $153 million compared to $173 million in the prior year period [34] Market Data and Key Metrics Changes - Service revenue represented approximately 40% of Safety Services segment net revenues for Q3 2020, up from 34% in the prior year [29] - Adjusted gross margins for Safety Services for Q3 2020 were 32.7%, representing a 259 basis point increase compared to the prior year [30] - Adjusted EBITDA margins for Specialty Services for Q3 2020 were 14.3%, representing a 74 basis point decline compared to the prior period [33] Company Strategy and Development Direction - The company remains focused on building upon its proven track record of organic growth within niche business services markets, complemented by disciplined and accretive M&A [8] - Recent acquisitions are expected to expand geographical reach in the U.S. and establish a platform for expansion in Europe [8] - The company aims for long-term organic revenue growth above the industry average and to expand adjusted EBITDA margins to 12% plus by fiscal year 2023 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being well-positioned and well-capitalized to continue executing long-term goals despite ongoing COVID-19 disruptions [12] - The company anticipates that infrastructure investments may become a reality post-election, which could benefit its operations [18] - Management remains cautiously optimistic about the future, with expectations of continued growth in service revenue and a strong contract backlog [50][53] Other Important Information - The company ended Q3 2020 with a net debt-to-adjusted EBITDA ratio of 1.8x and has ample capacity for additional accretive transactions [19] - Adjusted free cash flow for the 9 months ended September 30, 2020, was $301 million, representing a significant increase compared to the prior year [26] - The company has a robust pipeline of incremental M&A opportunities and expects to continue exploring acquisitions [19] Q&A Session Summary Question: Can you talk us through your thinking on the guidance? - Management indicated that the fourth quarter typically sees seasonality in revenue and SG&A, with costs returning to near 100% as temporary measures unwind [43] Question: Can you elaborate on the nature of the delays in the Safety Services segment? - Delays were primarily seen in healthcare projects, with no cancellations reported, indicating a push to future periods rather than project evaporation [73] Question: What are the expectations for free cash flow conversion in Q4? - Management expects strong cash generation in Q4, driven by working capital needs and historical performance trends [58][60]

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, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |------------------------------------------------------------------------------------------|-------------------------------------------------| | | | | For the transition period ...

APi Group Corporation (NYSE:APG) Q2 2020 Earnings Conference Call August 12, 2020 8:30 AM ET Company Participants Olivia Walton - VP, IR Martin Franklin - Co-Chairman Jim Lillie - Co-Chairman Russ Becker - President and CEO Tom Lydon - CFO Conference Call Participants Andrew Wittmann - Robert W. Baird Markus Mittermaier - UBS Andrew Kaplowitz - Citigroup Kathryn Thompson - Thompson Research John Tanwanteng - CJS Securities Operator Good morning, ladies and gentlemen, and welcome to APi Group's Second Quarte ...

Financial Performance - Net revenues for Q1 2020 were $858 million, a decrease of 6.9% compared to $922 million in Q1 2019[6]. - Gross profit for Q1 2020 was $162 million, slightly down from $163 million in Q1 2019[6]. - The company reported a net loss of $194 million for Q1 2020, compared to a net income of $21 million in Q1 2019[6][7]. - Operating income (loss) for Q1 2020 was $(234) million, a significant decline from $26 million in Q1 2019[6]. - EBITDA for Q1 2020 was $(161) million, a decrease of $214 million from $53 million in Q1 2019, reflecting increased operating expenses[179]. - The effective tax rate for Q1 2020 was 20.9%, significantly higher than 6.0% for the same period in 2019, primarily due to the change from "S" Corporation to "C" Corporation status[104]. - The company reported a net loss of $194 million for the three months ended March 31, 2020, resulting in a basic and diluted loss per ordinary share of $(1.14)[115]. Cash Flow and Liquidity - Net cash provided by operating activities was $55 million for the three months ended March 31, 2020, compared to $25 million for the same period in 2019[199]. - Net cash used in investing activities was $15 million for the three months ended March 31, 2020, compared to $22 million for the same period in 2019[201]. - Net cash provided by financing activities was $139 million for the three months ended March 31, 2020, compared to net cash used of $16 million in the prior year[202]. - Total liquidity as of March 31, 2020, was $499 million, comprising $436 million in cash and cash equivalents and $33 million available under the Revolving Credit Facility[191]. Assets and Liabilities - Total current assets increased to $1,450 million as of March 31, 2020, up from $1,342 million at December 31, 2019[5]. - Total liabilities rose to $2,361 million as of March 31, 2020, compared to $2,254 million at December 31, 2019[5]. - The accumulated deficit increased to $(325) million as of March 31, 2020, compared to $(131) million at December 31, 2019[8]. - Total shareholders' equity decreased to $1,525 million as of March 31, 2020, down from $1,757 million at December 31, 2019[5]. - As of March 31, 2020, the total debt obligations amounted to $1,407 million, an increase from $1,214 million as of December 31, 2019[99]. Impairment and Acquisitions - The company recorded impairment of goodwill and intangible assets amounting to $208 million in Q1 2020[6]. - The company recorded a $5 million impairment charge related to intangible assets classified as held for sale as of March 31, 2020[32]. - The Company completed the APi Acquisition on October 1, 2019, for a total consideration of $3,129 million, which included a cash payment of $2,703 million and 28,373,000 ordinary shares valued at $291 million[40][41][49]. - The acquisition resulted in recorded goodwill of $969 million, with provisional goodwill expected to be deductible for US income tax purposes amounting to $917 million[47]. - The Company anticipates finalizing its purchase price allocation for the APi Acquisition during the third quarter of 2020, which may lead to changes in the carrying value and impairment charge[32][46]. Segment Performance - The company operates under three reportable segments: Safety Services, Specialty Services, and Industrial Services, focusing on various infrastructure and contracting services[117]. - Safety Services net revenues decreased by $2 million, or 0.5%, to $424 million for the three months ended March 31, 2020, compared to $426 million in the prior year[184]. - Specialty Services net revenues increased by $14 million, or 4.9%, to $300 million for the three months ended March 31, 2020, compared to $286 million in the prior year[187]. - Industrial Services net revenues decreased by $76 million, or 35.7%, to $137 million for the three months ended March 31, 2020, compared to $213 million in the prior year[189]. - The Safety Services segment reported an operating loss of $10 million in Q1 2020, down from a profit of $52 million in Q1 2019, a decline of 119.2%[181]. Economic Impact and Future Outlook - The company noted that the COVID-19 pandemic has negatively impacted operations, suppliers, and customer demand, leading to impairment testing for goodwill[25]. - The company anticipates continued growth through both organic means and acquisitions, despite uncertainties related to the COVID-19 pandemic[129]. - The company experienced volume declines across all segments due to COVID-19, but is seeing indications of stabilizing and some volume improvements[154]. - The company implemented a preemptive cost reduction plan expected to save both expense and cash in 2020[155].