APi (APG) - 2024 Q3 - Quarterly Report

Acquisition and Restructuring - The total net consideration for the acquisition of Elevated Facility Services Group was $579 million, completed on June 3, 2024[167]. - The company completed an acquisition in the Safety Services Segment on October 1, 2024, with an aggregate consideration of approximately$104 million[167]. - The company incurred pre-tax restructuring costs of $5 million in the Safety Services segment related to the Chubb restructuring program during the nine months ended September 30, 2024, with an estimated total of$125 million in restructuring costs expected by the end of fiscal year 2025[169]. Financial Performance - Net revenues for Q3 2024 were $1,826 million, an increase of$42 million or 2.4% compared to $1,784 million in Q3 2023, driven by acquisitions and growth in Safety Services[185]. - Gross profit for Q3 2024 was$567 million, up $56 million or 11.0$511 million in Q3 2023, with a gross margin of 31.1%, an increase of 250 basis points year-over-year[187]. - Operating income for Q3 2024 was $142 million, a 36.5$104 million in Q3 2023[186]. - Net income for Q3 2024 was $69 million, an increase of$15 million or 27.8% compared to $54 million in Q3 2023, with net income as a percentage of net revenues rising to 3.8$218 million, an increase of $30 million or 16.0$188 million in Q3 2023[194]. - Safety Services segment revenues increased by $118 million or 9.7$1,335 million in Q3 2024, while Specialty Services revenues decreased by $76 million or 13.4$493 million[195]. - Net income for the nine months ended September 30, 2024 was $183 million, an increase of$55 million or 43.0% compared to the same period in 2023[213]. - EBITDA for the nine months ended September 30, 2024 was $583 million, an increase of$58 million or 11.0% from the same period in 2023[213]. Segment Performance - Safety Services net revenues increased by $195 million or 5.4$219 million or 14.1% compared to the same period in 2023[221]. - Safety Services operating margin improved to 10.8% for the nine months ended September 30, 2024, up from 8.0% in 2023[220]. - Specialty Services operating margin increased to 6.1% for the nine months ended September 30, 2024, compared to 5.4% in 2023[222]. Expenses and Costs - Selling, general, and administrative (SG&A) expenses increased to $425 million in Q3 2024 from$407 million in Q3 2023, representing a 4.4% increase[189]. - SG&A expenses for the nine months ended September 30, 2024 were $1,235 million, up$87 million or 7.6% from the prior year, reflecting investments in Safety Services[208]. - Interest expense for Q3 2024 was $41 million, up from$37 million in Q3 2023, primarily due to increased debt volume[190]. - The effective tax rate for Q3 2024 was 30.9%, compared to 25.5% in Q3 2023, influenced by nondeductible permanent items[192]. Cash Flow and Liquidity - As of September 30, 2024, the company had total liquidity of $982 million, including$487 million in cash and cash equivalents[232]. - Net cash provided by operating activities increased to $337 million for the nine months ended September 30, 2024, up from$217 million in the same period of 2023, primarily due to higher net income and lower working capital needs[242]. - Net cash used in investing activities rose significantly to $680 million for the nine months ended September 30, 2024, compared to$108 million for the same period in 2023, largely due to acquisitions totaling $647 million[243]. - Net cash provided by financing activities was$348 million for the nine months ended September 30, 2024, compared to a cash outflow of $253 million in the same period of 2023, driven by equity and debt issuances[244]. Market and Economic Conditions - The company monitors economic and market conditions that can negatively affect customer demand and planned capital budgets, impacting service demand[171]. - Seasonal variations typically result in lower net revenues during the first and second quarters due to unfavorable weather conditions affecting project schedules[172]. - Market risks impacting the customer base may affect accounts receivable or contract assets, with ongoing monitoring of customer creditworthiness[265]. - Supply chain risks include price fluctuations and availability of materials such as copper, steel, and cable optic fiber, which could impact operations[267]. - Significant declines in market prices for oil and gas may lead to project delays or cancellations, impacting profitability[268]. Foreign Operations and Currency - Revenues from foreign operations accounted for approximately 35$26 million for the nine months ended September 30, 2024, compared to a loss of $(22) million for the same period in 2023[263]. Strategic Plans - The company aims to grow recurring revenues and repeat business from long-standing customers, which is expected to provide stable cash flows and organic growth opportunities[165]. - The company plans to realign its segments in 2025 by moving its HVAC business from Safety Services to Specialty Services[164]. - The company expects to use proceeds from a recent public offering of common stock, totaling approximately$458 million, for general corporate purposes, including future acquisitions[237]. - The company has a stock repurchase program authorized for up to $1,000 million, with approximately$400 million remaining as of September 30, 2024[239].