APi (APG) - 2025 Q2 - Quarterly Results

Financial Performance Overview APi Group achieved record Q2 2025 financial results with strong revenue and EBITDA growth, though segment performance showed mixed margin trends Q2 2025 Consolidated Financial Results APi Group reported record Q2 2025 results, with net revenues up 15.0% to $2.0 billion and Adjusted EBITDA growing 17.7% Q2 2025 Consolidated Financial Results (in millions) | Metric | Q2 2025 | Q2 2024 | Y/Y Growth | | :--- | :--- | :--- | :--- | | Net Revenues | $1,990 M | $1,730 M | 15.0% | | Organic Net Revenue Growth | - | - | 8.3% | | Net Income | $77 M | $69 M | 11.6% | | Diluted EPS | $0.16 | $0.15 | 6.7% | | Adjusted EBITDA | $272 M | $231 M | 17.7% | | Adjusted EBITDA Margin | 13.7% | 13.4% | +30 bps | | Adjusted Net Income | $164 M | $136 M | 20.6% | | Adjusted Diluted EPS | $0.39 | $0.33 | 18.2% | - Revenue growth was driven by a combination of acquisitions, strong project revenue growth, pricing improvements, and an increase in inspection, service, and monitoring revenues[6] - The CEO highlighted continued positive momentum, accelerating organic growth, margin expansion, and improved free cash flow generation, expressing confidence in achieving the new 10/16/60+ long-term financial targets[2] Q2 2025 Segment Performance The company's two segments showed divergent Q2 2025 margin performance, with Safety Services expanding and Specialty Services contracting Safety Services Safety Services net revenues grew 15.8% to $1.36 billion with 5.6% organic growth, achieving margin expansion Safety Services Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Y/Y Change | | :--- | :--- | :--- | :--- | | Net Revenues | $1,362 M | $1,176 M | +15.8% | | Organic Net Revenue Growth | - | - | 5.6% | | Gross Margin | 36.8% | 36.1% | +70 bps | | Segment Earnings | $232 M | $190 M | +22.1% | | Segment Earnings Margin | 17.0% | 16.2% | +80 bps | - Margin expansion was driven by disciplined customer and project selection along with pricing improvements in both service and project revenues[7] Specialty Services Specialty Services achieved 13.3% organic revenue growth to $629 million, but experienced margin contraction from project mix and rising costs Specialty Services Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Y/Y Change | | :--- | :--- | :--- | :--- | | Net Revenues | $629 M | $555 M | +13.3% | | Organic Net Revenue Growth | - | - | 13.3% | | Gross Margin | 18.1% | 21.6% | -350 bps | | Segment Earnings | $71 M | $73 M | -2.7% | | Segment Earnings Margin | 11.3% | 13.2% | -190 bps | - The decline in gross and segment earnings margins was primarily driven by increased project starts, rising material costs, and weather impacts[15] Outlook and Corporate Actions APi Group raised full-year 2025 guidance after strong Q2 results and completed a three-for-two stock split Full-Year and Q3 2025 Guidance APi Group raised full-year 2025 guidance for net revenues and Adjusted EBITDA, while also issuing Q3 2025 projections Full-Year 2025 Guidance (in millions) | Full-Year 2025 Guidance | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Net Revenues | $7,650 - $7,850 M | $7,400 - $7,600 M | | Adjusted EBITDA | $1,005 - $1,045 M | $985 - $1,035 M | | Adjusted FCF Conversion | ~75% | (not specified) | Q3 2025 Guidance (in millions) | Q3 2025 Guidance | Projected Range | | :--- | :--- | | Net Revenues | $1,985 - $2,035 M | | Adjusted EBITDA | $270 - $280 M | Corporate Actions and Events APi Group executed a three-for-two stock split on June 30, 2025, and scheduled a Q2 earnings call for July 31, 2025 - On June 30, 2025, the company executed a three-for-two stock split via a stock dividend, with the par value remaining at $0.0001 per share[12] - A conference call to discuss financial results was scheduled for 8:30 a.m. (Eastern Time) on Thursday, July 31, 2025[13] Financial Statements (GAAP) This section presents APi Group's GAAP statements of operations, balance sheets, and cash flows for Q2 and year-to-date 2025 Condensed Consolidated Statements of Operations APi reported Q2 2025 net income of $77 million on $1,990 million net revenues, with six-month net income at $112 million Condensed Consolidated Statements of Operations (in millions) | (In millions) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net Revenues | $1,990 | $3,709 | | Gross Profit | $615 | $1,157 | | Operating Income | $143 | $227 | | Net Income | $77 | $112 | | Diluted EPS | $0.16 | $0.24 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets reached $8.54 billion, driven by goodwill and receivables, with total liabilities at $5.37 billion Condensed Consolidated Balance Sheets (in millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,798 | $2,658 | | Goodwill | $3,126 | $2,894 | | Total Assets | $8,539 | $8,152 | | Total Current Liabilities | $1,933 | $1,885 | | Long-term Debt | $2,751 | $2,749 | | Total Liabilities | $5,368 | $5,199 | | Total Shareholders' Equity | $3,171 | $2,953 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $145 million for H1 2025, with $140 million used in investing and $101 million in financing Condensed Consolidated Statements of Cash Flows (in millions) | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145 | $117 | | Net cash used in investing activities | $(140) | $(623) | | Net cash (used in) provided by financing activities | $(101) | $357 | | Net decrease in cash | $(68) | $(154) | Non-GAAP Reconciliations This section details reconciliations of GAAP to non-GAAP financial measures, including organic revenue, EBITDA, net income, and free cash flow Reconciliation of Organic Change in Net Revenues Q2 2025 reported revenue growth of 15.0% is reconciled to an 8.3% organic growth rate after adjusting for currency and acquisitions Reconciliation of Organic Change in Net Revenues | Q2 2025 vs Q2 2024 | Net Revenues Change (as reported) | Foreign Currency Translation | Acquisitions & Divestitures | Organic Change | | :--- | :--- | :--- | :--- | :--- | | Consolidated | 15.0% | 0.8% | 5.9% | 8.3% | | Safety Services | 15.8% | 1.4% | 8.8% | 5.6% | | Specialty Services | 13.3% | 0.0% | 0.0% | 13.3% | Reconciliation of Gross Profit and SG&A Q2 2025 GAAP Gross Profit of $615 million is adjusted to $620 million, and GAAP SG&A of $472 million is adjusted to $376 million - For Q2 2025, Adjusted Gross Profit was $620 million (31.2% margin) compared to GAAP Gross Profit of $615 million (30.9% margin)[39] - For Q2 2025, Adjusted SG&A was $376 million (18.9% of net revenues) compared to GAAP SG&A of $472 million (23.7% of net revenues), with key adjustments including amortization of intangible assets ($55 million) and systems/business enablement costs ($18 million)[39] Reconciliation of EBITDA Q2 2025 GAAP Net Income of $77 million is reconciled to Adjusted EBITDA of $272 million by adding back non-cash and specific operational adjustments Reconciliation of EBITDA (in millions) | Reconciliation (In millions) | Three Months Ended June 30, 2025 | | :--- | :--- | | Net Income (as reported) | $77 | | Interest expense, net | $37 | | Income tax provision | $31 | | Depreciation and amortization | $81 | | EBITDA | $226 | | Adjustments (Systems, Acquisition, Restructuring, etc.) | $46 | | Adjusted EBITDA | $272 | Reconciliation of Net Income and EPS Q2 2025 GAAP Income Before Tax of $108 million is adjusted to $213 million, yielding Adjusted Net Income of $164 million and Adjusted Diluted EPS of $0.39 Reconciliation of Net Income and EPS (in millions, except per share) | Reconciliation (In millions, except per share) | Three Months Ended June 30, 2025 | | :--- | :--- | | Income before income tax (as reported) | $108 | | Total Adjustments (Amortization, Systems, etc.) | $105 | | Adjusted income before income tax | $213 | | Adjusted income tax provision | $49 | | Adjusted net income | $164 | | Adjusted diluted EPS | $0.39 | Reconciliation of Segment Financials Q2 2025 segment financials show Safety Services with $232 million in earnings (17.0% margin) and Specialty Services with $71 million (11.3% margin) Q2 2025 Segment Performance (Adjusted, in millions) | Q2 2025 Segment Performance (Adjusted) | Safety Services | Specialty Services | | :--- | :--- | :--- | | Net Revenues | $1,362 M | $629 M | | Adjusted Gross Profit | $506 M | $114 M | | Adjusted Gross Margin | 37.2% | 18.1% | | Segment Earnings | $232 M | $71 M | | Segment Earnings Margin | 17.0% | 11.3% | Reconciliation of Free Cash Flow Q2 2025 GAAP Net Cash from Operating Activities of $83 million is reconciled to Adjusted Free Cash Flow of $100 million, representing a 36.8% conversion rate Reconciliation of Free Cash Flow (in millions) | Reconciliation (In millions) | Three Months Ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $83 | | Less: Purchases of property and equipment | $(27) | | Free cash flow | $56 | | Add: Cash payments for adjustments | $44 | | Adjusted free cash flow | $100 | | Adjusted EBITDA | $272 | | Adjusted free cash flow conversion | 36.8% |