-Record full year net revenues of $6.9 billion,
representing approximately 6% and 5.5% reported and organic growth,
respectively, with continued double-digit organic core inspection
revenue growth- -Record reported net income of $153 million and
adjusted EBITDA of $782 million for the full year, representing
year-over-year net income growth of 110% and adjusted EBITDA growth
of 16.2%- -Full year adjusted free cash flow conversion of 69%,
with year-end net leverage ratio of 2.3x- -Announces $1 Billion
Share Repurchase Program-
APi Group Corporation (NYSE: APG) (“APi” or the “Company”) today
reported its financial results for the three months and full year
ended December 31, 2023.
Russ Becker, APi’s President and Chief Executive Officer stated:
“2023 was a year of record financial results for APi. Our global
team of 29,000 leaders delivered record net revenues, record
adjusted EBITDA margins, and record adjusted free cash flow in an
evolving macro environment.”
Becker continued, “The Series B transaction represents another
step in our journey to drive value for our investors by simplifying
our capital structure, reducing our adjusted diluted share count,
and providing immediate accretion to adjusted earnings per share,
while having no impact on our focus on opportunistic M&A. We
appreciate everything Blackstone and Viking have done to bring this
transaction to fruition and look forward to their continued
support.
As we look to 2024, we have great confidence in the business,
our backlog, and our balance sheet. We believe we are well
positioned to deliver strong organic growth, drive margin expansion
and improve our free cash flow generation. We have significant
flexibility to pursue value-enhancing capital allocation
alternatives including, but not limited to, an acceleration of our
bolt-on M&A strategy and share repurchases. Longer term, we
remain focused on creating sustainable shareholder value by
delivering on our “13/60/80” targets, with a near-term focus on
generating adjusted EBITDA margins of 13% or more in 2025.”
Fourth Quarter
and Full Year 2023 Consolidated Results:
Three Months Ended December
31,
Year Ended December
31,
2023
2022
Y/Y
2023
2022
Y/Y
Net revenues
$
1,759
$
1,703
3.3
%
$
6,928
$
6,558
5.6
%
Organic net revenue growth
1.5
%
5.4
%
GAAP
Gross profit
$
508
$
463
9.7
%
$
1,940
$
1,714
13.2
%
Gross margin
28.9
%
27.2
%
+ 170bps
28.0
%
26.1
%
+190bps
Net income
$
25
$
22
13.6
%
$
153
$
73
109.6
%
Diluted EPS
$
(1.08
)
$
0.04
NM
$
(0.68
)
$
0.10
NM
Adjusted non-GAAP comparison
Adjusted gross profit
$
529
$
474
11.6
%
$
1,981
$
1,760
12.6
%
Adjusted gross margin
30.1
%
27.8
%
+ 230bps
28.6
%
26.8
%
+ 180bps
Adjusted EBITDA
$
208
$
183
13.7
%
$
782
$
673
16.2
%
Adjusted EBITDA as a % of net revenues
11.8
%
10.7
%
+ 110bps
11.3
%
10.3
%
+100bps
Adjusted net income
$
120
$
98
22.4
%
$
430
$
358
20.1
%
Adjusted diluted EPS
$
0.44
$
0.36
22.2
%
$
1.58
$
1.33
18.8
%
NM = Not Meaningful
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
Fourth Quarter 2023
Highlights
- Reported net revenue growth of 3.3% (1.5% organic) driven by
service growth across both segments, as well as modest benefits
from favorable foreign currency exchange rates and M&A,
partially offset by disciplined customer and project selection
leading to a decline in our projects business.
- Reported and adjusted gross margin increased 170 and 230 basis
points, respectively, compared to prior year period due to
continued price increases, outsized growth in higher margin service
revenue as well as significant margin expansion in our projects
business across both segments.
- Reported net income was $25 million and diluted EPS was
$(1.08). Adjusted net income was $120 million and adjusted diluted
EPS was $0.44, representing a 22.2% increase from prior year period
driven by significant adjusted gross margin expansion, and
decreased interest expense.
- Adjusted EBITDA increased by 13.7% compared to the prior year
period and adjusted EBITDA margin increased 110 basis points to
11.8%, primarily due to the factors impacting gross margin,
partially offset by investments to support profitable growth and
the investment in building our global capabilities and
infrastructure.
2023 Highlights
- Reported net revenue growth of 5.6% (5.4% organic) driven by
strong service growth across both segments, partially offset by
disciplined customer and project selection in our HVAC and
Specialty Services businesses.
- Reported and adjusted gross margin increased 190 and 180 basis
points, respectively, compared to prior year period due to
continued price increases, outsized growth in higher margin service
revenue as well as margin expansion in both our projects and
services businesses across both segments.
- Reported net income was $153 million and diluted EPS was
$(0.68). Adjusted net income was $430 million and adjusted diluted
EPS was $1.58, representing a 18.8% increase from prior year period
driven by significant adjusted gross margin expansion in both
Safety and Specialty Services, resulting from the factors mentioned
above, partially offset by increased interest expense.
- Adjusted EBITDA increased by 16.2% compared to the prior year
period and adjusted EBITDA margin increased 100 basis points to
11.3%, primarily due to the factors impacting gross margin,
partially offset by investments to support profitable growth and
the investment in building our global capabilities and
infrastructure.
Fourth Quarter
and Full Year 2023 Segment Results:
Safety Services
Three Months Ended December
31,
Year Ended December
31,
2023
2022
Y/Y
2023
2022
Y/Y
Safety Services
Net revenues
$
1,238
$
1,201
3.1
%
$
4,871
$
4,575
6.5
%
Organic net revenue growth
1.0
%
6.0
%
GAAP
Gross profit
$
413
$
378
9.3
%
$
1,570
$
1,389
13.0
%
Gross margin
33.4
%
31.5
%
+ 190 bps
32.2
%
30.4
%
+ 180 bps
Operating Income
$
104
$
70
48.6
%
$
396
$
256
54.7
%
Operating margin
8.4
%
5.8
%
+ 260bps
8.1
%
5.6
%
+ 250bps
Adjusted non-GAAP comparison
Adjusted gross profit
$
434
$
389
11.6
%
$
1,611
$
1,432
12.5
%
Adjusted gross margin
35.1
%
32.4
%
+ 270 bps
33.1
%
31.3
%
+ 180 bps
Adjusted EBITDA
$
189
$
158
19.6
%
$
664
$
559
18.8
%
Adjusted EBITDA as a % of net revenues
15.3
%
13.2
%
+ 210 bps
13.6
%
12.2
%
+ 140 bps
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
Fourth Quarter 2023 Safety Services
Highlights
- Reported net revenue growth of 3.1% (1.0% organic) driven by
growth in inspection, service and monitoring and the projects
business, as well as modest benefits from favorable foreign
currency exchange rates and M&A. This was partially offset by
planned customer attrition in our international business, and
planned disciplined customer and project selection in our HVAC
business.
- Reported and adjusted gross margin increased 190 and 270 basis
points, respectively, compared to prior year period due to
continued price increases, improved business mix of inspection,
services and monitoring revenue as well as significant margin
expansion in our projects business.
- Operating income increased by 48.6% compared to the prior year
period. Operating margin was 8.4%, representing a 260 basis point
increase compared to the prior year period.
- Adjusted EBITDA increased by 19.6% compared to the prior year
period. Adjusted EBITDA margin was 15.3%, representing a 210 basis
point increase compared to prior year period, primarily due to the
factors impacting adjusted gross margin, partially offset by
investments made to support profitable growth.
2023 Safety Services
Highlights
- Reported net revenue growth of 6.5% (6.0% organic) driven by
strong growth in inspection, service and monitoring and the
projects business, as well as modest benefits from favorable
foreign currency exchange rates and M&A. This was partially
offset by planned customer attrition in our international business,
and planned disciplined customer and project selection in our HVAC
business.
- Reported and adjusted gross margin increased 180 basis points,
compared to prior year period due to continued price increases,
improved business mix of inspection, services and monitoring
revenue as well as significant margin expansion in our projects
business.
- Operating income increased by 54.7% compared to the prior year
period. Operating margin was 8.1%, representing a 250 basis point
increase compared to the prior year period.
- Adjusted EBITDA increased by 18.8% compared to the prior year
period. Adjusted EBITDA margin was 13.6%, representing a 140 basis
point increase compared to prior year period, primarily due to the
factors impacting adjusted gross margin, partially offset by
investments made to support profitable growth.
Specialty Services
Three Months Ended December
31,
Year Ended December
31,
2023
2022
Y/Y
2023
2022
Y/Y
Specialty Services
Net revenues
$
525
$
510
2.9
%
$
2,079
$
2,030
2.4
%
Organic net revenue growth
1.8
%
2.5
%
GAAP
Gross profit
$
95
$
85
11.8
%
$
370
$
325
13.8
%
Gross margin
18.1
%
16.7
%
+ 140 bps
17.8
%
16.0
%
+ 180 bps
Operating Income
$
24
$
27
(11.1
)%
$
108
$
97
11.3
%
Operating margin
4.6
%
5.3
%
(70) bps
5.2
%
4.8
%
+ 40bps
Adjusted non-GAAP comparison
Adjusted gross profit
$
95
$
85
11.8
%
$
370
$
328
12.8
%
Adjusted gross margin
18.1
%
16.7
%
+ 140 bps
17.8
%
16.2
%
+ 160 bps
Adjusted EBITDA
$
59
$
53
11.3
%
$
239
$
210
13.8
%
Adjusted EBITDA as a % of net revenues
11.2
%
10.4
%
+ 80 bps
11.5
%
10.3
%
+ 120 bps
Notes: Refer to non-GAAP reconciliations
to the most comparable GAAP measures.
Fourth Quarter 2023 Specialty Services
Highlights
- Reported net revenue growth of 2.9% (1.8% organic) driven by
strong growth in service revenues, partially offset by disciplined
customer and project selection.
- Reported and adjusted gross margin increased 140 basis points,
compared to prior year period due to strong organic growth in
services revenues as well as significant margin expansion in our
projects business.
- Operating income decreased by 11.1% compared to the prior year
period. Operating margin was 4.6%, representing a 70 basis point
decrease compared to the prior year period.
- Adjusted EBITDA increased by 11.3% compared to the prior year
period. Adjusted EBITDA margin was 11.2%, representing a 80 basis
point increase compared to prior year period, primarily due to the
factors impacting gross margins, partially offset by timing of year
end incentive true-ups.
2023 Specialty Services
Highlights
- Reported net revenue growth of 2.4% (2.5% organic) driven by
strong growth in service revenues, partially offset by disciplined
customer and project selection resulting in lower project
revenues.
- Reported and adjusted gross margin increased 180 and 160 basis
points, respectively, compared to prior year period due to strong
organic growth in services revenues as well as significant margin
expansion in our projects business.
- Operating income increased by 11.3% compared to the prior year
period. Operating margin was 5.2%, representing a 40 basis point
increase compared to the prior year period.
- Adjusted EBITDA increased by 13.8% compared to the prior year
period. Adjusted EBITDA margin was 11.5%, representing a 120 basis
point increase compared to prior year period, primarily due to the
factors impacting gross margins, partially offset by increases in
profit based incentives.
Guidance
APi Group announces initial full year 2024 guidance for net
revenue, adjusted EBITDA, and free cash flow conversion.
- Net Revenues of $7,050 to $7,250 million
- Adjusted EBITDA of $855 to $905 million
- Adjusted Free Cash Flow Conversion of approximately 70%
APi Group announces guidance for the first quarter of 2024.
- Net Revenues of $1,560 to $1,610 million
- Adjusted EBITDA of $165 to $180 million
Series B Preferred Stock Retirement
Transaction
APi has reached an agreement with shareholders affiliated with
Blackstone Tactical Opportunities Fund (“Blackstone”) and Viking
Global Equities (“Viking”) to retire all of the outstanding shares
of their Series B Perpetual Convertible Preferred Stock (the
“Series B Preferred Stock”). Under the terms of the agreement,
Blackstone and Viking will each exercise their respective right to
convert all of their Series B Preferred Stock into common stock of
APi, resulting in a total of 800,000 shares of Series B Preferred
Stock being converted into approximately 32.5 million shares of
common stock of APi (the “Conversion Shares”).
Upon issuance of the Conversion Shares, APi will repurchase 16.3
million, or one-half, of the Conversion Shares (on a pro rata
basis) from Blackstone and Viking for an aggregate purchase price
of $600 million. The transaction is expected to be financed by (i)
an incremental term facility of $300 million issued at par; (ii)
cash on hand and available credit.
As a part of the agreement, Blackstone and Viking intend to
effect a coordinated secondary public offering with the goal of
selling approximately 8.1 million shares of APi’s common stock.
Following the sale, it is expected that any remaining common shares
owned by Blackstone and Viking would be subject to a 90-day
lockup.
The transaction is expected to provide substantial benefits to
APi and its common stockholders:
- Simplifies APi Group’s capital structure
- Preserves our strong, opportunistic balance sheet
- Reduces adjusted diluted share count by 16.3 million
shares
- Provides immediate accretion to adjusted earnings per
share
- Eliminates preferred dividend payments of $44 million
annually
- Not expected to impact reacceleration of bolt-on M&A
strategy
- Opportunity to attract new long-term investors to diversify the
Company’s investor base
New Share Repurchase
Authorization
The Company announced that its Board of Directors has authorized
a stock repurchase program to purchase up to an aggregate of $1
billion of shares of the Company’s common stock, of which $600
million will be utilized in the Series B Preferred Stock
repurchase. The timing, amount and manner of any repurchases under
the new repurchase program will be determined at the discretion of
the Company's management based on a number of factors, including
the availability of capital, capital allocation alternatives, and
market conditions for the Company's Class A common stock. The share
repurchase program does not require the Company to acquire any
specific number of shares. It may be modified, suspended, extended,
or terminated by the Company at any time without prior notice and
may be executed through open market purchases, privately negotiated
transactions or otherwise, and we may enter into Rule 10b5-1
trading plans in connection with such repurchases.
Conclusion
APi Co-Chair James E. Lillie concluded: “2023 was another
tremendous year in APi’s development with record net revenues,
record adjusted EBITDA, record reported and adjusted earnings per
share and record adjusted free cash flow. Our strategy of evolving
away from lower margin, higher risk opportunities while focusing
investments on service revenue expansion continues to yield the
desired results – margin expansion and stronger free cash flow
generation. With the progress made throughout the year reducing our
net leverage ratio to 2.3x, we are excited to build on our track
record of disciplined, predictable, and thoughtful decisions
regarding capital allocation, with a primary focus on continuing
bolt-on M&A at accretive multiples to supplement organic
growth. We are committed to being thoughtful allocators of capital
to drive shareholder value creation and to ensuring that the
company is in the best possible position to leverage opportunities
before it.”
Conference Call
APi will hold a webcast/dial-in conference call to discuss its
financial results at 8:30 a.m. (Eastern Time) on Wednesday,
February 28, 2024. Participants on the call will include Russell A.
Becker, President and Chief Executive Officer; Kevin S. Krumm,
Executive Vice President and Chief Financial Officer; and Sir
Martin E. Franklin and James E. Lillie, Co-Chairs.
To listen to the call by telephone, please dial 888-330-3428 or
646-960-0679 and provide Conference ID 2352966. You may also attend
and view the presentation (live or by replay) via webcast by
accessing the following URL:
https://events.q4inc.com/attendee/201211385
A replay of the call will be available shortly after completion
of the live call/webcast via the webcast link above.
About APi:
APi is a global, market-leading business services provider of
life safety, security and specialty services with a substantial
recurring revenue base and over 500 locations worldwide. APi
provides statutorily mandated and other contracted services to a
strong base of long-standing customers across industries. We have a
winning leadership culture driven by entrepreneurial business
leaders to deliver innovative solutions for our customers. More
information can be found at www.apigroupcorp.com.
Forward-Looking Statements and
Disclaimers
Please note that in this press release the Company may discuss
events or results that have not yet occurred or been realized,
commonly referred to as forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of APi Group
Corporation (“APi” or the “Company”). Such discussion and
statements may contain words such as “expect,” “anticipate,”
“will,” “should,” “believe,” “intend,” “plan,” “estimate,”
“predict,” “seek,” “continue,” “pro forma” “outlook,” “may,”
“might,” “should,” “can have,” “have,” “likely,” “potential,”
“target,” “indicative,” “illustrative,” and variations of such
words and similar expressions, and relate in this press release,
without limitation, to statements, beliefs, projections and
expectations about future events. Such statements are based on the
Company’s expectations, intentions and projections regarding the
Company’s future performance, anticipated events or trends and
other matters that are not historical facts.
These statements are not guarantees of future performance and
are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements,
including: (i) economic conditions, competition, political risks,
and other risks that may affect the Company’s future performance,
including the impacts of inflationary pressures and other
macroeconomic factors on the Company’s business, markets, supply
chain, customers and workforce, on the credit and financial
markets, on the alignment of expenses and revenues and on the
global economy generally; (ii) supply chain constraints and
interruptions, and the resulting increases in the cost, or
reductions in the supply, of the materials and commodities the
Company uses in its business and for which the Company bears the
risk of such increases; (iii) risks associated with the Company’s
expanded international operations; (iv) failure to realize the
anticipated benefits of the acquisition of the Chubb fire and
security business and our ability to successfully execute the
Company’s bolt-on acquisition strategy to acquire other businesses
and successfully integrate them into its operations; (v) failure to
fully execute the Company’s inspection first strategy or to realize
the expected service revenue from such inspections; (vi) risks
associated with the Company’s decentralized business model and
participation in joint ventures; (vii) improperly managed projects
or project delays; (viii) adverse developments in the credit
markets which could impact the Company’s ability to secure
financing in the future; (ix) the Company’s substantial level of
indebtedness; (x) risks associated with the Company’s contract
portfolio; (xi) changes in applicable laws or regulations; (xii)
the possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors; (xiii) the impact
of the conflict between Russia and Ukraine; (xiv) the trading price
of the Company’s common stock, which may be positively or
negatively impacted by market and economic conditions, the
availability of the Company’s common stock, the Company’s financial
performance or determinations following the date of this press
release to use the Company’s funds for other purposes; and (xv)
other risks and uncertainties, including those discussed in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2023 under the heading “Risk Factors.” Given these risks and
uncertainties, you are cautioned not to place undue reliance on
forward-looking statements. Additional information concerning these
risks, uncertainties and other factors that could cause actual
results to vary is, or will be, included in the periodic and other
reports filed by the Company with the Securities and Exchange
Commission. Forward-looking statements included in this press
release speak only as of the date hereof and, except as required by
applicable law, the Company does not undertake any obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or circumstances
after the date of this press release.
Non-GAAP Financial
Measures
This press release contains non-U.S. GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The Company uses certain non-U.S. GAAP
financial measures that are included in this press release and the
additional financial information both in explaining its results to
shareholders and the investment community and in its internal
evaluation and management of its businesses. The Company’s
management believes that these non-U.S. GAAP financial measures and
the information they provide are useful to investors since these
measures (a) permit investors to view the Company’s performance
using the same tools that management uses to evaluate the Company’s
past performance, reportable business segments and prospects for
future performance, (b) permit investors to compare the Company
with its peers and (c) determine certain elements of management’s
incentive compensation (d) provide consistent period-to-period
comparisons of the results. Specifically:
- The Company’s management believes that adjusted gross profit,
adjusted selling, general and administrative (“SG&A”) expenses,
adjusted net income, and adjusted earnings per share, which are
non-GAAP financial measures that exclude business transformation
and other expenses for the integration of acquired businesses, and
one-time and other events such as impairment charges, restructuring
costs, transaction and other costs related to acquisitions,
amortization of intangible assets, net COVID-19 relief, non-service
pension benefit, severance related costs related to corporate
leadership changes and certain tax benefits from the acquisition of
APi Group, Inc. (the “APi Acquisition”) are useful because they
provide investors with a meaningful perspective on the current
underlying performance of the Company’s core ongoing
operations.
- The Company discloses fixed currency net revenues and adjusted
EBITDA (“FFX”) on a consolidated basis or segment specific basis to
provide a more complete understanding of underlying revenue and
adjusted EBITDA trends by providing net revenues and adjusted
EBITDA on a consistent basis. Under U.S. GAAP, income statement
results are translated in U.S. Dollars at the average exchange
rates for the period presented. Management believes that the fixed
currency non-GAAP measures are useful in providing period-to-period
comparisons of the results of the Company’s operational
performance, as it excludes the translation impact of exchange rate
fluctuations on our international results. Fixed currency amounts
included in this release are based on translation into U.S. dollars
at the fixed foreign currency exchange rates established by
management at the beginning of 2023.
- The Company also presents organic changes in net revenues on a
consolidated basis or segment specific basis to provide a more
complete understanding of underlying revenue trends by providing
net revenues on a consistent basis as it excludes the impacts of
material acquisitions, completed divestitures, and changes in
foreign currency from year-over-year comparisons on reported net
revenues, calculated as the difference between the reported net
revenues for the current period and reported net revenues for the
current period converted at fixed foreign currency exchange rates
(excluding material acquisitions and divestitures). The remainder
is divided by prior year fixed currency net revenues, excluding the
impacts of completed divestitures.
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) is the measure of profitability used by management to
manage its segments and, accordingly, in its segment reporting. The
Company supplements the reporting of its consolidated financial
information with certain non-U.S. GAAP financial measures,
including EBITDA and adjusted EBITDA, which is defined as EBITDA
excluding the impact of certain non-cash and other specifically
identified items (“adjusted EBITDA”). Adjusted EBITDA margin is
calculated as adjusted EBITDA divided by net revenues. The Company
believes these non-U.S. GAAP measures provide meaningful
information and help investors understand the Company’s financial
results and assess its prospects for future performance. The
Company uses EBITDA and adjusted EBITDA to evaluate its
performance, both internally and as compared with its peers,
because it excludes certain items that may not be indicative of the
Company’s core operating results. Consolidated EBITDA is calculated
in a manner consistent with segment EBITDA, which is a measure of
segment profitability.
- The Company presents free cash flow, adjusted free cash flow
and adjusted free cash flow conversion, which are liquidity
measures used by management as factors in determining the amount of
cash that is available for working capital needs or other uses of
cash, however, it does not represent residual cash flows available
for discretionary expenditures. Free cash flow is defined as cash
provided by (used in) operating activities less capital
expenditures. Adjusted free cash flow is defined as cash provided
by (used in) operating activities plus or minus events including,
but not limited to, transaction and other costs related to
acquisitions, business transformation and other expenses for the
integration of acquired businesses, payments on acquired
liabilities, payments made for restructuring programs, and one-time
and other events such as post-measurement period purchase
accounting adjustments for acquisitions, COVID-19 related payroll
tax deferral and relief items. Adjusted free cash flow conversion
is defined as adjusted free cash flow as a percentage of adjusted
EBITDA.
- The Company calculates its leverage ratio in accordance with
its debt agreements which include different adjustments to EBITDA
from those included in the adjusted EBITDA numbers reported
externally.
While the Company believes these non-U.S. GAAP measures are
useful in evaluating the Company’s performance, this information
should be considered as supplemental in nature and not as a
substitute for or superior to the related financial information
prepared in accordance with U.S. GAAP. Additionally, these non-U.S.
GAAP financial measures may differ from similar measures presented
by other companies. A reconciliation of these non-U.S. GAAP
financial measures is included later in this press release.
Beginning with the first quarter of 2023, the Company simplified
the presentation of the non-GAAP reconciliations, by combining
certain adjustment line items. Certain prior year amounts have been
reclassified to conform to this presentation and the information in
the tables below has been retroactively adjusted to reflect these
changes in adjustment categories. Specifically, amounts previously
classified as “integration and reorganization” have been
reclassified and included with “business process transformation,”
and prior period amounts classified as “acquisition expenses” and
“recent acquisition transition expenses” have been combined and
categorized as “acquisition related expenses.”
The Company does not provide reconciliations of forward-looking
non-U.S. GAAP adjusted EBITDA and growth in organic net revenues to
GAAP due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that could be made for acquisitions and
divestitures, business transformation and other expenses for the
integration of acquired businesses, one-time and other events such
as impairment charges, transaction and other costs related to
acquisitions, restructuring costs, amortization of intangible
assets, net COVID-19 relief, and certain tax benefits from the APi
Acquisition, and other charges reflected in the Company’s
reconciliation of historic numbers, the amount of which, based on
historical experience, could be significant.
APi Group Corporation
Condensed Consolidated Statements
of Operations (GAAP)
(Amounts in millions, except per
share data)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net revenues
$
1,759
$
1,703
$
6,928
$
6,558
Cost of revenues
1,251
1,240
4,988
4,844
Gross profit
508
463
1,940
1,714
Selling, general, and administrative
expenses
433
414
1,581
1,552
Operating income
75
49
359
162
Interest expense, net
33
37
145
125
Loss (gain) on extinguishment of debt,
net
4
—
7
(5
)
Non-service pension benefit
(3
)
(10
)
(12
)
(42
)
Investment income and other, net
(4
)
(4
)
(13
)
(9
)
Other expense, net
30
23
127
69
Income before income taxes
45
26
232
93
Income tax provision
20
4
79
20
Net income
$
25
$
22
$
153
$
73
Net (loss) income attributable to common
shareholders:
Accrued stock dividend on Series A
Preferred Stock
(270
)
—
(270
)
—
Stock dividend on Series B Preferred
Stock
(11
)
(11
)
(44
)
(44
)
Net (loss) income attributable to common
shareholders
$
(256
)
$
11
$
(161
)
$
29
Net (loss) income
per common share
Basic
$
(1.08
)
$
0.04
$
(0.68
)
$
0.10
Diluted
(1.08
)
0.04
(0.68
)
0.10
Weighted average
shares outstanding
Basic
235
234
235
233
Diluted
235
267
235
266
APi Group Corporation
Condensed Consolidated Balance
Sheets (GAAP)
(Amounts in millions)
(Unaudited)
December 31,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
479
$
605
Accounts receivable, net
1,395
1,313
Inventories
150
163
Contract assets
436
459
Prepaid expenses and other current
assets
122
112
Total current assets
2,582
2,652
Property and equipment, net
385
407
Operating lease right of use assets
233
222
Goodwill
2,471
2,382
Intangible assets, net
1,620
1,784
Deferred tax assets
113
108
Pension and post-retirement assets
111
392
Other assets
75
144
Total assets
$
7,590
$
8,091
Liabilities, Redeemable Convertible
Preferred Stock, and Shareholders’ Equity
Current liabilities:
Short-term and current portion of
long-term debt
$
5
$
206
Accounts payable
472
490
Accrued liabilities
729
689
Contract liabilities
526
463
Operating and finance leases
75
73
Total current liabilities
1,807
1,921
Long-term debt, less current portion
2,322
2,583
Pension and post-retirement
obligations
50
40
Operating and finance leases
172
166
Deferred tax liabilities
233
340
Other noncurrent liabilities
138
117
Total liabilities
4,722
5,167
Total redeemable convertible preferred
stock
797
797
Total shareholders' equity
2,071
2,127
Total liabilities, redeemable convertible
preferred stock, and shareholders’ equity
$
7,590
$
8,091
APi Group Corporation
Condensed Consolidated Statements
of Cash Flows (GAAP)
(Amounts in millions)
(Unaudited)
Year Ended December
31,
2023
2022
Cash flows from operating
activities:
Net income
$
153
$
73
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
303
304
Restructuring charges, net of cash
paid
9
22
Deferred taxes
(32
)
(47
)
Share-based compensation expense
29
18
Profit-sharing expense
19
15
Non-cash lease expense
88
67
Net periodic pension benefit
(8
)
(35
)
Loss (gain) on extinguishment of debt,
net
7
(5
)
Other, net
—
3
Pension contributions
(4
)
(34
)
Changes in operating assets and
liabilities, net of effects of acquisitions
(50
)
(111
)
Net cash provided by operating
activities
$
514
$
270
Cash flows from investing
activities:
Acquisitions, net of cash acquired
$
(83
)
$
(2,839
)
Purchases of property and equipment
(86
)
(79
)
Proceeds from sales of property,
equipment, and businesses
54
17
Net cash used in investing activities
$
(115
)
$
(2,901
)
Cash flows from financing
activities:
Proceeds from long-term borrowings
$
—
$
1,104
Payments on long-term borrowings
(484
)
(34
)
Repurchases of long-term borrowings
—
(30
)
Payments of debt issuance costs
—
(29
)
Repurchases of common stock
(41
)
(44
)
Proceeds from equity issuances
—
797
Payments of acquisition-related
consideration
(4
)
(5
)
Restricted shares tendered for taxes
(3
)
(3
)
Net cash (used in) provided by financing
activities
$
(532
)
$
1,756
Effect of foreign currency exchange rate
on cash, cash equivalents, and restricted cash
6
(9
)
Net decrease in cash, cash equivalents,
and restricted cash
$
(127
)
$
(884
)
Cash, cash equivalents, and restricted
cash, beginning of period
607
1,491
Cash, cash equivalents, and restricted
cash, end of period
$
480
$
607
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Organic Change in Net Revenues
(non-GAAP)
(Unaudited)
Organic change in net
revenues
Three Months Ended December
31, 2023
Net revenues
Foreign
Net revenues
Organic
change
currency
change
Acquisitions and
change in
(as reported)
translation (a)
(fixed currency) (b)
divestitures, net (c)
net revenues (d)
Safety Services
3.1
%
1.6
%
1.5
%
0.5
%
1.0
%
Specialty Services
2.9
%
—
%
2.9
%
1.1
%
1.8
%
Consolidated
3.3
%
1.2
%
2.1
%
0.6
%
1.5
%
Year Ended December 31,
2023
Net revenues
Foreign
Net revenues
Organic
change
currency
change
Acquisitions and
change in
(as reported)
translation (a)
(fixed currency) (b)
divestitures, net (c)
net revenues (d)
Safety Services
6.5
%
0.2
%
6.3
%
0.3
%
6.0
%
Specialty Services
2.4
%
—
%
2.4
%
(0.1
)%
2.5
%
Consolidated
5.6
%
—
%
5.6
%
0.2
%
5.4
%
Notes:
(a)
Represents the effect of foreign currency
on reported net revenues, calculated as the difference between
reported net revenues and net revenues at fixed currencies for both
periods. Fixed currency amounts are based on translation into U.S.
Dollars at fixed foreign currency exchange rates established by
management at the beginning of 2023.
(b)
Amount represents the year-over-year
change when comparing both years after eliminating the impact of
fluctuations in foreign exchange rates by translating foreign
currency denominated results at fixed foreign currency ("FFX")
rates for both periods.
(c)
Adjustment to exclude net revenues from
material acquisitions from their respective dates of acquisition
until the first year anniversary from date of acquisition and net
revenues from divestitures for all periods for businesses divested
as of December 31, 2023.
(d)
Organic change in net revenues provides a
consistent basis for a year-over-year comparison in net revenues as
it excludes the impacts of material acquisitions, divestitures, and
the impact of changes due to foreign currency translation.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Gross profit and adjusted gross
profit (non-GAAP)
SG&A and adjusted SG&A
(non-GAAP)
(Amounts in millions)
(Unaudited)
Adjusted gross profit
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Gross profit (as reported)
$
508
$
463
$
1,940
$
1,714
Adjustments to reconcile gross profit to
adjusted gross profit:
Backlog amortization
(a)
7
8
27
30
Inventory step-up
(b)
—
—
—
9
Restructuring program related costs
(c)
14
3
14
7
Adjusted gross profit
$
529
$
474
$
1,981
$
1,760
Net revenues
$
1,759
$
1,703
$
6,928
$
6,558
Adjusted gross margin
30.1
%
27.8
%
28.6
%
26.8
%
Adjusted SG&A
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Selling, general, and administrative
expenses ("SG&A") (as reported)
$
433
$
414
$
1,581
$
1,552
Adjustments to reconcile SG&A to
adjusted SG&A:
Amortization of intangible assets
(d)
(50
)
(54
)
(197
)
(197
)
Contingent consideration and
compensation
(e)
(6
)
(1
)
(14
)
(9
)
Business process transformation
expenses
(f)
(13
)
(8
)
(30
)
(31
)
Acquisition related expenses
(g)
—
(32
)
(7
)
(121
)
Restructuring program related costs
(c)
(8
)
(9
)
(32
)
(23
)
Other
(h)
(11
)
2
(10
)
2
Adjusted SG&A expenses
$
345
$
312
$
1,291
$
1,173
Net revenues
$
1,759
$
1,703
$
6,928
$
6,558
Adjusted SG&A as a % of net
revenues
19.6
%
18.3
%
18.6
%
17.9
%
Notes:
(a)
Adjustment to reflect the addback of
amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the elimination of
costs related to the fair value step-up of acquired inventory.
(c)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(d)
Adjustment to reflect the addback of
amortization expense.
(e)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(f)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(g)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(h)
Adjustment includes various miscellaneous
non-recurring items, such as eliminations of changes in fair value
estimates to acquired liabilities and impairment recorded on assets
held-for-sale.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
EBITDA and adjusted EBITDA
(non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income (as reported)
$
25
$
22
$
153
$
73
Adjustments to reconcile net income to
EBITDA:
Interest expense, net
33
37
145
125
Income tax provision
20
4
79
20
Depreciation and amortization
77
79
303
304
EBITDA
$
155
$
142
$
680
$
522
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
6
1
14
9
Non-service pension benefit
(b)
(3
)
(10
)
(12
)
(42
)
Inventory step-up
(c)
—
—
—
9
Business process transformation
expenses
(d)
13
8
30
31
Acquisition related expenses
(e)
—
32
7
121
Loss (gain) on extinguishment of debt,
net
(f)
4
—
7
(5
)
Restructuring program related costs
(g)
22
12
46
30
Other
(h)
11
(2
)
10
(2
)
Adjusted EBITDA
$
208
$
183
$
782
$
673
Net revenues
$
1,759
$
1,703
$
6,928
$
6,558
Adjusted EBITDA as a % of net revenues
11.8
%
10.7
%
11.3
%
10.3
%
Notes:
(a)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(b)
Adjustment to reflect the elimination of
non-service pension benefit, which consists of interest cost,
expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(c)
Adjustment to reflect the elimination of
costs related to the fair value step-up of acquired inventory.
(d)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(e)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(f)
Adjustment to reflect the elimination of
(gain) loss on extinguishment of debt resulting from early
repayments and repurchases of long-term debt.
(g)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(h)
Adjustment includes various miscellaneous
non-recurring items, such as eliminations of changes in fair value
estimates to acquired liabilities and impairment recorded on assets
held-for-sale.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Income (loss) before income tax,
net income (loss) and EPS and
Adjusted income before income
tax, net income (loss) and EPS (non-GAAP)
(Amounts in millions, except per
share data)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Income before income tax provision (as
reported)
$
45
$
26
$
232
$
93
Adjustments to reconcile income before
income tax provision to adjusted income before income tax
provision:
Amortization of intangible assets
(a)
57
62
224
227
Contingent consideration and
compensation
(b)
6
1
14
9
Non-service pension benefit
(c)
(3
)
(10
)
(12
)
(42
)
Inventory step-up
(d)
—
—
—
9
Business process transformation
expenses
(e)
13
8
30
31
Acquisition related expenses
(f)
—
32
7
121
Loss (gain) on extinguishment of debt,
net
(g)
4
—
7
(5
)
Restructuring program related costs
(h)
22
12
46
30
Other
(i)
11
(2
)
10
(2
)
Adjusted income before income tax
provision
$
155
$
129
$
558
$
471
Income tax provision (as reported)
$
20
$
4
$
79
$
20
Adjustments to reconcile income tax
provision to adjusted income tax provision:
Income tax provision adjustment
(j)
15
27
49
93
Adjusted income tax provision
$
35
$
31
$
128
$
113
Adjusted income before income tax
provision
$
155
$
129
$
558
$
471
Adjusted income tax provision
35
31
128
113
Adjusted net income
$
120
$
98
$
430
$
358
Diluted weighted average shares
outstanding (as reported)
235
267
235
266
Adjustments to reconcile diluted weighted
average shares outstanding to adjusted diluted weighted average
shares outstanding:
Dilutive impact of shares from GAAP net
loss
(k)
33
—
33
—
Dilutive impact of Series A Preferred
Stock
(l)
4
4
4
4
Adjusted diluted weighted average shares
outstanding
272
271
272
270
Adjusted diluted EPS
$
0.44
$
0.36
$
1.58
$
1.33
Notes:
(a)
Adjustment to reflect the addback of
pre-tax amortization expense related to intangible assets.
(b)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(c)
Adjustment to reflect the elimination of
non-service pension benefit, which consists of interest cost,
expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(d)
Adjustment to reflect the elimination of
costs related to the fair value step-up of acquired inventory.
(e)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(f)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(g)
Adjustment to reflect the elimination of
(gain) loss on extinguishment of debt resulting from early
repayments and repurchases of long-term debt.
(h)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(i)
Adjustment includes various miscellaneous
non-recurring items, such as eliminations of changes in fair value
estimates to acquired liabilities and impairment recorded on assets
held-for-sale.
(j)
Adjustment to reflect an adjusted
effective cash tax rate of 23% for the three months and year ended
December 31, 2023 and 24% for the three months and year ended
December 31, 2022.
(k)
Adjustment to add the dilutive impact of
options, RSUs, warrants, and deemed conversion of Series B
Preferred Stock which were anti-dilutive and excluded from the
diluted weighted average shares outstanding (as reported).
(l)
Adjustment for the three months and years
ended December 31, 2023 and 2022 reflect the addition of the
dilutive impact of 4 million shares associated with the deemed
conversion of Series A Preferred Stock.
APi Group Corporation
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023 (a)
2022 (a)
2023 (a)
2022 (a)
Safety Services
Net revenues
$
1,238
$
1,201
$
4,871
$
4,575
Adjusted gross profit
434
389
1,611
1,432
Adjusted EBITDA
189
158
664
559
Adjusted gross margin
35.1
%
32.4
%
33.1
%
31.3
%
Adjusted EBITDA as a % of net revenues
15.3
%
13.2
%
13.6
%
12.2
%
Specialty Services
Net revenues
$
525
$
510
$
2,079
$
2,030
Adjusted gross profit
95
85
370
328
Adjusted EBITDA
59
53
239
210
Adjusted gross margin
18.1
%
16.7
%
17.8
%
16.2
%
Adjusted EBITDA as a % of net revenues
11.2
%
10.4
%
11.5
%
10.3
%
Total net revenues before corporate and
eliminations
(b)
$
1,763
$
1,711
$
6,950
$
6,605
Total adjusted EBITDA before corporate and
eliminations
(b)
248
211
903
769
Adjusted EBITDA as a % of net revenues
before corporate and eliminations
(b)
14.1
%
12.3
%
13.0
%
11.6
%
Corporate and Eliminations
Net revenues
$
(4
)
$
(8
)
$
(22
)
$
(47
)
Adjusted EBITDA
(40
)
(28
)
(121
)
(96
)
Total Consolidated
Net revenues
$
1,759
$
1,703
$
6,928
$
6,558
Adjusted gross profit
529
474
1,981
1,760
Adjusted EBITDA
208
183
782
673
Adjusted gross margin
30.1
%
27.8
%
28.6
%
26.8
%
Adjusted EBITDA as a % of net revenues
11.8
%
10.7
%
11.3
%
10.3
%
Notes:
(a)
Information derived from non-GAAP
reconciliations included elsewhere in this press release.
(b)
Calculated from results of the Company's
operating segments shown above, excluding Corporate and
Eliminations.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
As Reported
Adjustments
As Adjusted
As Reported
Adjustments
As Adjusted
Safety Services
Net revenues
$
1,238
$
—
$
1,238
$
1,201
$
—
$
1,201
Cost of revenues
825
(7
)
(a)
804
823
(8
)
(a)
812
(14
)
(b)
(3
)
(b)
Gross profit
$
413
$
21
$
434
$
378
$
11
$
389
Gross margin
33.4
%
35.1
%
31.5
%
32.4
%
Specialty Services
Net revenues
$
525
$
—
$
525
$
510
$
—
$
510
Cost of revenues
430
—
430
425
—
425
Gross profit
$
95
$
—
$
95
$
85
$
—
$
85
Gross margin
18.1
%
18.1
%
16.7
%
16.7
%
Corporate and Eliminations
Net revenues
$
(4
)
$
—
$
(4
)
$
(8
)
$
—
$
(8
)
Cost of revenues
(4
)
—
(4
)
(8
)
—
(8
)
Gross profit
$
—
$
—
$
—
$
—
$
—
$
—
Gross margin
—
%
—
%
—
%
—
%
Total Consolidated
Net revenues
$
1,759
$
—
$
1,759
$
1,703
$
—
$
1,703
Cost of revenues
1,251
(7
)
(a)
1,230
1,240
(8
)
(a)
1,229
(14
)
(b)
(3
)
(b)
Gross profit
$
508
$
21
$
529
$
463
$
11
$
474
Gross margin
28.9
%
30.1
%
27.2
%
27.8
%
Notes:
(a)
Adjustment to reflect the addback of
amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Year Ended December 31,
2023
Year Ended December 31,
2022
As Reported
Adjustments
As Adjusted
As Reported
Adjustments
As Adjusted
Safety Services
Net revenues
$
4,871
$
—
$
4,871
$
4,575
$
—
$
4,575
Cost of revenues
3,301
(27
)
(a)
3,260
3,186
(27
)
(a)
3,143
(14
)
(b)
(7
)
(b)
—
(9
)
(c)
Gross profit
$
1,570
$
41
$
1,611
$
1,389
$
43
$
1,432
Gross margin
32.2
%
33.1
%
30.4
%
31.3
%
Specialty Services
Net revenues
$
2,079
$
—
$
2,079
$
2,030
$
—
$
2,030
Cost of revenues
1,709
—
1,709
1,705
(3
)
(a)
1,702
Gross profit
$
370
$
—
$
370
$
325
$
3
$
328
Gross margin
17.8
%
17.8
%
16.0
%
16.2
%
Corporate and Eliminations
Net revenues
$
(22
)
$
—
$
(22
)
$
(47
)
$
—
$
(47
)
Cost of revenues
(22
)
—
(22
)
(47
)
—
(47
)
Gross profit
$
—
$
—
$
—
$
—
$
—
$
—
Gross margin
—
%
—
%
—
%
—
%
Total Consolidated
Net revenues
$
6,928
$
—
$
6,928
$
6,558
$
—
$
6,558
Cost of revenues
4,988
(27
)
(a)
4,947
4,844
(30
)
(a)
4,798
(14
)
(b)
(7
)
(b)
—
(9
)
(c)
Gross profit
$
1,940
$
41
$
1,981
$
1,714
$
46
$
1,760
Gross margin
28.0
%
28.6
%
26.1
%
26.8
%
Notes:
(a)
Adjustment to reflect the addback of
amortization expense related to backlog intangible assets.
(b)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(c)
Adjustment to reflect the elimination of
costs related to the fair value step-up of acquired inventory.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Adjusted Segment Financial
Information (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Safety Services
Safety Services EBITDA
$
158
$
132
$
607
$
492
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
—
1
7
5
Non-service pension benefit
(b)
(3
)
(10
)
(12
)
(42
)
Inventory step-up
(c)
—
—
—
9
Acquisition related expenses
(d)
—
24
5
57
Business process transformation
expenses
(e)
4
1
5
10
Restructuring program related costs
(f)
22
12
46
30
Other
(g)
8
(2
)
6
(2
)
Safety Services adjusted EBITDA
$
189
$
158
$
664
$
559
Specialty Services
Specialty Services EBITDA
$
51
$
53
$
217
$
206
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Contingent consideration and
compensation
(a)
6
—
7
4
Other
(g)
2
—
15
—
Specialty Services adjusted EBITDA
$
59
$
53
$
239
$
210
Corporate and Eliminations
Corporate and Eliminations EBITDA
$
(54
)
$
(43
)
$
(144
)
$
(176
)
Adjustments to reconcile EBITDA to
adjusted EBITDA:
Business process transformation
expenses
(e)
9
7
25
21
Acquisition related expenses
(d)
—
8
2
64
Loss (gain) on extinguishment of debt,
net
(h)
4
—
7
(5
)
Other
(g)
1
—
(11
)
—
Corporate and Eliminations adjusted
EBITDA
$
(40
)
$
(28
)
$
(121
)
$
(96
)
Notes:
(a)
Adjustment to reflect the elimination of
the expense attributable to deferred consideration to prior owners
of acquired businesses not expected to continue or recur.
(b)
Adjustment to reflect the elimination of
non-service pension benefit, which consists of interest cost,
expected return on plan assets and amortization of actuarial
gains/losses of the pension programs assumed as part of the Chubb
acquisition.
(c)
Adjustment to reflect the elimination of
costs related to the fair value step-up of acquired inventory.
(d)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(e)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(f)
Adjustment to reflect the elimination of
expenses associated with restructuring programs and related
costs.
(g)
Adjustment includes various miscellaneous
non-recurring items, such as eliminations of changes in fair value
estimates to acquired liabilities and impairment recorded on assets
held-for-sale.
(h)
Adjustment to reflect the elimination of
(gain) loss on extinguishment of debt resulting from early
repayments and repurchases of long-term debt.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Change in adjusted EBITDA
(non-GAAP)
(Unaudited)
Change in adjusted
EBITDA
Three Months Ended December
31, 2023
Change in
Adjusted EBITDA
(public rates) (a)
Foreign
currency
translation (b)
Change in
Adjusted EBITDA
(fixed currency) (c)
Safety Services
19.6
%
0.8
%
18.8
%
Specialty Services
11.3
%
—
%
11.3
%
Consolidated
13.7
%
0.7
%
13.0
%
Year Ended December 31,
2023
Change in
Adjusted EBITDA
(public rates) (a)
Foreign
currency
translation (b)
Change in
Adjusted EBITDA
(fixed currency) (c)
Safety Services
18.8
%
(0.4
)%
19.2
%
Specialty Services
13.8
%
—
%
13.8
%
Consolidated
16.2
%
(0.3
)%
16.5
%
Notes:
(a)
Adjusted EBITDA derived from non-GAAP
reconciliations included elsewhere in this press release.
(b)
Adjusted to eliminate the impact of
foreign currency on adjusted EBITDA amounts, calculated as the
difference between adjusted EBITDA at public currency rates and
adjusted EBITDA at fixed currency rates for both periods. Fixed
currency amounts are based on translation into U.S. Dollars at
fixed foreign currency exchange rates established by management at
the beginning of 2023.
(c)
Amount represents the year-over-year
change when comparing both years after eliminating the impact of
fluctuations in foreign exchange rates by translating foreign
currency denominated results at fixed foreign currency ("FFX")
rates for both periods.
APi Group Corporation
Reconciliations of GAAP to
Non-GAAP Financial Measures
Free cash flow and adjusted free
cash flow and conversion (non-GAAP)
(Amounts in millions)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net cash provided by operating
activities
(a)
$
297
$
188
$
514
$
270
Less: Purchases of property and
equipment
(a)
(22
)
(19
)
(86
)
(79
)
Free cash flow
$
275
$
169
$
428
$
191
Add: Cash payments related to following
items:
Contingent compensation
(b)
$
—
$
—
$
18
$
3
Pension contributions
(c)
—
—
—
27
Business process transformation
expenses
(d)
10
10
32
36
Acquisition related expenses
(e)
—
32
5
130
Restructuring payments
(f)
12
2
30
8
Payroll tax deferral
(g)
—
11
9
11
Other
(h)
3
6
15
6
Adjusted free cash flow
$
300
$
230
$
537
$
412
Adjusted EBITDA
(i)
$
208
$
183
$
782
$
673
Adjusted free cash flow conversion
144.2
%
125.7
%
68.7
%
61.2
%
Notes:
(a)
Operating cash flows and purchases of
property and equipment for the years ended December 31, 2023, and
2022 are as reported. Amounts for the three months ended December
31, 2023 and 2022 are calculated as the year ended less the amounts
reported for the nine months ended September 30, 2023 and 2022,
respectively.
(b)
Adjustment to reflect the elimination of
deferred payments to prior owners of acquired businesses not
expected to continue or recur.
(c)
Adjustment to reflect the elimination of
initial pension contribution payment related to the Chubb
acquisition not expected to continue or recur.
(d)
Adjustment to reflect the elimination of
expenses associated with the integration and reorganization of
newly acquired businesses and non-operational costs related to
business process transformation, including system and process
development costs and implementation of processes and compliance
programs related to the Sarbanes-Oxley Act of 2002.
(e)
Adjustment to reflect the elimination of
transaction costs related to potential and completed acquisitions
and expenses associated with the transition of newly acquired
businesses from prior ownership into APi Group.
(f)
Adjustment to reflect payments made for
restructuring programs.
(g)
Adjustment reflects the elimination of
operating cash for the impact of the Coronavirus Aid Relief and
Economic Security (CARES) Act. During the first quarter of 2020,
the CARES Act was passed, allowing the Company to defer the payment
of the employer's share of Social Security taxes until December
2021 and December 2022. The final payments were made on the amount
deferred in 2020 during the first half of 2023.
(h)
Adjustment includes various miscellaneous
non-recurring items, such as eliminations of payments made on
acquired liabilities.
(i)
Adjusted EBITDA derived from non-GAAP
reconciliations included elsewhere in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227980588/en/
Investor Relations and Media Inquiries: Adam Fee Vice
President of Investor Relations Tel: +1 651-240-7252 Email:
investorrelations@apigroupinc.us
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