TIDMJTWO TIDMJTOW
RNS Number : 2874J
API Group Corporation
08 April 2020
APi Group Reports Fourth Quarter and Full Year 2019 Financial
Results
Combined 2019 net revenues of $4.1 billion
Combined 2019 adjusted EBITDA of $393 million
Combined 2019 cash provided by operating activities of $295
million
2019 combined adjusted free cash flow conversion of 90%
New Brighton, Minnesota - April 8, 2020 - APi Group Corporation
(OTC:JJAQF; LSE:JTWO) ("APG" or the "Company"), today reported its
financial results for the three months and year ended December 31,
2019.
The Company has classified two subsidiaries in its Industrial
Services segment as assets held-for-sale as of December 31, 2019.
The results presented in this announcement on an as adjusted basis
include non-cash and other specifically identified adjustments in
addition to excluding the impact of these two subsidiaries, which
represent a combined $290 million and $229 million of net revenues
in 2019 and 2018, respectively. In addition, all of the full year
2019 financial results presented in this announcement combine the
results of APi Group, Inc. (the "Predecessor") for the period prior
to the October 1, 2019 closing of its acquisition by the Company
and the results of the Company following such acquisition (the
"Successor").
Fourth Quarter 2019 Highlights:
-- Reported net revenues were $985 million, compared to $992 million in the prior year period
-- Adjusted net revenues grew organically by 1.0% or $9.0
million to $926 million, compared to $917 million in the prior year
period
-- Reported gross margin was 20.1%, representing a 208 basis
point decline compared to prior year gross margin of 22.2%,
primarily due to an additional $22 million in cost of revenues from
the amortization of backlog intangible assets recorded in purchase
accounting
-- Adjusted gross margin was 23.4%, compared to 23.3% for the same period in 2018
-- Reported operating loss was $138 million, a $151 million
decline from prior year operating income of $13 million, which was
largely impacted by transaction related and non-recurring
expenses
-- Adjusted EBITDA was $109 million or 11.8%, a 97 basis point increase over prior year
-- Reported net loss was $150 million, a $145 million decline
from prior year net loss of $5 million, which was largely impacted
by transaction related and non-recurring expenses and reported net
loss was $0.89 per diluted share
-- Adjusted net income was $61 million, representing a $11
million increase over prior year and adjusted diluted EPS of $0.35,
a $0.06 increase over prior year
Full Year 2019 Highlights:
-- Combined net revenues were $4.1 billion (Predecessor $3.1
billion and Successor $985 million), an increase of $364 million or
9.8% over prior year
-- Adjusted combined net revenues grew 8.7% or $303 million to
$3.8 billion, compared to $3.5 billion in the prior year period
with segment growth of 4.2% in Safety Services, 9.9% in Specialty
Services and 10.7% in Industrial Services
-- Adjusted combined net revenues grew organically by 7.7% or
$272 million to $3.8 billion, compared to $3.5 billion in the prior
year period with organic growth of 4.5% in Safety Services, 7.0% in
Specialty Services and 10.9% in Industrial Services
-- Reported combined gross margin was 19.6%, representing a 151
basis point decline compared to prior year gross margin of 21.1%,
primarily due to an additional $22 million in cost of revenues from
the amortization of backlog intangible assets recorded in purchase
accounting
-- Adjusted combined gross margin was 21.5%, compared to 22.0%
in 2018, driven primarily by a decline in the Industrial Services
segment
-- Reported combined operating loss was $59 million, a $221
million decline from prior year operating income of $162 million,
which was largely impacted by transaction related and non-recurring
expenses
-- Adjusted combined EBITDA was $393 million or 10.3%, a 51 basis point increase over prior year
-- Reported combined net loss was $67 million, a $203 million
decline from prior year net income of $136 million, which was
largely impacted by transaction related and non-recurring expenses,
and reported net loss was $1.15 per share
-- Adjusted combined net income of $212 million, representing a
$29 million increase over prior year and adjusted combined diluted
EPS was $1.22, a $0.17 increase over prior year
Russ Becker, APi Group's President and Chief Executive Officer
said, "Our organic revenue growth and increasing margin profile
reflects the continued shift in our business towards more
profitable, recurring service
opportunities while maintaining a strong adjusted EBITDA margin of 10.3%."
"Facing the worldwide shock wave of COVID-19 has brought out the
best in APi's culture and our leadership organization. I need and
want to thank each of our employees for their sacrifices. They have
put APi first. The safety, health and well-being of all our
employees remains paramount, and we will continue to be proactive
in taking measures that we expect to help protect our business and
all of our constituencies."
APi Co-Chairman James E. Lillie added, "We continue to be
encouraged by the long-term opportunities that lie ahead for the
business. Since joining forces with the APi leadership team we have
made progress as planned on all of the short-term milestones and
objectives for the Company. The financial results for 2019 speak to
the strength of APi's operating model and the team's focus on
driving higher margin growth as well as our ability to generate
cash and run the business with a strong balance sheet. We believe
we are prepared to seize opportunities as we move through 2020 and
continue to execute on our long-term goals for the business."
Conference Call
APi Group will host a webcast/dial-in conference call to discuss
its 2019 financial results at 8:30 a.m. (Eastern Time) on
Wednesday, April 8, 2020. Participants on the call will include
Russ Becker, President and Chief Executive Officer; Tom Lydon,
Chief Financial Officer; James E. Lillie and Sir Martin E.
Franklin, Co-Chairmen.
To listen to the call by telephone, please dial 833-721-2905 or
929-517-9835 and provide Conference ID 2764874. You may also attend
and view the presentation (live or by replay) via webcast by
accessing the following URL:
https://event.on24.com/wcc/r/2253890/5C1738E2B85521CA6F22DD67A0557E64
A replay of the call will be available shortly after completion
of the live call on the webcast or by telephone, 855-859-2056 or
404-537-3406.
About APi
APi Group is a market-leading business services provider of life
safety, specialty and industrial services in over 200 locations,
primarily in North America. APi Group provides statutorily mandated
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
https://www.apigroupinc.com/ .
Investor Relations Inquiries:
Olivia Walton
Vice President of Investor Relations
+1 814-312-3981
email: investorrelations@apigroupinc.us
Media Contact:
Liz Cohen
Kekst CNC
+1 212-521-4845
Liz.Cohen@kekstcnc.com
Forward-Looking Statements and Disclaimers
This announcement does not constitute or form part of any offer
or invitation to purchase, otherwise acquire, issue, subscribe for,
sell or otherwise dispose of any securities, nor any solicitation
of any offer to purchase, otherwise acquire, issue, subscribe for,
sell, or otherwise dispose of any securities. The release,
publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in
such jurisdictions into which this announcement is released,
published or distributed should inform themselves about and observe
such restrictions.
Certain statements in this announcement are forward-looking
statements which 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, including expectations regarding: (i) the
ability of the Company to meet the eligibility criteria and effect
a registration under the Securities Act of its securities, a
listing of its securities on the New York Stock Exchange, its
domestication and the timing for such registration, listing and
domestication; (ii) the Company's positioning regarding its future
business plans and long-term goals; (iii) the Company's strategies
for each of its segments and the opportunities in the industries
the Company serves; (iv) the impact of the Company's planned
divestiture of two subsidiaries in its Industrial Services segment;
(v) certain expected 2020 financial results and (vi) the impacts of
the COVID-19 pandemic on the future operating and financial
performance of the Company, the Company's plans and strategies to
adapt and respond to the pandemic and the expected impact of those
plans and strategies. 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 and other risks that may affect the Company's future
performance, including the impacts of the COVID-19 pandemic on the
Company's business, markets, supply chain, customers and workforce,
on the credit and financial markets, and on the global economy
generally; (ii) the ability to recognize the anticipated benefits
of the acquisition and of the Company to take advantage of
strategic opportunities; (iii) the limited liquidity and trading of
the Company's securities; (iv) changes in applicable laws or
regulations; (v) the possibility that the Company may be adversely
affected by other economic, business, and/or competitive factors;
and (vi) other risks and uncertainties. Given
these risks and uncertainties, prospective investors are
cautioned not to place undue reliance on forward-looking
statements. Forward-looking statements speak only as of the date of
such statements 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 otherwise. Nothing in this
announcement constitutes or should be construed as constituting a
profit forecast. This announcement contains inside information as
defined in article 7 of the Market Abuse Regulation (EU) No
596/2014.
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 and includes a reconciliation of these
non-U.S. GAAP financial measures to the most directly comparable
financial measures calculated in accordance with GAAP. 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. Specifically:
-- The Company's management believes that "adjusted" net
revenues, "adjusted" gross margin, "adjusted" SG&A expense,
"adjusted" operating income (loss), "adjusted" earnings per share,
"adjusted" interest and "adjusted" tax rates, which exclude
business transformation and other expenses for the integration of
acquired businesses, the impact and results of two subsidiaries in
the Company's Industrial Services segment which the Company has
classified as assets held-for-sale as of December 31, 2019, and
one-time and other events such as impairment charges, share-based
compensation, transaction and other costs related to acquisitions,
amortization of intangible assets associated with acquisitions, and
certain tax benefits from 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 also presents changes in organic net revenues to
provide a more complete understanding of underlying revenue trends
by providing net revenues on a consistent basis as it excludes the
impacts of significant acquisitions, planned or completed
divestitures, and changes in foreign currency from year-over-year
comparisons.
-- 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
defined as EBITDA excluding the impact of certain non-cash and
other specifically identified items ("Adjusted EBITDA"). 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.
-- The Company presents non-U.S. GAAP financial measures on a
combined basis to illustrate the impact of the combined Predecessor
and Successor periods as a result of the APi Acquisition. The
Company believes that these combined measures are useful in
understanding the overall operating performance of the combined
business during 2019 as compared to the performance in the prior
year period and provide a more complete picture of the Company's
results after factoring in its current debt and capitalization
structure.
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FLFFASEITIII
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April 09, 2020 02:00 ET (06:00 GMT)
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