Slide 1: Q2 2023 Earnings Call
Q2 2023 Earnings Call August 3, 2023
Slide 2: Forward Looking Statements and Disclaimers
Forward Looking Statements and Disclaimers Please note that in this presentation 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
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company uses certain non-GAAP financial measures that are included in this presentation and the additional financial inform
Slide 4: Non-GAAP Financial Measures (cont’d)
Non-GAAP Financial Measures (cont’d) • 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,
Slide 5: APi’s “13/60/80” Shareholder Value Creation Framework
APi’s “13/60/80” Shareholder Value Creation Framework Building Great Leaders Growing Revenue • Teammate safety and engagement • Delivering long-term organic revenue growth above industry average • Everyone, everywhere is a leader • Go-to-market strategy of selling inspections first • Best-in-class f
Slide 6: Second Quarter 2023 Performance Highlights
Second Quarter 2023 Performance Highlights Record second quarter net revenues of $1.8 billion, an increase of 7.4% Organic net revenue growth of 7.6% in the second quarter Adjusted gross margin expansion of 160 basis points in the second quarter Record second quarter adjusted EBITDA of $203 million,
Slide 7: Second Quarter 2023 Financial Results Overview
Second Quarter 2023 Financial Results Overview THREE MONTHS ENDED JUNE 30, 2023 ADJUSTED ADJUSTED ADJUSTED NET REVENUES GROSS MARGIN EBITDA DILUTED EPS 7.4%/$122 million $203 million Representing a 11.5% margin, a Increase in reported net 80 basis point increase compared revenues compared to prior y
Slide 8: 2023 Financial Results Overview
2023 Financial Results Overview THREE MONTHS ENDED JUNE 30, 2023 NET REVENUES ADJUSTED GROSS PROFIT ADJUSTED EBITDA Total: $1.8 billion(1) Total: $502 million Total: $228 million(1) 21% 31% 30% 69% 70% 79% Safety Services Specialty Services Notes: Refer to Appendix for a reconciliation of non-GAAP m
Slide 9: Key Financial and Operating Metrics
Key Financial and Operating Metrics THREE MONTHS ENDED JUNE 30, ($ in millions, except per share figures) 2023 2022 YoY Change YoY (FFX)(a) Net Revenues $ 1,771 $ 1,649 + 7.4% + 7.6% Organic Net Revenue Growth (b) + 7.6% Adjusted Gross Profit $ 502 $ 441 + 13.8% Adjusted Gross Margin 28.3% 26.7% + 1
Slide 10: Key Segment Financial and Operating Metrics
Key Segment Financial and Operating Metrics THREE MONTHS ENDED JUNE 30, Safety Services Specialty Services YoY YoY YoY YoY ($ in millions) 2023 2022 Change (FFX)(a) 2023 2022 Change (FFX)(a) Net Revenues $ 1,225 $ 1,146 + 6.9% + 7.3% $ 555 $ 518 + 7.1% + 7.1% Organic Net Revenue Growth (b) + 7.3% +
Slide 11: Updated 2023 Guidance as of August 3, 2023
Updated 2023 Guidance as of August 3, 2023 NET REVENUES ADJUSTED EBITDA $7,015 - $7,075 million $765 - $785 million Up from Up from $6,875 – $7,025 million $740 – $780 million APi GROUP | BUILDING GREAT LEADERS® 11
Slide 12: Updated 2023 & Q3 Guidance as of August 3, 2023
Updated 2023 & Q3 Guidance as of August 3, 2023 Q3 2023 FY 2023 Net Revenues $1,860 to $1,890 million $7,015 to $7,075 million Reported Net Revenues versus Last Year 7% - 9% 7% - 8% Net Revenue Organic Growth 5% - 6% 6% - 7% at Fixed Currencies Adjusted EBITDA $215 to $225 million $765 to $785 milli
Slide 13: Capitalization
Capitalization As of the end of the second quarter, our net debt to adjusted EBITDA ratio was approximately 2.9x calculated pursuant to terms of existing debt agreements Remain laser focused on cash generation and deleveraging towards our target net leverage ratio of 2.0 to 2.5x, which we expect to
Slide 14: Differentiated, Inspection-First Business Model
Differentiated, Inspection-First Business Model APi’s strategy in Safety Services is to sell inspection work first, for which every $1 leads to $3 – $4 of service work(1), and ultimately to relationship based, higher margin, new contract revenue opportunities Target inspection $3 – $4 of service wor
Slide 15: Inspection First Organization Built on 10+ Years of Investment
Inspection First Organization Built on 10+ Years of Investment Highly coordinated annual inspection requiring years of investment, process improvement, and dedicated resources to deliver exceptional customer service at scale and to maintain sticky customer relationships 1 Sell & Schedule Inspection
Slide 16: Branch Case Study – Inspection First Strategy
Branch Case Study – Inspection First Strategy % EBITDA Margin Over Time For a Leading Branch 10 Yr. Revenue CAGR: 9% 10 Yr. EBITDA CAGR: 43% 25% A Leadership Instills Inspection First Mindset 23% 22% B Start of Expansion into High Tech Vertical 19% C New Branch Leader Reenforces Inspection First Min
Slide 17: Appendix
GROUP Appendix
Slide 18: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Organic Change in Net Revenues (non-GAAP) 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
Slide 19: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Gross Profit (non-GAAP) $ IN MILLIONS Adjusted SG&A (non-GAAP) 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 valu
Slide 20: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted EBITDA (non-GAAP) $ IN MILLIONS 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 elimin
Slide 21: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted income before income tax, net income (loss) and EPS (non-GAAP) $ IN MILLIONS a) Adjustment to reflect the addback of pre-tax amortization expense related to intangible assets. b) Adjustment to reflect the elimination of the expense attr
Slide 22: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Segment Financial Information (non-GAAP) $ IN MILLIONS a) Information derived from non-GAAP reconciliations included elsewhere in this presentation. b) Calculated from results of the Company's operating segments shown above, excluding C
Slide 23: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Segment Financial Information (non-GAAP) $ $ II N N M M II L LLL II O ONNS S a) Adjustment to reflect the addback of amortization expense related to backlog intangible assets. b) Adjustment to reflect the elimination of expenses associa
Slide 24: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Segment Financial Information (non-GAAP) $ $ II N N M M II L LLL II O ONNS S a) Adjustment to reflect the addback of amortization expense related to backlog intangible assets. b) Adjustment to reflect the elimination of costs related to
Slide 25: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Segment Financial Information (non-GAAP) $ IN MILLIONS 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) Adjustmen
Slide 26: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Change in adjusted EBITDA (non-GAAP) 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 differe
Slide 27: Reconciliation of Non-GAAP Financial Measures (cont’d)
Reconciliation of Non-GAAP Financial Measures (cont’d) Adjusted Free Cash Flow and Conversion (non-GAAP) $ IN MILLIONS a) Operating cash flows and purchases of property and equipment for the six months ended June 30, 2023 and 2022 are as reported. Amounts for the three months ended June 30, 2023 and
Slide 28: Investor Relations Inquiries
Investor Relations Inquiries: Adam Fee Vice President of Investor Relations +1 651-240-7252 email: investorrelations@apigroupinc.us Media Contact: Liz Cohen Kekst CNC +1 212-521-4845 Liz.Cohen@kekstcnc.com APi GROUP | BUILDING GREAT LEADERS® 28
Slide 29: Q2 2023 Earnings Call
APi Q2 2023 GROUP Earnings Call