APi Group Q1 2024 Earnings Report
Key Takeaways
APi Group reported a solid start to 2024, with continued progress on margin expansion initiatives, aiming for a 13% or more adjusted EBITDA margin in 2025. The company completed the Series B transaction and announced an agreement to acquire Elevated Facility Services Group, focusing on delivering the 2024 plan and long-term targets.
Net revenues declined by 0.8% (1.4% organic decline) due to a decline in project revenues driven by disciplined project and customer selection, partially offset by growth in inspection, service, and monitoring revenue in the Safety Services segment.
Reported and adjusted gross margin increased 440 and 390 basis points, respectively, compared to prior year period due to price increases, outsized growth in higher margin service revenue as well as significant margin expansion in project revenues across both segments.
Reported record net income was $45 million and diluted EPS was $(1.34). Adjusted net income was $94 million and adjusted diluted EPS was $0.34, representing a $0.09 increase from prior year period driven by significant adjusted gross margin expansion and decreased interest expense, partially offset by an increase in adjusted diluted weighted average shares outstanding.
Adjusted EBITDA increased by 19.0% (19.0% on a fixed currency basis) compared to the prior year period and adjusted EBITDA margin increased 180 basis points to a first quarter record of 10.9%, primarily due to the increase in gross margins, partially offset by investments to support profitable growth and the investment in building our global capabilities and infrastructure.
APi Group
APi Group
APi Group Revenue by Segment
Forward Guidance
APi Group continues to expect full year net revenue, adjusted EBITDA and adjusted free cash flow conversion in line with initial full year guidance. This guidance has not been adjusted to include the impact of the agreement to acquire Elevated, the divestiture announced this quarter, and the headwind from foreign exchange movements since our initial guidance announced on February 28, 2024. We will update our full year guidance following the close of the Elevated transaction. APi Group announces guidance for the second quarter of 2024.
Positive Outlook
- Net Revenues of $7,050 to $7,250 million
- Adjusted EBITDA of $855 to $905 million
- Adjusted Free Cash Flow Conversion of approximately 70% EBITDA
- Net Revenues of $1,750 to $1,800 million
- Adjusted EBITDA of $220 to $235 million
Revenue & Expenses
Visualization of income flow from segment revenue to net income