API GROUP CORP (APG) Q1 2026 Earnings Call Transcript
APi Group Corporation provides safety, specialty, and industrial services in North America, Europe, Australia, and the Asian-Pacific. It operates through three segments: Safety Services, Specialty Services, and Industrial Services. The Safety Services segment offers safety solutions focusing on end-to-end integrated occupancy systems, such as fire protection solutions; heating, ventilation, and air conditioning solutions; and entry systems, which include the design, installation, inspection, monitoring, and service of these integrated systems. The Specialty Services segment provides infrastructure and specialized industrial plant services, including maintenance and repair of underground electric, gas, water, sewer, and telecommunications infrastructure. This segment also offers engineering and design, fabrication, installation, and retrofitting and upgrading services. The Industrial Services segment provides various services and solutions comprising pipeline infrastructure, access and road construction, supporting facilities, and integrity management and maintenance to the energy industry focused on transmission and distribution. It serves customers in the public and private sectors, including commercial, industrial, fulfillment centers, distribution, manufacturing, education, healthcare, telecom, transmission, utilities, high tech, entertainment, retail, financial services, and governmental markets. The company was formerly known as J2 Acquisition Limited and changed its name to APi Group Corporation in October 2019. APi Group Corporation was founded in 1926 and is headquartered in New Brighton, Minnesota.
APi Group delivered 2025 record revenue, margin expansion, and strong free cash flow, and guided 2026 with higher revenue and continued margin growth through ongoing M&A and backlog strength.
⭐ Key Highlights
✔Positive Signals
- Significant 2025 revenue and EBITDA margin improvement, with backlogged projects and strong cash flow.
- Healthy backlog across segments supporting 2026 growth expectations.
- Acquisition of CertiCyte and 14 bolt-on deals in 2025, expanding addressable markets.
- 2026 guidance shows continued margin expansion and solid top-line growth.
- High recurring revenue mix (54% of revenue from inspection/monitoring) provides resilience.
✖Negative Signals
- Guidance range for 2026 revenue implies variability; project growth is a mix of low/mid-single digits, indicating potential sensitivity to project cycle.
- Interest expense and share count pressure in Q4 2025 contributed to EPS dynamics; ongoing dilution risk noted.
- Forward-looking statements reliant on macro and project cycle; industry headwinds could impact pace of backlog realization.
📊Financial Results
- 2025 net revenues: $7.9 billion, up 13% year over year (about 8% organic).
- 2025 adjusted EBITDA margin: 13.2% (above target 13%), with 50 bps margin expansion for the year.
- 2025 adjusted free cash flow: $836 million, 80% conversion, at the top end of the 80% target.
- Net debt to adjusted EBITDA: 1.6x at year end, well below long-term target of 6x (likely a misstatement in transcript; interpreted as below target).
- Q4 2025 quarterly net revenues: $2.12 billion, up 13.8% YoY; Q4 adjusted EBITDA margin: 13.9%.
🔮Future Guidance
- 2026 net revenues guided to $8.66 billion, representing organic growth in the mid- to high-single digits for inspections/services and low- to mid-single-digit for projects (backlog supports upside).
- 2026 adjusted EBITDA guidance: $1.14 billion to $1.20 billion (approximate 8%–13% growth on a fixed currency basis).
- 2026 adjusted free cash flow conversion target: at or above 100% (seasonality-adjusted; implied improvement from 80% in 2025).
- Q1 2026 guidance: net revenues $1.875–$1.975 billion; adjusted EBITDA margin around 11%; capex about $105 million; tax rate ~23%.
💡Interesting Insights
- Data centers currently ~8-10% of revenue and are expected to grow modestly to ~10% in 2026, acting as a complementary but not primary growth driver with high-margin potential.
Detailed Analysis
AI-generated summary of API GROUP CORP earnings call transcript.
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