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    APG
    Earnings call· Mar 2026(Q1 FY26)

    APi Group Q1 FY26 earnings call APG

    Apr 30, 2026 Source

    Executive summary

    APi Group Q1 FY26 — Strong Organic Growth and Strategic M&A Drive Performance

    APi Group delivered robust Q1 FY26 results, driven by strong organic growth across both Safety and Specialty Services segments and strategic M&A. The company continues to expand margins and generate significant free cash flow, maintaining a strong balance sheet for further capital deployment. Management highlighted the continued focus on inspection, service, and monitoring revenues, alongside disciplined project selection and operational efficiencies.

    Highlights

    5

    • Net revenues increased by 15% to $1.98 billion, with organic growth of 10.4%.

    • Adjusted EBITDA expanded by 70 basis points year-over-year to 11.9%, reaching $235.6 million.

    • Adjusted diluted EPS increased by 28% to $0.32.

    • Generated $125 million in adjusted free cash flow, up $39 million year-over-year, with 88% conversion on adjusted net income.

    • Net leverage ratio reduced to approximately 1.8x, well below the long-term target of 2.5x-3x.

    Concerns

    3

    • Adjusted gross margin decreased by 40 basis points to 31.3% due to business mix.

    • Specialty Services adjusted gross margin decreased by 50 basis points to 16.3% due to mix.

    • Strengthening U.S. dollar presents a headwind to full-year guidance.

    Guidance & targets

    21
    CategoryTargetConfidence
    Full-year net revenues
    $8.475 billion to $8.675 billion
    high materiality
    High
    Full-year organic net revenue growth
    5% to 7%
    high materiality
    High
    Full-year adjusted EBITDA
    $1.15 billion to $1.21 billion
    high materiality
    High
    Full-year adjusted EBITDA margin
    13.8%
    high materiality
    High
    Full-year adjusted EBITDA growth
    11% to 16%
    high materiality
    High
    Full-year adjusted free cash flow conversion
    approximately 115%
    medium materiality
    High
    Q2 net revenues
    $2.175 billion to $2.225 billion
    medium materiality
    High
    Q2 organic net revenue growth
    approximately 7% to 9%
    medium materiality
    High
    Q2 adjusted EBITDA
    $300 million to $310 million
    medium materiality
    High
    Q2 adjusted EBITDA margin
    13.9%
    medium materiality
    High
    Q2 adjusted EBITDA growth
    10% to 14%
    medium materiality
    High
    Full-year interest expense
    $130 million
    low materiality
    High
    Full-year depreciation
    $90 million
    low materiality
    High
    Full-year capital expenditures
    $105 million
    medium materiality
    High
    Full-year adjusted effective tax rate
    23%
    low materiality
    High
    Quarterly corporate expenses
    approximately $35 million
    low materiality
    High
    Full-year adjusted diluted weighted average share count
    $441 million
    low materiality
    High
    Net revenues
    $10 billion
    high materiality
    High
    Adjusted EBITDA margin
    16%+
    high materiality
    High
    Revenue from inspection, service, and monitoring
    60%+
    medium materiality
    High
    Cumulative adjusted free cash flow
    $3 billion
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Safety Services
    Driven by solid growth in inspection service and monitoring revenues, project revenues, and pricing improvements.
    Organic growth: 5.4%Segment earnings increase: 15.6% (11.7% fixed currency)Segment earnings margin increase: 60 bps YoY
    		$1.42 billion11.7%—16.3%
    Specialty Services
    Driven by growth in both projects and service revenues, benefiting from fixed cost absorption.
    Organic growth: 24.8%Segment earnings increase: 34.5%Segment earnings margin increase: 50 bps YoY
    		$569 million25.6%—6.9%

    Operational metrics

    14
    Net revenues
    $1.98 billionup 15.3% YoY
    Q1 FY26

    Reported net revenues for the three months ended March 31.

    Organic revenue growth (company-wide)
    10.4%
    Q1 FY26

    Company-wide organic revenue growth.

    Adjusted gross margin
    31.3%down 40 bps YoY
    Q1 FY26

    Primarily driven by business mix.

    Adjusted EBITDA
    $235.6 millionup 21.8% YoY
    Q1 FY26

    Growth driven by strong revenue growth and favorable SG&A leverage.

    Adjusted EBITDA margin
    11.9%up 70 bps YoY
    Q1 FY26

    Expansion driven by strong revenue growth and favorable SG&A leverage.

    Adjusted diluted EPS
    $0.32up 28% YoY
    Q1 FY26

    Increase driven by strong revenue growth, adjusted EBITDA margin expansion, and decrease in interest expense, partially offset by increase in share count.

    Adjusted free cash flow conversion
    88%
    Q1 FY26

    Conversion rate on adjusted net income.

    Net leverage ratio
    approximately 1.8x
    Q1 FY26 end

    Significantly below long-term target.

    Bolt-on M&A deployment
    approximately $250 million
    FY26

    Target for bolt-on M&A at attractive multiples, including international and elevator/escalator services.

    Revenue from inspection, service, monitoring
    53%
    Q1 FY26

    Portion of total revenue.

    Data center revenue contribution
    approximately 10% to 11%
    FY26

    Expected contribution to total revenue by the end of the year.

    Long-term net revenues target
    $10 billion
    by 2028

    Part of 10/16/60+ financial targets.

    Long-term adjusted EBITDA margin target
    16%+
    by 2028

    Part of 10/16/60+ financial targets.

    Long-term inspection, service, monitoring revenue target
    60%+
    over the long term

    Part of 10/16/60+ financial targets.

    Industry KPIs

    4
    MetricValueDetails
    Total backlogrobust and healthy
    End market pipelinerobust
    Acquisition contribution>$1 billionUSD
    Craft skilled labor headcount capacity29,000teammates

    Orderbook & backlog

    3
    Total backlogrobust and healthyQ1 FY26
    Specialty Services backlogsuper strongQ1 FY26
    International business backlogon par with previous yearQ1 FY26

    Deals & partnerships

    4
    CerticiteInspection first provider of comprehensive fire and life safety services across the Midwest.

    Closed in February. Part of over $1 billion total investment for three acquisitions. Founded with an inspection first mindset, 95% of revenue from inspection and service work.

    W Tech Fire GroupIreland-based, adds to fire sprinkler and suppression capabilities across Europe.

    Agreement announced earlier this month. Part of over $1 billion total investment for three acquisitions. Expected to operate as an independent business inside international operations, bringing strong suppression capabilities.

    Onex Fire Protection ServicesLeading provider of fire and life safety services in Canada with an inspection first mindset and a strong recurring revenue base.

    Agreement announced last week. Part of over $1 billion total investment for three acquisitions. Expected to operate as an independent portfolio business for the time being.

    MultipleBolt-on acquisitions.

    Four bolt-on acquisitions completed during the quarter.

    Risks & headwinds

    3
    Strengthening U.S. dollarFull-year 2026

    Offset strong business performance in full-year guidance.

    Mitigation: Guidance was revised to reflect the impact.

    Rising fuel costs and material inflationQ1 FY26

    Slight impact on gross margin percentage.

    Mitigation: Costs are protected at the time of proposal, and dollar impact is captured, especially in inspection, service, and monitoring revenues.

    Geopolitical conflict in the Middle EastOngoing

    International business feels impacts more so than North America.

    Mitigation: Company's presence in the Middle East is small.

    What to watch in Q2 FY26

    5

    Onex Fire Protection Services acquisition close

    Q2 FY26
    CurrentAgreement announced, expected Q2 close
    TargetClosed

    Why it matters

    This acquisition is part of a >$1 billion investment to expand fire and life safety in Canada and is expected to be accretive.

    And just last week, we announced an agreement to acquire Onex Fire Protection Services... We expect Onex Fire to close in the second quarter and Tech Fire to close in the third quarter of this year.

    Q&A highlights

    6

    Is the strong Specialty Services growth primarily from data centers or more broad-based?

    Russ Becker confirmed strong backlog and broad-based growth in Specialty Services, including industrial maintenance, infrastructure, potable water replacement, and telecom, in addition to data centers. He noted they are not over-indexing on data centers but taking advantage of opportunities.

    “I would classify the work in their portfolio to be more broad-based than just data centers.”

    asked by Andrew Kaplowitz · answered by Russell Becker

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic M&A and Portfolio Expansion

    APi Group announced three significant acquisitions: Certicite (closed Q1), W Tech Fire Group (Europe, expected Q3 close), and Onex Fire Protection Services (Canada, expected Q2 close), totaling over $1 billion. These deals strategically expand fire and life safety capabilities globally and are expected to be accretive to financial targets. The company also completed four bolt-on acquisitions and remains on track for $250 million in bolt-on M&A this year.

    02

    Operational Efficiency and Systems Advancement

    The company's business enablement program, including new business systems, saw its first pilot company go live, tracking in line with expectations. Management emphasized ongoing initiatives like disciplined customer selection, pricing, branch optimization, and procurement to drive continued margin expansion, aiming for 60-70 basis points of improvement for the year.

    03

    Strong Cash Flow and Balance Sheet

    APi generated $125 million in adjusted free cash flow in Q1, an increase of $39 million year-over-year, with an 88% conversion rate on adjusted net income. The net leverage ratio stands at a healthy 1.8x, providing significant flexibility for funding acquisitions and other capital deployment opportunities, with expectations to return to this level by year-end after financing new deals.

    04

    Segment Performance Drivers

    Specialty Services continued its strong momentum with 24.8% organic growth, benefiting from broad-based demand including data centers, industrial maintenance, and infrastructure work. Safety Services delivered 5.4% organic growth, driven by inspection, service, and monitoring revenues, with a consistent mid-to-upper single-digit growth trajectory expected for this segment.

    05

    Pricing Power and Cost Management

    Despite rising fuel costs and material inflation, APi has successfully implemented pricing increases, particularly in its inspection, service, and monitoring streams, which constitute 53% of revenue. This ability to pass through costs has protected dollar margins, though mix shifts towards project work and Specialty Services have slightly impacted overall gross margin percentages.

    06

    Long-Term Financial Targets

    The company reiterated its 10/16/60+ targets: $10 billion in net revenues by 2028, 16%+ adjusted EBITDA margin by 2028, 60%+ revenues from inspection, service, and monitoring long-term, and $3 billion of cumulative adjusted free cash flow through 2028, demonstrating confidence in its strategic direction and execution.

    AI-generated summary of the company’s earnings call. Not investment advice.