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    APG
    Earnings call· Jun 2026(Q2 FY26)

    APi Group Q2 FY26 earnings call APG

    Jul 30, 2026 Source

    Executive summary

    APi Group Q2 FY26 — Record Backlog and Strong Organic Growth

    APi Group delivered another strong quarter, driven by robust organic growth across both segments and a record backlog, particularly fueled by demand in data centers and advanced manufacturing. The company continues to execute its M&A strategy, closing several acquisitions, and remains focused on its inspection-first approach and long-term financial targets, while managing the mix impact of project work. Management expressed confidence in continued momentum for the second half of the year.

    Highlights

    5

    • Net revenues increased 13.3% to $2.25 billion, including 10.1% organic growth.

    • Adjusted EBITDA increased 14.3% with margin expanding 10 basis points to 13.8%.

    • Record backlog surpassed $5 billion for the first time in company history.

    • Adjusted free cash flow year-to-date was $228 million, up $42 million versus prior year.

    • Net leverage ratio ended the quarter at 2.2x, below the long-term target of 2.5x to 3x.

    Concerns

    2

    • International Safety segment was flat for the quarter, though it saw a return to organic growth in the back half.

    • Adjusted EBITDA margin expansion was partially offset by the near-term mix impact from a robust project environment, where gross margins are typically 10 percentage points lower than service work.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year Net Revenues
    $8.875B to $9.025B
    high materiality
    High
    Full-year Organic Revenue Growth
    7% to 9%
    high materiality
    High
    Full-year Adjusted EBITDA
    $1.205B to $1.245B
    high materiality
    High
    Full-year Adjusted EBITDA Margin
    13.7%
    high materiality
    High
    Full-year Adjusted EBITDA Growth
    16% to 20%
    high materiality
    High
    Full-year Adjusted Free Cash Flow Conversion
    approximately 115%
    medium materiality
    High
    Full-year Interest Expense
    $150M
    medium materiality
    High
    Full-year Depreciation Expense
    $90M
    medium materiality
    High
    Full-year Capital Expenditures
    $105M
    medium materiality
    High
    Full-year Adjusted Effective Tax Rate
    23%
    medium materiality
    High
    Full-year Corporate Expenses
    approximately $140M
    medium materiality
    High
    Full-year Adjusted Diluted Weighted Average Share Count
    439M
    medium materiality
    High
    Q3 Net Revenues
    $2.375B to $2.425B
    high materiality
    High
    Q3 Organic Net Revenue Growth
    approximately 8% to 10%
    high materiality
    High
    Q3 Adjusted EBITDA
    $325M to $335M
    high materiality
    High
    Q3 Adjusted EBITDA Margin
    13.8%
    high materiality
    High
    Q3 Adjusted EBITDA Growth
    16% to 19%
    high materiality
    High
    Net Revenues
    $10B+
    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
    $3B+
    high materiality
    High
    Annual Bolt-on M&A Deployment
    $250M
    medium materiality
    High
    Annual Bolt-on M&A Deployment
    towards $350M
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Safety Services
    Driven by solid growth in inspection, service, and monitoring revenues, project revenues, and pricing improvements. Adjusted gross margin expansion was driven by disciplined customer and project selection and pricing, partially offset by mix. Segment earnings margin was unchanged due to increased SG&A. International Safety saw a return to organic growth in the back half of the quarter, with increased pipeline and backlog, including data center projects.
    Organic growth: 4.7%Adjusted gross margin: 37.4%Adjusted gross margin change: +20 bps YoYSegment earnings growth: 8.6% YoYSegment earnings growth (fixed currency): 7.7% YoYNorth American Safety organic growth: high single digitsInternational Safety organic growth: flat
    		$1.48B8.8%—17%
    Specialty Services
    Driven by robust growth in both project and service revenues. Demand remains strong across targeted end markets. Adjusted gross margin expansion was driven by disciplined customer and project selection and pricing improvements, partially offset by SG&A expenses including variable compensation.
    Organic growth: 22%Adjusted gross margin: 19.3%Adjusted gross margin change: +120 bps YoYSegment earnings growth: 29.6% YoYData centers: notable contributor
    		$773M22.9%—11.9%

    Operational metrics

    15
    Net Revenues
    $2.25B+13.3% YoY
    Q2 FY26

    Reported net revenues for the three months ended June 30.

    Organic Growth
    10.1%
    Q2 FY26

    Organic growth driven by solid growth in inspection, service, monitoring, project revenues, and pricing improvements.

    Adjusted Gross Margin
    31.2%unchanged YoY
    Q2 FY26

    Margins increased in both project and service revenues, offset by project in business mix.

    Adjusted EBITDA
    $310.5M+14.3% YoY
    Q2 FY26

    Calculated from reported net revenues and adjusted EBITDA margin. Growth in adjusted EBITDA margin was driven by strong revenue growth, resulting in favorable SG&A leverage.

    Adjusted Diluted EPS
    $0.44+12.8% YoY
    Q2 FY26

    Increase driven by strong revenue growth and adjusted EBITDA margin expansion, partially offset by an increase in adjusted diluted weighted average shares outstanding.

    Adjusted Free Cash Flow Conversion
    68%
    YTD Q2 FY26

    Conversion rate on adjusted net income.

    Net Leverage Ratio
    2.2x
    Q2 FY26

    Below long-term target ratio.

    Share Repurchases
    $66M
    Q2 FY26

    First share repurchase under the existing program.

    Senior Unsecured Notes Issued
    $500M
    Q2 FY26

    Issued during the quarter to improve liquidity and extend maturity runway.

    Revolving Credit Facility
    $1B
    Q2 FY26

    Expanded during the quarter.

    Term Loan B Maturity
    2033
    Q2 FY26

    Proactively extended to improve liquidity and extend maturity runway.

    Bolt-on M&A Deployment
    $250M
    FY26

    Annual target for bolt-on M&A deployment.

    Annual Bolt-on M&A Deployment Scaling Target
    $350M
    annually

    Future target for annual bolt-on M&A deployment.

    Foreign Exchange Headwinds
    $30M
    FY26

    Estimated impact to net revenue relative to prior guidance.

    Foreign Exchange Headwinds
    $5M
    FY26

    Estimated impact to adjusted EBITDA relative to prior guidance.

    Industry KPIs

    4
    MetricValueDetails
    Total backlog$5B+USD
    Book to bill ratiomid-single digits%
    End market pipeline10-12%% of revenue
    Acquisition contributionOnyx-Fire, WTech, 3 bolt-ons

    Orderbook & backlog

    2
    Total Backlog$5B+Q2 FY26

    ~25% YoY

    Surpassed $5 billion for the first time in company history; quality of backlog is positive, expected to generate better gross margins than a year ago. Average project duration has increased from 1.6-9 months to 9-12 months.

    Order Intake Growthmid-single digitsQ2 FY26

    Portfolio additions were at their highest level in more than 2 years. Pipeline and book backlog increased during Q2.

    Deals & partnerships

    3
    Onyx-FireIncreases presence in the Canadian market, strong player in Canadian market, cultural alignment with inspection service first focus.

    Closed in June. CEO Bryan Chew known for long-term focus on inspection service first. Increases presence in Canadian market.

    WTechAdds valuable capabilities in Western European fire suppression, complementary to existing business, cultural alignment.

    Closed in early July. Strong fire suppression business in Western Europe, also does fire alarm. Services are complementary to APi's business in the region.

    Multiple unnamedBolt-on acquisitions to expand capabilities and geographies.

    Three bolt-on acquisitions completed during the quarter, including the first in elevator and escalator services and one in international safety. These are important milestones for building M&A pipelines in both businesses.

    Risks & headwinds

    4
    International Safety segment underperformanceQ2 FY26

    flat for the quarter

    Mitigation: Seeing return to organic growth in back half of quarter; global accounts capability gaining traction; pipeline and book backlog increased; continued push for recurring revenue mindset.

    Mix impact from robust project environmentnear-term

    project gross margins typically 10 percentage points lower than service work

    Mitigation: Disciplined customer and project selection; able to get higher gross margins on larger, more complex project work; still on track for 16% long-term margin objective.

    Foreign exchange headwindsFY26

    $30M to net revenue, $5M to adjusted EBITDA

    Mitigation: Increased guidance offsets estimated FX headwinds.

    Local opposition to data centersongoing

    not quantified

    Mitigation: Being good advocates and supporting build-out in an environmentally, socially responsible fashion; demand curve expected to far outweigh capacity curve through 2030.

    What to watch in Q3 FY26

    5

    International Safety organic growth

    Q3 FY26
    CurrentFlat for Q2
    TargetReturn to organic growth

    Why it matters

    Indicates successful execution of inspection-first strategy and global accounts in international markets, contributing to overall segment performance.

    International safety was flat for the quarter. However, we saw a return to organic growth in the back half of the quarter. Improvements in underlying commercial indicators give us confidence that the business will continue to grow as we move through the balance of the year.

    Q&A highlights

    6

    How are project sizes changing, what are the associated margins, and does the project mix inhibit achieving the 16% long-term EBITDA margin goal?

    Project sizes are significantly larger, with data center fire projects now pushing $20 million. This complexity allows for better pricing and higher gross margins, closing the gap with service work. Management believes they are still on track to achieve the 16% long-term margin objective by 2028.

    “Like when I think about the fire protection, life safety space and you think about a data center, 4 or 5 years ago, a large data center job might have been $7 million or $8 million. And today, you consistently see fire projects pushing $20 million.”

    asked by Andrew J. Wittmann · answered by Russell Becker

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Raised Full-Year Outlook

    APi Group reported robust second-quarter results, with net revenues increasing 13.3% to $2.25 billion, driven by 10.1% organic growth across both segments. Adjusted EBITDA grew 14.3%, and the adjusted EBITDA margin expanded by 10 basis points to 13.8%. This strong performance led management to raise its full-year guidance for net revenues to $8.875 billion to $9.025 billion and adjusted EBITDA to $1.205 billion to $1.245 billion, reflecting confidence in continued momentum.

    02

    Record Backlog and Strategic End Market Focus

    The company achieved a significant milestone, with its backlog surpassing $5 billion for the first time in its history. This record backlog is broad-based, with key contributions from strategic end markets such as data centers, semiconductors, advanced manufacturing, healthcare, and critical national infrastructure. Data centers, in particular, are a notable source of strength, expected to contribute 10-12% of FY26 revenue, and are seen as a long-term driver for recurring inspection and service revenue.

    03

    M&A Execution and Pipeline Expansion

    APi Group remained highly active on the M&A front, closing the acquisitions of Onyx-Fire in June and WTech in early July, both described as excellent strategic and cultural fits. Additionally, three bolt-on acquisitions were completed during the quarter, including the first in the elevator and escalator services business and one in international safety. The company is on track to deploy $250 million in bolt-on M&A this year and plans to scale annual deployment towards $350 million, leveraging its strong balance sheet.

    04

    Safety Services Segment Dynamics

    The Safety Services segment reported an 8.8% increase in net revenues to $1.48 billion, with 4.7% organic growth. North American Safety continued its strong performance with high single-digit organic growth, driven by its inspection-first strategy. International Safety, while flat for the quarter, showed signs of returning to organic growth in the latter half, with increased pipeline and backlog, particularly in the data center space, as global accounts capabilities gain traction.

    05

    Specialty Services Segment Outperformance and Margin Expansion

    The Specialty Services segment outperformed expectations, with net revenues increasing 22.9% (22% organically) to $773 million. This growth was broad-based across both project and service revenues, with data centers being a significant contributor. The segment's adjusted gross margin expanded by 120 basis points to 19.3%, and segment earnings margin increased by 60 basis points to 11.9%, attributed to disciplined customer and project selection and pricing improvements.

    06

    Capital Structure and Shareholder Returns

    APi Group demonstrated strong financial flexibility, generating $228 million in adjusted free cash flow year-to-date and maintaining a net leverage ratio of 2.2x. The company repurchased 1.6 million shares for $66 million and completed strategic capital markets actions, including issuing $500 million in senior unsecured notes and extending its Term Loan B maturity to 2033, enhancing liquidity and balance sheet strength.

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