Can you elaborate on the performance of the safety business, particularly North America and Europe, and any strategic actions to improve margins or color within safety?

North America Safety continues to perform very well. International Safety still has work to do to fully adopt the recurring revenue mindset, but positive results are emerging, with momentum building in new orders and backlog, especially in data centers. The inspection-first strategy continues to yield dividends. “In the international safety business, we still have work to do to, so to speak, convert to the mindset of like recurring revenue for service inspection work first.”

What is the outlook for M&A activity in the second half of the year, and are there any changes in target end markets or services for M&A?

No change in M&A strategy, focusing on fire life safety, security, elevator/escalator, and HVAC service. Recent M&A was opportunistic due to a strong balance sheet. Expect continued bolt-on M&A through H2 and into 2027, with a goal to scale annual deployment from $250 million to $350 million by leveraging AI for due diligence. “we set our -- kind of our annual goal is to do $250 million of bolt-on M&A a year. And we're in the process right now of working with our corporate development leader to build out his team and our capabilities and taking advantage of artificial intelligence to assist us on things like financial due diligence so that we can do $350 million of bolt-on M&A.”

How much of Specialty Services growth is price versus volume, and how meaningful will ongoing maintenance be for new builds like data centers?

The majority of Specialty Services organic growth is driven by market share gains and volume, with pricing contributing mainly through 4-5% escalation on MSAs. Service attachment to project work is expected to be high, especially for existing customers, and data center inspections will be significantly larger than typical inspections. “I would say the majority of the organic growth that you're seeing in specialty is coming from share and volume.”

APG

APi Group (APG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 30, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year Net Revenues	$8.875B to $9.025B high materiality	FY26	High
Full-year Organic Revenue Growth	7% to 9% high materiality	FY26	High
Full-year Adjusted EBITDA	$1.205B to $1.245B high materiality	FY26	High
Full-year Adjusted EBITDA Margin	13.7% high materiality	FY26	High
Full-year Adjusted EBITDA Growth	16% to 20% high materiality	FY26	High
Full-year Adjusted Free Cash Flow Conversion	approximately 115% medium materiality	FY26	High
Full-year Interest Expense	$150M medium materiality	FY26	High
Full-year Depreciation Expense	$90M medium materiality	FY26	High
Full-year Capital Expenditures	$105M medium materiality	FY26	High
Full-year Adjusted Effective Tax Rate	23% medium materiality	FY26	High
Full-year Corporate Expenses	approximately $140M medium materiality	FY26	High
Full-year Adjusted Diluted Weighted Average Share Count	439M medium materiality	FY26	High
Q3 Net Revenues	$2.375B to $2.425B high materiality	Q3 · FY26	High
Q3 Organic Net Revenue Growth	approximately 8% to 10% high materiality	Q3 · FY26	High
Q3 Adjusted EBITDA	$325M to $335M high materiality	Q3 · FY26	High
Q3 Adjusted EBITDA Margin	13.8% high materiality	Q3 · FY26	High
Q3 Adjusted EBITDA Growth	16% to 19% high materiality	Q3 · FY26	High
Net Revenues	$10B+ high materiality	by 2028 · FY28	High
Adjusted EBITDA Margin	16%+ high materiality	by 2028 · FY28	High
Revenue from Inspection, Service and Monitoring	60%+ medium materiality	over the long term	High
Cumulative Adjusted Free Cash Flow	$3B+ high materiality	through 2028 · FY28	High
Annual Bolt-on M&A Deployment	$250M medium materiality	this year · FY26	High
Annual Bolt-on M&A Deployment	towards $350M medium materiality	annually	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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	$1.48B	8.8%	—	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	$773M	22.9%	—	11.9%

APG operating KPIs by quarter

APG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Employees	—	29K I want to start by thanking our 29,000 teammates for their dedication to API. Source: earnings call transcript	31K I want to begin by thanking our 31,000 leaders for their dedication to APi. Source: earnings call transcript	+6.9%
Backlog	$4B+ Certain end markets are providing excellent project opportunities, which is evidenced by our backlog, which is north of $4 billion and continues to be very strong, robust and healthy. Source: earnings call transcript	—	$5B+ We ended the second quarter with a record backlog, surpassing $5 billion for the first time in APi's history. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

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 Growth mid-single digits Q2 FY26

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

Deals & partnerships

Onyx-Fire Increases 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.

WTech Adds 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 unnamed Bolt-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

International Safety segment underperformance Q2 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 environment near-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 headwinds FY26

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

Mitigation:Increased guidance offsets estimated FX headwinds.

Local opposition to data centers ongoing

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

International Safety organic growth

Q3 FY26

Current Flat for Q2

Target Return 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.

Find out whether APG delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.