What factors would push adjusted EBITDA margins to the upper end of the guidance, and what about recent tariff changes?

No material impact from tariff changes is expected. Margin expansion will be driven by continued execution of existing levers: appropriate pricing, enhanced gross margins on complex project work (e.g., data centers in remote locations), consistent organic growth, improved service mix, disciplined project selection, and procurement/systems optimization. “We do expect to see enhanced gross margins on some of our project-related work just because of the demands and the technical difficulty associated with some of this, especially data center work that's happening in remote locations, the size of the projects and the fact that you have to move people around in an effort to be able to execute on this work.”

How much is data centers contributing to 2026 growth, and is the incremental margin higher than the corporate average?

Data centers contributed 5% of revenue in 2024, 8% in 2025, and are expected to be 10% in 2026, contributing a couple of percentage points of growth. The margin profile for data center work is "really, really strong" due to technical complexity and limited competition, allowing for strong gross margins. “When we ended 2025, it was approximately 8% of our overall revenue, and we expect data centers to comprise about 10% of our total revenue in 2026.”

How has remaining performance obligations/backlog growth been developing, and how do the two segments' growth look for Q1 2026 given the wide organic sales growth range?

Backlog is healthy, up across both segments and various end markets, and at good margins. For Q1, Safety Services is expected to grow mid-to-upper single digits for service and low-to-mid single digits for projects. Specialty Services is expected to see double-digit revenue growth due to comparison against a down Q1 2025. “On the backlog, I'd say the backlog as we exited 2025 and into 2026 is healthy. It's up across both 2 segments across a variety of end markets.”

APG

APi Group (APG) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Industrials· Feb 25, 2026

Source: earnings call transcript

Executive summary

APi Group Q4 FY25 — Strong Performance, New Long-Term Targets, and Robust M&A Pipeline

APi Group delivered strong Q4 and full-year FY25 results, exceeding its 13/60/80 financial targets with robust revenue growth and margin expansion. The company introduced new ambitious 10/16/60+ plus targets for 2028, emphasizing continued organic growth, margin improvement, and significant free cash flow generation, supported by a healthy M&A pipeline and strong demand in key end markets like data centers.

Highlights

Achieved 2025 adjusted EBITDA margin of 13.2%, exceeding the 13% target.
Achieved 2025 adjusted free cash flow conversion of 80%, meeting the 80% target.
Full-year 2025 net revenues increased by 13%, with 8% organic growth.
Q4 FY25 adjusted EBITDA increased by 21.9%, with margin expanding 90 bps to 13.9%.
Net debt to adjusted EBITDA ratio at 1.6x, significantly below the long-term target of 2.5x-3x.

Concerns

Tariff impact

Guidance & targets

Category	Target	Timeline	Confidence
Full-year reported net revenues	$8.4 billion to $8.6 billion high materiality	FY26	High
Full-year adjusted EBITDA	$1.14 billion to $1.20 billion high materiality	FY26	High
Full-year adjusted free cash flow conversion	at or above 115% of adjusted net income medium materiality	FY26	High
Q1 reported net revenues	$1.875 billion to $1.975 billion medium materiality	Q1 · FY26	High
Q1 adjusted EBITDA	$225 million to $235 million medium materiality	Q1 · FY26	High
Full-year interest expense	approximately $130 million low materiality	FY26	High
Full-year depreciation	approximately $90 million low materiality	FY26	High
Full-year capital expenditures	approximately $105 million low materiality	FY26	High
Full-year adjusted effective tax rate	approximately 23% low materiality	FY26	High
Quarterly corporate expenses	approximately $35 million low materiality	FY26	High
Full-year adjusted diluted weighted average share count	approximately 441 million low materiality	FY26	High
Net revenues	$10 billion high materiality	FY28	High
Adjusted EBITDA margin	16% plus high materiality	FY28	High
Revenue from inspection, service and monitoring	60% plus high materiality	Long term	High
Cumulative adjusted free cash flow	$3 billion high materiality	Through FY28	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Safety Services Organic growth driven by continued growth in inspection, service and monitoring revenues, strong growth in project revenues and pricing improvements. Margin increase due to disciplined customer and project selection and pricing improvements. Organic growth: 6.6%Adjusted gross margin: 37.7% (up 110 bps)Segment earnings increase: 18%	$1.42 billion	10.6%	—	17.5%
Specialty Services Revenue growth driven by strong growth in project revenues. Margin increase due to an increase in project opportunities aligning with disciplined customer and project selection criteria and improved leverage of fixed overhead costs. Adjusted gross margin: 20.7% (up 190 bps)Segment earnings increase: 40.7%	$695 million	20.7%	—	11.9%

APG operating KPIs by quarter

APG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	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 north of $4 billion Q4 FY25

Continues to be very strong, robust and healthy, at good margins.

Deals & partnerships

CertaSite Inspection-first provider of comprehensive fire and life safety services in the Midwest.

Closed on February 2, 2026. Already pursuing additional opportunities created by this acquisition.

Elevated Established a new adjacent vertical in the highly attractive elevator and escalator service market.

Acquisition completed in a prior period, contributing to strategic initiatives.

Risks & headwinds

Tariff impact

don't expect to see any change in tariffs materially impacting our business, good or bad

Mitigation:Continue to lead business regardless of external factors, focus on pricing work appropriately.

What to watch in Q1 FY26

Organic revenue growth in project revenues

Q1 2026 and full-year 2026

Current Low single-digit growth expected in long-term algorithm

Target Mid-single-digit or higher growth, driven by strong end markets like data centers

Why it matters

Project revenue growth is the swing factor for overall revenue guidance, and strong end markets are providing tailwinds.

The only thing I would add to that, Tim, and I'll reiterate a point that maybe I made during my comments was the 54% of our revenue that comes from recurring inspection, service and monitoring. That we expect to grow in our long-term organic growth algorithm of mid- to mid upper single digits. And then it's going to be the project environment that could be from the low end to the high end of the range.

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

Q&A highlights

What market condition assumptions are embedded in the low vs. high end of the 2026 revenue guidance range (6% to 9% growth)?

Management expects high single-digit growth in inspection, service, and monitoring, and low single-digit growth in project revenues. The project environment has a tailwind from robust end markets like data centers, advanced manufacturing, semiconductors, healthcare, and critical infrastructure, which drives the higher end of the range. The 54% recurring revenue provides stability.

“We continue to communicate, I guess, a message to the -- to our businesses that we want to see high single-digit growth in the inspection, service and monitoring component of their business and low single-digit growth in the project piece of their business.”

asked by Timothy Mulrooney · answered by Russell Becker

2 min read 6 chapters

Detailed narrative

Achievement of 13/60/80 Targets

APi Group successfully delivered on its 2021 long-term financial framework, growing revenues from $3.9 billion in 2021 to $7.9 billion in 2025. Adjusted EBITDA margins reached 13.2% in 2025, exceeding the 13% target and significantly up from 10.3% in 2021. Adjusted free cash flow conversion was 80% in 2025, meeting the 80% target and well above 55% in 2021.

Introduction of New 10/16/60+ Plus Targets

Building on its success, the company introduced new ambitious 3-year targets for 2028: $10 billion in net revenues, 16%+ adjusted EBITDA margin, 60%+ of revenues from inspection, service, and monitoring, and $3 billion of cumulative adjusted free cash flow through 2028. These targets are supported by consistent mid-single-digit organic growth.

Strong Organic Growth and Margin Expansion

For full-year 2025, net revenues increased 13% (approximately 8% organically), with strong growth across both Safety Services (7% organic) and Specialty Services (10% organic). Adjusted gross margin expanded 50 bps, leading to a 50 bps expansion in adjusted EBITDA margin. Q4 FY25 saw 11.1% organic growth and 90 bps adjusted EBITDA margin expansion to 13.9%.

Robust M&A Strategy and Pipeline

APi Group completed 14 acquisitions in 2025, deploying approximately $580 million across 33 bolt-on acquisitions from 2023-2025. The company also closed the acquisition of CertaSite in February 2026, an inspection-first fire and life safety provider. The M&A pipeline remains robust across fire, life safety, electronic security, elevator and escalator, and niche specialty services, including international opportunities.

Data Center Opportunity and Margin Profile

Data centers represented approximately 5% of total revenue in 2024, grew to 8% in 2025, and are expected to comprise about 10% of total revenue in 2026. This segment is contributing a couple of percentage points of growth and offers a "really, really strong" margin profile due to the technical complexity and limited number of qualified players, allowing for strong gross margins.

Capital Deployment and Balance Sheet Strength

The company generated record adjusted free cash flow of $836 million in 2025, representing 80% conversion. The net debt to adjusted EBITDA ratio was approximately 1.6x at year-end, significantly below the long-term target of 2.5x-3x. This provides flexibility to pursue value-enhancing capital deployment, with M&A prioritized over opportunistic share repurchases.

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