APi Group (APG) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 net income of $69 million, up 43.8% year-over-year, and record adjusted EBITDA of $231 million, up 13.8%, despite a 2.3% revenue decline due to project delays and strategic project selection.

• Margin expansion, recurring revenue growth, and disciplined M&A drove performance, with strong execution in U.S. Life Safety and international businesses.

• Backlog increased by $500 million since year-end, with improved profitability and quality.

• Completed $570 million acquisition of Elevated Facility Services, expanding recurring revenue base; $458 million raised via equity offering.

• Management remains confident in achieving a 13%+ adjusted EBITDA margin target in 2025.

Financial highlights

• Q2 2024 net revenues were $1.73 billion, down 2.3% year-over-year; organic revenue declined 3.1%.

• Adjusted gross margin rose 340 bps to 31.7%; adjusted EBITDA up 13.8% to $231 million, margin up 190 bps to 13.4%.

• Adjusted diluted EPS was $0.49, up 19.5% year-over-year; adjusted net income increased 22.5% to $136 million.

• Net income for Q2 2024 rose 43.8% to $69 million; net income margin reached 4.0%.

• Adjusted free cash flow for Q2 was $122 million, up 34.1% year-over-year; conversion rate 52.8%.

Outlook and guidance

• Full-year 2024 revenue guidance: $7,150–$7,350 million, tracking toward the low end due to project delays.

• Full-year adjusted EBITDA guidance narrowed to $885–$915 million, representing 13–17% growth.

• Q3 2024 revenue expected at $1,860–$1,910 million; adjusted EBITDA $240–$250 million.

• Adjusted free cash flow conversion expected at ~70% for 2024.

• Sufficient liquidity for at least the next twelve months, with $820 million available as of June 30, 2024.