-Establishes new statutorily mandated service
platform in the highly attractive elevator and escalator services
space-
-Accretive to adjusted earnings per share-
-Enhances gross profit margin, adjusted EBITDA
margin, adjusted free cash flow and creates opportunities for cross
selling-
-Accelerates business mix shift towards 60% of
revenues from highly recurring inspection, service, and monitoring
services-
-Company provides preliminary first quarter
2024 results-
APi Group Corporation (NYSE: APG) (“APi” or the
“Company”) today announced that it has entered into a definitive
agreement to acquire Elevated Facility Services Group (“Elevated”),
a premier provider of contractually based services for all major
brands of elevator and escalator equipment. Elevated will be
acquired by APi from a fund managed by L Squared Capital Partners
for approximately $570 million in cash, subject to working capital
and other standard adjustments.
The transaction will expand APi’s position as a premier provider
of safety services focused on non-discretionary, regulatory driven
applications. Elevated’s focus on the elevator and escalator
services space complements APi’s existing capabilities in life
safety, fire protection and security, expanding APi’s total
addressable market by approximately $10 billion and creating a
long-term cross-selling opportunity. The majority of Elevated’s net
revenues come from non-discretionary services – inspections,
service, and repair– strengthening APi’s service offering and
allowing the business to drive strong financial results and free
cash flow in variable macroeconomic environments.
Elevated has many of the same attractive characteristics as APi,
including scale in a highly fragmented market, regulatorily driven
demand, a loyal customer base, an experienced leadership team, a
highly skilled workforce, and an unwavering focus on culture and
developing its teammates throughout the organization. Elevated will
also provide APi a platform from which to expand its bolt-on
M&A strategy in the fragmented elevator and escalator services
space.
The acquisition is expected to contribute ~$220 million in
annual revenue and to be accretive to APi’s “13/60/80” shareholder
value creation framework driven by Elevated’s strong EBITDA margin
profile, ~70% of revenue from inspections, service and repair, and
an asset light business model driving strong adjusted free cash
flow conversion. Following the transaction, the Company intends to
stay aligned with its long-term net leverage target of less than
2.5x and continues to see an attractive market to grow through
acquisitions.
Russ Becker, APi’s President and Chief Executive Officer stated:
“We have long viewed the elevator and escalator service market as
very attractive due to highly recurring nature of the business,
driven by non-discretionary, statutorily driven demand. We believe
Elevated is the perfect opportunity for APi to expand into this
adjacent and attractive market, creating a platform from which to
execute our bolt-on M&A strategy. I believe our strength in
operating a branch-led operating model makes APi the perfect owner
for Elevated and businesses like it.”
Becker continued, “We remain focused on creating sustainable
shareholder value by delivering on our '13/60/80' targets and
believe the addition of Elevated to the APi family will strengthen
our ability to deliver on these targets. Elevated and APi are
aligned from a culture, values, and fit perspective. Each business
prioritizes investing in its people throughout the organization,
including the men and women in the field. Our global team of 29,000
leaders is excited to welcome our new teammates from Elevated to
the APi family.”
Matt Biskaduros, Elevated’s Chief Executive Officer, added:
“This is a transformative milestone for Elevated and its team
members. Over the past 20 years, we have built a people-focused
business with a deeply loyal customer base. APi is well known as a
long-term owner of businesses, with a reputation of caring for and
developing its team. Partnering with APi will provide us with a
perfect platform on which to invest in our business and grow. I’d
like to thank all of our Elevated teammates for their ongoing
dedication to the business and hope they share in my excitement as
we look forward to the next stage of our growth as part of the APi
family.”
The transaction is expected to close in the second quarter of
2024, subject to customary closing conditions and regulatory
approvals. A presentation with additional detail about Elevated and
the transaction can be found on the investor relations section of
the Company’s website.
Preliminary, Unaudited First Quarter
2024 Results
For the first quarter 2024, the Company updates its prior
guidance provided on February 28, 2024, and expects net revenues
will range between $1.590 - $1.610 billion, adjusted EBITDA will
range between $172 - $177 million, and adjusted free cash flow
ahead of last year and in line with the seasonality of cash flow
generation of our business.
These preliminary results are based on the Company’s current
estimate of its results for the first quarter ended March 31, 2024,
and remain subject to normal accounting procedures and are subject
to change. A reconciliation is not provided for guidance on this
measure as the Company is unable at this time to predict the
amounts to be adjusted, such as the GAAP tax provision.
About APi:
APi is a global, market-leading business services provider of
life safety, security and specialty services with a substantial
recurring revenue base and over 500 locations worldwide. APi
provides statutorily mandated and other contracted services to a
strong base of long-standing customers across industries. We have a
winning leadership culture driven by entrepreneurial business
leaders to deliver innovative solutions for our customers. More
information can be found at www.apigroupcorp.com.
Non-GAAP Financial
Measures
This press release contains a non-U.S. GAAP financial measure
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The Company uses the non-U.S. GAAP
financial measure included in this press release and the additional
financial information both in explaining its results to
shareholders and the investment community and in its internal
evaluation and management of its businesses. The Company’s
management believes that this non-U.S. GAAP financial measures and
the information it provides is useful to investors since this
measure (a) permits investors to view the Company’s performance
using the same tools that management uses to evaluate the Company’s
past performance, reportable business segments and prospects for
future performance, (b) permits investors to compare the Company
with its peers,(c) determines certain elements of management’s
incentive compensation and (d) provides consistent period-to-period
comparisons of the results. Specifically:
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) is the measure of profitability used by management to
manage its segments and, accordingly, in its segment reporting. The
Company supplements the reporting of its consolidated financial
information with certain non-U.S. GAAP financial measures,
including EBITDA and adjusted EBITDA, which is defined as EBITDA
excluding the impact of certain non-cash and other specifically
identified items (“adjusted EBITDA”). Adjusted EBITDA margin is
calculated as adjusted EBITDA divided by net revenues. The Company
believes these non-U.S. GAAP measures provide meaningful
information and help investors understand the Company’s financial
results and assess its prospects for future performance. The
Company uses EBITDA and adjusted EBITDA to evaluate its
performance, both internally and as compared with its peers,
because it excludes certain items that may not be indicative of the
Company’s core operating results. Consolidated EBITDA is calculated
in a manner consistent with segment EBITDA, which is a measure of
segment profitability.
While the Company believes this non-U.S. GAAP measure is useful
in evaluating the Company’s performance, this information should be
considered as supplemental in nature and not as a substitute for or
superior to the related financial information prepared in
accordance with U.S. GAAP. Additionally, this non-U.S. GAAP
financial measure may differ from similar measures presented by
other companies. A reconciliation is not provided for guidance on
this measure as the Company is unable to predict the amounts to be
adjusted, such as the GAAP tax provision.
Forward-Looking Statements and
Disclaimers
Please note that in this press release the Company may discuss
events or results that have not yet occurred or been realized,
commonly referred to as forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of the Company.
Such discussion and statements may contain words such as “expect,”
“anticipate,” “will,” “should,” “believe,” “intend,” “plan,”
“estimate,” “predict,” “seek,” “continue,” “pro forma” “outlook,”
“may,” “might,” “should,” “can have,” “have,” “likely,”
“potential,” “target,” “indicative,” “illustrative,” and variations
of such words and similar expressions, and relate in this press
release, without limitation, to statements, beliefs, projections
and expectations about future events. Such statements are based on
the Company’s expectations, intentions and projections regarding
the Company’s future performance, anticipated events or trends and
other matters that are not historical facts. These statements
include (i) the Company’s expectations and beliefs regarding the
acquisition of Elevated, including with respect to the Company’s
market position, the Company’s long-term strategies and targets,
the expected revenue contribution, that the acquisition will be
accretive, the expected synergies, and the timing for closing of
the acquisition, and (ii) the Company’s preliminary financial
results for the first quarter of 2024.
These statements are not guarantees of future performance and
are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements,
including: (i) economic conditions, competition, political risks,
and other risks that may affect the Company’s future performance,
including the impacts of inflationary pressures and other
macroeconomic factors on the Company’s business, markets, supply
chain, customers and workforce, on the credit and financial
markets, on the alignment of expenses and revenues and on the
global economy generally; (ii) the inability of the Company to
successfully or timely consummate the acquisition of Elevated;
(iii) failure to realize the anticipated benefits of the
acquisition of Elevated and its ability to successfully execute the
Company’s bolt-on acquisition strategy to acquire other businesses
and successfully integrate them into its operations; (iv) changes
in applicable laws or regulations; (v) the possibility that the
Company may be adversely affected by other economic, business,
and/or competitive factors; and (vi) other risks and uncertainties,
including those discussed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2023 under the heading “Risk
Factors.” Given these risks and uncertainties, you are cautioned
not to place undue reliance on forward-looking statements.
Additional information concerning these risks, uncertainties and
other factors that could cause actual results to vary is, or will
be, included in the periodic and other reports filed by the Company
with the Securities and Exchange Commission. Forward-looking
statements included in this press release speak only as of the date
hereof and, except as required by applicable law, the Company does
not undertake any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or circumstances after the date of this press
release.
Preliminary Financial
Results
The preliminary financial results presented above for the three
months ended March 31, 2024 are based solely on currently available
information, which is subject to change. The Company’s actual
financial results for the three months ended March 31, 2024 are
subject to the completion of its financial statements for the three
months ended March 31, 2024, and are not indicative of future
performance. The Company’s actual financial results for the three
months ended March 31, 2024 may differ materially from the
preliminary financial results provided herein as a result of the
completion of the Company’s normal closing process, including the
completion of all of its controls procedures, which could identify
adjustments causing the actual results to be different from the
expectations. Accordingly, investors should not place undue
reliance on these preliminary financial results. In addition, this
update does not present all necessary information for an
understanding of the Company’s financial condition as of the date
of this release, or its results of operations for the first
quarter. Investors should review the Company’s complete financial
results for the quarter which it expects to release on May 2,
2024.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240415241879/en/
Investor Relations and Media Inquiries: Adam Fee Vice
President of Investor Relations Tel: +1 651-240-7252 Email:
investorrelations@apigroupinc.us
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