APi Group Corp 8-K, filed Feb 28, 2023

APi Group Corp (APG)

8-K 2023-02-28 For: 2023-02-28

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Added on April 12, 2026

About this 8-K

APi Group Corp filed this 8-K on February 28, 2023.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Delaware	001-39275	98-1510303
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1100 Old Highway 8 NW
New Brighton, Minnesota		55112
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	APG	The New York Stock Exchange


Exhibit No.		Description
99.1		Press Release issued by APi Group Corporation on February 28, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


			APi Group Corporation

Date:	February 28, 2023	By:	/s/ Kevin S. Krumm
			Name: Kevin S. Krumm Title: Chief Financial Officer


•		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.
•		The Company presents free cash flow, adjusted free cash flow and adjusted free cash flow conversion, which are liquidity measures used by management as factors in determining the amount of cash that is available for working capital needs or other uses of cash, however, it does not represent residual cash flows available for discretionary expenditures. Free cash flow is defined as cash provided by (used in) operating activities less capital expenditures. Adjusted free cash flow is defined as cash provided by (used in) operating activities plus or minus events including, but not limited to, transaction and other costs related to acquisitions, business transformation and other expenses for the integration of acquired businesses, payments on acquired liabilities, payments made for restructuring programs, impacts of businesses classified as assets held-for-sale and businesses divested, and one-time and other events such as COVID-19 related payroll tax deferral and relief items. Adjusted free cash flow conversion is defined as adjusted free cash flow as a percentage of adjusted EBITDA.
•	The Company calculates its leverage ratio in accordance with its debt agreements which include different adjustments to EBITDA from those included in the adjusted EBITDA numbers reported externally.


APi Group Corporation
Condensed Consolidated Statements of Operations (GAAP)
(Amounts in millions, except per share data)
(Unaudited)

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2022			2021			2022			2021
Net revenues	$	1,703		$	1,112		$	6,558		$	3,940
Cost of revenues		1,240			838			4,844			3,001
Gross profit		463			274			1,714			939
Selling, general, and administrative expenses		414			224			1,552			803
Operating income		49			50			162			136
Interest expense, net		37			17			125			60
(Gain) loss on extinguishment of debt, net		—			—			(5	)		9
Non-service pension benefit		(10	)		—			(42	)		—
Investment income and other, net		(4	)		—			(9	)		(12	)
Other expense, net		23			17			69			57
Income before income taxes		26			33			93			79
Income tax provision		4			18			20			32
Net income	$	22		$	15		$	73		$	47
Net income attributable to common shareholders:
Accrued stock dividend on Series A Preferred Stock		—			(184	)		—			(184	)
Stock dividend on Series B Preferred Stock		(11	)		—			(44	)		—
Net income attributable to common shareholders	$	11		$	(169	)	$	29		$	(137	)
Net income per common share
Basic	$	0.04		$	(0.75	)	$	0.10		$	(0.67	)
Diluted		0.04			(0.75	)		0.10			(0.67	)
Weighted average shares outstanding
Basic		234			225			233			206
Diluted		267			225			266			206


APi Group Corporation
Condensed Consolidated Balance Sheets (GAAP)
(Amounts in millions)
(Unaudited)

	December 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	605	$	1,188
Restricted cash		2		302
Accounts receivable, net		1,313		767
Inventories		163		69
Contract assets		459		217
Prepaid expenses and other current assets		110		83
Total current assets		2,652		2,626
Property and equipment, net		407		326
Operating lease right of use assets		222		101
Goodwill		2,382		1,106
Intangible assets, net		1,784		882
Deferred tax assets		108		73
Pension and post-retirement assets		392		—
Other assets		144		45
Total assets	$	8,091	$	5,159
Liabilities, Redeemable Convertible Preferred Stock, and Shareholders’ Equity
Current liabilities:
Short-term and current portion of long-term debt	$	206	$	1
Accounts payable		490		236
Accrued liabilities		689		360
Contract liabilities		463		243
Operating and finance leases		73		27
Total current liabilities		1,921		867
Long-term debt, less current portion		2,583		1,766
Pension and post-retirement obligations		40		—
Operating and finance leases		166		79
Deferred tax liabilities		340		43
Other noncurrent liabilities		117		81
Total liabilities		5,167		2,836
Total redeemable convertible preferred stock		797		—
Total shareholders' equity		2,127		2,323
Total liabilities, redeemable convertible preferred stock, and shareholders’ equity	$	8,091	$	5,159


APi Group Corporation
Condensed Consolidated Statements of Cash Flows (GAAP)
(Amounts in millions)
(Unaudited)
	For the Year Ended December 31,
	2022			2021
Cash flows from operating activities:
Net income	$	73		$	47
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		304			202
Restructuring charges, net of cash paid		22			—
Deferred taxes		(47	)		6
Share-based compensation expense		18			12
Profit-sharing expense		15			15
Non-cash lease expense		67			31
Net periodic pension benefit		(35	)		—
(Gain) loss on extinguishment of debt, net		(5	)		9
Other, net		3			7
Pension contributions		(34	)		—
Changes in operating assets and liabilities, net of effects of acquisitions		(111	)		(147	)
Net cash provided by operating activities		270			182

Cash flows from investing activities:
Acquisitions, net of cash acquired		(2,839	)		(86	)
Purchases of property and equipment		(79	)		(55	)
Proceeds from sales of property, equipment, held for sale assets, and businesses		17			20
Net cash used in investing activities		(2,901	)		(121	)

Cash flows from financing activities:
Proceeds from long-term borrowings		1,104			650
Payments on long-term borrowings		(34	)		(321	)
Repurchases of long-term borrowings		(30	)		—
Payments of debt issuance costs		(29	)		(11	)
Repurchases of common stock		(44	)		—
Proceeds from equity issuances		797			676
Payments of acquisition-related consideration		(5	)		(74	)
Restricted shares tendered for taxes		(3	)		(3	)
Net cash provided by financing activities		1,756			917
Effect of foreign currency exchange rate on cash, cash equivalents, and restricted cash		(9	)		(2	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(884	)		976
Cash, cash equivalents, and restricted cash, beginning of period		1,491			515
Cash, cash equivalents, and restricted cash, end of period	$	607		$	1,491


APi Group Corporation
Reconciliations of GAAP to Non-GAAP Financial Measures
Organic change in net revenues (non-GAAP)
(Amounts in millions)
(Unaudited)

Organic change in net revenues

	For the Three Months Ended December 31, 2022
	Net revenues
	change			Acquisitions and			Foreign currency			Organic change in
	(as reported)			divestitures, net (a)			translation (b)			net revenues (c)
Safety Services		111.1	%		94.8	%		(1.8	)%		18.1	%
Specialty Services		(8.9	)%			─		(0.4	)%		(8.5	)%
Consolidated		53.1	%		48.4	%		(1.1	)%		5.8	%
										.

	For the Year Ended December 31, 2022
	Net revenues
	change			Acquisitions and			Foreign currency			Organic change in
	(as reported)			divestitures, net (a)			translation (b)			net revenues (c)
Safety Services		120.0	%		104.3	%		(1.4	)%		17.1	%
Specialty Services		6.4	%			─		(0.2	)%		6.7	%
Consolidated		66.4	%		55.0	%		(0.8	)%		12.2	%


APi Group Corporation
Reconciliations of GAAP to Non-GAAP Financial Measures
Gross profit and adjusted gross profit (non-GAAP)
SG&A and adjusted SG&A (non-GAAP)
(Amounts in millions)
(Unaudited)

Adjusted gross profit

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022			2021			2022			2021
Gross profit (as reported)		$	463		$	274		$	1,714		$	939
Adjustments to reconcile gross profit to adjusted gross profit:
Backlog amortization	(a)		8			—			30			5
Inventory step-up	(b)		—			—			9			—
Restructuring costs	(c)		3			—			7			—
Adjusted gross profit		$	474		$	274		$	1,760		$	944

Net revenues		$	1,703		$	1,112		$	6,558		$	3,940
Adjusted gross margin			27.8	%		24.6	%		26.8	%		24.0	%


Adjusted SG&A

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022			2021			2022			2021
Selling, general, and administrative expenses ("SG&A") (as reported)		$	414		$	224		$	1,552		$	803
Adjustments to reconcile SG&A to adjusted SG&A:
Amortization of intangible assets	(d)		(54	)		(32	)		(197	)		(122	)
Contingent consideration and compensation	(e)		(1	)		2			(9	)		7
Business process transformation expenses	(f)		(8	)		(10	)		(22	)		(35	)
Acquisition expenses	(g)		—			(8	)		(26	)		(24	)
Recent acquisition transition expenses	(h)		(32	)		—			(95	)		—
Integration and reorganization expenses	(i)		—			—			(9	)		—
Restructuring costs	(c)		(9	)		—			(23	)		—
Divested businesses	(j)		—			—			—			(1	)
COVID-19 relief at international subsidiaries, net	(k)		2			—			2			—
Corporate executive reorganization	(l)		—			—			—			(6	)
Adjusted SG&A expenses		$	312		$	176		$	1,173		$	622

Net revenues		$	1,703		$	1,112		$	6,558		$	3,940
Adjusted SG&A as a % of net revenues			18.3	%		15.8	%		17.9	%		15.8	%


APi Group Corporation
Reconciliations of GAAP to Non-GAAP Financial Measures
EBITDA and adjusted EBITDA (non-GAAP)
(Amounts in millions)
(Unaudited)

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022			2021			2022			2021
Net income (as reported)		$	22		$	15		$	73		$	47
Adjustments to reconcile net income to EBITDA:
Interest expense, net			37			17			125			60
Income tax provision			4			18			20			32
Depreciation and amortization			79			48			304			202
EBITDA		$	142		$	98		$	522		$	341
Adjustments to reconcile EBITDA to adjusted EBITDA:
Contingent consideration and compensation	(a)		1			(2	)		9			(7	)
Non-service pension benefit	(b)		(10	)		—			(42	)		—
Inventory step-up	(c)		—			—			9			—
Business process transformation expenses	(d)		8			10			22			35
Acquisition expenses	(e)		—			9			26			26
Recent acquisition transition expenses	(f)		32			—			95			—
Integration and reorganization expenses	(g)		—			—			9			—
Restructuring costs	(h)		12			—			30			—
(Gain) loss on extinguishment of debt, net	(i)		—			—			(5	)		9
Divested businesses	(j)		—			—			—			(1	)
COVID-19 relief at international subsidiaries, net	(k)		(2	)		—			(2	)		(2	)
Corporate executive reorganization	(l)		—			—			—			6
Adjusted EBITDA		$	183		$	115		$	673		$	407

Net revenues		$	1,703		$	1,112		$	6,558		$	3,940
Adjusted EBITDA as a % of net revenues			10.7	%		10.3	%		10.3	%		10.3	%


APi Group Corporation
Reconciliations of GAAP to Non-GAAP Financial Measures
Income (loss) before income tax, net income (loss) and EPS and
Adjusted income before income tax, net income (loss) and EPS (non-GAAP)
(Amounts in millions, except per share data)
(Unaudited)

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022			2021			2022			2021
Income before income tax provision (as reported)		$	26		$	33		$	93		$	79
Adjustments to reconcile income before income tax provision to adjusted income before income tax provision:
Amortization of intangible assets	(a)		62			32			227			127
Contingent consideration and compensation	(b)		1			(2	)		9			(7	)
Non-service pension benefit	(c)		(10	)		—			(42	)		—
Inventory step-up	(d)		—			—			9			—
Business process transformation expenses	(e)		8			10			22			35
Acquisition expenses	(f)		—			13			26			30
Recent acquisition transition expenses	(g)		32			—			95			—
Integration and reorganization expenses	(h)		—			—			9			—
Restructuring costs	(i)		12			—			30			—
(Gain) loss on extinguishment of debt, net	(j)		—			—			(5	)		9
Divested businesses	(k)		—			—			—			(1	)
COVID-19 relief at international subsidiaries, net	(l)		(2	)		—			(2	)		(2	)
Corporate executive reorganization	(m)		—			—			—			6
Adjusted income before income tax provision		$	129		$	86		$	471		$	276

Income tax provision (as reported)		$	4		$	18		$	20		$	32
Adjustments to reconcile income tax provision to adjusted income tax provision:
Income tax provision adjustment	(n)		27			2			93			26
Adjusted income tax provision		$	31		$	20		$	113		$	58

Adjusted income before income tax provision			129			86		$	471		$	276
Adjusted income tax provision			31			20			113			58
Adjusted net income		$	98		$	66		$	358		$	218

Diluted weighted average shares outstanding (as reported)			267			225			266			206
Adjustments to reconcile diluted weighted average shares outstanding to adjusted diluted weighted average shares outstanding:
Dilutive impact of shares from GAAP net loss	(o)		—			—			—			1
Dilutive impact of Series A Preferred Stock	(p)		4			4			4			4
Adjusted diluted weighted average shares outstanding			271			229			270			211

Adjusted diluted EPS		$	0.36		$	0.29		$	1.33		$	1.03


APi Group Corporation
Adjusted Segment Financial Information (non-GAAP)
(Amounts in millions)
(Unaudited)

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022 (a)			2021 (a)			2022 (a)			2021 (a)
Safety Services
Net revenues		$	1,201		$	569		$	4,575		$	2,080
Adjusted gross profit			389			176			1,432			655
Adjusted EBITDA			158			77			559			291

Adjusted gross margin			32.4	%		30.9	%		31.3	%		31.5	%
Adjusted EBITDA as a % of net revenues			13.2	%		13.5	%		12.2	%		14.0	%

Specialty Services
Net revenues		$	510		$	560		$	2,030		$	1,907
Adjusted gross profit			85			98			328			289
Adjusted EBITDA			53			66			210			195

Adjusted gross margin			16.7	%		17.5	%		16.2	%		15.2	%
Adjusted EBITDA as a % of net revenues			10.4	%		11.8	%		10.3	%		10.2	%

Total net revenues before corporate and eliminations	(b)	$	1,711		$	1,129		$	6,605		$	3,987
Total adjusted EBITDA before corporate and eliminations	(b)		211			143			769			486
Adjusted EBITDA as a % of net revenues before corporate and eliminations	(b)		12.3	%		12.7	%		11.6	%		12.2	%

Corporate and Eliminations
Net revenues		$	(8	)	$	(17	)	$	(47	)	$	(47	)
Adjusted EBITDA			(28	)		(28	)		(96	)		(79	)

Total Consolidated
Net revenues		$	1,703		$	1,112		$	6,558		$	3,940
Adjusted gross profit			474			274			1,760			944
Adjusted EBITDA			183			115			673			407

Adjusted gross margin			27.8	%		24.6	%		26.8	%		24.0	%
Adjusted EBITDA as a % of net revenues			10.7	%		10.3	%		10.3	%		10.3	%


APi Group Corporation
Reconciliations of GAAP to Non-GAAP Financial Measures
Free cash flow and adjusted free cash flow and conversion (non-GAAP)
(Amounts in millions)
(Unaudited)

		For the Three Months Ended December 31,						For the Year Ended December 31,
		2022			2021			2022			2021
Net cash provided by operating activities	(a)	$	188		$	114		$	270		$	182
Less: Purchases of property and equipment	(a)		(19	)		(12	)		(79	)		(55	)
Free cash flow		$	169		$	102		$	191		$	127
Add (deduct): Cash payments (sources) related to following items:
Contingent compensation	(b)	$	—		$	1		$	3		$	20
Pension contributions	(c)		—			—			27			—
Business process transformation expenses	(d)		8			10			22			35
Acquisition costs	(e)		1			7			35			24
Recent acquisition transition expenses	(f)		31			—			95			—
Integration and reorganization expenses	(g)		2			—			14			—
Restructuring payments	(h)		2			—			8			—
COVID-19 relief at international subsidiaries, net	(i)		(2	)		—			(2	)		(2	)
Payroll tax deferral	(j)		11			19			11			19
Payments on acquired liabilities	(k)		8			—			8			—
Adjusted free cash flow		$	230		$	139		$	412		$	223

Adjusted EBITDA	(l)	$	183		$	115		$	673		$	407
Adjusted free cash flow conversion			125.7	%		120.9	%		61.2	%		54.8	%