APi Group Reports Fourth Quarter and Full Year 2021 Financial Results
-Reported net revenues increased by 26% and 10% in the fourth quarter and full year, respectively-
-Net revenues increased on an organic basis by 27% in the fourth quarter, excluding Industrial Services-
-Net revenues increased on an organic basis by 16% in the full year, excluding Industrial Services-
-Reported gross margin expansion of 219 and 276 basis points in the fourth quarter and full year, respectively-
New Brighton, Minnesota - March 1, 2022 - APi Group Corporation (NYSE: APG) ("APG", "APi" or the "Company") today reported its financial results for the three months and full year ended December 31, 2021.
Fourth Quarter 2021 Highlights:
Full Year 2021 Highlights:
Russ Becker, APi's President and Chief Executive Officer stated: "As discussed at the investor conferences last week in Miami, 2021 was a watershed year in the development of APi. Despite the many macro headwinds, I am proud of our team and how we achieved our stated strategic goals amidst ongoing supply chain disruptions, inflationary pressures and COVID-19 impacts.
I continue to be energized by the host of opportunities in front of us. As we look ahead to 2022, our record backlog continues to build and provides us with a solid foundation for organic growth. Underlying demand in our key end markets such as data centers, fulfillment and distribution centers, healthcare and high-tech remains robust. While our business is not immune to macro marketplace disruptions related to supply chain disruptions and inflationary cost pressures, we believe we have more tools to mitigate these issues than our competitors. The acquisition of Chubb has enhanced our overall competitive position and our protective moat around the business. Our average project size in our largest segment, Safety Services, is now approximately $5,000 and the average duration of our projects is very short, which we believe will allow us to reasonably control inflationary variables and manage our supply chain. We believe these are competitive advantages as they allow us to stay focused on real-time pricing and operational efficiency to ensure true costs are reflected in the services we provide.
We begin 2022 focused on delivering our three-year plan of continued healthy top-line growth in line with our average historical trend of 6 - 7%, as we focus on driving our adjusted EBITDA margin to 13%+ by 2025. We expect to accomplish this while delivering on an average adjusted free cash flow conversion of approximately 80% over the coming three years and using the cash generated to reduce debt on average by one turn annually to return to our targeted long-term net debt to adjusted EBITDA ratio of 2.0x - 2.5x."
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APi Co-Chair James E. Lillie added: "APi's execution against its goals despite supply chain disruptions, inflationary pressures, and COVID-19 related disruptions speaks to the strength of the Company's recurring revenue services-focused business model, the discipline of the organization and its leadership team as we continue our focus on shareholder value creation.
We entered 2022 with positive momentum on many fronts. Notably, the Chubb acquisition meets our previously stated, key strategic investment criteria. Chubb has a history of strong free cash flow generation, they are leaders in their niche markets and they have an experienced leadership team. The acquisition significantly expands our geographical reach from 200+ locations to 500+ locations and strengthens our protective moat through greater statutorily-required, recurring revenue with 50%+ of our revenue now coming from service-related activities. As we begin the process of integrating Chubb, we are simultaneously investing in the growth of its platform and generating synergies across our combined platform. To help drive value and deliver on our commitments, we have enhanced our team with new global leaders adding depth to our bench, as we plan for the future together as one team united by market-leading brands across the globe.
We are focused on making the right choices for the long-term health of the business, being opportunistic on M&A and remaining focused on creating sustainable shareholder value. Following the closing of the Chubb acquisition, our net debt to adjusted EBITDA ratio was approximately 3.9x and our revenue backlog remained at a record high level. Both of these metrics are great indicators of the positive momentum in the business. We have a healthy balance sheet and strong organic revenue prospects for the year ahead."
Conference Call
APi will hold a webcast/dial-in conference call to discuss its financial results at 8:30 a.m. (Eastern Time) on Tuesday, March 1, 2022. Participants on the call will include Russ Becker, President and Chief Executive Officer; Kevin Krumm, Executive Vice President and Chief Financial Officer; and James E. Lillie and Sir Martin E. Franklin, Co-Chairs.
To listen to the call by telephone, please dial 866-342-8591 or 203-518-9713 and provide Conference ID 2003217. You may also attend and view the presentation (live or by replay) via webcast by accessing the following URL:
https://event.on24.com/wcc/r/3572271/62D830326A8BC325528EF24622A516E3
A replay of the call will be available shortly after completion of the live call/webcast via telephone at 800-723-0394 or 402-220-2649 or via the webcast link above.
About APi:
APi is a global, market-leading business services provider of safety and specialty services in 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.
Investor Relations Inquiries:
Olivia Walton
Vice President of Investor Relations
Tel: +1 651-604-2773
Email: investorrelations@apigroupinc.us
Media Contact:
Liz Cohen
Kekst CNC
Tel: +1 212-521-4845
Email: Liz.Cohen@kekstcnc.com
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Forward-Looking Statements and Disclaimers
Certain statements in this announcement are forward-looking statements which 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, including expectations regarding: (i) the Company's long-term targets, goals and strategies; (ii) the Company's future financial performance including revenue and adjusted EBITDA margin growth and cash flow conversion (iii) the impact of the Company's backlog and continued demand on future results; (iv) the expected benefits of the acquisition of the Chubb fire and security business, including enhancement of the Company's competitive position, the global expansion of the Company's business, and the long-term opportunities for and anticipated synergies of the combined platform; and (v) the Company's ability to successfully manage supply chain disruptions and inflationary cost pressures through its cost focused culture and business strategies and lower project size and durations. 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 and other risks that may affect the Company's future performance, including the impacts of the COVID-19 pandemic 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 the Chubb fire and security business; (iii) failure to realize the anticipated benefits of the acquisition of the Chubb fire and security business; (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. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements 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 otherwise.
Non-GAAP Financial Measures
This press release contains non-U.S. GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company uses certain non-U.S. GAAP financial measures that are 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 these non-U.S. GAAP financial measures and the information they provide are useful to investors since these measures (a) permit 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) permit investors to compare the Company with its peers and (c) determine certain elements of management's incentive compensation. Specifically:
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• | The Company's management believes that adjusted net revenues, adjusted gross profit, adjusted selling, general and administrative ("SG&A") expenses, adjusted net income, and adjusted earnings per share, which are non-GAAP financial measures that exclude business transformation and other expenses for the integration of acquired businesses, the impact and results of businesses classified as assets held-for-sale and businesses divested, and one-time and other events such as impairment charges, share-based compensation, transaction and other costs related to acquisitions, amortization of intangible assets, net COVID-19 relief,severance related costs related to corporate leadership changes and certain tax benefits from the acquisition of APi Group, Inc. (the "APi Acquisition"), are useful because they provide investors with a meaningful perspective on the current underlying performance of the Company's core ongoing operations. The Company no longer adjusts gross profit, selling, general, and administrative expense and net income for depreciation remeasurements associated with acquisitions. The prior comparative periods have been recast to reflect the updated presentation. |
• | Adjusted net revenues is defined as net revenues excluding the impact and results of businesses classified as assets held-for-sale and businesses divested. The Company's management believes that this measure is useful as a supplement to enable investors to compare period-over-period results on a more consistent basis without the effects of businesses classified as assets held-for-sale and businesses divested, which more meaningfully reflects the Company's core ongoing operations and performance. The Company uses adjusted net revenues 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. |
• | The Company also presents organic changes in net revenues on a consolidated basis, segment specific basis, or on a consolidated basis excluding certain segments, to provide a more complete understanding of underlying revenue trends by providing net revenues on a consistent basis as it excludes the impacts of material acquisitions, completed divestitures, and changes in foreign currency from year-over-year comparisons on reported net revenues, calculated as the difference between the reported net revenues for the current period and reported net revenues for the current period converted at the prior year average monthly exchange rates (excluding acquisitions and divestitures). The remainder is divided by the prior year net revenues, excluding the impacts of material acquisitions and completed divestitures. This press release also includes net revenues excluding Industrial Services on an organic basis in order to provide a more complete understanding for investors of the financial results of our two most significant segments for which organic growth is a key metric. |
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• | 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 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 adjusted 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, 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 does not provide reconciliations of forward-looking non-U.S. GAAP adjusted net revenues and adjusted EBITDA guidance to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for acquisitions and divestitures, business transformation and other expenses for the integration of acquired businesses, one-time and other events such as impairment charges, transaction and other costs related to acquisitions, amortization of intangible assets, net COVID-19 relief, and certain tax benefits from the APi Acquisition, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
While the Company believes these non-U.S. GAAP measures are 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, these non-U.S. GAAP financial measures may differ from similar measures presented by other companies. A reconciliation of these non-U.S. GAAP financial measures is included later in this press release.
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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, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Net revenues | $ | 1,112 | $ | 882 | $ | 3,940 | $ | 3,587 | ||||
Cost of revenues | 838 | 684 | 3,001 | 2,831 | ||||||||
Gross profit | 274 | 198 | 939 | 756 | ||||||||
Selling, general and administrative expenses | 224 | 219 | 803 | 725 | ||||||||
Impairment of goodwill | - | - | - | 197 | ||||||||
Operating income (loss) | 50 | (21 | ) | 136 | (166 | ) | ||||||
Interest expense, net | 17 | 11 | 60 | 52 | ||||||||
Loss on extinguishment of debt | - | - | 9 | - | ||||||||
Investment income and other, net | - | (14 | ) | (12 | ) | (34 | ) | |||||
Other expense (income), net | 17 | (3 | ) | 57 | 18 | |||||||
Income (loss) before income taxes | 33 | (18 | ) | 79 | (184 | ) | ||||||
Income tax provision (benefit) | 18 | 4 | 32 | (31 | ) | |||||||
Net income (loss) | $ | 15 | $ | (22 | ) | $ | 47 | $ | (153 | ) | ||
Net income (loss) attributable to common shareholders: | ||||||||||||
Accrued stock dividend on Series A Preferred Shares | (184 | ) | (222 | ) | (184 | ) | (222 | ) | ||||
Net loss attributable to common shares | $ | (169 | ) | $ | (244 | ) | $ | (137 | ) | $ | (375 | ) |
Net income (loss) per common share | ||||||||||||
Basic | $ | (0.75 | ) | $ | (1.44 | ) | $ | (0.67 | ) | $ | (2.21 | ) |
Diluted | (0.75 | ) | (1.44 | ) | (0.67 | ) | (2.21 | ) | ||||
Weighted average shares outstanding | ||||||||||||
Basic | 225 | 169 | 206 | 169 | ||||||||
Diluted | 225 | 169 | 206 | 169 |
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APi Group Corporation | ||||
Condensed Consolidated Balance Sheets (GAAP) | ||||
(Amounts in millions) | ||||
(Unaudited) | ||||
December 31, 2021 | December 31, 2020 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 1,188 | $ | 515 |
Restricted cash | 302 | - | ||
Accounts receivable, net | 767 | 639 | ||
Inventories | 69 | 64 | ||
Contract assets | 217 | 142 | ||
Prepaid expenses and other current assets | 83 | 77 | ||
Total current assets | 2,626 | 1,437 | ||
Property and equipment, net | 326 | 355 | ||
Operating lease right of use assets | 101 | 107 | ||
Goodwill | 1,106 | 1,082 | ||
Intangible assets, net | 882 | 965 | ||
Deferred tax assets | 73 | 89 | ||
Other assets | 45 | 30 | ||
Total assets | $ | 5,159 | $ | 4,065 |
Liabilities and Shareholders' Equity | ||||
Current liabilities: | ||||
Short-term and current portion of long-term debt | $ | 1 | $ | 18 |
Accounts payable | 236 | 150 | ||
Accrued liabilities | 360 | 356 | ||
Deferred consideration | - | 67 | ||
Contract liabilities | 243 | 219 | ||
Operating and finance leases | 27 | 31 | ||
Total current liabilities | 867 | 841 | ||
Long-term debt, less current portion | 1,766 | 1,397 | ||
Deferred tax liabilities | 43 | 45 | ||
Operating and finance leases | 79 | 96 | ||
Other noncurrent liabilities | 81 | 128 | ||
Total liabilities | 2,836 | 2,507 | ||
Total shareholders' equity | 2,323 | 1,558 | ||
Total liabilities and shareholders' equity | $ | 5,159 | $ | 4,065 |
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APi Group Corporation | |||||
Condensed Consolidated Statements of Cash Flows (GAAP) | |||||
(Amounts in millions) | |||||
(Unaudited) | |||||
For the Year Ended December 31, | |||||
2021 | 2020 | ||||
Cash flows from operating activities: | |||||
Net income (loss) | $ | 47 | $ | (153 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||
Depreciation and amortization | 202 | 263 | |||
Impairment of goodwill | - | 197 | |||
Deferred taxes | 6 | (74 | ) | ||
Share-based compensation expense | 12 | 5 | |||
Profit-sharing expense | 15 | 14 | |||
Non-cash lease expense | 31 | 30 | |||
Loss on extinguishment of debt | 9 | - | |||
Other, net | 7 | - | |||
Changes in operating assets and liabilities, net of effects of business acquisitions | (147 | ) | 214 | ||
Net cash provided by operating activities | 182 | 496 | |||
Cash flows from investing activities: | |||||
Acquisitions, net of cash acquired | (86 | ) | (319 | ) | |
Purchases of property and equipment | (55 | ) | (38 | ) | |
Proceeds from sales of property, equipment, held for sale assets, and businesses | 20 | 17 | |||
Net cash used in investing activities | (121 | ) | (340 | ) | |
Cash flows from financing activities: | |||||
Proceeds from long-term borrowings | 650 | 250 | |||
Payments on long-term borrowings | (321 | ) | (21 | ) | |
Repurchase of common shares | - | (30 | ) | ||
Payments of acquisition-related consideration | (74 | ) | (93 | ) | |
Deferred financing costs paid | (11 | ) | (8 | ) | |
Proceeds from share issuance and warrant exercises | 676 | 3 | |||
Restricted shares tendered for taxes | (3 | ) | (2 | ) | |
Net cash provided by financing activities | 917 | 99 | |||
Effect of foreign currency exchange rate on cash and cash equivalents | (2 | ) | 4 | ||
Net increase in cash and cash equivalents | 976 | 259 | |||
Cash, cash equivalents, and restricted cash, beginning of period | 515 | 256 | |||
Cash, cash equivalents, and restricted cash, end of period | $ | 1,491 | $ | 515 | |
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APi Group Corporation | ||||||||
Reconciliations of GAAP to Non-GAAP Financial Measures | ||||||||
Net revenues and adjusted net revenues (non-GAAP) | ||||||||
Organic change in net revenues (non-GAAP) | ||||||||
(Amounts in millions) | ||||||||
(Unaudited) | ||||||||
Adjusted net revenues | ||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Net revenues (as reported) | $ | 1,112 | $ | 882 | $ | 3,940 | $ | 3,587 |
Adjustments to reconcile net revenues to adjusted net revenues: | ||||||||
Divested businesses | (a) | - | (8 | ) | - | (91 | ) | |
Adjusted net revenues | $ | 1,112 | $ | 874 | $ | 3,940 | $ | 3,496 |
Organic change in net revenues
For the Three Months Ended December 31, 2021 | ||||
Net revenues | ||||
change | Acquisitions and | Foreign currency | Organic change in | |
(as reported) | divestitures, net (b) | translation (c) | net revenues (d) | |
Safety Services | 29.3 % | 6.1 % | 0.2 % | 23.0 % |
Specialty Services | 36.6 % | - | - | 36.6 % |
Industrial Services | (14.7) % | (7.8) % | - | (6.9) % |
Consolidated | 26.1 % | 2.0 % | 0.1 % | 24.0 % |
Consolidated, excluding Industrial Services | 31.0 % | 3.5 % | 0.1 % | 27.4 % |
. | ||||
For the Year Ended December 31, 2021 | ||||
Net revenues | ||||
change | Acquisitions and | Foreign currency | Organic change in | |
(as reported) | divestitures, net (b) | translation (c) | net revenues (d) | |
Safety Services | 26.9 % | 8.6 % | 0.7 % | 17.6 % |
Specialty Services | 18.0 % | - | - | 18.0 % |
Industrial Services | (50.8) % | (9.5) % | 0.4 % | (41.7) % |
Consolidated | 9.8 % | 1.1 % | 0.4 % | 8.3 % |
Consolidated, excluding Industrial Services | 21.1 % | 4.6 % | 0.4 % | 16.1 % |
Notes:
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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, | ||||||||
2021 | 2020 | 2021 | 2020 | ||||||
Gross profit (as reported) | $ | 274 | $ | 198 | $ | 939 | $ | 756 | |
Adjustments to reconcile gross profit to adjusted gross profit: | |||||||||
Divested businesses | (a) | - | (1 | ) | - | (2 | ) | ||
Backlog amortization | (b) | - | 18 | 5 | 69 | ||||
Inventory step-up | (c) | - | 4 | - | 4 | ||||
Adjusted gross profit | $ | 274 | $ | 219 | $ | 944 | $ | 827 | |
Adjusted net revenues | (d) | $ | 1,112 | $ | 874 | $ | 3,940 | $ | 3,496 |
Adjusted gross margin | 24.6 | % | 25.1 | % | 24.0 | % | 23.7 | % |
Adjusted SG&A | |||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | ||||||||
2021 | 2020 | 2021 | 2020 | ||||||
Selling, general and administrative expenses ("SG&A") (as reported) | $ | 224 | $ | 219 | $ | 803 | $ | 725 | |
Adjustments to reconcile SG&A to adjusted SG&A: | |||||||||
Divested businesses | (a) | - | - | (1 | ) | (2 | ) | ||
Contingent consideration and compensation | (e) | 2 | (29 | ) | 7 | (29 | ) | ||
Amortization of intangible assets | (f) | (32 | ) | (30 | ) | (122 | ) | (113 | ) |
Business process transformation costs | (g) | (10 | ) | (6 | ) | (35 | ) | (13 | ) |
Corporate executive reorganization | (h) | - | - | (6 | ) | - | |||
Public company registration, listing and compliance | (i) | - | - | - | (5 | ) | |||
Acquisition expenses | (j) | (8 | ) | (8 | ) | (24 | ) | (10 | ) |
COVID-19 severance costs at Canadian subsidiaries | (k) | - | - | - | (1 | ) | |||
Adjusted SG&A expenses | $ | 176 | $ | 146 | $ | 622 | $ | 552 | |
Adjusted net revenues | (d) | $ | 1,112 | $ | 874 | $ | 3,940 | $ | 3,496 |
Adjusted SG&A as a percentage of adjusted net revenues | 15.8 | % | 16.7 | % | 15.8 | % | 15.8 | % |
Notes:
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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, | |||||||||
2021 | 2020 | 2021 | 2020 | |||||||
Net income (loss) (as reported) | $ | 15 | $ | (22 | ) | $ | 47 | $ | (153 | ) |
Adjustments to reconcile net income (loss) to EBITDA: | ||||||||||
Interest expense, net | 17 | 11 | 60 | 52 | ||||||
Income tax provision (benefit) | 18 | 4 | 32 | (31 | ) | |||||
Depreciation and amortization | 48 | 67 | 202 | 263 | ||||||
EBITDA | $ | 98 | $ | 60 | $ | 341 | $ | 131 | ||
Adjustments to reconcile EBITDA to adjusted EBITDA: | ||||||||||
Divested businesses | (a) | - | (2 | ) | (1 | ) | 4 | |||
Contingent consideration and compensation | (b) | (2 | ) | 29 | (7 | ) | 29 | |||
Impairment of goodwill and intangible assets | (c) | - | - | - | 193 | |||||
Business process transformation costs | (d) | 10 | 6 | 35 | 13 | |||||
Corporate executive reorganization | (e) | - | - | 6 | - | |||||
Public company registration, listing and compliance | (f) | - | - | - | 5 | |||||
Acquisition expenses | (g) | 9 | 8 | 26 | 10 | |||||
Inventory step-up | (h) | - | 4 | - | 4 | |||||
COVID-19 relief at Canadian subsidiaries, net | (i) | - | (2 | ) | (2 | ) | (8 | ) | ||
Loss on extinguishment of debt | (j) | - | - | 9 | - | |||||
Adjusted EBITDA | $ | 115 | $ | 103 | $ | 407 | $ | 381 | ||
Adjusted net revenues | (k) | $ | 1,112 | $ | 874 | $ | 3,940 | $ | 3,496 | |
Adjusted EBITDA as a percentage of adjusted net revenues | 10.3 | % | 11.8 | % | 10.3 | % | 10.9 | % |
Notes:
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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, | |||||||||
2021 | 2020 | 2021 | 2020 | |||||||
Income (loss) before income tax provision (as reported) | $ | 33 | $ | (18 | ) | $ | 79 | $ | (184 | ) |
Adjustments to reconcile income (loss) before income tax provision to adjusted income before income tax provision: | ||||||||||
Divested businesses | (a) | - | (2 | ) | (1 | ) | 4 | |||
Amortization of intangible assets | (b) | 32 | 48 | 127 | 182 | |||||
Contingent consideration and compensation | (c) | (2 | ) | 29 | (7 | ) | 29 | |||
Impairment of goodwill and intangible assets | (d) | - | - | - | 193 | |||||
Business process transformation costs | (e) | 10 | 6 | 35 | 13 | |||||
Corporate executive reorganization | (f) | - | - | 6 | - | |||||
Public company registration, listing and compliance | (g) | - | - | - | 5 | |||||
Acquisition expenses | (h) | 13 | 8 | 30 | 10 | |||||
Inventory step-up | (i) | - | 4 | - | 4 | |||||
COVID-19 relief at Canadian subsidiaries, net | (j) | - | (2 | ) | (2 | ) | (8 | ) | ||
Loss on extinguishment of debt | (k) | - | - | 9 | - | |||||
Adjusted income before income tax provision | $ | 86 | $ | 73 | $ | 276 | $ | 248 | ||
Income tax provision (benefit) (as reported) | $ | 18 | $ | 4 | $ | 32 | $ | (31 | ) | |
Adjustments to reconcile income tax provision to adjusted income tax provision: | ||||||||||
Income tax provision adjustment | (l) | 2 | 11 | 26 | 81 | |||||
Adjusted income tax provision | $ | 20 | $ | 15 | $ | 58 | $ | 50 | ||
Adjusted income before income tax provision | $ | 86 | $ | 73 | $ | 276 | $ | 248 | ||
Adjusted income tax provision | 20 | 15 | 58 | 50 | ||||||
Adjusted net income | $ | 66 | $ | 58 | $ | 218 | $ | 198 | ||
Diluted weighted average shares outstanding (as reported) | 225 | 169 | 206 | 169 | ||||||
Adjustments to reconcile diluted weighted average shares outstanding to adjusted diluted weighted average shares outstanding: | ||||||||||
Dilutive impact of shares from GAAP net loss | (m) | - | 7 | 1 | 3 | |||||
Dilutive impact of Series A Preferred Shares | (n) | 4 | 4 | 4 | 4 | |||||
Adjusted diluted weighted average shares outstanding | 229 | 180 | 211 | 176 | ||||||
Adjusted diluted EPS | $ | 0.29 | $ | 0.33 | $ | 1.03 | $ | 1.13 |
Notes:
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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, | |||||||||||
2021 (a) | 2020 (a) | 2021 (a) | 2020 (a) | |||||||||
Safety Services | ||||||||||||
Adjusted net revenues | $ | 569 | $ | 440 | $ | 2,080 | $ | 1,639 | ||||
Adjusted gross profit | 176 | 144 | 655 | 523 | ||||||||
Adjusted EBITDA | 77 | 59 | 291 | 224 | ||||||||
Adjusted gross margin | 30.9 | % | 32.7 | % | 31.5 | % | 31.9 | % | ||||
Adjusted EBITDA as a percentage of adjusted net revenues | 13.5 | % | 13.4 | % | 14.0 | % | 13.7 | % | ||||
Specialty Services | ||||||||||||
Adjusted net revenues | $ | 481 | $ | 352 | $ | 1,653 | $ | 1,401 | ||||
Adjusted gross profit | 87 | 62 | 267 | 227 | ||||||||
Adjusted EBITDA | 60 | 44 | 184 | 170 | ||||||||
Adjusted gross margin | 18.1 | % | 17.6 | % | 16.2 | % | 16.2 | % | ||||
Adjusted EBITDA as a percentage of adjusted net revenues | 12.5 | % | 12.5 | % | 11.1 | % | 12.1 | % | ||||
Industrial Services | ||||||||||||
Adjusted net revenues | $ | 81 | $ | 87 | $ | 277 | $ | 472 | ||||
Adjusted gross profit | 11 | 13 | 22 | 77 | ||||||||
Adjusted EBITDA | 6 | 11 | 11 | 64 | ||||||||
Adjusted gross margin | 13.6 | % | 14.9 | % | 7.9 | % | 16.3 | % | ||||
Adjusted EBITDA as a percentage of adjusted net revenues | 7.4 | % | 12.6 | % | 4.0 | % | 13.6 | % | ||||
Total adjusted net revenues before corporate and eliminations | (b) | $ | 1,131 | $ | 879 | $ | 4,010 | $ | 3,512 | |||
Total adjusted EBITDA before corporate and eliminations | (b) | 143 | 114 | 486 | 458 | |||||||
Adjusted EBITDA as a percentage of adjusted net revenues before corporate and eliminations | (b) | 12.6 | % | 13.0 | % | 12.1 | % | 13.0 | % | |||
Corporate and Eliminations | ||||||||||||
Adjusted net revenues | $ | (19 | ) | $ | (5 | ) | $ | (70 | ) | $ | (16 | ) |
Adjusted EBITDA | (28 | ) | (11 | ) | (79 | ) | (77 | ) | ||||
Total Consolidated | ||||||||||||
Adjusted net revenues | $ | 1,112 | $ | 874 | $ | 3,940 | $ | 3,496 | ||||
Adjusted gross profit | 274 | 219 | 944 | 827 | ||||||||
Adjusted EBITDA | 115 | 103 | 407 | 381 | ||||||||
Adjusted gross margin | 24.6 | % | 25.1 | % | 24.0 | % | 23.7 | % | ||||
Adjusted EBITDA as a percentage of adjusted net revenues | 10.3 | % | 11.8 | % | 10.3 | % | 10.9 | % |
Notes:
14
APi Group Corporation | ||||||||||||
Reconciliations of GAAP to Non-GAAP Financial Measures | ||||||||||||
Adjusted Segment Financial Information (non-GAAP) | ||||||||||||
(Amounts in millions) | ||||||||||||
(Unaudited) | ||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Safety Services | ||||||||||||
Safety Services EBITDA | $ | 74 | $ | 56 | $ | 287 | $ | 140 | ||||
Adjustments to reconcile EBITDA to adjusted EBITDA: | ||||||||||||
Contingent consideration and compensation | (a) | - | 1 | 2 | 5 | |||||||
Impairment of goodwill and intangible assets | (b) | - | - | - | 83 | |||||||
Business process transformation | (e) | 2 | - | 3 | - | |||||||
Acquisition expenses | (g) | 1 | - | 1 | - | |||||||
Inventory step-up | (j) | - | 4 | - | 4 | |||||||
COVID-19 relief at Canadian subsidiaries, net | (c) | - | (2 | ) | (2 | ) | (8 | ) | ||||
Safety Services adjusted EBITDA | $ | 77 | $ | 59 | $ | 291 | $ | 224 | ||||
Specialty Services | ||||||||||||
Specialty Services EBITDA | $ | 62 | $ | 15 | $ | 193 | $ | 95 | ||||
Adjustments to reconcile EBITDA to adjusted EBITDA: | ||||||||||||
Contingent consideration and compensation | (a) | (2 | ) | 28 | (9 | ) | 22 | |||||
Impairment of goodwill and intangible assets | (b) | - | - | - | 52 | |||||||
Acquisition expenses | (g) | - | 1 | - | 1 | |||||||
Specialty Services adjusted EBITDA | $ | 60 | $ | 44 | $ | 184 | $ | 170 | ||||
Industrial Services | ||||||||||||
Industrial Services EBITDA | $ | 6 | $ | 13 | $ | 12 | $ | 2 | ||||
Adjustments to reconcile EBITDA to adjusted EBITDA: | ||||||||||||
Divested businesses | (d) | - | (1 | ) | (1 | ) | 4 | |||||
Contingent consideration and compensation | (a) | - | (1 | ) | - | - | ||||||
Impairment of goodwill and intangible assets | (b) | - | - | - | 58 | |||||||
Industrial Services adjusted EBITDA | $ | 6 | $ | 11 | $ | 11 | $ | 64 | ||||
Corporate and Eliminations | ||||||||||||
Corporate and Eliminations EBITDA | $ | (44 | ) | $ | (24 | ) | $ | (151 | ) | $ | (106 | ) |
Adjustments to reconcile EBITDA to adjusted EBITDA: | ||||||||||||
Business process transformation | (e) | 8 | 6 | 32 | 13 | |||||||
Divested businesses | (d) | - | (1 | ) | - | - | ||||||
Contingent consideration and compensation | (a) | - | 1 | - | 2 | |||||||
Public company registration, listing and compliance | (f) | - | - | - | 5 | |||||||
Acquisition expenses | (g) | 8 | 7 | 25 | 9 | |||||||
Loss on extinguishment of debt | (h) | - | - | 9 | - | |||||||
Corporate executive reorganization | (i) | - | - | 6 | - | |||||||
Corporate and Eliminations adjusted EBITDA | $ | (28 | ) | $ | (11 | ) | $ | (79 | ) | $ | (77 | ) |
Notes:
15
APi Group Corporation | ||||||||||||||||
Reconciliations of GAAP to Non-GAAP Financial Measures | ||||||||||||||||
Adjusted Segment Financial Information (non-GAAP) | ||||||||||||||||
(Amounts in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended December 31, 2021 | For the Three Months Ended December 31, 2020 | |||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||
Safety Services | ||||||||||||||||
Net revenues | $ | 569 | $ | - | $ | 569 | $ | 440 | $ | - | $ | 440 | ||||
Cost of revenues | 393 | - | 393 | 313 | (13 | ) | (a) | 296 | ||||||||
(4 | ) | (c) | ||||||||||||||
Gross profit | $ | 176 | $ | - | $ | 176 | $ | 127 | $ | 17 | $ | 144 | ||||
Gross margin | 30.9 | % | 30.9 | % | 28.9 | % | 32.7 | % | ||||||||
Specialty Services | ||||||||||||||||
Net revenues | $ | 481 | $ | - | $ | 481 | $ | 352 | $ | - | $ | 352 | ||||
Cost of revenues | 394 | - | 394 | 295 | (5 | ) | (a) | 290 | ||||||||
Gross profit | $ | 87 | $ | - | $ | 87 | $ | 57 | $ | 5 | $ | 62 | ||||
Gross margin | 18.1 | % | 18.1 | % | 16.2 | % | 17.6 | % | ||||||||
Industrial Services | ||||||||||||||||
Net revenues | $ | 81 | $ | - | $ | 81 | $ | 95 | $ | (8 | ) | (b) | $ | 87 | ||
Cost of revenues | 70 | - | 70 | 81 | (7 | ) | (b) | 74 | ||||||||
Gross profit | $ | 11 | $ | - | $ | 11 | $ | 14 | $ | (1 | ) | $ | 13 | |||
Gross margin | 13.6 | % | 13.6 | % | 14.7 | % | 14.9 | % | ||||||||
Corporate and Eliminations | ||||||||||||||||
Net revenues | $ | (19 | ) | $ | - | $ | (19 | ) | $ | (5 | ) | $ | - | $ | (5 | ) |
Cost of revenues | (19 | ) | - | (19 | ) | (5 | ) | - | (5 | ) | ||||||
Total Consolidated | ||||||||||||||||
Net revenues | $ | 1,112 | $ | - | $ | 1,112 | $ | 882 | $ | (8 | ) | (b) | $ | 874 | ||
Cost of revenues | 838 | - | 838 | 684 | (7 | ) | (b) | 655 | ||||||||
(18 | ) | (a) | ||||||||||||||
(4 | ) | (c) | ||||||||||||||
Gross profit | $ | 274 | $ | - | $ | 274 | $ | 198 | $ | 21 | $ | 219 | ||||
Gross margin | 24.6 | % | 24.6 | % | 22.4 | % | 25.1 | % |
Notes:
16
APi Group Corporation | ||||||||||||||||
Reconciliations of GAAP to Non-GAAP Financial Measures | ||||||||||||||||
Adjusted Segment Financial Information (non-GAAP) | ||||||||||||||||
(Amounts in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Year Ended December 31, 2021 | For the Year Ended December 31, 2020 | |||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||
Safety Services | ||||||||||||||||
Net revenues | $ | 2,080 | $ | - | $ | 2,080 | $ | 1,639 | $ | - | $ | 1,639 | ||||
Cost of revenues | 1,426 | (1 | ) | (a) | 1,425 | 1,174 | (54 | ) | (a) | 1,116 | ||||||
(4 | ) | (c) | ||||||||||||||
Gross profit | $ | 654 | $ | 1 | $ | 655 | $ | 465 | $ | 58 | $ | 523 | ||||
Gross margin | 31.4 | % | 31.5 | % | 28.4 | % | 31.9 | % | ||||||||
Specialty Services | ||||||||||||||||
Net revenues | $ | 1,653 | $ | - | $ | 1,653 | $ | 1,401 | $ | - | $ | 1,401 | ||||
Cost of revenues | 1,390 | (4 | ) | (a) | 1,386 | 1,189 | (15 | ) | (a) | 1,174 | ||||||
Gross profit | $ | 263 | $ | 4 | $ | 267 | $ | 212 | $ | 15 | $ | 227 | ||||
Gross margin | 15.9 | % | 16.2 | % | 15.1 | % | 16.2 | % | ||||||||
Industrial Services | ||||||||||||||||
Net revenues | $ | 277 | $ | - | $ | 277 | $ | 563 | $ | (91 | ) | (b) | $ | 472 | ||
Cost of revenues | 255 | 255 | 484 | (89 | ) | (b) | 395 | |||||||||
Gross profit | $ | 22 | $ | - | $ | 22 | $ | 79 | $ | (2 | ) | $ | 77 | |||
Gross margin | 7.9 | % | 7.9 | % | 14.0 | % | 16.3 | % | ||||||||
Corporate and Eliminations | ||||||||||||||||
Net revenues | $ | (70 | ) | $ | - | $ | (70 | ) | $ | (16 | ) | $ | - | $ | (16 | ) |
Cost of revenues | (70 | ) | - | (70 | ) | (16 | ) | - | (16 | ) | ||||||
Total Consolidated | ||||||||||||||||
Net revenues | $ | 3,940 | $ | - | $ | 3,940 | $ | 3,587 | $ | (91 | ) | (b) | $ | 3,496 | ||
Cost of revenues | 3,001 | (5 | ) | (a) | 2,996 | 2,831 | (89 | ) | (b) | 2,669 | ||||||
(69 | ) | (a) | ||||||||||||||
(4 | ) | (c) | ||||||||||||||
Gross profit | $ | 939 | $ | 5 | $ | 944 | $ | 756 | $ | 71 | $ | 827 | ||||
Gross margin | 23.8 | % | 24.0 | % | 21.1 | % | 23.7 | % |
Notes:
17
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 Year Ended December 31, | |||||
2021 | 2020 | ||||
Net cash provided by operating activities (as reported) | $ | 182 | $ | 496 | |
Less: Purchases of property and equipment | (55 | ) | (38 | ) | |
Free cash flow | $ | 127 | $ | 458 | |
Add (deduct): Cash payments (sources) related to following items: | |||||
Divested businesses | (a) | - | (15 | ) | |
Contingent compensation | (b) | 20 | 19 | ||
Business process transformation costs | (c) | 35 | 13 | ||
Public company registration, listing and compliance | (d) | - | 5 | ||
Acquisition expenses | (e) | 24 | 10 | ||
COVID-19 relief at Canadian subsidiaries, net | (f) | (2 | ) | (8 | ) |
Payroll tax deferral | (g) | 19 | (39 | ) | |
Adjusted free cash flow | $ | 223 | $ | 443 | |
Adjusted EBITDA | (h) | $ | 407 | $ | 381 |
Adjusted free cash flow conversion | 54.8 | % | 116.3 | % |
Notes:
18
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APi Group Corporation published this content on 01 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2022 12:45:07 UTC.