-Record second quarter net revenues of $1.6 billion-

-Reported net revenues increased by 69% and net revenues increased on an organic basis by 12% in the second quarter-

-Reported and adjusted gross margin expansion of 270 and 282 basis points, respectively, in the second quarter-

-Record second quarter adjusted EBITDA of $176 million-

-Record second quarter adjusted diluted earnings per share of $0.37-

APi Group Corporation (NYSE: APG) (“APG”, “APi” or the “Company”) today reported its financial results for the three and six months ended June 30, 2022.

Second Quarter 2022 Highlights:

• Reported net revenues increased by 68.6% or $671 million to $1.6 billion compared to $978 million in the prior year period, driven by revenue from acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Net revenues increased on an organic basis by 12.3% compared to the prior year period, driven by continued growth in inspection and service revenue in Safety Services
• Reported gross margin was 26.4%, representing a 270 basis point increase compared to prior year period reported gross margin of 23.7%, driven by an improved mix of inspection and service revenue supplemented by acquisitions in Safety Services and organic growth as well as improved productivity in Specialty Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Adjusted gross margin was 26.7%, representing a 282 basis point increase compared to prior year period adjusted gross margin of 23.9%, driven by an improved mix of inspection and service revenue supplemented by acquisitions in Safety Services and organic growth as well as improved productivity in Specialty Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Reported net income was $30 million, representing a $9 million increase from prior year period reported net income of $21 million
• Adjusted net income was $99 million and adjusted diluted EPS was $0.37, representing a $0.08 increase from prior year period driven by accretion from acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Adjusted EBITDA increased by 66.0% or $70 million to $176 million compared to $106 million in the prior year period, driven by acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Adjusted EBITDA margin was 10.7%, compared to prior year period adjusted EBITDA margin of 10.8%, driven by an improved mix of inspection and service revenue and organic growth, offset by the impact of completed acquisitions, supply chain disruptions and inflation causing downward pressure on margins

First Half 2022 Highlights:

• Reported net revenues increased by 75.2% or $1.3 billion to $3.1 billion compared to $1.8 billion in the prior year period, driven by revenue from acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Net revenues increased on an organic basis by 13.9% compared to the prior year period, driven by continued growth in inspection and service revenue in Safety Services as well as general market recovery in Safety and Specialty Services compared to the prior year period which was negatively impacted by the COVID-19 pandemic
• Reported gross margin was 26.0%, representing a 280 basis point increase compared to prior year period reported gross margin of 23.2%, driven by an improved mix of inspection and service revenue supplemented by acquisitions in Safety Services and organic growth as well as improved productivity in Specialty Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Adjusted gross margin was 26.6%, representing a 321 basis point increase compared to prior year period adjusted gross margin of 23.4%, driven by an improved mix of inspection and service revenue supplemented by acquisitions in Safety Services and organic growth as well as improved productivity in Specialty Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Reported net income was $23 million, representing a $10 million increase from prior year period reported net income of $13 million
• Adjusted net income was $161 million and adjusted diluted EPS was $0.60, representing a $0.21 increase from prior year period driven by accretion from acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Adjusted EBITDA increased by 82.0% or $137 million to $304 million compared to $167 million in the prior year period, driven by acquisitions in Safety Services and strong organic growth in Safety and Specialty Services
• Adjusted EBITDA margin was 9.7%, representing a 37 basis point increase compared to prior year period adjusted EBITDA margin of 9.4%, driven by an improved mix of inspection and service revenue supplemented by acquisitions in Safety Services and organic growth, partially offset by supply chain disruptions and inflation causing downward pressure on margins

Russ Becker, APi’s President and Chief Executive Officer stated: “I am pleased with our strong results for the second quarter, including record net revenues, record adjusted EBITDA and record adjusted diluted earnings per share, as well as the first half of the year, especially in this ongoing volatile macro environment. Our revenue momentum continues to reflect strong demand for our services across our portfolio and it is gratifying to see Chubb have organic growth in the year-to-date period after many years of decline under prior ownership. We saw strong continued growth in net revenues on an organic basis of approximately 12% in our legacy business and in line with our strategic initiatives, we saw a 20%+ increase in inspection, service and monitoring revenue as we march towards our goal of 60%+ as a percentage of total net revenues. This was a key driver of the 282 basis point increase in adjusted gross margin compared to the prior year period as on average, inspection and service revenue generates 10%+ higher gross margin and monitoring revenue generates 20%+ higher gross margin than contract revenue. In addition, we generated seasonally significant free cash flow and continued to offset short-term margin pressures from inflationary cost increases and supply chain disruptions through pricing actions, fuel surcharges and procurement initiatives, all of which contributed to a solid quarter.

As we look ahead to the remainder of 2022, we expect the macro environment to remain volatile. We will remain laser focused on the activities that helped us deliver a strong first half, including pricing, our focus on growing inspection, service and monitoring revenue, strong spend controls, and disciplined project and customer selection. We are focused on continuing to deliver strong operating and financial performance while also executing on our long-term goals including value capture opportunities relating to our acquisition of Chubb and beginning the budgeting process for 2023.”

APi Co-Chair James E. Lillie added: “We are very pleased with how the business is performing in this volatile environment. It is clear to us that our strategic focus on growing inspection, service and monitoring revenue through our market-leading brands, and working tirelessly to become more efficient in the way we do business, is a winning formula whether the macro environment is for you or against you. APi’s execution against its goals despite challenges faced in an uncertain macro environment speak to the strength of the Company’s recurring revenue, services-focused business model, the discipline of the organization and its leadership team. Importantly, we are pleased that our historical and ongoing investment in our employees across our platform has protected us from the turnover of employees that many of our competitors are managing through. We remain an employer of choice with modest attrition which helps protect efficiency, productivity and margins.

The integration of Chubb is going very well and is ahead of our initial plan. We look forward to detailing the specific actions that have been taken, the initiatives that are underway, the savings achieved, the efficiencies captured and the planned steps across the various regions in which we operate that will occur over the months and years ahead to drive savings, efficiencies and most importantly, organic growth. We plan to hold an integration update call with investors later this year and look forward to updating investors on our progress and plans.”

Conference Call

APi will hold a webcast/dial-in conference call to discuss its financial results at 8:00 a.m. (Eastern Time) on Thursday, August 4, 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 888-632-3382 or 785-830-1914 and provide Conference ID 1104568. 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/3858601/54E6BE01C2E541B57872A40A6ED701FD

A replay of the call will be available shortly after completion of the live call/webcast via telephone at 800-839-3607 or 402-220-2970 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.

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, including its pricing, focus on growing inspection, service and monitoring revenue, strong spend controls, and disciplined project and customer selection; (ii) the Company’s outlook and expected 2022 financial performance and ability to execute on long-term goals; and (iii) the expected benefits of the acquisition of the Chubb fire and security business. 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, 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) supply chain constraints and interruptions, and the resulting increases in the cost, or reductions in the supply, of the materials commodities and labor the Company uses in its business and for which the Company bears the risk of such increases; (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; (vi) the impact of the conflict between Russia and Ukraine; and (vii) 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:

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.

Beginning with the first quarter of 2022, the Company has combined its Industrial Services and Specialty Services segments into one operating segment. Certain prior year amounts have been recast to conform to this presentation and the information in the tables below has been retroactively adjusted to reflect these changes in reporting segments.