APi Group Reports Fourth Quarter and Full Year 2019 Financia

|Apr 8|magazine92 min read

NEW BRIGHTON, Minn., April 8, 2020 /PRNewswire/ -- APi Group Corporation (OTC:JJAQF; LSE:JTWO) ("APG" or the "Company"), today reported its financial results for the three months and year ended December 31, 2019.

The Company has classified two subsidiaries in its Industrial Services segment as assets held-for-sale as of December 31, 2019. The results presented in this announcement on an as adjusted basis include non-cash and other specifically identified adjustments in addition to excluding the impact of these two subsidiaries, which represent a combined $290 million and $229 million of net revenues in 2019 and 2018, respectively. In addition, all of the full year 2019 financial results presented in this announcement combine the results of APi Group, Inc. (the "Predecessor") for the period prior to the October 1, 2019 closing of its acquisition by the Company and the results of the Company following such acquisition (the "Successor").

Fourth Quarter 2019 Highlights:

  • Reported net revenues were $985 million, compared to $992 million in the prior year period
  • Adjusted net revenues grew organically by 1.0% or $9.0 million to $926 million, compared to $917 million in the prior year period
  • Reported gross margin was 20.1%, representing a 208 basis point decline compared to prior year gross margin of 22.2%, primarily due to an additional $22 million in cost of revenues from the amortization of backlog intangible assets recorded in purchase accounting
  • Adjusted gross margin was 23.4%, compared to 23.3% for the same period in 2018
  • Reported operating loss was $138 million, a $151 million decline from prior year operating income of $13 million, which was largely impacted by transaction related and non-recurring expenses
  • Adjusted EBITDA was $109 million or 11.8%, a 97 basis point increase over prior year
  • Reported net loss was $150 million, a $145 million decline from prior year net loss of $5 million, which was largely impacted by transaction related and non-recurring expenses and reported net loss was $0.89 per diluted share
  • Adjusted net income was $61 million, representing a $11 million increase over prior year and adjusted diluted EPS of $0.35, a $0.06 increase over prior year

Full Year 2019 Highlights:

  • Combined net revenues were $4.1 billion (Predecessor $3.1 billion and Successor $985 million), an increase of $364 million or 9.8% over prior year
  • Adjusted combined net revenues grew 8.7% or $303 million to $3.8 billion, compared to $3.5 billion in the prior year period with segment growth of 4.2% in Safety Services, 9.9% in Specialty Services and 10.7% in Industrial Services
  • Adjusted combined net revenues grew organically by 7.7% or $272 million to $3.8 billion, compared to $3.5 billion in the prior year period with organic growth of 4.5% in Safety Services, 7.0% in Specialty Services and 10.9% in Industrial Services
  • Reported combined gross margin was 19.6%, representing a 151 basis point decline compared to prior year gross margin of 21.1%, primarily due to an additional $22 million in cost of revenues from the amortization of backlog intangible assets recorded in purchase accounting
  • Adjusted combined gross margin was 21.5%, compared to 22.0% in 2018, driven primarily by a decline in the Industrial Services segment
  • Reported combined operating loss was $59 million, a $221 million decline from prior year operating income of $162 million, which was largely impacted by transaction related and non-recurring expenses
  • Adjusted combined EBITDA was $393 million or 10.3%, a 51 basis point increase over prior year
  • Reported combined net loss was $67 million, a $203 million decline from prior year net income of $136 million, which was largely impacted by transaction related and non-recurring expenses, and reported net loss was $1.15 per share
  • Adjusted combined net income of $212 million, representing a $29 million increase over prior year and adjusted combined diluted EPS was $1.22, a $0.17 increase over prior year

Russ Becker, APi Group's President and Chief Executive Officer said, "Our organic revenue growth and increasing margin profile reflects the continued shift in our business towards more profitable, recurring service opportunities while maintaining a strong adjusted EBITDA margin of 10.3%."

"Facing the worldwide shock wave of COVID-19 has brought out the best in APi's culture and our leadership organization. I need and want to thank each of our employees for their sacrifices. They have put APi first. The safety, health and well-being of all our employees remains paramount, and we will continue to be proactive in taking measures that we expect to help protect our business and all of our constituencies."

APi Co-Chairman James E. Lillie added, "We continue to be encouraged by the long-term opportunities that lie ahead for the business. Since joining forces with the APi leadership team we have made progress as planned on all of the short-term milestones and objectives for the Company. The financial results for 2019 speak to the strength of APi's operating model and the team's focus on driving higher margin growth as well as our ability to generate cash and run the business with a strong balance sheet. We believe we are prepared to seize opportunities as we move through 2020 and continue to execute on our long-term goals for the business."

Conference Call

APi Group will host a webcast/dial-in conference call to discuss its 2019 financial results at 8:30 a.m. (Eastern Time) on Wednesday, April 8, 2020. Participants on the call will include Russ Becker, President and Chief Executive Officer; Tom Lydon, Chief Financial Officer; James E. Lillie and Sir Martin E. Franklin, Co-Chairmen.

To listen to the call by telephone, please dial 833-721-2905 or 929-517-9835 and provide Conference ID 2764874. 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/2253890/5C1738E2B85521CA6F22DD67A0557E64

A replay of the call will be available shortly after completion of the live call on the webcast or by telephone, 855-859-2056 or 404-537-3406.

About APi

APi Group is a market-leading business services provider of life safety, specialty and industrial services in over 200 locations, primarily in North America. APi Group provides statutorily mandated 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 https://www.apigroupinc.com/.

Investor Relations Inquiries:

Olivia Walton
Vice President of Investor Relations
+1 814-312-3981
email: [email protected]

Media Contact:

Liz Cohen
Kekst CNC
+1 212-521-4845
[email protected]

 

Forward-Looking Statements and Disclaimers
This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, issue, subscribe for, sell or otherwise dispose of any securities, nor any solicitation of any offer to purchase, otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any securities. The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

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 ability of the Company to meet the eligibility criteria and effect a registration under the Securities Act of its securities, a listing of its securities on the New York Stock Exchange, its domestication and the timing for such registration, listing and domestication; (ii) the Company's positioning regarding its future business plans and long-term goals; (iii) the Company's strategies for each of its segments and the opportunities in the industries the Company serves; (iv) the impact of the Company's planned divestiture of two subsidiaries in its Industrial Services segment; (v) certain expected 2020 financial results and (vi) the impacts of the COVID-19 pandemic on the future operating and financial performance of the Company, the Company's plans and strategies to adapt and respond to the pandemic and the expected impact of those plans and strategies. 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, and on the global economy generally; (ii) the ability to recognize the anticipated benefits of the acquisition and of the Company to take advantage of strategic opportunities; (iii) the limited liquidity and trading of the Company's securities; (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. Nothing in this announcement constitutes or should be construed as constituting a profit forecast. This announcement contains inside information as defined in article 7 of the Market Abuse Regulation (EU) No 596/2014.

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 and includes a reconciliation of these non-U.S. GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. 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:

  • The Company's management believes that "adjusted" net revenues, "adjusted" gross margin, "adjusted" SG&A expense, "adjusted" operating income (loss), "adjusted" earnings per share, "adjusted" interest and "adjusted" tax rates, which exclude business transformation and other expenses for the integration of acquired businesses, the impact and results of two subsidiaries in the Company's Industrial Services segment which the Company has classified as assets held-for-sale as of December 31, 2019, and one-time and other events such as impairment charges, share-based compensation, transaction and other costs related to acquisitions, amortization of intangible assets associated with acquisitions, and certain tax benefits from 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 also presents changes in organic net revenues to provide a more complete understanding of underlying revenue trends by providing net revenues on a consistent basis as it excludes the impacts of significant acquisitions, planned or completed divestitures, and changes in foreign currency from year-over-year comparisons.
  • 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"). 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.
  • The Company presents non-U.S. GAAP financial measures on a combined basis to illustrate the impact of the combined Predecessor and Successor periods as a result of the APi Acquisition. The Company believes that these combined measures are useful in understanding the overall operating performance of the combined business during 2019 as compared to the performance in the prior year period and provide a more complete picture of the Company's results after factoring in its current debt and capitalization structure.

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.

 

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



 For the three months ended December 31, 


2019


2018


 (Successor) 


 (Predecessor) 

Net revenues

$

985


$

992

Cost of revenues

787


772

Gross profit

198


220

Selling, general and administrative expenses

336


207

Impairment of goodwill, intangibles and long-lived assets

-


-

Operating income (loss)

(138)


13

Interest expense, net

16


8

Investment income and other, net

(6)


4

Income (loss) before income tax provision

(148)


1

Income tax provision

2


6

Net loss

$

(150)


$

(5)

Loss per ordinary share




Basic

$

(0.89)


 NM 

Weighted average shares outstanding




Basic

169.4


 NM 





 * NM - NOT MEANINGFUL 




 

APi Group Corporation

Condensed Consolidated Statements of Operations (GAAP)

(Amounts in millions, except per share data)

(Unaudited)



 For the year ended December 31, 2019 


 For the year ended December 31, 2018 



 Period from 




 Year ended 

 January 1, 2019 to 


 Year ended 


 December 31, 2019 

 September 30, 2019 


 December 31, 2018 


 (Successor) 

 (Predecessor) 


 (Predecessor) 

Net revenues

$

985

$

3,107


$

3,728

Cost of revenues

787

2,503


2,941

Gross profit

198

604


787

Selling, general and administrative expenses

359

490


625

Impairment of goodwill, intangibles and long-lived assets

-

12


-

Operating income (loss)

(161)

102


162

Investment income and other, net

15

20


22

Other (income) expense, net

(25)

(11)


(6)

Income (loss) before income tax provision

(151)

93


146

Income tax provision

2

7


10

Net income (loss) 

$

(153)

$

86


$

136

Loss per ordinary share





Basic and diluted

$

(1.15)

 NM 


 NM 

Weighted average shares outstanding





Basic and diluted

133.1

 NM 


 NM 






 * NM - NOT MEANINGFUL 





 

APi Group Corporation

Condensed Consolidated Balance Sheets (GAAP)

(Amounts in millions)

(Unaudited)



 December 31, 2019 


 December 31, 2018 





Assets

 (Successor) 


 (Predecessor) 

Current assets:




Cash and cash equivalents

$

256


$

54

Accounts receivable, net

730


765

Inventories, net

58


56

Contract assets

245


240

Prepaid expenses and other current assets

33


27

Assets held for sale

20


-

Total current assets

1,342


1,142

Property, plant and equipment, net

402


328

Operating lease right of use assets

105


-

Goodwill

980


320

Intangible assets, net

1,121


204

Other assets

61


47

Total assets

$

4,011


$

2,041

Liabilities and Shareholders' Equity




Current liabilities:




Short-term debt and current portion of long-term debt

$

19


$

295

Accounts payable

156


174

Other accrued liabilities

355


327

Deferred consideration

73


-

Contract liabilities

193


203

Operating and finance leases

27


-

Total current liabilities

823


999

Long-term debt, less current portion

1,171


305

Deferred income taxes

23


-

Operating and finance leases

95


-

Other noncurrent liabilities

142


104

Total liabilities

2,254


1,408

Total shareholders' equity

1,757


633

Total liabilities and shareholders' equity

$

4,011


$

2,041

 

 

APi Group Corporation

Condensed Consolidated Statements of Cash Flows (GAAP)

(Amounts in millions)

(Unaudited)



For the years ended 



 Period from 




 Year ended 

 January 1, 2019 to 


 Year ended 


 December 31, 2019 

 September 30, 2019 


 December 31, 2018 


 (Successor) 

 (Predecessor) 


 (Predecessor) 

Cash flows from operating activities:





Net income (loss) as reported

$

(153)

$

86


$

136

Adjustments to reconcile net income (loss) to net cash provided by operating activities:





Depreciation and amortization

69

78


109

Impairment of goodwill, intangibles and long-lived assets

-

12


-

Deferred taxes

(2)

1


-

Share-based compensation expense

156

35


3

Other, net

(2)

-


(1)

Changes in operating assets and liabilities, net of effects of business acquisitions

82

(67)


(135)

Net cash provided by operating activities

150

145


112

Cash flows from investing activities:





Acquisitions, net of cash acquired

(2,565)

(6)


(234)

Purchases of property and equipment

(11)

(53)


(74)

Proceeds from sales of property and equipment

5

7


5

Advances (payments) on notes receivable, net

27

1


3

Proceeds of marketable securities, net

816

-


-

Net cash used in investing activities

(1,728)

(51)


(300)

Cash flows from financing activities:





Proceeds from issuance of long-term borrowings and revolving credit line

1,214

76


315

Payments on long-term borrowings

-

(17)


(12)

Deferred financing costs paid

(24)

-


(1)

Payments of acquisition-related contingent consideration

(2)

(16)


(25)

Proceeds from issuance of ordinary shares and warrant exercise

210

-


-

Distributions paid

-

(53)


(74)

Net cash provided by (used in) financing activities

1,398

(10)


203

Effect of foreign currency exchange rate change on cash and cash equivalents

(1)

-


(2)

Net increase (decrease) in cash and cash equivalents

(181)

84


13

Cash and cash equivalents at beginning of period

437

54


41

Cash and cash equivalents at end of period

$

256

$

138


$

54

 

 

APi Group Corporation

Adjusted Condensed Consolidated Statements of Operations (non-GAAP)

For the Three Months Ended December 31, 2019 and 2018

 (Amounts in millions, except per share data)

(Unaudited)



 For the three months ended December 31, 2019 


 For the three months ended December 31, 2018 


 AS REPORTED 




 AS ADJUSTED 


 AS REPORTED 




 AS ADJUSTED 


 Three months ended 




 Three months ended 


 Three months ended 




 Three months ended 


 December 31, 2019 

 Adjustments 



 December 31, 2019 


 December 31, 2018 

 Adjustments 



 December 31, 2018 


 (Successor) 




 (Successor) 


 (Predecessor) 




 (Predecessor) 

Net revenues

$

985

$

(59)


 (a) 

$

926


$

992

$

(75)


 (a) 

$

917

Cost of revenues

787

(56)


 (a) 

709


772

(69)


 (a) 

703



(22)


 (b) 








Gross profit

198

19



217


220

(6)



214

Selling, general and administrative expenses

336

(5)


 (a) 

131


207

(6)


 (a) 

132



(29)


 (b) 




(11)


 (b) 




(156)


 (c)  




(58)


 (d) 




(15)


 (d)  








Operating income (loss)

(138)

224



86


13

69



82

Interest expense, net

16

-



16


8

8


 (e) 

16

Other (income) expense, net

(6)

-



(6)


4

-



4

Income (loss) before income tax provision

(148)

224



76


1

61



62

Income tax provision

2

13


 (f) 

15


6

6


 (f) 

12

Net income (loss)

$

(150)

$

211



$

61


$

(5)

$

55



$

50













Earnings (loss) per share












Basic and diluted

$

(0.89)

 NM 



$

0.35


 NM 

 NM 



$

0.29

Weighted average shares outstanding












Basic and diluted

169.4

4.5


 (h) 

173.9


 NM 

173.9


 (i) 

173.9













 * NM - NOT MEANINGFUL 












Notes:


(a) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

(b)

Adjustment to reflect the addback of amortization expense related to intangibles assets.

(c)

Adjustment to reflect the elimination of non-cash, share-based compensation costs, primarily including $155 million for the Founder Preferred Shares dividend rights.

(d)

Adjustment to reflect the elimination of the following non-recurring costs in 2019: $5 million of costs related to business process transformation and public company registration, listing and compliance and $10 million of potential and completed acquisition-related costs, and elimination of the following non-recurring costs in 2018: $33 million of contingent consideration related to acquired businesses and $25 million of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition.

(e) 

Adjustment to reflect an increase in interest expense of $14 million related to the $1.2 billion of Term Loan at a rate of 4.29% issued in connection with the APi Acquisition and $2 million related to amortization of debt issuance costs and commitment fees, offset by elimination of $8 million of interest expense related to the Predecessor's Term Loan and Revolving Credit Facility.

(f) 

Adjustment to reflect the tax effect of adjustments and a restatement of the Company's tax expense to the Company's adjusted effective tax rate of 20% (taking into consideration the approximately $350 million tax asset acquired with the APi Acquisition and including the period from January 1 through September 30, 2019 for both Successor and Predecessor).

(g) 

Not used.

(h)

Adjustment to reflect the diluted weighted average shares outstanding following the APi Acquisition and includes the dilutive impact associated with the deemed conversion of Founder Preferred Shares and restricted stock units.

(i) 

Adjustment to reflect the adjusted, diluted weighted average shares outstanding as if the APi Acquisition had occurred on January 1, 2018. Excludes 64.5 million warrants outstanding, which are exercisable at a price of $11.50 per share for a total of 21.5 million ordinary shares.

 

 

APi Group Corporation

Adjusted Condensed Consolidated Statements of Operations (non-GAAP)

For the Year Ended December 31, 2019

 (Amounts in millions, except per share data)

(Unaudited)



 AS REPORTED 

 AS REPORTED 





 AS ADJUSTED 



 Period from 







 Year ended 

 January 1, 2019 to 

 Year ended 




 Year Ended 


 December 31, 2019 

 September 30, 2019 

 December 31, 2019 

 Adjustments 



 December 31, 2019 


 (Successor) 

 (Predecessor) 

 (Combined) 




 (Combined) 

Net revenues

$

985

$

3,107

$

4,092

$

(290)


 (a) 

$

3,802

Cost of revenues

787

2,503

3,290

(283)


 (a) 

3,007





(22)


 (b) 

(22)

Gross profit

198

604

802

15



817

Selling, general and administrative expenses

359

490

849

(33)


 (a) 

509





(54)


 (b) 






(193)


 (c) 






(60)


 (d) 


Impairment of goodwill, intangibles and other assets

-

12

12

(12)


 (e) 


Operating income (loss)

(161)

102

(59)

367



308

Interest expense, net

15

20

35

24


 (f) 

59

Other (income) expense, net

(25)

(11)

(36)

20


 (g) 

(16)

Income (loss) before income tax provision

(151)

93

(58)

323



265

Income tax provision

2

7

9

44


 (h) 

53

Net income (loss) 

$

(153)

$

86

$

(67)

$

279



$

212

Earnings (loss) per share








Diluted

$

(1.15)

 NM 

$

(0.50)

 NM 



$

1.22

Weighted average shares outstanding








Diluted

133.1

 NM 

133.1

40.5


 (i) 

173.6









 * NM - NOT MEANINGFUL 








Notes:


(a)

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

(b)

Adjustment to reflect the addback of amortization expense related to intangibles assets.

(c) 

Adjustment to reflect the elimination of non-cash, share-based compensation costs, primarily including $155 million for the Founder Preferred Shares dividend rights in 2019 and equity-based compensation related to prior ownership.

(d) 

Adjustment to reflect the elimination of the following non-recurring costs: $17 million of costs related to business process transformation and public company registration, listing and compliance, $18 million of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition, and $25 million of potential and completed acquisition-related costs.

(e) 

Adjustment to reflect the elimination of non-cash impairment charges related to goodwill and intangibles attributable to one of the Predecessor's acquired business during the period from January 1, 2019 to September 30, 2019.

(f) 

Adjustment to reflect an increase in interest expense of $38 million related to the $1.2 billion of Term Loan at a rate of 4.29% issued in connection with the  APi Acquisition and $5 million related to amortization of debt issuance costs and commitment fees, offset by elimination of $19 million of interest expense related to the Predecessor's Term Loan and Revolving Credit Facility.

(g)

Adjustment to reflect the elimination of APG investment income prior to the APi Acquisition that is not expected to recur. Cash from these investments was used to fund a portion of the cash consideration for the APi Acquisition.

(h)

Adjustment to reflect the tax effect of adjustments and a restatement of the Company's tax expense to the Company's adjusted effective tax rate of 20% (taking into consideration the approximately $350 million tax asset acquired with the APi Acquisition and including the period from January 1 through September 30, 2019 for both Successor and Predecessor).

(i) 

Adjustment to reflect the inclusion of 4 million Founder Preferred Shares, convertible to common on a 1:1 basis and the full year impact of 48.5 million shares issued in connection with the APi Acquisition. Excludes 64.5 million warrants outstanding, which are exercisable at a price of $11.50 per share for a total of 21.5 million ordinary shares.


 

 

APi Group Corporation

Adjusted Condensed Consolidated Statements of Operations (non-GAAP)

For the Year Ended December 31, 2018

 (Amounts in millions, except per share data)

(Unaudited)




 For the year ended December 31, 2018 


 AS REPORTED 




 AS ADJUSTED 


 Year ended 




 Year ended 


 December 31, 2018 

 Adjustments 



 December 31, 2018 


 (Predecessor) 




 (Predecessor) 

Net revenues

$

3,728

$

(229)


 (a) 

$

3,499

Cost of revenues

2,941

(211)


 (a) 

2,730

Gross profit

787

(18)



769

Selling, general and administrative expenses

625

(15)


 (a) 

489



(47)


 (b) 




(74)


 (d) 


Operating income (loss)

162

118



280

Interest expense, net

22

35


 (f) 

57

Other (income) expense, net

(6)

-



(6)

Income (loss) before income tax provision

146

83



229

Income tax provision

10

36


 (h) 

46

Net income (loss)

$

136

$

47



$

183

Earnings (loss) per share






Diluted

 NM 

 NM 



$

1.05

Weighted average shares outstanding






Diluted

 NM 

173.6


 (i) 

173.6







 * NM - NOT MEANINGFUL 






Notes:


(a)

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

(b) 

Adjustment to reflect the addback of amortization expense related to intangibles assets.

(c) 

Not used.

(d) 

Adjustment to reflect the elimination of the following non-recurring costs: $10 million of costs related to non-recurring operational matters, $30 million of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition, and $34 million of potential and completed acquisition-related costs.

(e)

Not used.

(f) 

Adjustment to reflect an increase in interest expense of $51 million related to the $1.2 billion of Term Loan at a rate of 4.29% issued in connection with the APi Acquisition and $6 million related to amortization of debt issuance costs and commitment fees, offset by elimination of $22 million of interest expense related to the Predecessor's Term Loan and Revolving Credit Facility.

(g) 

Not used.

(h) 

Adjustment to reflect the tax effect of adjustments and a restatement of the Company's tax expense to the Company's adjusted effective tax rate of 20% (taking into consideration the approximately $350 million tax asset acquired with the APi Acquisition and including the period from January 1 through September 30, 2019 for both Successor and Predecessor).

(i) 

Adjustment to reflect the adjusted, diluted weighted average shares outstanding as if the APi Acquisition had occurred on January 1, 2018. Excludes 64.5 million warrants outstanding, which are exercisable at a price of $11.50 per share for a total of 21.5 million ordinary shares.

 

 

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 


 For the years ended 








 Period from 










 Year ended 

 January 1, 2019 to 

 Year ended 


 Year ended 



 December 31, 2019 


 December 31, 2018 


 December 31, 2019 

 September 30, 2019 

 December 31, 2019 


 December 31, 2018 



 (Successor) 


 (Predecessor) 


 (Successor) 

 (Predecessor) 

 (Combined) 


 (Predecessor) 

Net income (loss) as reported


$

(150)


$

(5)


$

(153)

$

86

$

(67)


$

136

Adjustments to reconcile to net income (loss)











Interest expense, net


16


8


15

20

35


22

Income tax provision


2


6


2

7

9


10

Depreciation and amortization


69


33


69

78

147


109

EBITDA


$

(63)


$

42


$

(67)

$

191

$

124


$

277

Adjustments to reconcile EBITDA to adjusted EBITDA:











Businesses classified as held-for-sale

(a)

1


(1)


1

23

24


(7)

Impairment of goodwill, intangibles and long-lived assets

(b)

-


-


-

12

12


-

Share-based compensation costs

(c)

156


4


156

37

193


4

Potential and completed acquisitions expenses

(d)

10


33


21

4

25


34

Expenses related to prior ownership

(e)

-


21


-

18

18


36

Public company registration, listing and compliance

(f)

5


-


17

-

17


-

Investment income

(g)

-


-


(20)

-

(20)


-

Adjusted EBITDA


$

109


$

99


$

108

$

285

$

393


$

344












Adjusted net revenues


$

926


$

917




$

3,802


$

3,499

Adjusted EBITDA as a percentage of adjusted net revenues

11.8%


10.8%




10.3%


9.8%

Notes:


(a) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

(b)

Adjustment to reflect the elimination of non-cash impairment charges related to goodwill and intangibles attributable to one of the Predecessor's acquired business during the period from January 1, 2019 to September 30, 2019.

(c) 

Adjustment to reflect the elimination of non-cash, share-based compensation costs, primarily including $155 million for the Founder Preferred Shares dividend rights in 2019 and equity-based compensation related to prior ownership.

(d) 

Adjustment to reflect the elimination of contingent consideration related to acquired businesses, transaction expenses associated with the APi Acquisition and other potential and completed acquisition-related costs.

(e) 

Adjustment to reflect the elimination of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition.

(f) 

Adjustment to reflect the elimination of costs relating to public company registration, listing and compliance.

(g) 

Adjustment to reflect the elimination of APG investment income prior to the APi Acquisition that is not expected to recur. Cash from these investments was used to fund a portion of the cash consideration for the APi Acquisition.

 

 

APi Group Corporation

Adjusted Segment Financial Information (non-GAAP)

(Amounts in millions)

(Unaudited)



 For the three months ended 


 For the years ended 


 AS ADJUSTED 


 AS ADJUSTED 


 AS ADJUSTED 


 AS ADJUSTED 


 December 31, 2019 


 December 31, 2018 


 December 31, 2019 


 December 31, 2018 









Safety Services








Adjusted net revenues

$

435


$

435


$

1,777


$

1,705

Adjusted gross profit

135


134


533


499

Adjusted EBITDA

59


53


233


202









Adjusted gross profit as a percentage of adjusted net revenues

31.0%


30.8%


30.0%


29.3%

Adjusted EBITDA as a percentage of adjusted net revenues

13.6%


12.2%


13.1%


11.8%









Specialty Services








Adjusted net revenues

$

386


$

334


$

1,493


$

1,359

Adjusted gross profit

70


61


238


219

Adjusted EBITDA

50


38


174


146









Adjusted gross profit as a percentage of adjusted net revenues

18.1%


18.3%


15.9%


16.1%

Adjusted EBITDA as a percentage of adjusted net revenues

13.0%


11.4%


11.7%


10.7%









Industrial Services (a)








Adjusted net revenues

$

108


$

152


$

547


$

494

Adjusted gross profit

12


19


46


51

Adjusted EBITDA

12


15


36


38









Adjusted gross profit as a percentage of adjusted net revenues

11.1%


12.5%


8.4%


10.3%

Adjusted EBITDA as a percentage of adjusted net revenues

11.1%


9.9%


6.6%


7.7%









Corporate and Eliminations








Adjusted net revenues

$

(3)


$

(4)


$

(15)


$

(59)

Adjusted EBITDA

(12)


(7)


(50)


(42)









Adjusted EBITDA as a percentage of adjusted net revenues

NM


NM


NM


NM









Total Consolidated (a)








Adjusted net revenues

$

926


$

917


$

3,802


$

3,499

Adjusted gross profit

217


214


817


769

Adjusted EBITDA

109


99


393


344









Adjusted gross profit as a percentage of adjusted net revenues

23.4%


23.3%


21.5%


22.0%

Adjusted EBITDA as a percentage of adjusted net revenues

11.8%


10.8%


10.3%


9.8%









 * NM - NOT MEANINGFUL 








Notes:


(a) 

Adjusted financial information reflects the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

 

 

APi Group Corporation

Adjusted Segment Financial Information (non-GAAP)

Reconciliations of GAAP to Non-GAAP Financial Measures

(Amounts in millions)

(Unaudited)




 For the three months ended 


 For the years ended 








 Period from 










 Year ended 

 January 1, 2019 to 

 Year ended 


 Year ended 



 December 31, 2019 


 December 31, 2018 


 December 31, 2019 

 September 30, 2019 

 December 31, 2019 


 December 31, 2018 



 (Successor) 


 (Predecessor) 


 (Successor) 

 (Predecessor) 

 (Combined) 


 (Predecessor) 

Safety Services











Safety Services EBITDA


$

59


$

48


$

59

$

170

$

229


$

197

Adjustments to reconcile EBITDA to adjusted EBITDA:










Share-based compensation costs

(a)

-


-


-

2

2


-

Expenses related to prior ownership

(b)






2

2


-

Potential and completed acquisitions expenses

(d)

-


5


-

-

-


5

Safety Services adjusted EBITDA


$

59


$

53


$

59

$

174

$

233


$

202

Specialty Services











Specialty Services EBITDA


$

50


$

18


$

50

$

111

$

161


$

125

Adjustments to reconcile EBITDA to adjusted EBITDA:










Impairment of goodwill, intangibles and long-lived assets

(c)

-


-


-

12

12


-

Potential and completed acquisitions expenses

(d)

-


20


-

-

-


21

Expenses related to prior ownership

(b)

-


-


-

1

1


-

Specialty Services adjusted EBITDA


$

50


$

38


$

50

$

124

$

174


$

146

Industrial Services











Industrial Services EBITDA


$

9


$

8


$

9

$

21

$

30


$

37

Adjustments to reconcile EBITDA to adjusted EBITDA:










Businesses classified as held-for-sale

(e)

1


(1)


1

4

5


(7)

Potential and completed acquisitions expenses

(d)

2


8


2

(1)

1


8

Industrial Services adjusted EBITDA


$

12


$

15


$

12

$

24

$

36


$

38

Notes:


(a)

Adjustment to reflect the elimination of non-cash, equity-based compensation related to prior ownership.

(b)

Adjustment to reflect the elimination of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition.

(c) 

Adjustment to reflect the elimination of non-cash impairment charges related to goodwill and intangibles attributable to one of the Predecessor's business during the period from January 1, 2019 to September 30, 2019.

(d) 

Adjustment to reflect the elimination of potential and completed acquisition-related costs.

(e) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

 

 

APi Group Corporation

Adjusted Segment Financial Information (non-GAAP)

Reconciliations of GAAP to Non-GAAP Financial Measures

(Amounts in millions)

(Unaudited)



 For the year ended December 31, 2019 


 AS REPORTED 

 AS REPORTED 






 AS ADJUSTED 


 Year ended 

 January 1, 2019 to 

 Year ended 





 Year ended 


 December 31, 2019 

 September 30, 2019 

 December 31, 2019 


 Adjustments 



 December 31, 2019 

Safety Services

 (Successor) 

 (Predecessor) 

 (Combined) 





 (Combined) 

Net revenues

$                       435

$                    1,342

$                    1,777


$                            -



$                    1,777

Cost of revenues

310

944

1,254


(10)


 (a) 

1,244

Gross profit

$                       125

$                       398

$                       523


$                         10



$                       533

Gross profit as a percentage of net revenues

28.7%

29.7%

29.4%





30.0%










Specialty Services









Net revenues

$                       386

$                    1,107

$                    1,493


$                            -



$                    1,493

Cost of revenues

324

939

1,263


(8)


 (a) 

1,255

Gross profit

$                         62

$                       168

$                       230


$                           8



$                       238

Gross profit as a percentage of net revenues

16.1%

15.2%

15.4%





15.9%










Industrial Services









Net revenues

$                       167

$                       670

$                       837


$                     (290)


 (b) 

$                       547

Cost of revenues

156

632

788


(283)


 (b) 

501






(4)


 (a) 


Gross profit

$                         11

$                         38

$                         49


$                         (3)



$                         46

Gross profit as a percentage of net revenues

6.6%

5.7%

5.9%





8.4%










Corporate and Eliminations









Net revenues

$                         (3)

$                       (12)

$                       (15)


$                            -



$                       (15)

Cost of revenues

(3)

(12)

(15)


-



(15)










Total Consolidated









Net revenues

$                       985

$                    3,107

$                    4,092


$                     (290)


 (b) 

$                    3,802

Cost of revenues

787

2,503

3,290


(283)


 (b) 

2,985






(22)


 (a) 


Gross profit

$                       198

$                       604

$                       802


$                         15



$                       817

Gross profit as a percentage of net revenues

20.1%

19.4%

19.6%





21.5%

Notes:


(a) 

Adjustment to reflect the addback of amortization expense related to the backlog intangibles assets.

(b) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

 

 

APi Group Corporation

Adjusted Segment Financial Information (non-GAAP)

Reconciliations of GAAP to Non-GAAP Financial Measures

For the Year Ended December 31, 2018

 (Amounts in millions)

(Unaudited)



 For the year ended December 31, 2018 


 AS REPORTED 





 AS ADJUSTED 


 Year ended 





 Year ended 


 December 31, 2018 


 Adjustments 



 December 31, 2018 

Safety Services

 (Predecessor) 





 (Predecessor) 

Net revenues

$                             1,705


-



$                             1,705

Cost of revenues

1,206


-



1,206

Gross profit

$                                499


-



$                                499

Gross profit as a percentage of net revenues

29.3%





29.3%








Specialty Services







Net revenues

$                             1,359


-



$                             1,359

Cost of revenues

1,140


-



1,140

Gross profit

$                                219


-



$                                219

Gross profit as a percentage of net revenues

16.1%





16.1%








Industrial Services







Net revenues

$                                723


(229)


 (a) 

$                                494

Cost of revenues

654


(211)


 (a) 

443

Gross profit

$                                  69


(18)



$                                  51

Gross profit as a percentage of net revenues

9.5%





10.3%








Corporate and Eliminations







Net revenues

$                                (59)


-



$                                (59)

Cost of revenues

(59)


-



(59)








Total Consolidated







Net revenues

$                             3,728


(229)


 (a) 

$                             3,499

Cost of revenues

2,941


(211)


 (a) 

2,730

Gross profit

$                                787


$                                (18)



$                                769

Gross profit as a percentage of net revenues

21.1%





22.0%

Notes:


(a) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

 

 

APi Group Corporation

Adjusted Segment Financial Information (non-GAAP)

Reconciliations of GAAP to Non-GAAP Financial Measures

For the Three Months Ended December 31, 2019 and 2018

 (Amounts in millions)

(Unaudited)



 For the three months ended December 31, 2019 


 For the three months ended December 31, 2018 


 AS REPORTED 




 AS ADJUSTED 


 AS REPORTED 




 AS ADJUSTED 


 Three months ended 




 Three months ended 


 Three months ended 




 Three months ended 


 December 31, 2019 

 Adjustments 



 December 31, 2019 


 December 31, 2018 

 Adjustments 



 December 31, 2018 


 (Successor) 




 (Successor) 


 (Predecessor) 




 (Predecessor) 

Safety Services












Net revenues

$                    435

$                         -



$                    435


$                    435

$                         -



$                    435

Cost of revenues

310

(10)


 (a) 

300


301

-



301

Gross profit

$                    125

$                      10



$                    135


$                    134

$                         -



$                    134

Gross profit as a percentage of net revenues

28.7%




31.0%


30.8%




30.8%













Specialty Services












Net revenues

$                    386

$                         -



$                    386


$                    334

$                         -



$                    334

Cost of revenues

324

(8)


 (a) 

316


273

-



273

Gross profit

$                      62

$                        8



$                      70


$                      61

$                         -



$                      61

Gross profit as a percentage of net revenues

16.1%




18.1%


18.3%




18.3%













Industrial Services












Net revenues

$                    167

$                    (59)


 (b) 

$                    108


$                    227

$                    (75)


 (b) 

$                    152

Cost of revenues

156

(56)


 (b) 

96


202

(69)


 (b) 

133



(4)


 (a) 



-

-



-

Gross profit

$                      11

$                        1



$                      12


$                      25

$                      (6)



$                      19

Gross profit as a percentage of net revenues

6.6%




11.1%


11.0%




12.5%













Corporate and Eliminations












Net revenues

$                      (3)

$                         -



$                      (3)


$                      (4)

$                         -



$                      (4)

Cost of revenues

(3)

-



(3)


(4)

-



(4)













Total Consolidated












Net revenues

$                    985

$                    (59)


 (b) 

$                    926


$                    992

$                    (75)


 (b) 

$                    917

Cost of revenues

787

(22)


 (a) 

709


772

(69)


 (b) 

703



(56)


 (b) 








Gross profit

$                    198

$                      19



$                    217


$                    220

$                      (6)



$                    214

Gross profit as a percentage of net revenues

20.1%




23.4%


22.2%




23.3%

Notes:


(a) 

Adjustment to reflect the addback of amortization expense related to the backlog intangibles assets.

(b) 

Adjustment to reflect the elimination of amounts related to businesses classified as held-for-sale as of December 31, 2019.

 

 

APi Group Corporation

Reconciliations of GAAP to Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Free Cash Flow and Adjusted Free Cash Flow and Conversion (non-GAAP)

For the Year Ended December 31, 2019

 (Amounts in millions)

(Unaudited)




 For the year ended December 31,  




 Period from 




 Year ended 

 January 1, 2019 to 

 Year ended 



 December 31, 2019 

 September 30, 2019 

 December 31, 2019 



 (Successor) 

 (Predecessor) 

 (Combined) 

Net cash provided by operating activities (As Reported)


$

150

$

145

$

295

Less: Purchases of property and equipment


(11)

(53)

(64)

Free cash flow


$

139

$

92

$

231

Add: Cash payments related to following items:





Potential and completed acquisitions expenses

(a)

19

5

24

Expenses related to prior ownership

(b)

-

18

18

Public company registration, listing and compliance

(c)

17

-

17

Settlement of Predecessor stock options

(d)

62

-

62

Adjusted free cash flow


$

237

$

115

$

352






Adjusted EBITDA


$

108

$

285

$

393

Adjusted free cash flow conversion




90%

Notes:


(a) 

Adjustment to reflect the elimination of potential and completed acquisition-related costs.

(b)

Adjustment to reflect the elimination of charges and costs under prior ownership not expected to continue or recur following the APi Acquisition.

(c)  

Adjustment to reflect the elimination of costs relating to public company registration, listing and compliance.

(d) 

Adjustment to eliminate the cash settlement of equity compensation paid by prior ownership at the closing of the APi Acquisition.

 

 

APi Group Corporation

Reconciliations of GAAP to Non-GAAP Financial Measures

Organic Revenue Growth (non-GAAP)

 (Unaudited)



 For the year ended December 31, 2019 


 (Combined) 


AS REPORTED

Acquisitions




Net revenue

and planned 

Foreign currency

Organic net


growth

divestitures, net (a)

translation (b)

revenue growth (c)

Safety Services

4.2%

0.0%

(0.3%)

4.5%

Specialty Services

9.9%

2.9%

-

7.0%

Industrial Services

15.8%

5.1%

(0.2%)

10.9%

Combined consolidated

9.8%

2.2%

(0.1%)

7.7%

Notes:


(a) 

Acquisitions include pre-acquisition net revenues in their respective years of acquisition.  Planned divestitures exclude net revenues for both 2019 and 2018 for the Company's businesses held for sale.

(b) 

Represents the effect of foreign currency on 2019 reported net revenues, calculated as the difference between the 2019 reported net revenues and the 2019 local currency net revenues converted at the prior year average monthly exchange rates (excluding acquisitions and divestitures).

(c) 

Organic net revenue growth provides a consistent basis for year-over-year comparisons in net revenues as it excludes the impacts of acquisitions, planned and completed divestitures, and the impact of changes due to foreign currency translation.

 

Cision View original content:http://www.prnewswire.com/news-releases/api-group-reports-fourth-quarter-and-full-year-2019-financial-results-301037417.html

SOURCE APi Group Corporation