APi Group Corp (APG, Financial) released its Q3 2023 financial results on November 2, 2023. The company reported record net revenues of $5.2 billion for the first nine months of the year, representing approximately 7% reported and organic growth. The company's Q3 net income was $54 million, marking a 93% year-over-year growth. Adjusted EBITDA for the quarter was $224 million, representing a margin expansion of 190 basis points.
Financial Highlights
APG's Q3 2023 consolidated results showed a net revenue growth of 2.8%, driven by strong service growth across both segments. The company's reported and adjusted gross margin increased by 320 and 270 basis points respectively, compared to the prior year period. This was due to continued price increases and growth in higher margin service revenue. The company's reported net income was $54 million and diluted EPS was $0.15. Adjusted net income was $130 million and adjusted diluted EPS was $0.48, representing a $0.11 increase from the prior year period.
Segment Results
The Safety Services segment reported a net revenue growth of 5.5%, driven by double-digit core inspection revenue growth. The segment's reported and adjusted gross margin increased by 340 and 260 basis points respectively, due to continued price increases and improved business mix. The Specialty Services segment, however, reported a decline in net revenue by 3.6% due to disciplined customer and project selection and customer project delays. Despite this, the segment's reported and adjusted gross margin increased by 240 and 220 basis points respectively.
Guidance
APG revised its full-year net revenue and adjusted EBITDA guidance. The company now expects net revenues of $6,900 to $6,950 million, down from $7,015 to $7,075 million. However, the adjusted EBITDA guidance was raised to $775 to $785 million, up from $765 to $785 million. The company also announced its Q4 2023 guidance, expecting net revenues of $1,730 to $1,780 million and adjusted EBITDA of $200 to $210 million.
APG's President and CEO, Russ Becker, expressed satisfaction with the company's financial performance, attributing the success to the company's focus on delivering financial targets and driving margin expansion across the business. He also expressed confidence in the company's ability to continue evolving into a lower capex, asset-light business focused on high-margin services.
APG's Co-Chair, James E. Lillie, also highlighted the company's strategy of focusing on growing service-based recurring revenue while slowing revenue growth in select businesses through improved project selection. He noted that this strategy is yielding the desired results, improving margins while reducing capital spending and driving free cash flow generation.
Explore the complete 8-K earnings release (here) from APi Group Corp for further details.
