3. APi Group Corp. (NYSE:APG)
Market Cap as of October 22: $5.91 billion
Number of Hedge Fund Holders: 52
APi Group Corp. (NYSE:APG) is a leading provider of safety services focused on end-to-end integrated occupancy systems (fire protection services, HVAC, and entry systems), including design, installation, inspection, and service. It serves a diverse customer base in the energy, industrial, and commercial sectors.
In Q2 2024, the company’s revenue dropped 2.32% year-over-year, still recording a strong total amount of $1.73 billion. Specialty Services revenues decreased by 18.4%. Organic revenue declined 15.3%, driven by a 21% decline in project revenues. Service revenues were down 10%.
Despite the decline, it has strategically focused on more profitable projects. This initiative has been particularly successful in the international HVAC and Specialty Services businesses. While federal funding, permitting, and customer delays contributed to the reduction in project revenue this quarter, these are temporary setbacks. The impacted revenue is expected to contribute meaningfully to the full-year 2024 revenue.
It completed 6 bolt-on acquisitions, including Elevated Facility Services, and is progressing towards its long-term value creation goals. It anticipates a positive impact on margins from its business mix and is optimistic about achieving an adjusted EBITDA margin of 13% or more by 2025. It aims to reduce net leverage below 2.5x by the end of the year while maintaining its M&A strategy. Additionally, the company has ~$400 million remaining under its share repurchase authorization.
The company’s strategic focus on the data center market, coupled with its disciplined acquisition strategy and commitment to margin expansion, positions it for robust growth in the second half of 2024 and beyond. APi Group Corp.’s (NYSE:APG) deep industry relationships, regulatory protections, and ability to serve large-scale clients provide a solid foundation for long-term success.
Greystone Capital Management stated the following regarding APi Group Corporation (NYSE:APG) in its Q2 2024 investor letter:
“APi Group Corporation (NYSE:APG) has been in and out of client portfolios since inception (mostly in) and has earned our trust by carrying over the founding culture of the business on its route to becoming public, while increasing their focus on growing the more durable and higher margin fire safety services segment.
The start of 2024 has been a busy one for APG with the recent retirement of their Series B Preferred stock, along with the acquisition of Elevated Facility Services Group, a leading provider of contractually based maintenance and repair services for elevator and escalator brands. I was thrilled to see this deal announcement given the revenue and EBITDA contributions, but also because management likely sees similar opportunities to grow non-discretionary recurring revenue by winning incremental service work…” (Click here to read the full text)
