APi (APG) - 2025 Q1 - Quarterly Report

Financial Performance - Net revenues for Q1 2025 were $1,719 million, an increase of$118 million or 7.4% compared to $1,601 million in Q1 2024[175] - Gross profit for Q1 2025 was$542 million, up $50 million or 10.2$492 million in Q1 2024, with a gross margin of 31.5%[177] - Operating income decreased by $16 million or 16.0$84 million in Q1 2025 from $100 million in Q1 2024[175] - Income before income taxes decreased by$17 million or 27.0% to $46 million in Q1 2025 from$63 million in Q1 2024[175] - Net income for Q1 2025 was $35 million, a decrease of$10 million or 22.2% compared to $45 million in Q1 2024[175] - Adjusted EBITDA for Q1 2025 was$193 million, an increase of $18 million or 10.3$175 million in Q1 2024, with adjusted EBITDA as a percentage of net revenues rising to 11.2% from 10.9%[184] Expenses and Costs - Selling, general, and administrative expenses increased by $66 million or 16.8$458 million in Q1 2025 compared to 392 million in Q1 2024[175] - SG&A expenses for Q1 2025 were 458 million, up $66 million or 16.8$392 million in Q1 2024, with SG&A as a percentage of net revenues increasing to 26.6% from 24.5%[179] - Interest expense, net increased by $4 million or 11.8$38 million in Q1 2025 compared to $34 million in Q1 2024[175] - The Chubb restructuring program is expected to incur approximately$125 million in restructuring and other costs by the end of fiscal year 2025[159] Segment Performance - Safety Services net revenues increased by $150 million or 13.4$1,267 million in Q1 2025, driven by acquisitions, pricing improvements, and growth in inspection and service revenues[187] - Specialty Services net revenues decreased by $33 million or 6.8$453 million in Q1 2025, attributed to lower project and service revenues and adverse weather impacts[189] - Safety Services segment earnings as a percentage of net revenues improved to 15.7% in Q1 2025 from 14.8% in Q1 2024, driven by disciplined customer selection and pricing improvements[188] - Specialty Services segment earnings as a percentage of net revenues decreased to 6.4% in Q1 2025 from 8.8% in Q1 2024, due to lower fixed cost absorption from decreased revenues[190] Liquidity and Capital Structure - Total liquidity as of March 31, 2025, was $954 million, consisting of$460 million in cash and cash equivalents and $494 million available under the Revolving Credit Facility[199] - The company had a first lien net leverage ratio of 1.7:1.0 as of March 31, 2025, in compliance with its credit agreement covenants[218] - As of March 31, 2025, the remaining principal amount outstanding on the 2021 Term Loan was$2,157 million, with no amounts outstanding under the Revolving Credit Facility[219] - The company issued 12,650,000 shares of common stock in a public offering, raising approximately $458 million net of expenses, to be used for general corporate purposes[203] Share Repurchase and Capital Expenditures - The company repurchased 16,260,160 shares of common stock for approximately$600 million during 2024, and an additional 2,063,715 shares for approximately $75 million in the first quarter of 2025[206][211] - The company authorized a new share repurchase program in April 2025 to purchase up to$1,000 million of common stock, replacing the previous program announced in 2024[207] - The company’s capital expenditures are typically less than 1.5% of annual net revenues, indicating a focus on maintaining efficient operations[227] Foreign Operations and Currency Exposure - Revenues from foreign operations accounted for approximately 37% of consolidated net revenues for the three months ended March 31, 2025[229] - Foreign currency translation gains totaled approximately $59 million for the three months ended March 31, 2025, compared to a loss of$(42) million for the same period in 2024[230] - The company has entered into cross-currency swaps and foreign currency forward contracts to manage foreign currency exposure related to intercompany loans[230] Risk Factors and Internal Controls - The company is exposed to supply chain risks, including price fluctuations of materials such as copper and steel, which could impact profitability on fixed-price contracts[233] - Significant declines in market prices for oil and gas may lead to project delays or cancellations, affecting overall profitability[234] - Management has concluded that internal controls over financial reporting were effective as of March 31, 2025[238] - There have been no changes in internal control over financial reporting that materially affected the company during the quarter ended March 31, 2025[239] - The company has not experienced material changes in risk factors since the last report[240]