Executive Summary / Key Takeaways

• APi Group is strategically transforming into a resilient, high-margin business services provider, targeting over $10 billion in net revenues and a 16%+ adjusted EBITDA margin by 2028, underpinned by its "inspection and service first" strategy.
• The company demonstrated robust financial performance in Q3 2025, with net revenues increasing 14.2% and adjusted EBITDA margin reaching 13.5%, driven by strong organic growth in its Safety Services segment and a return to growth in Specialty Services.
• Significant investments in AI-enabled operational technologies and a disciplined M&A strategy, including 11 bolt-on acquisitions year-to-date in Q3 2025, are enhancing efficiency, expanding market reach, and solidifying its competitive moat.
• A strong balance sheet, characterized by a net debt to adjusted EBITDA ratio of approximately 2.0x and robust free cash flow generation (88% conversion in Q3 2025), provides substantial capital for continued strategic growth and shareholder returns.
• APi Group's diversified, statutorily-driven service portfolio and highly variable cost structure position it favorably to withstand economic fluctuations and competitive pressures in fragmented markets.

A Foundation of Safety and Service in a Dynamic Market

APi Group Corporation (APG) stands as a global leader in business services, specializing in fire and life safety, security, elevator and escalator, and specialty services. With a substantial recurring revenue base and operations spanning over 500 locations across more than 20 countries, APG has cultivated a robust market presence. The company's overarching strategy, encapsulated by its "inspection and service first" philosophy, is designed to build a resilient business model that prioritizes long-term, predictable revenue streams. This approach is further supported by a purpose-driven leadership culture and a disciplined framework for capital allocation, all aimed at achieving ambitious long-term financial targets, including over $10 billion in net revenues and a 16%+ adjusted EBITDA margin by 2028.

The industry landscape in which APG operates is characterized by fragmentation, particularly in its core safety services, where competition often comes from numerous small local operators. However, broader trends such as reindustrialization, the proliferation of data centers, and advancements in AI are creating significant demand for specialized infrastructure and safety solutions. APG's strategic positioning allows it to capitalize on these trends, especially in complex, large-scale projects where its geographic footprint and specialized expertise provide a distinct advantage.

A History of Strategic Evolution and Value Creation

Since becoming a publicly traded entity on the New York Stock Exchange in October 2019, APi Group has demonstrated a remarkable trajectory of growth and strategic evolution. The company successfully navigated the unprecedented challenges of the global pandemic in 2020, showcasing its operational agility and ability to expand margins even in uncertain economic conditions. Over the past five years, APi Group has more than doubled its net revenues, a testament to its effective growth strategy.

A pivotal moment in APG's history was the 2021 acquisition of Chubb, a significant transaction that substantially expanded its international footprint. Following this, APi Group initiated a multi-year restructuring program for Chubb in 2022, which concluded in the second quarter of 2025, successfully realizing over $90 million of its $125 million value capture target. This operational optimization has been crucial in transforming the international business, which began 2025 with fewer than 5 loss-making branches, a significant improvement from over 50 at the time of acquisition.

In 2024, APi Group strategically entered the over $10 billion domestic elevator and escalator services market through the acquisition of Elevated Facility Services Group. This move aligns with the company's long-term goal of building a $1 billion-plus platform in this highly recurring, non-discretionary market. The company has also engaged in selective business pruning, divesting lower-margin customer accounts and a small business in its Specialty segment that did not align with its financial targets. Further enhancing its strategic focus, APi Group realigned its segments in January 2025, moving the HVAC business to Specialty Services to create a more pure-play life safety business within Safety Services.

Technological Edge and Operational Innovation

APi Group's commitment to operational excellence is deeply intertwined with its strategic investments in technology and innovation. The company is actively piloting and deploying a suite of AI-enabled tools designed to empower its 29,000 leaders, enhance efficiency, and improve customer service, directly contributing to its growth and margin expansion targets.

Key technological differentiators include:

• APi Echo: This tool allows field leaders to record conversations and summarize key notes without needing to leave the field or remove safety gloves, significantly accelerating the speed of doing business.
• One Code: Providing quick access to situation-relevant fire protection codes and detailed information, One Code saves valuable time for estimators, designers, and field leaders.
• Connected Glasses: These enable remote experts to guide field leaders in real-time, leading to quicker service delivery and a higher first-time fix rate for customers.
• AI-enabled Predictive Tool: This innovative tool flags customers with a high attrition risk, allowing local teams to take proactive steps to engage and strengthen specific customer relationships.
• Global Step Safety Platform: Launched last year, this platform allows team members to document and manage safety activities from mobile devices, establish safety standards, and provides leaders with better data and visibility into safety metrics, fostering continuous improvement.

Beyond these operational tools, APi Group is undertaking a significant three-year investment in systems and business enablement, including a new ERP system for its Safety Services segment. This initiative aims to equip branches and field leaders with modern tools and data to serve customers more efficiently and effectively. While 2025 is anticipated to be the peak year for spending on this system deployment, it is a foundational step towards scaling the business to its $10 billion revenue target and enhancing overall productivity. These technological advancements collectively form a critical component of APG's competitive moat, driving operational efficiency, improving safety, and strengthening customer relationships, all of which are vital for sustained financial performance and market positioning.

Financial Performance: A Trajectory of Growth and Profitability

APi Group's financial results for the third quarter and first nine months of 2025 underscore its successful execution of strategic initiatives. For the three months ended September 30, 2025, net revenues increased by 14.2% to $2.085 billion, with organic growth contributing approximately 10%. This growth was broadly driven by an increase in inspection, service, and monitoring (ISM) revenues, strong project activity, recent acquisitions, and effective pricing strategies. Adjusted gross margin expanded by 50 basis points to 31.5%, primarily due to disciplined customer and project selection and pricing improvements, partially offset by changes in business mix. Adjusted EBITDA margin for the quarter saw a 10 basis point increase to 13.5%, reflecting robust revenue growth and gross margin expansion, even with strategic investments to support future growth.

The Safety Services segment was a significant driver of this performance, reporting $1.403 billion in net revenues for Q3 2025, a 15.4% increase, with approximately 9% organic growth. This segment continued its impressive streak of double-digit inspection revenue growth in North America for the 21st consecutive quarter. Its segment earnings margin expanded by 40 basis points to 16.8%, benefiting from disciplined project selection and pricing. The Specialty Services segment also contributed positively, with $683 million in net revenues for Q3 2025, an 11.6% organic increase driven by strong project revenues. While its segment earnings margin decreased by 80 basis points to 11.9% due to increased project starts, mix, and material costs, management anticipates sequential margin expansion in Q4 2025 and into 2026 as these projects mature.

For the nine months ended September 30, 2025, APi Group reported net revenues of $5.794 billion, a 12.4% increase over the prior year. Net income for the period was $205 million, up 12%, and adjusted EBITDA reached $746 million, a 14.6% increase, resulting in an adjusted EBITDA margin of 12.9%.

APi Group's liquidity and capital resources remain robust. As of September 30, 2025, total liquidity stood at $1.299 billion, comprising $555 million in cash and cash equivalents and $744 million available under its expanded Revolving Credit Facility. The company's net debt to adjusted EBITDA ratio was approximately 2.0x, comfortably below its long-term target of 2.5x. This strong financial position is supported by consistent free cash flow generation, with adjusted free cash flow reaching $248 million in Q3 2025, representing an 88% conversion rate. Year-to-date, adjusted free cash flow totaled $434 million, and the company expects to achieve approximately 75% conversion for the full year 2025. This financial strength provides significant flexibility for strategic capital deployment, including disciplined M&A and opportunistic share repurchases, such as the $75 million (3.10 million shares) repurchased during the nine months ended September 30, 2025.

Competitive Arena: Differentiated Strengths in Fragmented Markets

APi Group operates in highly fragmented markets where competition often arises from numerous small, local operators. However, its scale, diversified service portfolio, and strategic focus provide significant competitive advantages against both local players and larger, more specialized competitors such as Quanta Services (PWR), MYR Group (MYRG), EMCOR Group (EME), and MasTec (MTZ).

APi Group's core competitive strengths, or "moats," include:

• Diverse Service Portfolio and Integrated Solutions: APG offers end-to-end integrated occupancy systems and specialized industrial plant services. This comprehensive approach, spanning fire protection, security, elevator services, HVAC, and infrastructure maintenance, fosters stronger customer loyalty and generates recurring revenue from integrated projects. This contrasts with Quanta Services, which focuses more on large-scale energy infrastructure, positioning APG with a unique value proposition in bundled safety services for commercial and industrial clients.
• Global Network and Regulatory Expertise: Operating in over 20 countries, APG leverages its global presence and deep understanding of regulatory environments to execute projects efficiently and mitigate risks in international markets. This broad reach and specialized knowledge can be an advantage over competitors like MYR Group, which may have a more concentrated focus on electrical infrastructure.
• Scale and Reach for Complex Projects: APG's capacity to handle large, complex projects, particularly in high-growth areas like data centers and advanced manufacturing, is a significant differentiator. As Russ Becker noted, "the size of some of these projects and the complexity of these projects creates opportunity for folks like us because there's only a handful of national players that can handle the Fire life safety on, say, a large data center project." This capability allows APG to secure contracts that smaller competitors cannot, and its geographic footprint enables it to serve projects in remote locations.
• Inspection-First Model: The company's strategic emphasis on recurring, statutorily mandated inspection and service work allows for more disciplined and selective engagement in project work. This approach often leads to higher-margin project opportunities derived from established customer relationships, differentiating it from firms that may primarily compete on price for project bids.
• Operational Technology: The deployment of AI-enabled tools and a new ERP system enhances APG's operational efficiency, safety, and customer service capabilities. These technological advancements provide a tangible edge in service delivery and project management, contributing to a stronger competitive position.

While APi Group excels in these areas, it acknowledges vulnerabilities, particularly in price-driven competition, where, as Russ Becker stated, "We don't do well when we just compete on price." The company's strategic response is to avoid such scenarios through disciplined project and customer selection. Compared to EMCOR Group, which also offers building systems integration, APG's focus on comprehensive industrial solutions and global reach provides a distinct competitive edge in recurring service contracts. Against MasTec, which specializes in communications and utility infrastructure, APG's emphasis on integrated safety and specialty services allows for stronger customer relationships through end-to-end maintenance.

Outlook and Growth Catalysts

APi Group's outlook for 2025 and its long-term 10/16/60+ financial targets reflect a confident and strategic growth trajectory. For the full year 2025, the company has raised its guidance, now expecting net revenues between $7.825 billion and $7.925 billion, representing 12% to 13% reported growth and 7% to 8% organic growth. Adjusted EBITDA is projected to be between $1.015 billion and $1.045 billion, implying approximately 15% growth at the midpoint and an adjusted EBITDA margin exceeding the 2025 goal of 13%. The adjusted free cash flow conversion is expected to remain strong at approximately 75%.

This increased guidance is driven by strong Q3 2025 performance, an improved outlook for the remainder of the year, and the impact of recent M&A activity. Management anticipates a strong fourth quarter, with mid- to upper single-digit organic revenue growth and the highest margin expansion of the year.

Looking further ahead to 2028, the 10/16/60+ framework sets ambitious targets: over $10 billion in net revenues (supported by consistent mid-single-digit organic growth), a 16%+ adjusted EBITDA margin, over 60% of revenues from inspection, service, and monitoring, and over $3 billion in cumulative adjusted free cash flow. Key growth catalysts include the continued expansion of the ISM business, a record backlog across both segments, and disciplined project selection in high-growth end markets such as data centers, semiconductors, advanced manufacturing, aviation, healthcare, and critical infrastructure. The company also plans to deploy approximately $250 million annually on bolt-on acquisitions, focusing on fire protection, electronic security, and the burgeoning elevator and escalator services platform.

Risks and Strategic Resilience

Despite a compelling growth story, APi Group faces several risks inherent in its industry. Economic and market volatility can impact customer capital and maintenance budgets. The company is also exposed to tariffs and fluctuating material costs, particularly for steel pipe, which could affect profitability on fixed-price contracts. Project delays and shortages of skilled labor also pose operational challenges.

However, APi Group has robust mitigation strategies in place. Its cost structure is highly variable, with 70% to 75% being flexible, allowing for rapid adjustments to economic slowdowns. The company proactively incorporates contractual provisions to pass on material cost increases resulting from tariffs. Furthermore, investments in AI and technology are aimed at enhancing labor productivity and scaling the business to address potential skilled labor shortages. The company's proven resilience during the 2020 pandemic, where it successfully flexed operations and expanded margins, provides confidence in its ability to navigate future macroeconomic challenges.

Conclusion

APi Group Corporation is executing a clear and compelling strategy to transform into a highly resilient, recurring revenue-driven business services powerhouse. Its "inspection and service first" philosophy, coupled with disciplined capital allocation and strategic investments in operational technology, is driving consistent organic growth and significant margin expansion. The company's strong Q3 2025 financial results, robust liquidity, and ambitious 10/16/60+ long-term targets underscore its potential for sustained value creation.

By leveraging its diversified service portfolio, global reach, and technological innovations, APi Group is effectively differentiating itself in fragmented markets and capitalizing on broad industry tailwinds. While risks such as economic volatility and material cost fluctuations persist, the company's adaptable cost structure and proactive mitigation strategies position it for continued success. For discerning investors, APi Group presents a compelling compounding story, built on a foundation of operational excellence and a clear roadmap for profitable growth.