APi Group Q4 2025 Earnings Results & Report

APi Group EPS Results

• Actual EPS: $0.44
• Consensus EPS: $0.40
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.51
• EPS Beat Rate: 7 of last 8 quarters

APi Group Revenue Results

• Actual Revenue: $2.12 billion
• Expected Revenue: $2.09 billion
• Beat/Miss: Beat by +$24.45 million
• YoY Revenue Growth: +13.80%

APi Group (NYSE:APG) is a provider of safety and specialty services for commercial, industrial and institutional customers. Its work includes the installation, inspection, maintenance and repair of systems and infrastructure used in buildings and industrial facilities.

The company’s services include fire protection and life-safety systems, security, heating and cooling, plumbing, electrical work, and other building and infrastructure services. APi Group delivers these offerings through a network of operating businesses and local brands.

APi Group traces its roots to a pipe installation business established in Minnesota in 1926. It serves customers primarily in North America and Europe. Russell Becker has served as the company’s president and chief executive officer.

APi Group Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: APi reported that it achieved its prior 13/60/80 targets for 2025 (revenue growth, margin, and free cash flow conversion) and set new long‑term targets of 10/16/60+ through 2028 (>$10B revenue, 16%+ adjusted EBITDA margin, 60%+ inspection/service/monitoring).
• Positive Sentiment: Record 2025 operating performance — full‑year net revenue of $7.9B, Q4 net revenue $2.12B (+13.8% YoY), Q4 adjusted EBITDA margin 13.9%, adjusted diluted EPS $0.44 (+29%), and record adjusted free cash flow of $836M (80% conversion).
• Positive Sentiment: 2026 guidance targets $8.4B–$8.6B in revenue (≈5% organic at midpoint), adjusted EBITDA $1.14B–$1.2B (13.8% margin at midpoint) and continued strong free cash flow conversion (~75% of EBITDA), implying further margin expansion.
• Positive Sentiment: M&A remains a strategic priority — APi deployed roughly $580M across 33 bolt‑ons (2023–2025), closed CertaSite in Feb‑2026, sees a robust pipeline including larger opportunities, and exits Q4 with conservative leverage (~1.6x net debt/EBITDA) to fund deals.
• Negative Sentiment: Management flagged sensitivity to project revenue mix — increasing exposure to data centers (≈5% of revenue in 2024 → ~8% in 2025 → ~10% expected in 2026) and a wide guidance range reflect dependence on project/backlog variability that could pressure results if demand softens.

Presentation

[Operator]

Good morning, ladies and gentlemen, welcome to APi Group's Q4 and full year 2025 financial results conference call. All participants are now in a listen-only mode until the question and answer session. We ask that all participants limit themselves to one question during the question and answer session. Please note, this call is being recorded. I will be standing by should you need any assistance. I will now turn the call over to Adam Fee, Vice President of Investor Relations at APi Group. Please go ahead.

[Adam Fee, VP of Investor Relations and Equity Capital Markets at APi Group]

Thank you. Good morning, everyone, thank you for joining our Q4 2025 earnings conference call. Joining me on the call today is Russ Becker, our President and CEO, and David Jackola, our Executive Vice President and Chief Financial Officer. Before we begin, I'd like to remind you that certain statements in the company's earnings press release and on this call are forward-looking statements, which are based on expectations, intentions, projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts. These statements are not a guarantee 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.

[Adam Fee, VP of Investor Relations and Equity Capital Markets at APi Group]

In our press release and filings with the SEC, we detail the material risks that may cause our future results to differ from our expectations. Our statements are as of today, February 25th, and we undertake no obligation to update any forward-looking statements we may make, except as required by law. As a reminder, we have posted a presentation detailing our Q4 financial performance on the Investor Relations page of our website. Our comments today will also include non-GAAP financial measures and other key reporting metrics. The reconciliation of and other information regarding these items can be found in our press release and our presentation. It is now my pleasure to turn the call over to Russ.

[Russ Becker, President and CEO at APi Group]

Thank you, Adam. Good morning, everyone. Thank you for taking the time to join our call this morning. I want to start by thanking Adam Fee for his leadership of our investor relations function over the last three years. Adam has done an excellent job building trust with the investment community, and we are excited to announce his transition into a finance leadership role within our elevator business. With this transition, Adam Walters, who previously served on our corporate development team, will take over leadership responsibilities of investor relations. We remain grateful for the hard work of our 29,000 leaders and their dedication to APi. The safety, health, and well-being of each of our leaders is our number one value.

[Russ Becker, President and CEO at APi Group]

We continue to prioritize investing in the men and the women in the field as human beings and aim to provide each of them with training, advancement opportunities, and leadership development. I'm proud to announce that APi has once again been recognized as a military-friendly employer for 2026. We remain committed to providing opportunities for veterans and their spouses to build careers and develop as leaders. Back in 2021, we introduced our long-term 13/60/80 shareholder value creation framework. Since then, 13/60/80 has been our North Star, and I'm proud of our team's relentless focus and dedication to delivering on these commitments. Over the last several years, our journey has been marked by meaningful progress. We grew revenues from $3.9 billion in 2021-$7.9 billion in 2025.

[Russ Becker, President and CEO at APi Group]

We increased our percentage of revenue coming from inspection, service, and monitoring from 40% in 2021-54% in 2025. We established a new adjacent vertical in the highly attractive elevator and escalator service market with the acquisition of Elevated. We accelerated our bolt-on M&A strategy by deploying approximately $580 million across 33 bolt-on acquisitions from 2023 through 2025. Notably, as it relates to our 13/60/80 targets, we ended the year with adjusted EBITDA margins at 13.2%, above our 13% target and significantly above our 2021 adjusted EBITDA margin of 10.3%.

[Russ Becker, President and CEO at APi Group]

Additionally, we ended 2025 with adjusted free cash flow conversion of 80%, right in line with our stated target of 80%, and well above our 2021 adjusted free cash flow conversion of 55%. Thank you to all of our teammates for helping us win and for their focus, discipline, and commitment that made these results possible. In 2021, we set ambitious financial targets, and through our collective teamwork and belief, we achieved these targets. This allowed us to set our new, ambitious, but achievable three-year long-term financial targets of 10/16/60+. I am grateful. Now, I will dive into our record 2025 full year results. The business continues to build momentum, delivering robust, top-line growth while expanding margins. We continue to have strong growth in inspection, service, and monitoring revenues. We capitalized on a robust project environment.

[Russ Becker, President and CEO at APi Group]

Finally, we continued to execute accretive bolt-on M&A at attractive multiples. For the year, net revenues increased by 13%, approximately 8% organically, with strong growth across both segments. In our Safety Services segment, revenues grew organically by approximately 7%, led by growth in inspection, service, and monitoring revenues. As expected, Specialty Services maintained the momentum and closed the year with strong growth, delivering 10% organic growth for the year. In line with our strategic initiatives, we continued to drive improvements in adjusted gross margin, which expanded 50 basis points for the year. The strong performance in gross margin led to our record full year 2025 adjusted EBITDA margin, representing margin expansion of 50 basis points.

[Russ Becker, President and CEO at APi Group]

We expect to see continued margin expansion in 2026 and beyond, largely driven by the same initiatives that we have been executing for the past several years, which include the following: consistent organic growth, improved inspection service and monitoring revenue mix, disciplined customer and project selection, pricing, branch and field optimization, procurement systems and scale, accretive M&A, and selective business pruning. As I like to say, we can always just be better. 2025 was another year of strong free cash flow, with record adjusted free cash flow of $836 million, representing 80% conversion on adjusted EBITDA. Our consistent free cash flow growth and the strength of our balance sheet provides flexibility to pursue value-enhancing capital deployment alternatives, including accretive M&A and opportunistic share repurchases.

[Russ Becker, President and CEO at APi Group]

In 2025, we continued to execute our M&A plan, completing 14 acquisitions and building on our long track record of integrating businesses and supplementing growth through M&A at attractive multiples. On February 2, 2026, we closed on the previously announced acquisition of CertaSite, an inspection-first provider of comprehensive fire and life safety services in the Midwest. We're already pursuing the additional opportunities created by this acquisition and welcome our new CertaSite team members to the APi family. Looking ahead, we are excited about the pipeline of M&A opportunities we see across fire-life safety, electronic security, elevator and escalator, and niche specialty services. Our team remains hard at work, prioritizing the most attractive opportunities. We will continue to focus on the quality of the business and importantly, on the culture, value, and fit. Our value proposition as a forever home continues to resonate with sellers.

[Russ Becker, President and CEO at APi Group]

I want to take a moment to recognize a significant milestone for our company. In 2026, APi Group will celebrate its 100-year anniversary, marking a century of commitment to our customers and an unwavering focus on the safety, health, and well-being of each of our leaders. As we reflect on our legacy and begin the next century of growth, we have much to be grateful for. A central part of our 100-year anniversary will be gratitude and giving back to the communities that have supported us along the way and contributed so meaningfully to our ability to win. I look forward to celebrating with our 29,000 leaders around the world. Entering 2026, we remain laser-focused on our new North Star, the 10/16/60+ financial targets we introduced in May at our Investor Day.

[Russ Becker, President and CEO at APi Group]

As a reminder, these targets are: $10 billion in net revenues by 2028, supported by consistent mid-single-digit organic growth, 16%+ adjusted EBITDA margin by 2028, 60%+ of our revenues from inspection, service, and monitoring over the long term, and $3 billion of cumulative adjusted free cash flow through 2028. I am proud of our team and the record financial results achieved in 2025. As we begin 2026, I have great confidence in our ability to continue to deliver strong organic growth, expand margins, and grow free cash flow by staying focused on investing in and caring about our people on a daily basis. I would now like to hand the call over to David to discuss our Q4 financial results and 2026 guidance in more detail. David?

[David Jackola, Executive Vice President and CFO at APi Group]

Thanks, Russ, good morning, everyone. Reported net revenues for the three months ended December 31st were $2.12 billion, a 13.8% increase compared to $1.86 billion in the prior year period. Organic growth of 11.1% was driven by continued growth in inspection, service, and monitoring revenues, strong growth in project revenues, and pricing improvements. Adjusted gross margin for the three months ended December 31st was 32.2%, representing a 110 basis point increase compared to the prior year period, driven by disciplined customer and project selection and pricing improvements, partially offset by project revenue mix. adjusted EBITDA increased by 21.9% for the three months ended December 31st, with adjusted EBITDA margin coming in at 13.9%, representing a 90 basis point increase compared to the prior year period.

[David Jackola, Executive Vice President and CFO at APi Group]

Growth in adjusted EBITDA was driven by strong revenue growth and adjusted gross margin expansion. Adjusted diluted earnings per share for the three months ended December 31st was $0.44, representing a $0.10 or 29.4% increase compared to the prior year period. The increase was driven by strong revenue growth, adjusted gross margin expansion, and a decrease in interest expense, partially offset by an increase in the share count. I will now discuss our results in more detail for the Safety Services segment. Safety Services reported net revenues for the three months ended December 31st of $1.42 billion, a 10.6% increase compared to $1.29 billion in the prior year period. Organic growth of 6.6% was driven by continued growth in inspection, service, and monitoring revenues, strong growth in project revenues, and pricing improvements.

[David Jackola, Executive Vice President and CFO at APi Group]

Adjusted gross margin for the three months ended December 31st was 37.7%, representing a 110 basis point increase compared to the prior year period, driven by disciplined customer and project selection, as well as pricing improvements, leading to margin expansion in inspection, service, and monitoring revenues, as well as project revenues. Segment earnings increased by 18% for the three months ended December 31st, and segment earnings margin was 17.5%, representing a 110 basis point increase compared to the prior year period, primarily due to adjusted gross margin expansion. I will now discuss our results in more detail for the Specialty Services segment.

[David Jackola, Executive Vice President and CFO at APi Group]

Specialty Services reported net revenues for the three months ended December 31st were $695 million, an increase of 20.7% compared to $576 million in the prior year period, driven by strong growth in project revenues. adjusted gross margin for the three months ended December 31st was 20.7%, representing a 190 basis point increase compared to the prior year period, driven by an increase in project opportunities that align with our disciplined customer and project selection criteria and improved leverage of fixed overhead costs. Segment earnings increased 40.7% for the three months ended December 31st, and segment earnings margin was 11.9%, representing a 170 basis point increase compared to the prior year period, primarily due to adjusted gross margin expansion.

[David Jackola, Executive Vice President and CFO at APi Group]

Turning to cash flow, we continue to focus on driving strong free cash flow conversion. For the three months ended December 31st, adjusted free cash flow came in at $402 million, up $95 million versus last year and representing an adjusted free cash flow conversion of 136%. The strong free cash flow in the Q4 drove adjusted free cash flow of $836 million for the full year 2025, up $168 million versus last year and representing a conversion rate of 80%. I want to reiterate what Russ said earlier and express my gratitude to all our leaders and teammates for their role in helping us execute and achieve our 80% free cash flow conversion target in 2025.

[David Jackola, Executive Vice President and CFO at APi Group]

Our teams understand the importance of free cash flow generation, our performance and progress reflect that focus. At the end of the Q4, our net debt to adjusted EBITDA ratio was approximately 1.6x, significantly below our long-term target of 2.5x-3x, allowing us the flexibility to pursue value-enhancing capital deployment opportunities in 2026. As a reminder, our long-term capital deployment priorities are: maintaining net leverage at stated long-term targets, strategic M&A at attractive multiples, and opportunistic share repurchases. Turning to 2026 guidance. Based on current foreign exchange rates and acquisitions closed to date, we expect full year reported net revenues of $8.4 billion-$8.6 billion, representing organic growth of 5% at the midpoint.

[David Jackola, Executive Vice President and CFO at APi Group]

We expect our organic revenue growth for the year to align with our long-term growth algorithm, which, as a reminder, is mid to high single-digit growth in inspection, service, and monitoring revenues, and low to mid single-digit growth in project revenues. We expect full year adjusted EBITDA of $1.14 billion-$1.2 billion, which represents adjusted EBITDA growth of approximately 8%-13% on a fixed currency basis and adjusted EBITDA margin of 13.8% at the midpoint, up 60 basis points versus 2025. In 2026, we expect to maintain momentum in terms of delivering free cash flow growth, with 2026 adjusted free cash flow conversion expected to be at or above 115% of adjusted net income, which is equivalent to approximately 75% of adjusted EBITDA.

[David Jackola, Executive Vice President and CFO at APi Group]

As a reminder, the Q1 is traditionally our weakest quarter for free cash flow conversion due to seasonality. Turning to the Q1, we expect reported net revenues of $1.875 billion-$1.975 billion, representing organic revenue growth of 4%-10%. We expect Q1 adjusted EBITDA of $225 million-$235 million, which represents adjusted EBITDA growth of approximately 12%-17% on a fixed currency basis and adjusted EBITDA margin of 11.9% at the midpoint, which is up 70 basis points versus last year. For 2026, we anticipate interest expense to be approximately $130 million, depreciation to be approximately $90 million, capital expenditures to be approximately $105 million, and our adjusted effective tax rate to be approximately 23%.

[David Jackola, Executive Vice President and CFO at APi Group]

We expect corporate expenses to be approximately $35 million per quarter, with some timing variability throughout the year, and our adjusted diluted weighted average share count to be approximately 441 for the year. Lastly, we anticipate systems and business enablement expense for 2026, which we adjust out of our financial results to be consistent with 2025. I will now turn the call back over to Russ.

[Russ Becker, President and CEO at APi Group]

Thanks, David. Our record results in 2025 once again demonstrate the strength of our recurring revenue services-focused business model and the ongoing execution of our strategy by our teammates. We begin 2026 with positive momentum and strong demand for our services across our global platform. We remain relentlessly focused on growing inspection, service, and monitoring revenues. That, combined with the accelerating growth in our backlog and robust M&A pipeline, provides a solid foundation for strong organic and inorganic growth in 2026, while continuing to expand our margins. We remain focused on creating sustainable shareholder value by delivering on our 10/16/60+ targets. With that, I would now like to turn the call back over to the operator and open the call up for Q&A.

[Operator]

We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tim Mulrooney with William Blair. Your line is open. Please go ahead.

[Tim Mulrooney, Partner and Group Head of Global Services at William Blair]

Russ, David, good morning.

[Russ Becker, President and CEO at APi Group]

Hey, Tim. How are you?

[David Jackola, Executive Vice President and CFO at APi Group]

How are you?

[Tim Mulrooney, Partner and Group Head of Global Services at William Blair]

Doing well, thanks. Yeah, just wanted to say congrats to Adam, too, on moving on to the next chapter. That was great to hear. Well deserved. My question is just a really high-level one. You know, your revenue guidance, it's calling for 6% growth at the low end of the range and 9% growth at the high end. Can you just talk about what kind of market condition assumptions that you're embedding in that low end versus that high end or various swing factors that you're embedding to achieving the different ends of that range, please? Thank you.

[Russ Becker, President and CEO at APi Group]

Yeah. I can start, and David can add any color if he would like to, Tim. You know, we continue to communicate, I guess, in message to our businesses, that we want to see high single-digit growth in the inspection service and monitoring component of their business and, you know, low single-digit growth in the project piece of their business. We do happen to have a tailwind. You know, certain end markets are providing, you know, excellent project opportunities, you know, which is evidenced by our backlog, you know, which is, you know, north of $4 billion and continues to be very strong, robust, and healthy. Probably the most important aspect of it is that it's very, very healthy.

[Russ Becker, President and CEO at APi Group]

We are seeing a tailwind that's coming from it, and not all end markets are the same. I talk about end markets, you know, a lot, and I talk about end markets a lot with our business leaders. You know, obviously, the talk of the town is data centers, and, you know, we're reaping some of the benefit of the robust data center market, both on the inspection and service side, but also on the project side. Advanced manufacturing continues to be, you know, robust. Semiconductors providing some opportunities, healthcare, critical infrastructure. We are seeing some strong tailwinds in certain end markets on the project side of our business that we're taking advantage of.

[David Jackola, Executive Vice President and CFO at APi Group]

The only thing I would add to that, Tim, and I'll reiterate a point that maybe I made during my comments, was the 54% of our revenue that comes from recurring inspection service and monitoring that we expect to grow in our long-term organic growth algorithm, of mid-to-mid-upper single digits. Then it's gonna be the project environment that could be from the low end to the high end of the range.

[Tim Mulrooney, Partner and Group Head of Global Services at William Blair]

Okay. Thank you.

[Operator]

Your next question comes from the line of David Paige with RBC Capital Markets. Your line is open. Please go ahead.

[David Paige, Equity Research AVP at RBC Capital Markets]

Hi, good morning. Thank you for taking my question. Congrats, Adam. Well deserved. I was wondering maybe you could do the same for adjusted EBITDA margins.

[David Paige, Equity Research AVP at RBC Capital Markets]

... Is there anything that would push you? I know the range is that, you know, wide, but anything that would push you to the upper end or maybe even beat at the end, if you thought so? Maybe I know it's early days, but lay in how you're thinking about the recent changes to tariffs, if any. Thank you.

[Russ Becker, President and CEO at APi Group]

I would start by saying we don't expect to see any change in tariffs materially impacting our business, good or bad. We just continue to lead our business, you know, regardless of, you know, kind of what's happening external of all things APi and focusing on the things that we can control. You know, obviously, we need to make sure that we're pricing our work appropriately on all aspects of our business, not just the project side of our business, but the inspection service and monitoring component of our business.

[Russ Becker, President and CEO at APi Group]

We do expect to see, you know, enhanced gross margins on some of our project-related work just because of the demands and the technical difficulty associated with some of this, especially data center work, that's happening in remote locations, the size of the projects, and the fact that you have to, you know, move, you know, people around to, you know, in an effort to be able to execute on this work. We think that that's gonna provide us with opportunities to expand our, our gross margins on that type of work. You know, we just need to continue to pull on the same levers that we've been pulling since for a long time. I mean, this goes back even before 13/60/80.

[Russ Becker, President and CEO at APi Group]

we just need to continue to pull on the same levers and execute and pound on the same drum, and we will continue to expand our margins as we continue to grow.

[David Paige, Equity Research AVP at RBC Capital Markets]

Thank you.

[Operator]

Your next question comes from the line of Jonathan Tanwanteng with CJS Securities. Your line is open. Please go ahead.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Hi, thank you for taking my questions, and congrats to Adam also. I was wondering if you could expand on the data center opportunity. How much is that contributing to your growth in 2026? Can you also talk about if the incremental margin there is higher than the corporate average? Russ, you mentioned more, you know, technical expertise there. Just wondering if that also corresponds to the margin uplift.

[David Jackola, Executive Vice President and CFO at APi Group]

Yeah, I'll be happy to start that and let Russ comment if he'd like it at the end. Data centers are an area that's contributing to our growth in 2025 and 2026. It's an opportunity that we're taking advantage of, but we're not over-committing to. I'd say in 2024, data centers represented approximately 5% of our overall revenue. When we ended 2025, it was approximately 8% of our overall revenue, and we expect data centers to comprise about 10% of our total revenue in 2026. It's contributing a couple percentage points of growth in both 2025 and 2026, but we've still got plenty of really good organic growth momentum in other parts of the business as well.

[David Jackola, Executive Vice President and CFO at APi Group]

It's a contributor, but it is not the primary driver of our growth in 2025 and 2026. I'd say the margin profile of the data center work is really, really strong. There's not many players in the market that can do the work that we're doing in data centers, and that's allowing us to leverage our relationships, propose a strong gross margin, and execute against that. I don't know if there's anything else you'd like to add, Russ?

[Russ Becker, President and CEO at APi Group]

No, I think you hit it.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Okay, great. Thank you. I was wondering if you could just talk about the M&A pipeline going forward. I see that you closed four in Q1. Just how does that pipeline look, going forward, just from a tuck-in perspective, and then also the opportunity for larger deals?

[Russ Becker, President and CEO at APi Group]

Well, you may be under. We're wondering who's gonna be the first person to ask more than one question, Jonathan. Anyways, the M&A pipeline remains robust, and we continue to see a lot of really good opportunities, you know, in the space, you know, especially in North America. In fire, life, safety, security space, we've really got some nice opportunities in the elevator and escalator space that we, you know, plan to execute on here in the Q2. The good part is that we're really have opened up the aperture to the international business and have some fantastic businesses that we're doing work on right now.

[Russ Becker, President and CEO at APi Group]

You know, with the, with the idea that we're going to, you know, be able to get these businesses closed, you know, in the Q2 and Q3 and, you know, bring some of those folks into the APi family. There's a just a tremendous amount of opportunities, and I think in my remarks, I talked about the idea of APi being a forever home for the sellers of these business. It continues to resonate with people, and it allows us to, you know, buy these businesses at, you know, the right price and which is a really good thing. Yeah, we're really excited, you know, about, you know, the, our pipeline for 2026 and beyond.

[Jonathan Tanwanteng, Managing Director at CJS Securities]

Got it. Thanks, Russ.

[Operator]

Your next question comes from the line of Julian Mitchell with Barclays. Your line is open. Please go ahead.

[Julian Mitchell, Equity Research Analyst of US Industrials at Barclays]

Hi, good morning. Just circle back on the top line, if there was any color you could give us on, how remaining performance obligations or backlog growth, you know, how's that been developing? I suppose, you know, allied to that, looking at the Q1-

[Julian Mitchell, Equity Research Analyst of US Industrials at Barclays]

... Guy, there's a very, very wide range on the organic sales growth. Maybe help us understand kind of how you see the two segments' growth in the Q1, please.

[David Jackola, Executive Vice President and CFO at APi Group]

Sure. I think you snuck in a two-part question as well, maybe. On the backlog, I'd say the backlog as we exited 2025 and into 2026 is healthy. It's up across both two segments, across a variety of end markets, and as Russ said in his comments, it's healthy, which means it's at good margin and work that we feel really good about. In terms of Q1 and how that plays out across the segments, you know, I'd say the safety segment is gonna be a lot of the same. I'll refer back to our organic growth algorithm. On the service side, we target mid to upper single-digit growth in that segment in service, and our Q1 outlook reflects that.

[David Jackola, Executive Vice President and CFO at APi Group]

On the project side, we reflect low to mid. Our outlook reflects that as well, but it's probably closer to the mid. In the Specialty Services segment, we're comparing against a down Q1 of 2025, so I'd expect growth to be in the double digit revenue growth in the Q1 of 2026. Does that help?

[Julian Mitchell, Equity Research Analyst of US Industrials at Barclays]

That's perfect. Thanks a lot, David.

[Operator]

Your next question comes from the line of Curtis Nagle with BofA Securities. Your line is open. Please go ahead.

[Curtis Nagle, Senior U.S. SMid Cap Internet Analyst at BofA Securities]

Great. Thanks so much for taking the question. Maybe if we just quickly go back to some of the trends in data center services revenue. You know, how much of a pickup are you hopefully starting to see in, you know, from project work converting to service and, you know, hopefully that turning into, you know, a long-standing, durable base of, you know, high margin, press?

[Russ Becker, President and CEO at APi Group]

Well, it for sure will. I mean, you know, the project-related work that we're doing in the data center space is because of the relationships that have been established, you know, on the existing campuses of a lot of these hyperscalers, where we're already doing the inspection service and monitoring. You know, the data center, the project side of it, you know, the size of these projects is significantly higher than what we've seen in the past. You're not going to see. You know, we're gonna win the inspection service and monitoring. There's no, I don't have any question about that, as we continue to move forward on some of this project work.

[Russ Becker, President and CEO at APi Group]

You know, the size of the inspection service and monitoring account is significantly lower than the size of the project-related work. You just need to continue to chip away and build your inspection service and monitoring business, which we continue to do. We continue to see really, really good growth, you know, on the inspection side of our business. And if you recall, you know, we generate someplace between $3 and $4 worth of service work for every dollar of inspection revenue that we generate, and that continues to grow at that high single-digit clip. You know, the playbook is working, and we continue to execute on it, and we continue to see really good results.

[Russ Becker, President and CEO at APi Group]

It's no different than in the data center space as the rest of our business.

[Curtis Nagle, Senior U.S. SMid Cap Internet Analyst at BofA Securities]

Okay, thank you.

[Operator]

Your next question comes from the line of Andrew Kaplowitz with Citi. Your line is open. Please go ahead.

[Andrew Kaplowitz, Managing Director at Citi]

Hey, Russ. Hey, guys. How are you doing? Adam, congratulations.

[Adam Fee, VP of Investor Relations and Equity Capital Markets at APi Group]

Thank you.

[Andrew Kaplowitz, Managing Director at Citi]

Russ-

[Russ Becker, President and CEO at APi Group]

This is a going away party for Andrew.

[Andrew Kaplowitz, Managing Director at Citi]

There you go.

[Russ Becker, President and CEO at APi Group]

Anyway.

[Andrew Kaplowitz, Managing Director at Citi]

Russ.

[Russ Becker, President and CEO at APi Group]

Good morning, Andy.

[Andrew Kaplowitz, Managing Director at Citi]

Good morning. This might be a bit nitpicky, but maybe you already said it. Like, on inspection, like, I think you last quarter had, you know, over 20 quarters in a row of double digits. Did it still grow double digits this quarter? If not, is it just kind of the law of large numbers starting to, you know, get to that segment and still couldn't grow high single digits plus? How is core inflation?

[Russ Becker, President and CEO at APi Group]

We knew somebody was gonna pick up on that. It did grow double-digit, but we are moving to the point where it's gonna be the law of large numbers. You know, it'll be tougher and tougher to comp against that. We continue to see really good growth in our inspection business. Yes, it did grow double digits. You're just gonna hear us, we're not gonna talk about it as prevalently.

[Andrew Kaplowitz, Managing Director at Citi]

Sounds good. Thank you.

[Operator]

Your next question comes from the line of Tomohiko Sano with JPMorgan. Your line is open. Please go ahead.

[Tomohiko Sano, Managing Director at JPMorgan Chase & Co.]

Hi, everyone. First of all, congratulations on your hundredth anniversary.

[Russ Becker, President and CEO at APi Group]

Thanks, Tomohiko. Good morning.

[Tomohiko Sano, Managing Director at JPMorgan Chase & Co.]

Thank you. Your 2026 guidance implies an about 60 basis points improvement in adjusted EBITDA margin at the midpoint. What other major drivers behind this margin expansions? As you work toward to, 16%+ margin target for 2028, which initiatives do you plan to further strength or newly implement, please?

[Russ Becker, President and CEO at APi Group]

Hey, good question, Tomohiko. Thanks for being on this morning. Yeah, you're right about 60 basis points at the midpoint. You know, really, the initiatives that are going to get us to 16% by the end of 2028 are the initiatives that got us to 13% by 2025. You know, I'd say, as we get deeper into the 2028 period, we're going to start to see increased benefits from our investments that we're making as an organization in procurement, as well as some of the benefits from the system and technology investment that we're currently undergoing in our North America business. Accretive M&A will play a part in that as well.

[Tomohiko Sano, Managing Director at JPMorgan Chase & Co.]

Thank you.

[Operator]

Your next question comes from the line of Jasper Bibb with Truist Securities. Your line is open. Please go ahead.

[Jasper Bibb, VP Equity Research at Truist Securities]

Good morning, guys. Just wanted to ask about the assumption for project demand and your guidance. I think you're projecting low to mid singles growth for the year, but cited a lot of strength in project pipeline, data center, et cetera. I guess just how would you frame the assumption of low to mid-single-digit versus a strong pipeline there? Is that conservatism because it's earlier in the year? Is it harder comps? Just any detail there would be helpful. Thanks.

[Russ Becker, President and CEO at APi Group]

I think you nailed all three of the reasons around that as a midpoint of our guide. I mean, we guide a guide in a range for a reason. Those are three very good reasons to start where we did for the year.

[Jasper Bibb, VP Equity Research at Truist Securities]

Fair enough. Thank you very much.

[Russ Becker, President and CEO at APi Group]

Thanks, Jasper.

[Operator]

Your next question comes from the line of Andrew Wittmann with Baird. Your line is open. Please go ahead.

[Andrew Wittmann, Managing Director and Senior Research Analyst at Baird]

Yeah, thanks. A lot of my questions have been asked and answered. I guess maybe, Russ, if you had to use the crystal ball a little bit, with the balance sheet here, you're pretty significantly below your ranges. That's a pretty big change. Like if you think about capital deployment in 2026, like, if you had to split up how it's going to go out and get invested, do you think that M&A is bigger than buyback or the other way around? I guess I'd want to just try to understand how much you think you can get done this year, given that you got a lot of capital here.

[Andrew Wittmann, Managing Director and Senior Research Analyst at Baird]

Do you think that maybe as a sub question to that one part question, is there something chunkier in here? I mean, you guys have had the history of doing some larger deals. You know, you haven't had a gigantic one for a year, but is this the year that comes back? Thank you.

[Russ Becker, President and CEO at APi Group]

I mean, we will. Good morning, and thanks, Andrew. I appreciate the thoughtfulness of your questions. We're always looking from an M&A perspective and doing work on, you know, what I guess you classified as chunkier transactions. We see some opportunity for sure, you know, in the life safety and security space, as well as the elevator and escalator space. We're doing work, you know, all the time. I would say, yes, you could expect to see us do something chunkier. Will it be Chubb? You know, I don't know. You know, we really haven't found anything that necessarily fits exactly what we're looking for, you know, that would be of that size and scale.

[Russ Becker, President and CEO at APi Group]

When you, when you describe chunky, if you're thinking about things like the size of, say, Elevated or, you know, even CertaSite, yeah, I think you're going to see us do, you know, be active, you know, in that, in that space. I would suggest that, you know, the priority would be M&A in front of share repurchases, especially with the performance of our stock, you know, over the last period of time. We for sure see opportunity in the M&A space that we're going to continue to dig in on and do some work.

[Andrew Wittmann, Managing Director and Senior Research Analyst at Baird]

Okay. Thank you very much.

[Operator]

Your next question comes from the line of Joshua Chan with UBS. Your line is open. Please go ahead.

[Joshua Chan, Executive Director and Equity Research Analyst at UBS]

Hi, good morning, Russ, David, and congratulations, Adam. I just wanted to ask about, you know, how firm do you see the project environment currently? I think the low end of your guide may assume a somewhat of a changing environment, I guess, as you go through the year. I just wanted to make sure that that's not what you're signaling or seeing and just kind of ask about, you know, the firmness of the environment. Thank you.

[Russ Becker, President and CEO at APi Group]

Yeah, well, I mean, I saw your print, that hit earlier, this morning, Joshua, in talking about, you know, organic growth in our Safety business. Like, it's really good. I mean, so both on the inspection and service side and on the project side. We expect it to remain positive and strong as we work our way through the year. We don't see anything that suggests that it's not going to continue to be strong and robust.

[Joshua Chan, Executive Director and Equity Research Analyst at UBS]

Okay. That's great to hear, and thanks for the color.

[Operator]

Your next question comes from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead.

[Stephanie Moore, SVP of Equity Research at Jefferies LLC]

Great. Good morning. Thanks, everybody. I wanted to ask maybe a bigger picture question here, especially based on, you know, what I think were very strong 2025 results across the board, but especially on the top line. I wanted to ask maybe this question in a different way. You know, I think given that the underlying industrial economy, based on, you know, most macro indicators that have suggested that 2025 was not a very great industrial year, but we are seeing some green shoots possibly to start 2026, notably with just given, you know, the PMI print for January and the like. I wanted you to maybe touch a little bit on kind of, one, how much exposure you think you have to kind of the near-term macro within the industrial economy?

[Stephanie Moore, SVP of Equity Research at Jefferies LLC]

Maybe asked another way, how insulated are you to that as well? Kind of a big picture question and trying to get a sense of, if the industrial economy does ultimately improve, how are you guys positioned? Thanks.

[Russ Becker, President and CEO at APi Group]

Well, I think you know what? You know, I'm not an economist, by any stretch of the mean, Stephanie. I think, we've hopefully, we've demonstrated, to the investment community the resilience, you know, in our business. You know, 54% of our revenue comes from inspection service and monitoring, that's gonna be there, you know, regardless of what's going on in the macro. You know, I feel like we've done, a nice job of leading the business through, you know, what you could argue is kind of a herky-jerky, economic environment, you know, over the last period of time.

[Russ Becker, President and CEO at APi Group]

I guess I'm maybe using too many words to get to the point where I feel like we're very well insulated from any noise that may come in the macros. I also think that this is a business that's, you know, if things do improve, this business should see the benefits of that and be able to take advantage of that. You know, I was joking around with our, with a handful of our board members about this, maybe three months or four months, maybe even six months ago, I don't remember. The reality of it is that since the company's gone public, you know, we really haven't been in a an economic environment where we've just had tailwinds behind us.

[Russ Becker, President and CEO at APi Group]

You know, it seems like, you know, it was, you know, we go public and we get hammered with COVID. Then as soon as COVID's, you know, goes, so to speak, goes away, we get hammered with inflationary times, and then it's tariffs. It seems like there's always been some headwind, you know, that's been in front of this business, and yet we've continued to show really good resilience, as we've grown the top line, both inorganically and organically, and expanded our margins, you know, through those headwinds. Like, I feel like this is just a really strong, resilient business that has that 54% of our revenue kind of backbone from inspection service and monitoring that, you know, kind of creates that protective moat around the company.

[Russ Becker, President and CEO at APi Group]

I feel really good about how we're positioned and how if we do see, you know, tailwinds, in the economy, we should be able to take advantage of that. We didn't lose you, did we, Stephanie?

[Operator]

Your next question comes from the line of Kathryn Thompson with Thompson Research Group. Your line is open. Please go ahead.

[Kathryn Thompson, CEO ana Partner at Thompson Research Group]

Hi, thank you for taking my question today. I promise I will ask just one. Once again, it is stepping back and look at the forest for the trees. The cat's out of the bag with AI, broadly in the U.S. market and the global market. Put more simply, with the reindustrialization of the U.S. market, which is a bigger trend that includes AI, but it's a bigger trend. When you look at your APi end market of, say, light, non-res versus more that heavy or industrial. In other words, light, I would put, like the Boston field trip that we did a few years ago to a commercial building versus the heavier, which would be a data center build-out or energy-supporting data build-out.

[Kathryn Thompson, CEO ana Partner at Thompson Research Group]

Where do you see that end market breakout today versus that light versus kind of heavy? Where do you see it five years from now, based on what you're seeing and your crystal ball? What does that mean for your margin goals? Thanks so much.

[Russ Becker, President and CEO at APi Group]

You did a great job of adding, like, three questions in one question, Catherine.

[Kathryn Thompson, CEO ana Partner at Thompson Research Group]

Well, you know, it was heavy versus light, you know?

[Russ Becker, President and CEO at APi Group]

Yeah.

[Kathryn Thompson, CEO ana Partner at Thompson Research Group]

How about you just ponder on that a little bit?

[Russ Becker, President and CEO at APi Group]

Well, no, I mean, you know, it's a thought-provoking, you know, it's obviously a thought-provoking question. If you look at Specialty Services, a significant, you know, component of their revenue mix, a very significant component of their revenue mix comes in what you would consider that heavy industrial. You know, based on your description of what's considered heavy industrial, you know, including data centers and things like that, you can see, you can see where that's gonna continue to have good, strong, you know, organic growth, and that's evidenced right now, you know, in our backlog. I don't know that any one of us can sit here and tell you that, you know, we're gonna have, you know.

[Russ Becker, President and CEO at APi Group]

you know, 60/40, heavy versus light, you know, in five years. What I can tell you is that our company is better situated for the more complex, you know, types of end markets. Whether that's advanced manufacturing, data centers, semiconductors, utility, like, that's more complicated. Those are complicated facilities that require a different level of expertise, not only on the inspection service and monitoring side, but also on the project side. We have always done well in there.

[Russ Becker, President and CEO at APi Group]

If you go back and look at some of our end market data that's included in either Adam or the other Adam, their the spreadsheets that they have on our investor site, you know, when you look at, like, how much of our business comes from commercial, I would tell you that most of that is on the inspection and service side and not necessarily on the project side. You know, we will continue to build, you know, our inspection and service business, more so on the light side. Now, I don't know that, you know what I mean, that's what you put office space in the light side, we'll continue to do that. As it relates to, you know, artificial intelligence, you know, we're embracing it.

[Russ Becker, President and CEO at APi Group]

We actually think that artificial intelligence is gonna be an enabler for our business and not a job displacement tool, if you will. You know, we actually have stood up an AI team that's being led by a very smart individual in our company. The mandate that they've been given is to really focus our early efforts on enabling our field leaders and making the work of our field leaders, you know, making it more enjoyable, more efficient, hopefully freeing up more time so that they can spend more time on our customer sites. That's what they like to do, and that's the mandate that that team has been given.

[Russ Becker, President and CEO at APi Group]

We think that as we continue to adopt artificial intelligence in our business, that it's gonna free up people from doing, I'll just say, more mundane tasks, and we can redeploy them into, you know, activities that are going to ultimately help us grow our inspection service and monitoring business. You know, you've heard us talk about that piece of our business. It takes more infrastructure to run that part of our business than, say, the project side of our business. We see, artificial intelligence really enabling that aspect of our business, which is gonna free up more people to help it grow. It's a, it's a really good thing. You had a very thought-provoking question, Kathryn.

[Kathryn Thompson, CEO ana Partner at Thompson Research Group]

Great! Thanks so much, and, best of luck.

[Russ Becker, President and CEO at APi Group]

Thank you.

[Operator]

There are no further questions at this time. I will now turn the call back to Russ Becker, President and CEO, for closing remarks.

[Russ Becker, President and CEO at APi Group]

Thank you. In closing, I would like to thank all of our teammates for their continued support and dedication to our business. We believe our people are the foundation on which everything else is built. Without them, we do not exist. I would also like to thank our long-term shareholders, as well as those that have recently joined us, for their support. We appreciate your ownership of APi and look forward to updating you on our progress throughout the remainder of the year. Thank you again, and Adam, thank you for everything that you've done for us. I'm very grateful.

[Adam Fee, VP of Investor Relations and Equity Capital Markets at APi Group]

Thank you.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Adam Fee, VP of Investor Relations and Equity Capital Markets
• David Jackola, Executive Vice President and CFO
• Russ Becker, President and CEO

Analysts

• Andrew Kaplowitz, Managing Director at Citi
• Andrew Wittmann, Managing Director and Senior Research Analyst at Baird
• Curtis Nagle, Senior U.S. SMid Cap Internet Analyst at BofA Securities
• David Paige, Equity Research AVP at RBC Capital Markets
• Jasper Bibb, VP Equity Research at Truist Securities
• Jonathan Tanwanteng, Managing Director at CJS Securities
• Joshua Chan, Executive Director and Equity Research Analyst at UBS
• Julian Mitchell, Equity Research Analyst of US Industrials at Barclays
• Kathryn Thompson, CEO ana Partner at Thompson Research Group
• Stephanie Moore, SVP of Equity Research at Jefferies LLC
• Tim Mulrooney, Partner and Group Head of Global Services at William Blair
• Tomohiko Sano, Managing Director at JPMorgan Chase & Co.