APi Group NYSE: APG reported higher first-quarter 2026 revenue and earnings and raised its full-year outlook, citing broad-based demand, continued growth in inspection, service and monitoring work, and margin expansion. Management also highlighted an active start to the year for acquisitions aimed at expanding the company’s Safety Services platform in North America and Europe.
First-quarter results show double-digit organic growth
For the quarter ended March 31, Executive Vice President and CFO David Jackola said reported net revenues rose 15.3% year over year to $1.98 billion, up from $1.72 billion in the prior-year period. Jackola said organic revenue growth was 10.4%, driven by “solid growth in inspection, service, and monitoring revenues, growth in project revenues, and pricing improvements.”
Adjusted EBITDA increased 21.8% year over year, with adjusted EBITDA margin rising 70 basis points to 11.9%, which Jackola attributed to “strong revenue growth and favorable SG&A leverage.” Adjusted diluted EPS was $0.32, up $0.07, or 28%, from the prior year, with Jackola pointing to revenue growth, margin expansion and lower interest expense, partially offset by a higher share count.
Russ Becker, president and CEO, said the company expanded adjusted EBITDA margins by 70 basis points year over year and expects continued margin expansion during 2026, citing initiatives such as improved revenue mix, disciplined project selection, pricing, branch and field optimization, procurement scale, and accretive M&A.
Segment performance: Safety Services grows mid-single digits; Specialty Services accelerates
In Safety Services, Jackola reported first-quarter net revenues of $1.42 billion, up 11.7% year over year, with organic growth of 5.4%. He said adjusted gross margin increased 20 basis points to 37.2% on “disciplined customer and project selection and pricing improvements,” partially offset by mix. Segment earnings margin increased 60 basis points to 16.3%, driven by gross margin expansion and SG&A leverage.
In Specialty Services, net revenues increased 25.6% to $569 million, including 24.8% organic growth, which Jackola said was driven by growth in both project and service revenues. Adjusted gross margin declined 50 basis points to 16.3% due to mix, but segment earnings margin increased 50 basis points to 6.9% on favorable fixed cost absorption, partially offset by mix.
Asked about the drivers in Specialty Services, Becker said the backlog is “super strong” and while data centers are a benefit, the portfolio is “more broad-based than just data centers,” pointing to industrial maintenance and service work, infrastructure, potable water replacement and telecom work, with a “really diverse” backlog across services and geographies.
Cash flow, leverage, and margin drivers
APi generated $125 million in adjusted free cash flow in the quarter, up $39 million from last year, which Jackola said equated to 88% conversion of adjusted net income. He said the company remains on track for its full-year adjusted free cash flow conversion target of approximately 115%.
At quarter-end, APi’s net debt to adjusted EBITDA ratio was approximately 1.8x, which Jackola said is “significantly below” the company’s long-term target range of 2.5x to 3x. On financing for the pending Wtech and Onyx acquisitions, Jackola said APi plans to use a mix of cash on hand, cash flow from operations, and incremental debt. He later added that once those two acquisitions close and are financed, leverage is expected to be “at or below the low end” of the target range, and he expects leverage to be worked back down “to kind of the ballpark of where we are today by the end of the year.”
Management also discussed pricing and cost inflation. In response to a question on input costs, Becker said the company has seen the impact of rising fuel costs and “some material inflation” as a result of tariffs and conflict in Iran. He said the company has been able to protect itself at the time of proposal and capture the dollar impact as costs change, emphasizing that about 53% of revenue comes from inspection, service and monitoring, where pricing can be adjusted “nearly in real time.” Becker said he has not seen customer sensitivity to pricing and that the company has continued to capture price.
On mix effects, Jackola said first-quarter mix pressure reflected two factors: higher project revenue (which he said averages about 10 percentage points lower gross margin than inspection, service and monitoring work) and the faster growth of Specialty Services relative to Safety Services. He said there was no material purchase pull-forward in the quarter.
Acquisitions and integration approach
Becker said the company closed the acquisition of CertaSite in February, describing it as an “inspection-first provider of comprehensive fire and life safety services across the Midwest.” He also highlighted two additional announced deals: an agreement to acquire Ireland-based Wtech Fire Group and an agreement to acquire Onyx-Fire Protection Services in Canada. Becker said APi expects Onyx-Fire to close in the second quarter and Wtech to close in the third quarter, adding that APi will update full-year guidance after those transactions close.
Becker said the three acquisitions represent an investment of more than $1 billion to build out the Safety Services segment across the U.S., Europe and Canada, and said each is accretive to APi’s “10/16/60+” financial targets. He also said APi completed four bolt-on acquisitions during the quarter and remains on track to deploy about $250 million in bolt-on M&A this year, including opportunities in the international business and elevator and escalator services businesses.
On why larger deals have clustered in 2026, Becker said the timing was driven by opportunities presenting themselves at the right time, citing Onyx as a deal APi had previously passed on due to integration bandwidth in Canada. He also described Wtech as a relationship-driven opportunity and said the CertaSite acquisition was more process-driven.
Becker also provided detail on how the acquired businesses align to APi’s “inspection-first” strategy. He said CertaSite was “way down the line” with roughly 95% of revenue from inspection and service work. He said Onyx is in a “similar spot” to APi with a focus on building a robust inspection, service and monitoring business, while Wtech is more project-heavy today with opportunity to build inspection and service revenue over time. On integration, Becker said CertaSite will continue operating as an independent business within North American Safety Services, while Onyx and Wtech are expected to operate as standalone or portfolio businesses initially, with market-by-market decisions in Canada after regulatory filings and close.
Guidance raised; data centers expected to remain around 10% of sales
Jackola raised APi’s full-year 2026 guidance (based on current FX rates and acquisitions closed to date). The company now expects:
- Net revenues: $8.475 billion to $8.675 billion (up from $8.4 billion to $8.6 billion), implying 5% to 7% organic growth.
- Adjusted EBITDA: $1.15 billion to $1.21 billion (up from $1.14 billion to $1.2 billion), with an adjusted EBITDA margin of 13.8% at the midpoint and 11% to 16% growth.
Jackola said the higher guidance reflects strong performance to start the year, offset by headwinds from a strengthening U.S. dollar since February. For the second quarter, APi expects reported net revenues of $2.175 billion to $2.225 billion, with organic growth of about 7% to 9%, and adjusted EBITDA of $300 million to $310 million.
In Q&A, Becker said APi remains on track for data centers to represent approximately 10% to 11% of revenue by year-end, adding that the pipeline remains robust and that APi is being selective about project opportunities and partners, with an emphasis on opportunities that can convert into inspection, service and monitoring work after installation.
Jackola also reiterated expectations for continued year-over-year margin expansion, saying the company targets 60 to 70 basis points of adjusted EBITDA margin improvement for 2026.
About APi Group NYSE: APG
APi Group Corp. is a global specialty contractor that provides fire protection, security, mechanical insulation and energy services to commercial, industrial and institutional clients. Headquartered in New Brighton, Minnesota, the company designs, installs, inspects, tests, maintains and repairs a wide range of safety and infrastructure systems. Through its network of operating subsidiaries, APi Group delivers end-to-end solutions for new construction, facility renovations and ongoing maintenance requirements.
Its service portfolio spans life safety and industrial services—such as fire suppression systems, fire alarms and emergency lighting—and specialized offerings including technical insulation, access solutions, passive fire protection and energy efficiency upgrades.
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