APi Group Expects Strong Q2 Organic Revenue Growth, Plans To Pursue More Bolt-On Buyouts

APi Group Corp APG provided Q2 2023 preliminary expectations and an update on strategic acquisitions.

Q2 Outlook: APG expects adjusted EBITDA to be at or above the midpoint of the previously announced guidance of $195 million to $205 million. 

The company expects Q2 organic net revenue growth in the high single digits, continued gross and adjusted EBITDA margin expansion, and improvement in FCF conversion.

Russ Becker, President and CEO, commented, "As we cross the half-way point of 2023, we are pleased with the momentum the business continues to demonstrate. Demand for our services remains robust across the markets we serve, and our leaders continue to execute our value-based pricing strategy...Our free cash flow generation and EBITDA growth gives us confidence in our ability to reduce net leverage to near the top end of our target net leverage range of 2.0x – 2.5x near the end of the year while returning to bolt-on M&A."

Mergers & Acquisitions Update: At the end of Q2, APG concluded a strategic acquisition in the Safety Services segment for around $35 million. 

The company expects to close the buyout of at least two additional businesses within the Safety Services segment in Q3. 

APG expects to generate a combined annualized net revenue contribution from these three acquisitions of around $35 million in 2024, with all deals expected to be immediately accretive to the EBITDA margin.

The company expects to release Q2 earnings results on August 3, 2023.

Price Action: APG shares closed higher by 2.54% at $27.08 on Monday.