Executive Summary

Q1 2025 delivered record net revenues of $1.719B (+7.4% YoY) and record first‑quarter adjusted EBITDA of $193M, with adjusted EBITDA margin expanding 30 bps to 11.2%; adjusted diluted EPS was $0.37 while GAAP diluted EPS was $0.11 .
Results beat S&P Global consensus: revenue $1.656B* vs actual $1.719B and Primary EPS $0.240* vs actual $0.247*; company raised FY2025 revenue and adjusted EBITDA guidance (FX-driven) and issued Q2 guidance above Q1 levels . Values retrieved from S&P Global.*
Safety Services grew net revenue 13.4% (5.6% organic), with segment earnings margin +90 bps to 15.7%; Specialty Services declined 6.8% (6.6% organic) with margin pressure from adverse weather and lower fixed cost absorption .
Capital deployment remains constructive: $75M repurchased in Q1 and a new $1B buyback authorization; Investor Day (May 21) unveiled 10/16/60+ targets (>$10B revenue, ≥16% adj. EBITDA margin by 2028, ≥60% ISM revenue, ≥$3B cumulative adj. FCF) .

What Went Well and What Went Wrong

What Went Well

Safety Services momentum: net revenue +13.4% (5.6% organic), segment earnings +20.6%, margin +90 bps to 15.7%, driven by pricing, value capture, and ISM growth .
Persistent ISM progress: North American inspection revenue rose double digits for the 19th straight quarter; mix shift toward services supports margin durability .
FX tailwind and execution supported raised FY guidance; management highlighted protective moat from statutorily driven demand and variable cost structure: “We believe this positions us well to navigate the dynamic tariff variables in the marketplace.” .

What Went Wrong

Specialty Services revenue −6.8% (−6.6% organic) with gross margin −150 bps and segment margin −240 bps, reflecting adverse weather and lower fixed cost absorption .
GAAP diluted EPS declined to $0.11 (vs $0.37 adjusted), reflecting higher SG&A (systems enablement, amortization) and interest expense, partially offsetting EBITDA growth .
Weather reduced Specialty’s organic revenue by mid‑single‑digits YoY (≈5 days lost), delaying margin recovery until 2H; management expects modestly down Specialty margins for full year 2025 .

Financial Results

Consolidated Performance vs Prior Quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Net Revenues ($USD Billions)	$1.826	$1.861	$1.719
GAAP Diluted EPS ($)	$0.23	$(0.10)	$0.11
Adjusted Diluted EPS ($)	$0.51	$0.51	$0.37
Gross Margin (%)	31.1%	30.9%	31.5%
Adjusted EBITDA ($USD Millions)	$245	$242	$193
Adjusted EBITDA Margin (%)	13.4%	13.0%	11.2%

Q1 2025 vs Wall Street Consensus (S&P Global)

Metric	Consensus*	Actual
Revenue ($USD Billions)	$1.656*	$1.719
Primary EPS ($)	$0.240*	$0.247*

Beat: Revenue and Primary EPS; note S&P “Primary EPS” differs from company GAAP diluted and adjusted EPS. Values retrieved from S&P Global.*

Segment Breakdown – Q1 2025 vs Q1 2024 (recast)

Segment Metric	Q1 2024	Q1 2025
Safety Services Net Revenues ($USD Billions)	$1.117	$1.267
Safety Services Adjusted Gross Margin (%)	36.1%	37.0%
Safety Services Segment Earnings ($USD Millions)	$165	$199
Safety Services Segment Earnings Margin (%)	14.8%	15.7%
Specialty Services Net Revenues ($USD Billions)	$0.486	$0.453
Specialty Services Adjusted Gross Margin (%)	18.3%	16.8%
Specialty Services Segment Earnings ($USD Millions)	$43	$29
Specialty Services Segment Earnings Margin (%)	8.8%	6.4%

KPIs

KPI	Q1 2025
Organic Net Revenue Growth (Consolidated)	1.9%
Backlog (approx.)	~$3.5B; up YoY and building into Q2
Adjusted Free Cash Flow ($USD Millions)	$86
Adjusted FCF Conversion (%)	44.6%
Share Repurchases	$75M (≈2.1M shares)
Net Leverage Ratio	~2.3x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues	FY 2025	$7.3–$7.5B	$7.4–$7.6B	Raised (FX)
Adjusted EBITDA	FY 2025	$970–$1,020M	$985–$1,035M	Raised (FX)
Adjusted FCF Conversion	FY 2025	~75%	~75%	Maintained
Net Revenues	Q2 2025	—	$1.875–$1.925B	New
Adjusted EBITDA	Q2 2025	—	$260–$270M	New
Interest Expense	FY 2025	—	~$145M	New
Depreciation	FY 2025	—	~$90M	New
Capital Expenditures	FY 2025	—	~$100M	New
Adjusted Effective Tax Rate	FY 2025	—	~23%	New
Adjusted Corporate Expense	Per Quarter (2025)	—	$30–$35M	New
Adjusted Diluted Weighted Avg Shares	FY 2025	—	~282M	New
Share Repurchase Authorization	—	Prior program (Feb 2024)	New $1B authorization	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q3 2024)	Current Period (Q1 2025)	Trend
Tariffs/Macro	Focus on pricing and value capture; margin expansion; limited tariff commentary	"Safe harbor in the tariff storm"; contracts allow cost pass-through; pipe price volatility moderated; ~15% of revenues exposed (project U.S. life safety); some material pulled forward	Proactive mitigation; minimal expected impact on ISM; managed materials risk
ISM Mix	Double-digit inspection growth; services mix supported margin gains	19th straight quarter of double-digit inspection growth in North America; long-term 60% ISM target reiterated	Continuing progress toward ≥60%
Specialty Services	Revenue declines on delays/divestitures; mixed margins	Weather impact (~5 lost days); backlog +7% organic; return to organic growth in Q2; full-year margins modestly down; accretive in 2026	Improving trajectory into 2H; backlog supportive
Systems & Tech Enablement	Business process transformation referenced	New 3‑year "Systems and Business Enablement" program to equip branches/field leaders and enable long‑term targets	New investment; margin and growth enabler
Capital Allocation	Strong FCF; leverage ~2.2x; flexibility for M&A	$75M buyback in Q1; new $1B authorization; target ~$250M bolt‑ons in 2025; elevator service bolt‑on expected	Balanced M&A and buybacks; platform expansion
Reindustrialization/Data Centers	Project delays risk noted; cautious exposure	Selective participation; avoid over-commitment; aim to anchor projects from ISM relationships	Disciplined pursuit; diversified end-markets

Management Commentary

“We are off to a strong start in 2025, with a return to traditional levels of organic growth… We’ve also continued to expand margins and deploy capital on M&A and share repurchases to drive shareholder value.” — CEO Russ Becker .
“APi is a safe harbor in the tariff storm… We expect to be able to pass along much, if not all, material cost increases.” — CEO Russ Becker .
“Adjusted diluted EPS for the first quarter was $0.37… driven by strong growth in adjusted EBITDA.” — CFO Glenn David Jackola .
“Our Board has authorized a new $1 billion share repurchase program… giving us more flexibility to act.” — CEO Russ Becker .
Investor Day unveiled 10/16/60+ long-term targets (>$10B revenue; ≥16% adjusted EBITDA margin by 2028; ≥60% ISM; ≥$3B cumulative adj. FCF) .

Q&A Highlights

Backlog and visibility: Backlog ~$3.5B and building into Q2; specialty backlog +7% organic, expecting return to organic growth in Q2 .
Tariff exposure and pricing: ~15% of revenues directly exposed (project U.S. life safety); contractual pass-throughs in place; pulled forward materials boosted Q1 organic growth vs initial guide .
Specialty weather impact: ~5 lost days YoY, mid‑single‑digit organic impact; margins to expand in 2H, still modestly down in FY2025, accretive in 2026 .
Capital allocation: Healthy mix of M&A (~$250M target) and buybacks; elevator service platform expansion underway .
Systems enablement: New 3‑year program to equip field leaders with modern tools, supporting margin/growth targets .

Estimates Context

Q1 2025 beat S&P Global consensus: revenue $1.656B* vs $1.719B actual, Primary EPS $0.240* vs $0.247* actual. Values retrieved from S&P Global.*
Q2 2025 guidance (revenue $1.875–$1.925B; adjusted EBITDA $260–$270M) appears consistent with S&P consensus trajectory (Q2 revenue estimate $1.897B*), implying sequential top‑line growth and margin expansion vs Q1 . Values retrieved from S&P Global.*

Key Takeaways for Investors

Safety Services continues to drive the story: robust ISM growth and margin expansion support sustained EBITDA improvement; Specialty headwinds look transitory with backlog and weather normalization pointing to better 2H .
Results and raised FY guide (FX-driven) plus a $1B buyback authorization are positive stock catalysts; watch delivery against Q2 margin step‑up and Investor Day long-term targets .
Tariff risks are well‑mitigated through contractual pass‑throughs and a services‑heavy revenue mix; materials volatility may create timing effects but limited margin risk in ISM .
Free cash flow conversion improving (44.6% in Q1; ~75% FY target) and leverage ~2.3x provide ample capital allocation flexibility for bolt‑on M&A and buybacks .
Elevator service expansion is an incremental growth vector aligned with ISM strategy; execution should be accretive to margin framework over time .
Near‑term trading: emphasize guidance momentum and capital returns; medium‑term thesis: ISM mix shift, systems enablement, disciplined project selection, and accretive M&A underpin the 10/16/60+ framework .

Notes: All non-GAAP metrics and reconciliations per company disclosures; “Primary EPS” and consensus figures marked with * are from S&P Global and may differ from company-reported GAAP diluted and adjusted EPS.

APi Group Corp (APG)·Q1 2025 Earnings Summary