-Net revenues, excluding Industrial Services, increased on an organic basis by 21% in the second quarter-

-Adjusted earnings per share in the second quarter of $0.31-

-Acquisition of Chubb fire and security business expected to close around year-end 2021-

APi Group Corporation (NYSE: APG) (“APG”, “APi” or the “Company”) today reported its financial results for the three and six months ended June 30, 2021.

Second Quarter 2021 Highlights:

• Reported net revenues increased by 10.0% or $89 million to $978 million compared to $889 million in the prior year period, primarily driven by general market recoveries in Safety and Specialty Services and revenue from acquisitions completed in the second half of 2020 in Safety Services, partially offset by the divestiture of two businesses in Industrial Services and the delay and suspension of certain projects in Industrial Services
• Adjusted net revenues increased by 15.2% or $129 million to $978 million, compared to $849 million in the prior year period, primarily driven by general market recoveries in Safety and Specialty Services, offset by the delay and suspension of certain projects in Industrial Services
• Net revenues, excluding Industrial Services, increased on an organic basis by 21.1% compared to the prior year period
• Reported gross margin was 23.7%, representing a 415 basis point increase compared to prior year gross margin of 19.6%, driven by a decrease in amortization expense, improved mix in Safety Services and the divestiture of two businesses in Industrial Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Adjusted gross margin was 24.2%, representing a 27 basis point decrease compared to prior year adjusted gross margin of 24.5%, driven by supply chain disruptions and inflation causing downward pressure on margins, partially offset by improved mix in Safety Services
• Reported operating income was $47 million, an improvement of $20 million from prior year operating income of $27 million
• Reported net income was $21 million, a $15 million decline from prior year net income of $36 million, reflecting a non-cash $9 million loss on the extinguishment of debt and income tax expense of $9 million compared to an income tax benefit of $12 million in the prior year period. Reported net income was $0.09 per diluted share
• Adjusted net income was $63 million and adjusted diluted EPS was $0.31, representing a $0.03 decline from prior year primarily due to the increased number of shares to 206 million from 174 million in the prior year period
• Adjusted EBITDA was $106 million or 10.8%, representing a 106 basis point decline compared to prior year adjusted EBITDA margin of 11.9%, driven by supply chain disruptions and inflation causing downward pressure on margins and less contribution from joint ventures in Specialty Services than the prior year period

First Half 2021 Highlights:

• Reported net revenues increased by 1.9% or $34 million to $1.8 billion compared to $1.7 billion in the prior year period, primarily driven by general market recoveries in Safety and Specialty Services and revenue from acquisitions completed in the second half of 2020 in Safety Services, partially offset by the divestiture of two businesses in Industrial Services and the delay and suspension of certain projects in Industrial Services
• Adjusted net revenues increased by 6.7% or $112 million to $1.8 billion, compared to $1.7 billion in the prior year period, primarily driven by general market recoveries in Safety and Specialty Services, offset by the delay and suspension of certain projects in Industrial Services
• Net revenues, excluding Industrial Services, increased on an organic basis by 11.7% compared to the prior year period
• Reported gross margin was 23.2%, representing a 396 basis point increase compared to prior year gross margin of 19.2%, driven by a decrease in amortization expense, improved mix in Safety Services and the divestiture of two businesses in Industrial Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Adjusted gross margin was 23.7%, representing a 27 basis point increase compared to prior year gross margin of 23.4%, driven by improved mix in Safety Services, partially offset by supply chain disruptions and inflation causing downward pressure on margins
• Reported operating income was $45 million, a $252 million increase from prior year operating loss of $207 million, primarily due to the impairment charge of $208 recorded in the prior year period
• Reported net income was $13 million, a $171 million increase from prior year net loss of $158 million, primarily due to the impairment charge of $208 million recorded in the prior year period. Reported net income was $0.06 per diluted share
• Adjusted net income was $87 million and adjusted diluted EPS was $0.43, representing a $0.06 decline from prior year due to the increased number of shares to 203 million from 174 million in the prior year period
• Adjusted EBITDA was $167 million or 9.4%, representing a 39 basis point decline compared to prior year adjusted EBITDA margin of 9.8%, driven by supply chain disruptions and inflation causing downward pressure on margins and less contribution from joint ventures in Specialty Services than the prior year period

Russ Becker, APi’s President and Chief Executive Officer stated: “We are encouraged by the progress towards recovery since the height of the pandemic at this time last year. As we have discussed throughout the quarter, COVID-19 continues to impact our business despite our team’s agility as we manage the rise in the number of COVID-19 cases, coupled with supply chain disruptions and inflation. These supply chain issues impact our work and the work of others on certain projects and ultimately have an effect on our efficiency, causing downward pressure on margins. We expect these negative variables will be with us through the balance of the year, however we do not believe they limit us in achieving our long-term goals. I am incredibly grateful for the leaders across our organization who remain dedicated to meeting robust demand across our key end markets.

The acquisition of Chubb fire and security business, which we anticipate will close around year end, will elevate APi to the world’s leading life safety services provider and create growth opportunities for our leaders, and accelerated earnings growth for our shareholders. Similar to APi, Chubb is a people-centered business. We look forward to welcoming Chubb’s 13,000 employees to our family of businesses and supporting their development as leaders, as the business shifts from a non-core asset to a paramount strategic priority within APi. We believe our combined leadership team will drive towards maximizing business performance and capitalizing on future cross-selling opportunities. We believe there is significant future value creation opportunity as we combine our two organizations and realize revenue as well as cost synergies.”

APi Co-Chair James E. Lillie added: “Our progress this year is meaningful and we are even more excited by the long-term future of APi following the strategic Chubb transaction. While COVID-19 continues to impact our business, as well as those of our customers and suppliers, we remain confident in our ability to execute on our long-term goals for the business.

We believe Chubb is a sleeping giant and will be a core asset for us that we plan to invest behind in the years to come. We believe the transaction will be highly accretive with compelling synergies, complement revenue growth through cross-selling certain products and services and provide meaningful opportunity for margin expansion. Importantly, we estimate that 50%+ of our revenue will be service-based, statutorily-required, recurring revenue.

Our near-term focus will be on closing the transaction and then deleveraging through our asset-light, high free cash flow conversion operating model, while continuing to invest in our leaders and business process improvements. We expect to be at a pro forma net leverage ratio of around 4.25x at closing with the goal of returning to below 3.0x net leverage expeditiously.”

Conference Call

APi will hold a webcast/dial-in conference call to discuss its financial results at 8:30 a.m. (Eastern Time) on Wednesday, August 11, 2021. Participants on the call will include Russ Becker, President and Chief Executive Officer; Tom Lydon, Chief Financial Officer; and James E. Lillie and Sir Martin E. Franklin, Co-Chairs.

To listen to the call by telephone, please dial 877-876-9173 or 785-424-1667 and provide Conference ID 6548827. You may also attend and view the presentation (live or by replay) via webcast by accessing the following URL: https://event.on24.com/wcc/r/3303564/F831B4F02051AA0AF54667BF99578379

A replay of the call will be available shortly after completion of the live call/webcast via telephone at 800-839-5127 or 402-220-2692 or via the webcast link above.

About APi:

APi is a market-leading business services provider of safety, specialty and industrial services in over 200 locations in North America and Europe. APi provides statutorily mandated and other contracted services to a strong base of long-standing customers across industries. We have a winning leadership culture driven by entrepreneurial business leaders to deliver innovative solutions for our customers. More information can be found at www.apigroupcorp.com.

Forward-Looking Statements and Disclaimers

Certain statements in this announcement are forward-looking statements which are based on the Company’s expectations, intentions and projections regarding the Company’s future performance, anticipated events or trends and other matters that are not historical facts, including expectations regarding: (i) the Company’s long-term targets, goals and strategies; (ii) certain expected future financial results of the Company; (iii) the expected benefits of the acquisition of Chubb, including the creation of growth opportunities for the Company’s leaders, the acceleration of earnings for the Company’s stockholders, the global expansion of the Company’s business, cross-selling and cost synergy opportunities, and organic growth and margin expansion opportunities; (iv) the Company’s intention to invest in Chubb and make it a core asset of the Company; and (v) the impacts of the COVID-19 pandemic on the future operating and financial performance of the Company and its customers, the Company’s plans and strategies to adapt and respond to the pandemic and the expected impact of those plans and strategies. These statements are not guarantees 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, including: (i) economic conditions, competition and other risks that may affect the Company’s future performance, including the impacts of the COVID-19 pandemic on the Company’s business, markets, supply chain, customers and workforce, on the credit and financial markets, on the alignment of expenses and revenues and on the global economy generally; (ii) the inability of the Company to successfully or timely consummate the acquisition of Chubb; (iii) failure to realize the anticipated benefits of the acquisition of Chubb; (iv) changes in applicable laws or regulations; (v) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and (vi) other risks and uncertainties. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This press release contains non-U.S. GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company uses certain non-U.S. GAAP financial measures that are included in this press release and the additional financial information both in explaining its results to shareholders and the investment community and in its internal evaluation and management of its businesses. The Company’s management believes that these non-U.S. GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the Company’s performance using the same tools that management uses to evaluate the Company’s past performance, reportable business segments and prospects for future performance, (b) permit investors to compare the Company with its peers and (c) determine certain elements of management’s incentive compensation. Specifically:

The Company does not provide reconciliations of forward-looking non-U.S. GAAP adjusted net revenues and adjusted EBITDA guidance to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for acquisitions and divestitures, business transformation and other expenses for the integration of acquired businesses, one-time and other events such as impairment charges, transaction and other costs related to acquisitions, amortization of intangible assets, net COVID-19 relief, and certain tax benefits from the APi Acquisition, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

While the Company believes these non-U.S. GAAP measures are useful in evaluating the Company’s performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with U.S. GAAP. Additionally, these non-U.S. GAAP financial measures may differ from similar measures presented by other companies. A reconciliation of these non-U.S. GAAP financial measures is included later in this press release.

Organic change in net revenues

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