APi Group Corporation (APG) | The Buildout — AI Infrastructure
The Verdict
APi Group is a physical services and specialty contracting company. It installs, inspects, and monitors fire and life-safety systems and performs specialty construction work, including on data-center campuses. Its role in the AI buildout is indirect: as data centers are built, APG supplies the safety and specialty contracting layer, then converts inspection work into recurring service and monitoring revenue.
| Market Cap | — |
| Revenue (TTM) | $8.4B |
| Revenue Growth | +14.1% |
| EBITDA Margin (TTM) | 10.8% |
| Net Debt | $3.0B |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Recurring revenue engine: about 53% of revenue comes from inspection, service, and monitoring, and APG generates $3–$4 of service work for every $1 of inspection revenue.
- Long-term 10/16/60+ targets aim for $10B revenue by 2028, 16%+ adjusted EBITDA margin, 60%+ service mix, and $3B cumulative adjusted FCF through 2028.
- Safety Services delivered 5.4% organic growth in Q1 2026 and a 16.3% segment earnings margin, up 60 bps year over year.
- Three Safety Services acquisitions — CertaSite, Onyx, and Wtech — total more than $1B and are described as accretive to 10/16/60+ targets.
- Balance sheet capacity remains: Q1 net leverage was 1.8x, below the 2.5–3.0x target, and May financing added a $500M notes offering and a $1B revolver.
What We’re Watching
- Gross-margin mix pressure: project revenue runs about 10 percentage points lower gross margin than inspection/service/monitoring, and Specialty is structurally lower-margin.
- Integration load: CertaSite closed February 2, Onyx June 9, and Wtech July 2, 2026 — three separate integration paths in one year.
- Specialty Services growth is expected to slow in 2H 2026 as comparisons harden.
- FX and cost inflation from tariffs and the Iran conflict have already nicked margin; pricing protects dollars, not all margin.
The thesis is strengthening. Management raised full-year guidance in April, closed all three large acquisitions, and delivered record Q2 results with over 10% organic growth; Q1 leverage was 1.8x and management expected a year-end level near 1.8x. The open question is whether the project-heavy mix and three simultaneous integrations allow the targeted 60–70 bps of full-year adjusted EBITDA margin expansion.
Earnings Beat
In Q2 FY2026, APi Group reported revenue of $2,254M with gross margin of 31.2%, up from 30.9% a year earlier. Reported EBITDA was $259M, an 11.5% margin, and net income was $99M; management's press release highlighted over 10% organic revenue growth and adjusted EBITDA margin expansion year over year.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.3B | $2.0B | $2.0B | +13.3% |
| Gross margin | 31.2% | 28.1% | 30.9% | +30bps |
| EBITDA | $259M | $233M | $224M | +15.6% |
| EPS | $0.23 | $0.13 | $0.19 | +22.6% |
We continued building on our strong start to the year in the second quarter, delivering over 10% organic revenue growth and adjusted EBITDA margin expansion year over year.— Russ Becker, President and CEO, July 30, 2026
Management tone: On the Q1 2026 call, management's tone was confident, disciplined, and strategically deliberate, with direct answers on M&A, margin math, and leverage. The Q2 press release carried a positive tone, but the full Q2 call is not present in the source material.
Management Guidance
As of the Q1 2026 call, management guided FY2026 to revenue of $8.475B–$8.675B, organic growth of 5%–7%, adjusted EBITDA of $1.15B–$1.21B, an adjusted EBITDA margin of 13.8% at the midpoint, and adjusted free cash flow conversion of approximately 115%. Reaffirmed assumptions included $130M interest expense, $90M depreciation, $105M capex, a 23% adjusted effective tax rate, and roughly $35M in corporate expenses per quarter. The July 30 Q2 release said the full-year 2026 outlook was raised, but specific revised ranges were not in the source set.
Trajectory
Reported revenue moved from $1,982M in Q1 FY2026 to $2,254M in Q2 FY2026, a 13.7% sequential rebound; trailing twelve-month revenue reached $8,438M. Gross margin recovered to 31.2% in Q2 after 28.1% in Q1, but reported EBITDA margin was 11.5% in Q2, roughly stable against 11.8% in Q1. The driver is mix: fast Specialty growth and project revenue pressure gross margin, while adjusted SG&A leverage has supported EBITDA margin; management still targets 60–70 bps of full-year adjusted EBITDA margin expansion.
The Model
The model projects FY+1 revenue of $8,920M and EBITDA of $1,240M (13.9% margin), and FY+2 revenue of $9,700M with EBITDA of $1,455M (15.0% margin). Near-term revenue is anchored by 5%–7% guided organic growth plus closed acquisitions; FY+2 margin expansion reflects continuation of the service-mix shift toward the 60%+ inspection/service/monitoring target and leverage from systems and scale.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.9B | $8.9B | $9.7B |
| YoY Growth | — | +12.8% | +8.7% |
| EBITDA | $810M | $1.2B | $1.5B |
| EBITDA Margin | 10.2% | 13.9% | 15.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.3% above analyst consensus.
As of the Q1 2026 call, management guided FY2026 to revenue of $8.475B–$8.675B, organic growth of 5%–7%, adjusted EBITDA of $1.15B–$1.21B, an adjusted EBITDA margin of 13.8% at the midpoint, and adjusted free cash flow conversion of approximately 115%. Reaffirmed assumptions included $130M interest expense, $90M depreciation, $105M capex, a 23% adjusted effective tax rate, and roughly $35M in corporate expenses per quarter. The July 30 Q2 release said the full-year 2026 outlook was raised, but specific revised ranges were not in the source set.
What Could Go Right — and Wrong
- Wtech and Onyx integrate faster than expected; Wtech's margin moves toward North American Safety levels and branches reach the 20% EBITDA branch benchmark.
- Data-center revenue share rises above the 10–11% expectation and follow-on service wins prove the $3–$4 service-per-$1-inspection flywheel.
- The ~$250M bolt-on M&A plan completes, adding international and elevator/escalator recurring revenue.
- The systems rollout scales beyond the first April pilot without disruption, supporting long-term SG&A leverage.
- Recurring inspection/service mix moves toward 60%+ and gross margin recovers from project-mix pressure.
- Project-heavy mix persists; project revenue runs about 10 percentage points lower gross margin than service work.
- Specialty Services decelerates in 2H 2026 while labor selectivity caps volume.
- Integration of CertaSite, Onyx, and Wtech slows or costs more than planned.
- FX strength and tariff/Iran-driven input inflation erode margin beyond a slight nick.
- Data-center project pipeline cools or service conversion from data-center install work stalls.
Looking Ahead
Over the next 12 months, the source material points to full Q2 earnings detail, continued bolt-on deployment toward the ~$250M annual target, and disclosure of how Wtech and Onyx contributions reshape guidance after their closings. Management also expects data-center revenue to reach 10%–11% of 2026 revenue by year-end, adjusted free cash flow conversion near 115%, and leverage to glide back to about 1.8x after the acquisition financing. The longer arc is the 10/16/60+ framework through 2028.
- After Q2 2026 releaseFull Q2 earnings detail — Tests revised FY2026 guidance, segment mix, and Wtech/Onyx contribution.
- 2H 2026Bolt-on M&A deployment — Target ~$250M in 2026; Q1 closed only $25M.
- Year-end 2026Data-center revenue mix — Management expects 10%–11% of 2026 revenue from data centers.
- Year-end 2026Leverage glide path — Management expects leverage near ~1.8x after acquisition financing.
- FY2026Adjusted FCF conversion — Target ~115%; Q1 was 88%, back half carries plan.
- 202810/16/60+ targets — $10B revenue, 16%+ EBITDA margin, 60%+ service mix, $3B FCF.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $7.0B | $7.9B | $8.4B | +12.7% |
| Gross Margin | 31.0% | 29.2% | 29.3% | 185bps |
| EBITDA | $786M | $810M | $3.8B | +3.1% |
| EBITDA Margin | 11.2% | 10.2% | 10.8% | 96bps |
| Net Income | $250M | $302M | $346M | +20.8% |
| Free Cash Flow | $536M | $663M | $2.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)29.3%
- EBITDA Margin (TTM)10.8%
- Net Margin (TTM)4.1%
- ROIC7.0%
- FCF Conversion81.6%
- SBC / Revenue0.7%
The Company
APi Group is a global business services provider of fire and life safety, security, elevator and escalator, and specialty services. Founded in 1926 and celebrating its 100th year, the company operates more than 500 locations with roughly 29,000 employees. For AI infrastructure, APG installs and maintains fire protection, suppression, and life-safety systems on data-center campuses and performs specialty contracting work; management says data centers are a contributor but not the primary driver of growth.
APG reports through Safety Services and Specialty Services. Safety Services spans North America, Europe, and Asia-Pacific, offering design, installation, inspection, service, and monitoring; Specialty Services covers specialty contracting, fabrication and distribution, and infrastructure and utility work. The company owns roughly 50 facilities and leases about 500, with locations in the U.S., France, United Kingdom, Australia, Netherlands, and over 15 other countries. Its stated capital allocation priority is M&A ahead of repurchases.
Business Segments
Competitive Landscape
The source record names two documented competitors: EMCOR Group in larger electrical/mechanical construction and Johnson Controls in fire/life safety/building systems. APG's 10-K describes its segments as leading providers; the differentiator is the recurring service footprint, 500+ locations, and inspection-to-service conversion.
- EMCOR Group (EME)Documented as a larger electrical/mechanical construction competitor. Neighbor read-through: RPO $15.62B, organic growth 16.8%, mechanical margin fell from 11.9% to 10.9% on mix.
- Johnson Controls (JCI)Documented as a competitor in fire/life safety/building systems. Backlog $20B, orders +30%, adjusted EBIT margin 15.5%, up 310 bps.
Supply Chain
APG sits between fire-safety equipment suppliers and building owners/contractors, but the source set includes no company-confirmed supplier or customer names. Its 10-K supply evidence returned no records and no sole-source disclosures.