APG - Increasing Estimates For Onyx Acquisition

Research evidence excerpt

APG - Increasing Estimates For Onyx Acquisition

Truist Securities

Company Description

APi Group (APG) is one of the largest providers of Life Safety and Specialty Contracting services in the United States with a strong market

position in Europe (~23% of revenue), Asia-Pacific (~9% of revenue) and Canada (~5% of revenue). APG’s core Life Safety service offering

centers around the Fire Protection services business (we estimate ~50% of revenue) where the company is the #1 player by market share

in the United States. Other key Life Safety service offerings include HVAC, elevator/escalator services and security monitoring. We believe

APG is a top ten Specialty Contractor in the United States with service offerings including infrastructure/utility maintenance and repair,

sheet metal fabrication and plant maintenance and outage services. The company is headquartered in New Brighton, MN and employed

29k people globally as of year-end FY25. APG is listed on the NYSE and initially came public via a 2019 SPAC merger.

Investment Thesis

We expect APi Group (APG) to continue driving mix toward higher-margin, recurring service revenues in the Safety Services segment

which we believe will drive multiple expansion over time. Our sense is that mid single-digit organic growth led by CPI-plus pricing increases

should be achievable with margins expanding as APG increases Inspection/Service/Monitoring revenue mix, delivers on remaining Chubb

value capture and laps project selection initiatives. In our view, APG's historical success with tuck-in M&A should be repeatable and drive

modest EPS accretion over our forecast period. We rate APG shares Buy.

Valuation and Risks

We value APG using the following valuation metrics: (1) EV/EBITDA multiples; and (2) FCF/Share multiples.