UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM10-Q~~

(Mark One)

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~

2024

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to

Commission File Number001-39275

APi Group Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware		98-1510303
~~Delaware~~	~~98-1510303~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1100 Old Highway 8 NW New Brighton, Minnesota	55112
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (651)636-4320

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

~~Trading~~

~~Symbol(s)~~

Name of each exchange

on which registered

Common Stock, par value $0.0001 per share

APG

~~APG~~

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐x No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated ~~filer,”~~filer”, “smaller reporting ~~company,”~~company”, and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐o

Non-accelerated filer

☒

Smaller reporting company

☐o

Emerging growth company

☐o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐o No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: ~~169,294,244~~274,286,981 shares of ~~Common Stock~~common stock as of ~~May 29, 2020.~~

April 25, 2024.

Table of Contents

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

~~Item~~

ITEM 1. ~~Financial Statements~~

FINANCIAL STATEMENTS

APi Group Corporation

Condensed Consolidated Balance Sheets

~~March 31, 2020 (Successor)~~ (Unaudited)

(In millions, except share and ~~December 31, 2019 (Successor)~~

~~(In millions)~~

~~(Unaudited)~~

   March 31,
2020
(Successor) December 31,
2019
(Successor)
Assets

Current assets:

Cash and cash equivalents
   $ 436 $ 256
Accounts receivable, net of allowances of $1 and $0 at March 31, 2020 and December 31, 2019, respectively
   662 730
Inventories
   59 58
Contract assets
   251 245
Prepaid expenses and other current assets
   37 33
Assets held for sale
   5 20


Total current assets
   1,450 1,342
Property and equipment, net
   397 402
Operating lease right of use asset
   103 105
Goodwill
   767 980
Intangible assets, net
   1,069 1,121
Preferred tax assets
   64 —
Other assets
   36 61


Total assets
   $ 3,886 $ 4,011


Liabilities and Shareholders’ Equity

Current liabilities:

Short-term and current portion of long-term debt
   $ 217 $ 19
Accounts payable
   152 156
Contingent consideration and compensation liabilities
   47 49
Accrued salaries and wages
   104 149
Deferred consideration
   35 73
Other accrued liabilities
   132 157
Contract liabilities
   205 193
Operating and finance leases
   27 27


Total current liabilities
   919 823
Long-term debt, less current portion
   1,167 1,171
Contingent consideration and compensation liabilities
   22 15
Operating and finance leases
   93 95
Deferred tax liabilities
   24 23
Deferred consideration
   53 78
Other noncurrent liabilities
   83 49


Total liabilities
   2,361 2,254
Shareholders’ equity:

Preferred shares, no par value; unlimited authorized shares; 4 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
   —   —
Ordinary shares; no par value, unlimited authorized shares, 169 and 170 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
   —
Additionalpaid-in capital
   1,880 1,885
Accumulated deficit
   (325 ) (131 )
Accumulated other comprehensive income (loss)
   (30 ) 3


Total shareholders’ equity
   1,525 1,757


Total liabilities and shareholders’ equity
   $ 3,886 $ 4,011

per share data)
March 31,
2024 December 31,
2023
Assets
Current assets:
Cash and cash equivalents $ 247 $ 479
Accounts receivable, net of allowances of $5 and $5 at March 31, 2024 and December 31, 2023, respectively 1,256 1,395
Inventories 148 150
Contract assets 458 436
Prepaid expenses and other current assets 123 122
Total current assets 2,232 2,582
Property and equipment, net 375 385
Operating lease right of use assets 234 233
Goodwill 2,471 2,471
Intangible assets, net 1,549 1,620
Deferred tax assets 115 113
Pension and post-retirement assets 106 111
Other assets 110 75
Total assets $ 7,192 $ 7,590
Liabilities, Redeemable Convertible Preferred Stock, and Shareholders’ Equity
Current liabilities:
Short-term and current portion of long-term debt $ 105 $ 5
Accounts payable 382 472
Contingent consideration and compensation liabilities 21 22
Accrued salaries and wages 241 363
Contract liabilities 542 526
Operating and finance leases 75 75
Other accrued liabilities 288 344
Total current liabilities 1,654 1,807
Long-term debt, less current portion 2,624 2,322
Pension and post-retirement obligations 48 50
Contingent consideration and compensation liabilities 17 11
Operating and finance leases 173 172
Deferred tax liabilities 236 233
Other noncurrent liabilities 139 127
Total liabilities 4,891 4,722
Commitments and contingencies (Note 14)
5.5% Series B Redeemable Convertible Preferred Stock, $0.0001 par value, 800,000 authorized shares, 0 and 800,000 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively — 797
Shareholders’ equity:
Series A Preferred Stock, $0.0001 par value; 7,000,000 authorized shares; 4,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023 — —
Common stock; $0.0001 par value, 500,000,000 authorized shares, 261,636,951 shares and 235,575,316 shares issued at March 31, 2024 and December 31, 2023, respectively (excluding 8,281,148 shares declared for stock dividend at December 31, 2023) — —
Additional paid-in capital 2,814 2,572
Retained earnings (accumulated deficit) 10 (11)
Accumulated other comprehensive loss (523) (490)
Total shareholders’ equity 2,301 2,071
Total liabilities, redeemable convertible preferred stock, and shareholders’ equity $ 7,192 $ 7,590

See notes to condensed consolidated financial statements.

Table of Contents

APi Group Corporation

Condensed Consolidated Statements of Operations

~~Three Months Ended March 31, 2020 (Successor) and 2019 (Predecessor)~~

(Unaudited)

(In millions, except per share amounts)

~~(Unaudited)~~

   Three months ended
March 31,
   2020 2019
   (Successor) (Predecessor)
Net revenues
   $ 858 $ 922
Cost of revenues
   696 759


Gross profit
   162 163
Selling, general, and administrative expenses
   188 137
Impairment of goodwill and intangible assets
   208 —


Operating income (loss)
   (234 ) 26


Interest expense, net
   14 6
Investment income and other, net
   (3 ) (2 )


Other expense, net
   11 4


Income (loss) before income tax provision
   (245 ) 22
Income tax provision (benefit)
   (51 ) 1


Net income (loss)
   $ (194 ) $ 21


Net loss per ordinary share:

Basic
   $ (1.14 ) n/a
Diluted
   $ (1.14 ) n/a
Weighted average shares outstanding:

Basic
   170 n/a
Diluted
   170 n/a
Pro forma income information (See Note 2):

Historical income before income taxes
   n/a $ 22
Pro forma provision for income taxes
   n/a 6


Pro forma net income
   n/a $ 16


	Three Months Ended March 31,
	2024		2023
Net revenues	$	1,601	$	1,614
Cost of revenues	1,109		1,189
Gross profit	492		425
Selling, general, and administrative expenses	392		352
Operating income	100		73
Interest expense, net	34		37
Loss on extinguishment of debt, net	—		3
Investment expense (income) and other, net	3		(5)
Other expense, net	37		35
Income before income taxes	63		38
Income tax provision	18		12
Net income	$	45	$	26
Net (loss) income attributable to common shareholders:
Stock dividend on Series B Preferred Stock	$	(7)	$	(11)
Conversion of Series B Preferred Stock	(372)		—
Net (loss) income attributable to common shareholders	$	(334)	$	15
Net (loss) income per common share:
Basic	$	(1.34)	$	0.05
Diluted	(1.34)		0.05
Weighted average shares outstanding:
Basic	250		234
Diluted	250		267

See notes to condensed consolidated financial statements.

Table of Contents

APi Group Corporation

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

~~Three Months Ended March 31, 2020 (Successor) and 2019 (Predecessor)~~

(Unaudited)

(In millions)

~~(Unaudited)~~

   Three months ended March 31,
   2020    2019
   (Successor)    (Predecessor)
Net income (loss)
   $ (194 )    $ 21
Other comprehensive income (loss):

Fair value change - derivatives, net of $9 and $0 of tax (expense) benefit, respectively
   (27 )    —
Foreign currency translation adjustment
   (6 )    3




Comprehensive income (loss)
   $ (227 )    $ 24


	Three Months Ended March 31,
	2024		2023
Net income	$	45	$	26
Other comprehensive income:
Fair value change - derivatives, net of tax (expense) benefit of $(5), and $3, respectively	13		(13)
Foreign currency translation adjustment	(42)		14
Comprehensive income	$	16	$	27

See notes to condensed consolidated financial statements.

Table of Contents

APi Group Corporation

Condensed Consolidated Statements of Shareholders’ Equity

~~Three Months Ended March 31, 2020 (Successor) and 2019 (Predecessor)~~

(Unaudited)

(In millions, except share amounts)

~~(Unaudited)~~

Successor
Accumulated
Preferred Shares Issued Ordinary Shares Issued Additional Other Total
and Outstanding and Outstanding Paid-In Accumulated Comprehensive Shareholders’
Shares Amount Shares Amount Capital Deficit Income (Loss) Equity
Balance, December 31, 2019
4,000,000 $ —   169,902,260 $ —   $ 1,885 $ (131 ) $ 3 $ 1,757
Net loss
—   —   —   —   —   (194 ) —   (194 )
Share cancellations
—   —   (608,016 ) —   (6 ) —   —   (6 )
Share-based compensation
—   —   —   —   1 —   —   1
Fair value change - derivatives
—   —   —   —   —   —   (27 ) (27 )
Foreign currency translation adjustment
—   —   —   —   —   —   (6 ) (6 )

Balance, March 31, 2020
4,000,000 $ —   169,294,244 $ —   $ 1,880 $ (325 ) $ (30 ) $ 1,525

Predecessor
Accumulated Note
Common Stock Issued Additional Other Receivable Total
and Outstanding Paid-In Retained Comprehensive From Stockholders’
Shares Amount Capital Earnings Income (Loss) Stockholder Equity
Balance, December 31, 2018

11,000,000 $ —   $ —   $ 663 $ (28 ) $ (2 ) $ 633
Net income

—   —   —   21 —   —   21
Distributions and other

—   —   —   (15 ) —   —   (15 )
Foreign currency translation adjustment

—   —   —   —   3 —   3

Balance, March 31, 2019

11,000,000 $ —   $ —   $ 669 $ (25 ) $ (2 ) $ 642


	Preferred Stock Issued and Outstanding			Common Stock Issued and Outstanding			Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2023	4,000,000	$	—	235,575,316	$	—	$	2,572	$	(11)	$	(490)	$	2,071
Net income	—	—		—	—		—		45		—		45
Fair value change - derivatives	—	—		—	—		—		—		13		13
Foreign currency translation adjustment	—	—		—	—		—		—		(42)		(42)
Gain on dedesignated derivatives amortized from AOCI into income	—	—		—	—		—		—		(4)		(4)
Series A Preferred Stock dividend	—	—		7,944,104	—		—		—		—		—
Series B Preferred Stock dividend	—	—		620,240	—		7		(7)		—		—
Conversion of Series B Preferred Stock, net	—	—		16,260,163	—		214		(17)		—		197
Profit sharing plan contributions	—	—		510,319	—		18		—		—		18
Share-based compensation and other, net	—	—		726,809	—		3		—		—		3
Balance, March 31, 2024	4,000,000	$	—	261,636,951	$	—	$	2,814	$	10	$	(523)	$	2,301


	Preferred Stock Issued and Outstanding			Common Stock Issued and Outstanding			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	4,000,000	$	—	233,403,912	$	—	$	2,558	$	(164)	$	(267)	$	2,127
Net income	—	—		—	—		—		26		—		26
Fair value change - derivatives	—	—		—	—		—		—		(13)		(13)
Foreign currency translation adjustment	—	—		—	—		—		—		14		14
Series B Preferred Stock dividend	—	—		1,082,877	—		—		—		—		—
Share repurchases	—	—		(541,316)	—		(12)		—		—		(12)
Profit sharing plan contributions	—	—		631,194	—		14		—		—		14
Share-based compensation and other, net	—	—		636,233	—		9		—		—		9
Balance, March 31, 2023	4,000,000	$	—	235,212,900	$	—	$	2,569	$	(138)	$	(266)	$	2,165

See notes to condensed consolidated financial statements.

Table of Contents

APi Group Corporation

Condensed Consolidated Statements of Cash Flows

~~Three Months Ended March 31, 2020 (Successor) and 2019 (Predecessor)~~

(Unaudited)

(In millions)

~~(Unaudited)~~

   Three months ended March 31,
   2020    2019
   (Successor)    (Predecessor)
Cash flows from operating activities:

Net income (loss)
   $ (194 )    $ 21
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation
   18    16
Amortization
   52    9
Impairment of goodwill and intangible assets
   208    —
Deferred taxes
   (53 )    —
Share-based compensation expense
   1    —
Other, net
   (2 )    (2 )
Changes in operating assets and liabilities, net of effects of business acquisitions

Accounts receivable
   63    102
Contract assets
   (7 )    (52 )
Inventories
   (2 )    (6 )
Prepaid expenses and other assets
   9    (2 )
Accounts payable
   (4 )    (37 )
Accrued liabilities and income taxes payable
   (56 )    (24 )
Contract liabilities
   14    (9 )
Other liabilities
   8    9




Net cash provided by operating activities
   55    25




Cash flows from investing activities:

Acquisitions, net of cash acquired
   (5 )    (1 )
Purchases of property and equipment
   (11 )    (22 )
Proceeds from sales of property, equipment and held for sale
   1    2
Advances on other notes receivable
   —      (4 )
Payments received on other notes receivable
   —      1
Proceeds from sale of marketable securities, net
   —      2




Net cash used in investing activities
   (15 )    (22 )




Cash flows from financing activities:

Net short-term debt
   200    1
Proceeds from long-term borrowings
   1    5
Payments on long-term borrowings
   (6 )    (7 )
Payments of acquisition-related consideration
   (56 )    —
Distributions paid
   —      (15 )




Net cash provided by (used in) financing activities
   139    (16 )




Effect of foreign currency exchange rate change on cash and cash equivalents
   1    —




Net increase (decrease) in cash and cash equivalents
   180    (13 )
Cash and cash equivalents, beginning of period
   256    54




Cash and cash equivalents, end of period
   $ 436    $ 41





Supplemental schedule of disclosures of cash flow information:

Cash paid for interest
   $ 13    $ 6
Cash paid for income taxes, net of refunds
   8    2

Three Months Ended March 31,
2024 2023
Cash flows from operating activities:
Net income $ 45 $ 26
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 19 19
Amortization 50 55
Restructuring charges, net of cash paid (8) —
Share-based compensation expense 8 5
Profit-sharing expense 6 5
Non-cash lease expense 26 18
Net periodic pension cost (benefit) 4 (3)
Loss on extinguishment of debt, net — 3
Other, net (13) (5)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable 128 96
Contract assets (26) (30)
Prepaid expenses and other current assets (7) (15)
Accounts payable (86) (47)
Accrued liabilities and income taxes payable (128) (112)
Contract liabilities 19 5
Other assets and liabilities (30) (21)
Net cash provided by (used in) operating activities 7 (1)
Cash flows from investing activities:
Acquisitions, net of cash acquired (23) (10)
Purchases of property and equipment (22) (21)
Proceeds from sales of property and equipment 23 4
Net cash used in investing activities (22) (27)
Cash flows from financing activities:
Net short-term debt 100 —
Proceeds from long-term borrowings 300 —
Payments on long-term borrowings (2) (202)
Repurchases of common stock — (12)
Conversion of Series B Preferred Stock (600) —
Restricted shares tendered for taxes (11) (2)
Net cash used in financing activities (213) (216)
Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash (4) 2
Net decrease in cash, cash equivalents, and restricted cash (232) (242)
Cash, cash equivalents, and restricted cash, beginning of period 480 607
Cash, cash equivalents, and restricted cash, end of period $ 248 $ 365
Supplemental cash flow disclosures:
Cash paid for interest, net of interest income $ 36 $ 27
Cash paid for income taxes, net of refunds 35 19
Accrued consideration issued in business combinations 5 1
Shares of common stock issued to profit sharing plan 18 14
Shares of common stock issued for conversion of Series B Preferred Stock 569 —

See notes to condensed consolidated financial statements.

Table of Contents

APi Group Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Amounts in millions, except shares and where noted otherwise)

~~(Unaudited)~~

~~Note 1. Nature of Business~~

APi Group Corporation (the “Company” or “APG”) is a market-leading business services provider of safety, specialty, and industrial services in over 200 locations, primarily in North America. Until its acquisition of APi Group, Inc. (“APi Group”) on October 1, 2019, the Company had neither engaged in any operations nor generated any revenues. (See Note 4 – “Business Combinations”).

~~Note 2. Basis~~

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of ~~Presentation~~business

APi Group Corporation (the “Company” or “APG”) is a global, market-leading business services provider of life safety, security and ~~Significant Accounting Policies~~

specialty services with a substantial recurring revenue base and over 500 locations worldwide.

Principles of ~~consolidation:~~consolidation

The accompanying interim unaudited condensed consolidated financial statements (the “Interim Statements”) include the accounts of the Company and of its ~~wholly owned~~wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These Interim Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by generally accepted accounting principles ~~generally accepted~~ in the United States of America ~~(U.S. GAAP)~~(“U.S. GAAP”) for complete financial statements. The ~~unaudited~~ condensed consolidated balance ~~sheet~~sheets as of December 31, ~~2019 was~~2023 were derived from audited financial statements for the year then ended but ~~does~~do not include all of the information and footnotes required by U.S. GAAP with respect to annual financial statements. In the opinion of management, the Interim Statements include all adjustments (including normal recurring accruals) necessary for a fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for the dates and periods presented. It is recommended that these Interim Statements ~~should~~ be read in conjunction with the Company’s audited annual consolidated financial statements and accompanying footnotes thereto for the year ended December 31, ~~2019.~~2023. Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period.

~~In accounting for~~

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Restricted cash is reported as other current assets in the ~~acquisition~~condensed consolidated balance sheets. Restricted cash reflects collateral against certain bank guarantees.

Investments

The Company holds investments in joint ventures, the majority of APi Group (the “APi Acquisition”), APG is considered the acquirer of APi Group for accounting purposes and APi Group is the accounting Predecessor. The Company’s financial statement presentation for the APi Group financial information as of and for the periods presented prior to the APi Acquisition datewhich are ~~labeled “Predecessor”. The Company’s financial statements, including APi Group from the APi Acquisition date, are labeled “Successor”. The merger was~~ accounted for ~~as a business combination using~~under the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See Note 4 – “Business Combinations” for a discussion of the fair values of assets and liabilities recorded in connection with the APi Acquisition, which remain preliminary as of March 31, 2020.

~~As a result of the application of the acquisition~~equity method of accounting as of the effective date of the APi Acquisition, the accompanying Interim Statements include a black line division, where applicable, which indicates a differentiation that the Predecessor and Successor reporting entities shown are presented on a different basis and are, therefore, not comparable.

~~The historical financial information of~~ the Company ~~which was, prior to~~does not exercise control over the ~~APi Acquisition, an acquisition vehicle, has not been presented in~~joint ventures. The Company exercises control over one joint venture that is consolidated into the Company's financial statements ~~as these historical amounts are not considered meaningful. As an acquisition vehicle, the Company retained and invested the proceeds from its initial public offering (the “IPO”)~~ and the ~~funds were used to pay a portion of the cash consideration~~results for that joint venture for the ~~APi Acquisition.~~

~~As of~~three months ended March 31, ~~2020, the Company had two classes~~2024 were immaterial. The Company’s share of stock outstanding: ordinary shares, which equate to common shares under U.S. GAAP, and Founder Preferred Shares, which equate to preferred shares under U.S. GAAP. Subsequent to March 31, 2020, the Company changed its jurisdiction of incorporationearnings from the ~~British Virgin Islands to the State of Delaware, which resulted in conversion of ordinary shares~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares~~non-consolidated joint ventures was $2 and ~~where noted otherwise)~~

~~(Unaudited)~~

and Founder Preferred Shares to shares of common stock and Series A Preferred Stock, respectively (see Note 17 – “Subsequent Events”). The Interim Statements present the ordinary shares and Founder Preferred Shares that were outstanding as of March 31, 2020 and December 31, 2019 prior to the change in the jurisdiction of incorporation and the conversion of such shares.

~~Unaudited pro forma income information:~~ The unaudited pro forma net income information presented on the face of the unaudited condensed consolidated statements of operations gives effect to the conversion of APi Group to a C corporation. Prior to such conversion, APi Group was a S corporation and generally not subject to federal income taxes within the United States. The pro forma net income presented on the face of the unaudited condensed consolidated statement of operations, therefore, includes an adjustment for income tax expense on the income as if APi Group had been a C corporation for the period from January 1, 2019 through March 31, 2019, at an assumed combined federal, state, local and foreign effective income tax rate of 28.7%.

~~Use of estimates and risks and uncertainty ofCOVID-19:~~ The Interim Statements are prepared in conformity with U.S. GAAP. Management’s application of U.S. GAAP requires the pervasive use of estimates and assumptions in preparing the unaudited condensed consolidated financial statements. On January 30, 2020, the World Health Organization declared the coronavirus outbreak~~(COVID-19)~~ ~~a “Public Health Emergency of International Concern” and on March 11, 2020, declaredCOVID-19~~ ~~a pandemic. Inmid-March~~ ~~2020, U.S. State Governors, local officials and leaders outside of the U.S. began ordering various“shelter-in-place”~~ orders which have had various impacts on the U.S. and global economies. This has required greater use of estimates and assumptions in the preparation of the Interim Statements, specifically those estimates and assumptions utilized in the Company’s forecasted cash flows that form the basis in developing the fair values utilized in its impairment assessments, annual effective tax rate, and assessment of the realizability of deferred tax assets. This has included assumptions as to the duration and severity of the~~COVID-19~~ pandemic, timing and amount of demand shifts for the Company’s services, labor availability and productivity, supply chain continuity, required remedial measures, and timing as to a return to normalcy.

~~As theCOVID-19~~ pandemic continues to evolve, the Company believes the extent of the impact to its businesses, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the~~COVID-19~~ pandemic, the pandemic’s impact on the U.S. and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond the Company’s knowledge and control, and as a result, at this time the Company is unable to predict the cumulative impact, both in terms of severity and duration, that~~COVID-19~~ will have on its businesses, operating results, cash flows and financial condition, but it could be material if the current circumstances continue to exist for a prolonged period of time. Although we have made our best estimates based upon current information, actual results could materially differ from the estimates and assumptions developed by management. If so, the Company may be subject to future incremental impairment charges as well as changes to recorded reserves and valuations.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~Goodwill impairment:~~ Goodwill represents the excess of cost over the fair market value of net tangible and identifiable intangible assets of acquired businesses. Goodwill is not amortized but instead is annually tested for impairment, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. The Company has recorded goodwill in connection with its historical acquisitions of businesses. Upon acquisition, these businesses were either combined into one of the existing components or managed on a stand-alone basis as an individual component.

The components are aligned to one of the Company’s three reportable segments, Safety Services, Specialty Services, or Industrial Services. Goodwill is required to be evaluated for impairment at the reporting unit level, which represents the operating segment level or one level below the operating segment level for which discrete financial information is available.

Management identifies its reporting units by assessing whether components have discrete financial information available, engage in business activities, and have a segment manager regularly review the component’s operating results. If two or more components are deemed economically similar, those components are aggregated into one reporting unit when performing the annual goodwill impairment test.

The Company performs its annual goodwill impairment assessment on October 1 each fiscal year, or more frequently if events or circumstances arise which indicate that goodwill may be impaired. Qualitative indicators that may trigger the need for annual or interim quantitative impairment testing include, among other things, deterioration in macroeconomic conditions, declining financial performance, deterioration in the operational environment, or an expectation of selling or disposing of a portion of a reporting unit. Additionally, a significant change in business climate, a loss of a significant customer, increased competition, a sustained decrease in share price, or a decrease in estimated fair value below book value may trigger the need for interim impairment testing of goodwill associated with one or more reporting units.

While the Company’s services have largely been deemed essential, the Company did experience negative impacts on its operations in the latter part of March as the shelter-in-place orders began. The impact of COVID-19 has negatively impacted the Company’s operations, suppliers and other vendors, and customer base. In addition to the impacts of COVID-19, the Company was also impacted by a significant decline in demand and volatility in oil prices as some of the Company’s services involve work within the oil and gas industry. As a result, during the first quarter of 2020, the Company concluded that an impairment triggering event had occurred for all of its reporting units and performed impairment tests for its goodwill and recoverability tests for its long-lived assets, which primarily include finite-lived intangible assets, property and equipment and right of use lease assets. As a result of the impairment testing performed in connection with the triggering event, the Company determined that certain of its goodwill and intangible assets were impaired as the preliminary carrying values exceeded fair values. The Company recorded an aggregate non-cash charge$2 during the three months ended March 31, ~~2020 in connection with these impairments. See Note 7 – “Goodwill~~2024 and ~~Intangibles” for further information.~~

~~As a result of the impairment triggering event~~2023, respectively. The earnings are recorded within investment expense (income) and the Company performed an impairment test for its goodwill at all reporting units. The Company performed a quantitative test comparing the fair value of each reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded as a reduction to goodwill with a corresponding change to earningsother, net in the ~~period the goodwill is determined to be impaired. Any goodwill impairment is limited to the total amount~~condensed consolidated statements of ~~goodwill allocated to that reporting unit. As~~operations. The investment balances were $5 and $4 as of March 31, ~~2020, the Company had not finalized its purchase price allocation for the APi Acquisition (See Note 4 – “Business Combinations”). The carrying value of each reporting unit used~~2024 and December 31, 2023, respectively, and are recorded within other assets in the impairment test was based on preliminary values from the APi Acquisition. The Company anticipates it will finalize its accounting for the APi Acquisition during the third quarter of 2020, which will lead to changes in the carrying value of each reporting unit and may change the corresponding impairment charge recognized in each reporting unit.

The Company determines the fair value of its reporting units using a combination of the income approach (discounted cash flow method) and market approach (guideline transaction method and guideline public company method). Management weighs each of the methods applied to determine the fair value of its reporting units.

Under the discounted cash flow method, the Company determines fair value based on the estimated future cash flows for each reporting unit, discounted to present value using a risk-adjusted industry weighted-average cost of capital, which reflects the overall level of inherent risk for each reporting unit and the rate of return an outside investor would expect to earn. Cash flow projections are derived from budgeted amounts (typically a~~one-year~~ model) and subsequent period cash flows are developed for each reporting unit using growth rates that management believes are reasonably likely to occur from a market participant’s standpoint. All cash flow projections by reporting unit are evaluated by management. A terminal value is derived by capitalizing free cash flow into perpetuity. The capitalization rate is derived from the weighted-average cost of capital and the estimated long-term growth rate for each reporting unit.

condensed consolidated balance sheets.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

Under the guideline transaction and guideline public company methods, the Company determines the estimated fair value for each of its reporting units by applying transaction multiples and public company multiples, respectively, to each reporting unit’s applicable earnings measure. The transaction multiples are based on observed purchase transactions for similar businesses adjusted for size, diversification and risk. The public company multiples are based on peer group multiples adjusted for size, growth, risk and margin.

~~Impairment of long-lived assets excluding goodwill:~~ The Company periodically reviews the carrying amount of its long-lived asset groups, including property and equipment and other identifiable intangibles subject to amortization, when events or changes in circumstances indicate the carrying value may not be recoverable. If facts and circumstances support the possibility of impairment, the Company will compare the carrying value of the asset or asset group with the undiscounted future cash flows related to the asset or asset group. If the carrying value of the asset or asset group is greater than its undiscounted cash flows, the resulting impairment will be determined as the difference between the carrying value and the fair value, where fair value is determined for the carrying amount of the specific asset groups based on discounted future cash flows or appraisal of the asset groups.

~~As noted above in “Use of estimates and risks and uncertainty ofCOVID-19”,~~ during the first quarter of 2020, the Company concluded that an impairment triggering event had occurred. The Company reviewed its long-lived assets for impairment and recorded a $5 impairment charge related to the intangible assets that were part of a business classified as held for sale at March 31, 2020. The impairment was measured under the market multiple approach, utilizing estimates of market multiples from the eventual sale of the business based on information obtained as part of the marketing process. The carrying value used in the impairment test was based on preliminary values from the APi Acquisition. The Company anticipates it will finalize its purchase price allocation for the APi Acquisition during the third quarter of 2020, which will lead to changes in the carrying value and may change the corresponding impairment charge.

~~Note 3. Recent accounting pronouncements~~

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

See the ~~recent accounting pronouncements~~ discussion below for information pertaining to the effects of ~~recently adopted and other~~ recent accounting pronouncements as updated from the discussion in the Company’s ~~2019~~2023 audited consolidated financial statements included in the ~~Registration Statement~~Company’s Annual Report on Form~~S-4~~ ~~effective May 1, 2020.~~

~~Accounting standards issued~~ 10-K filed on February 28, 2024.

In March 2024, the SEC adopted final rules on the enhancement and ~~adopted:~~

~~In August 2018, the FASB issued ASUNo. 2018-13,~~~~Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement~~~~. The ASU removes the requirement to disclose the amount~~standardization of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASUclimate-related disclosures, which requires disclosure of ~~changes~~material climate-related risks, material Scope 1 and Scope 2 greenhouse gas emissions, and other matters. As it pertains to the financial statements, subject to certain materiality thresholds, the final rules require the financial statement footnotes to include certain disclosures regarding the amounts of expenses (or capitalized costs) incurred that relate to severe weather events and other natural conditions, as well as other disclosures regarding the material impact on financial estimates and assumptions of severe weather events and other natural conditions or disclosed targets or transition plans, and

Table of Contents

amounts related to carbon offsets and renewable energy credits. The disclosures will be required at the earliest in ~~unrealized gains and losses~~the annual financial statements for the ~~period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at~~year ended December 31, 2025. The company is currently evaluating the ~~end~~impact of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments or changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted this ~~guidance as of January 1, 2020, which did not have a material impact~~ on its consolidated financial ~~position, results of operations, cash flows, or disclosures.~~

~~In June 2016, the FASB issued ASUNo. 2016-13,~~~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~, to replace the incurred loss model for financial assets measured at amortized cost and require entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. For trade and other receivables, contract assets, loans and other financial

statements.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The Company adopted this guidance as of January 1, 2020, which did not have a material impact on its consolidated financial statements as credit losses are not expected to be significant based on historical trends, the financial condition of our customers and external factors. Management actively monitors the economic environment, including any potential effects from the~~COVID-19~~ ~~pandemic, on the Company’s customers and its financial assets.~~

~~Accounting standards issued but not yet adopted:~~

~~In January 2020, the FASB issued ASU2020-01,~~Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU~~2020-01”)~~to clarify the interaction in accounting for equity securities under Topic 321, investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU~~2020-01~~ is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

~~In December 2019, the FASB issued ASU2019-12,~~~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU2019-12”)~~, which eliminates certain exceptions to the existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU also simplifies the accounting for income taxes by clarifying and amending existing guidance related to the effects of enacted changes in tax laws or rates in the effective tax rate computation, the recognition of franchise tax and the evaluation of a~~step-up~~ ~~in the tax basis of goodwill, among other clarifications. ASU2019-12~~ is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

~~Note 4. Business Combinations~~

~~On September 2, 2019, the~~

NOTE 3. BUSINESS COMBINATIONS

The Company (then known as J2 Acquisition Limited) entered into an agreement (the “Purchase Agreement”) to acquire all of the issued and outstanding capital stock of APi Group (the “APi Acquisition”), a market-leading business services provider of safety, specialty, and industrial services in over 200 locations, primarily in North America. In accordanceregularly evaluates potential acquisitions that strategically fit with the ~~terms of the Purchase Agreement, on October 1, 2019, the Company completed the APi Acquisition and obtained control of APi Group and, concurrently, changed~~Company’s existing portfolio or expand the Company’s ~~name to APi Group Corporation.~~

The aggregate purchase price consideration transferred to the shareholders of APi Group (the “Sellers”) totaled $2,991, which included: i) a cash payment made at closing of $2,565, net of cash acquired; ii) deferred purchase consideration with an estimated fair value of $135; and iii) 28,373,000 ordinary shares of the Company with a value of $291. The Company funded the cash portion of the purchase price with a combination of cash on hand, a $1,200 term loan underportfolio into a new ~~term loan facility (see Note 11 – “Debt”)~~ and ~~approximately $207 of proceeds from a warrant exercise.~~

The deferred purchase price consideration is an estimate of future payments to be made to the Sellers pursuant to the terms of the Purchase Agreement upon final determination of certain income tax related matters. Prior to the APi Acquisition, APi Group was structured for United States (“US”) income tax purposes as a “flow through entity”. Pursuant to the terms of the Purchase Agreement, the Company agreed to pay to the Sellers the following amounts: i) up to $130 related to an Internal Revenue Code (“IRC”) Section 338(h)(10) election made by the Sellers; ii) up to $22.5 for IRC Section 965 taxes incurred by the Sellers and; iii) an amount sufficient to cover the Sellers’ state and federal tax liabilities for 2019. These deferred paymentsattractive business area. Acquisitions are expected to be paid to the Sellers over the course of approximately 18 months from the APi Acquisition date. A final determination of the amounts of deferred purchase consideration due to the sellers will not be determined until such time that the Company files its final 2019 tax return. The

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

Company expects to file its final 2019 tax returns no later than the fourth quarter of 2020. The fair value of the deferred purchase consideration is based on management’s estimated amounts and timing of future payments, discounted utilizing rates ranging from 2.6% to 2.8% to reflect market participant assumptions. The discount rate utilized was a risk-free rate selected based on the nearest risk-free rate term associated with the payments of the deferred purchase consideration, with a credit risk premium applied as the payments are not risk-free. During the three months ended March 31, 2020, the Company recorded measurement period adjustments related to revising the estimate of deferred consideration, which reduced the purchase price by $12.

~~The estimated fair value of the Company’s capital stock issued as purchase consideration was determined in accordance with ASC 820,~~~~Fair Value Measurement~~ ~~(“ASC 820”)~~.

~~The APi Acquisition was~~ accounted for as a business ~~combination~~combinations using the acquisition method of ~~accounting in accordance with ASC 805,~~~~Business Combinations~~~~(“ASC 805”). The~~accounting. As such, the Company makes a preliminary allocation of the purchase price ~~has been preliminarily allocated~~ to the tangible assets and identifiable intangible assets acquired and liabilities assumed. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Purchase price is allocated to acquired assets and liabilities assumed based upon their estimated fair values, with limited exceptions as permitted pursuant to U.S. GAAP, as determined based on estimates and assumptions deemed reasonable by the ~~exception~~Company. The Company engages third-party valuation specialists to assist with preparation of critical assumptions and calculations of the ~~following: i)pre-acquisition~~ ~~contingencies which are recognized and measured in accordance with ASC 450,~~~~Contingencies~~ ~~(“ASC 450”) if~~ fair value ~~cannot be determined; ii) indemnification~~of acquired tangible and intangible assets ~~which are recognized and recorded~~ in ~~accordance~~connection with ASC 805 consistent with that used to measure the liabilities to which they relate, subject to any contractual limitations; iii) deferred income tax assets acquired and liabilities assumed which are recognized and measured in accordance with ASC 740,~~Income Taxes~~~~; iv) certain lease related assets and liabilities which are measured and recognized in accordance with ASC 842,~~~~Leases~~ ~~and; v) assets held for sale which are measured in accordance with ASC 360,~~~~Impairment or Disposal of Long-Live Assets~~. The Company has not finalized its accounting for the APi Acquisition as this transaction occurred during the fourth quarter of 2019. The areas of the purchase price allocation that are not yet finalized are primarily related to the valuation of: i) property and equipment; ii) intangible assets; iii) lease-related assets and liabilities; iv) indemnification assets and; v)~~pre-acquisition~~ ~~contingencies. Additionally, the purchase price allocation is provisional for incometax-related~~ matters and a final determination of deferred purchase consideration. The Company anticipates it will finalize its accounting for the APi Acquisition, including the allocation of goodwill to reporting units, during the third quarter of 2020.

significant acquisitions. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed ~~has been~~is recorded as goodwill. ~~The APi Acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative~~Goodwill is attributable to ~~prior similar acquisitions driven by maturity and quality~~the workforce of the acquired businesses, the complementary strategic fit and resulting synergies these businesses bring to existing operations, and ~~industry, including workforce, and how~~the opportunities in new markets expected to be achieved from the expanded platform.

2024 Acquisitions

During the three months ended March 31, 2024, the Company ~~expects to leverage this business~~completed three individually immaterial acquisitions for aggregate consideration transferred of $28, made up of cash paid at closing of $23 and accrued consideration of $5. The results of operations of these acquisitions are included in the Company’s condensed consolidated statements of operations from their respective dates of acquisition and were not material.

2023 Acquisitions

During 2023, the Company completed an acquisition included within the ~~public capital markets to create additional value~~Safety Services segment ("Acquisition A23"). The results of the A23 business are reported within the Company's Safety Services segment. Consideration for ~~its shareholders.~~ Acquisition A23 included cash paid at closing of $30, cash deposited into escrow for future deferred payments of $5, and accrued consideration of $3.

During 2023, the Company completed an acquisition included within the Safety Services segment ("Acquisition B23"). The results of the B23 business are reported within the Company's Safety Services segment. Consideration for Acquisition B23 included cash paid at closing of $27 and accrued consideration of $5.

During 2023, the Company completed five individually immaterial acquisitions for aggregate consideration transferred of $24, made up of cash paid at closing of $22 and accrued consideration of $2.

The results of operations of these acquisitions are included in the Company’s condensed consolidated statement of operations from their respective dates of acquisition and were not material.

The Company has ~~assigned~~not finalized its accounting for the ~~provisional goodwill~~acquisitions and will make appropriate adjustments to ~~its reportable segments as follows: i) Safety Services—$633; ii) Specialty Services—$286; iii) Industrial Services—$50. Under~~ the ~~terms~~purchase price allocation prior to completion of the ~~Purchase Agreement,~~measurement periods, as required. Based on preliminary estimates, the ~~Sellers made a Section 338(h)(10) election under the US IRC. Accordingly,~~total amount of goodwill ~~attributable to the US operating subsidiaries and thestep-up~~ ~~to fair value allocated to US domiciled property and equipment and intangible assets reflected in the acquisition date balance sheet are~~from acquisitions expected to be deductible for ~~US income tax purposes. The provisional amount of goodwill that is expected to be deductible for US income~~ tax purposes is ~~$917.~~

~~Prior~~$47. See Note 6 - "Goodwill and Intangibles" for the provisional goodwill assigned to ~~the APi Acquisition, one~~each segment.

Table of the APi Group subsidiaries was the subject of a class action lawsuit in which the plaintiffs claim the Subsidiary owed unpaid overtime wages stemming from its alleged misclassification of employees as exempt from~~time-and-a-half~~ pay under the Fair Labor Standards Act (FLSA). During September 2019, prior to the APi Acquisition, a tentative settlement was reached under which the Subsidiary agreed to pay approximately $20 to the participants in the class action. Accordingly, pursuant to ASC 805, a liability for this~~pre-acquisition~~ contingency was recognized. This matter was included as a specifically identified indemnification matter in the Purchase Agreement, for which the Company recognized an indemnification asset in purchase accounting, as the amount is deemed realizable based on the contractual nature of this item. During the quarter ended March 31, 2020, the indemnified matter was funded by the former stockholders.

Contents

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

The following table summarizes ~~the preliminary fair value of consideration transferred and~~ the preliminary estimated fair values of the assets acquired and liabilities assumed at the ~~date~~dates of ~~the APi Acquisition:~~

Cash paid at closing
   $ 2,703
Deferred consideration
   135
Share consideration—28,373,000 APG ordinary shares
   291


Total consideration
   $ 3,129



Cash
   $ 138
Accounts receivable
   770
Contract assets
   350
Other current assets
   182
Property and equipment
   416
Finance and operating lease right of use assets
   102
Other noncurrent assets
   72
Assets held for sale
   14
Intangibles
   1,182
Goodwill
   969
Accounts payable
   (188 )
Contract liabilities
   (206 )
Accrued expenses
   (392 )
Other current liabilities
   (57 )
Operating lease liability
   (101 )
Finance lease liability
   (18 )
Deferred tax liability
   (25 )
Other noncurrent liabilities
   (79 )


Net assets aquired
   $ 3,129

acquisition:


	Acquisition A23		Acquisition B23		Other 2023 acquisitions
Cash paid at closing	$	30	$	27	$	22
Cash deposited into escrow	5		—		—
Accrued consideration	3		5		2
Total net consideration	$	38	$	32	$	24

Cash and cash equivalents	—		1		—
Accounts receivable	6		7		—
Contract assets	1		2		—
Other current assets	—		—		1
Intangible assets	13		11		9
Goodwill	21		15		16
Other accrued liabilities	—		(2)		—
Contract liabilities	(3)		(2)		(2)
Net assets acquired	$	38	$	32	$	24

Accrued consideration

The ~~fair value of the acquired trade accounts receivables approximates the carrying value of trade accounts receivables due~~Company’s acquisition purchase agreements typically include deferred payment provisions, often to ~~the short-term nature of the expected timeframe to collect the amounts due to the Company and the contractual cash flows, which are expected to be collected related to these receivables.~~

As part of the purchase price allocation, the Company determined the identifiable intangible assets were: i) customer relationships; ii) tradenames and trademarks and; iii) contractual backlog. The fair value of the intangible assets was estimated using variations of the income approach. Specifically, the excess earnings method was utilized to estimate the fair value of the customer relationships and the contractual backlog and the relief from royalty method was utilized to estimate the fair value of the tradenames and trademarks. The customer relationships intangible asset pertains to APi Group’s~~non-contractual~~ relationships with its customers. Tradenames and trademarks relate to the individual acquired subsidiaries’ names and overall consolidated group name and related industry recognition. Contractual backlog represents the expected remaining cash flows to be received under~~non-cancellable~~ customer contracts, which are anticipated to be completed within the next 15 months. The cash flow projections were discounted using rates ranging from 15.7% to 17.5%. The cash flows were based on estimates used to price the transaction, including market participant considerations, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~The following table summarizes the preliminary fair value of the identifiable intangible assets:~~

Contractual backlog
   $ 112
Customer relationships
   762
Tradenames and trademarks
   308


Total intangibles
   $ 1,182

The estimated useful lives over which the intangible assets will be amortized are as follows: contractual backlog (15 months), customer relationships (8 years), and tradenames and trademarks (15 years).

Pursuant to the terms of the Purchase Agreement, approximately $2 of cash consideration and $18 of share consideration (1,746,342 ordinary shares) were placed into escrow. As of March 31, 2020, 608,016 shares had been released from escrow. The cash escrow and share consideration escrow represent escrow accounts established for consideration adjustments that may be required to be made by the employee stock ownership plan (“ESOP”). The share consideration placed in escrow is specifically related to any indemnification matters, including certain specifically identified indemnification matters in the Purchase Agreement (the “Indemnity Escrow Account”) related to~~pre-acquisition~~ asserted claims and litigation. The Indemnity Escrow Account will remain in place until the later of March 31, 2021 or the receipt of the Final Determination Letter (as defined in the Purchase Agreement) in relation to the termination of the ESOP, to the extent there are no submitted but unsettled indemnification claims at that date. Prior to the APi Acquisition, the ESOP held an approximately 36% ownership interest in APi Group. Pursuant to the terms of the Purchase Agreement, the Purchase Agreement contains an indemnification cap of $45. For any indemnification claims that are identified, the~~pro-rata~~ ~~portion that relates to the ESOP shareholders of APi Group will be paid from the Indemnity Escrow Account up to $18. For any indemnification claims that are identified, thepro-rata~~ ~~portion that relates to thenon-ESOP~~ ~~shareholders of APi Group will require settlement directly from those former shareholders.~~

~~The following unaudited pro forma consolidated financial information reflects the results of operations~~sellers who become employees of the Company for the three months ended March 31, 2019 as if the APi Acquisition and related financing had occurred as of January 1, 2018, after giving effect to certain purchase accounting and financing adjustments. These amounts are based on financial information of APi Group and are not necessarily indicative of what Company’s operating results would have been had the acquisition and related financing taken place on January 1, 2018.

   Three Months
Ended
March 31, 2019
(Predecessor)
Net revenue
   $ 922
Net loss
   (10 )

Pro forma financial information is presented as if the operations of APi Group had been included in the consolidated results of the Company since January 1, 2018 and gives effect to transactions that are directly attributable to the APi Acquisition and related financing. Successor and Predecessor periods have been combined in the pro forma financial information for the three months ended March 31, 2019 with pro forma adjustments to adjust for the different basis in accounting between the Successor and the Predecessor. Adjustments include: additional depreciation and amortization expense related to the fair value of acquired property and equipment and intangible assets as if such assets were acquired on January 1, 2018; interest expense under the Company’s $1,200 term loan under a new term loan facility as if the amount borrowed to partially finance the purchase price was borrowed on January 1, 2018; and adjustments for interest and investment income on cash and cash equivalents and investments in marketable securities held by the Company for the three months ended March 31, 2019 related to

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

the IPO proceeds generated and invested until the completion of the APi Acquisition as the pro forma financial statements assume that the IPO financing occurred on January 1, 2018 and the proceeds were used to complete the APi Acquisition concurrently. Further adjustments assume income taxes for the Predecessor periods based on a blended US federal and state statutory tax rate.

~~The purchase agreements related to APi Group’s previously completed acquisitions typically included deferred payment provisions to the former owners, who became employees of APi Group.~~or its subsidiaries. The provisions are made up of ~~two~~three general types of arrangements, ~~both~~contingent compensation and contingent consideration (both of which are contingent on the future performance of the acquired ~~entity; contingent~~entity) and deferred payments related to indemnities. Contingent compensation ~~and contingent consideration. Compensation~~ arrangements are ~~also~~typically contingent on the former owner’s future employment with ~~APi Group. The expense~~the Company, and the related ~~to contingent compensation arrangements is~~amounts are recognized over the required employment period, which is typically ~~three~~one to ~~five~~four years. Contingent consideration arrangements are not contingent on employment and are included as part of purchase consideration at the time of the initial ~~acquisition. Both the compensation-type~~acquisition and ~~contingent consideration arrangements~~ are ~~typically~~ paid over a ~~three-~~one to ~~five-year~~four year period.

The ~~total~~liability for deferred payments is recognized at the date of acquisition based on the Company’s best estimate and is typically payable over a one to three year period. Deferred payments are not contingent ~~compensation arrangement liability assumed as part of the APi Acquisition was $27.~~ on any future performance or employment obligations and can be offset for working capital true-ups, and representations and warranty items.

The total contingent compensation arrangement liability was ~~$34~~$11 and ~~$30 at~~$9 as of March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, respectively. The maximum payout of these arrangements upon completion of the future performance periods ~~is $102~~was $15 and ~~$99,~~$15, inclusive of the ~~$34~~$11 and ~~$30~~$9, accrued as of March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, respectively. The contingent compensation liability is included in contingent consideration and compensation liabilities in the condensed consolidated balance sheets for all periods presented. ~~Compensation expense is recognized~~The Company primarily determines the contingent compensation liability based on ~~the individual arrangement’s portion of the~~forecasted cumulative earnings ~~achieved~~ compared to the cumulative earnings target set forth in the ~~arrangement in conjunction~~arrangement. Compensation expense associated with ~~the portion of~~these arrangements is recognized ratably over the required employment ~~period that has passed compared to what is remaining.~~

period.

The ~~total accrued~~ contingent consideration ~~obligation assumed as part~~obligations are measured at fair value each reporting period and changes in estimates of ~~the APi Acquisition was $8 which is included~~fair value are recognized in ~~other accrued and other noncurrent liabilities as of October 1, 2019.~~

~~The~~earnings. For additional considerations regarding the fair value of the Company's contingent consideration obligations assumed related to APi Group’s previously completed acquisitions is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. There are no elements of contingent consideration related to the APi Acquisition, other than those liabilities, ~~assumed related to APi Group’s previously completed acquisitions. See~~see Note ~~8 – “Fair~~7 - "Fair Value of Financial ~~Instruments”~~Instruments."

The total liability for ~~further information regarding the contingent consideration liabilities.~~

In conjunction with the APi Acquisition, the Company acquired certain assets that qualified as held for sale. Accordingly, these assets were recognized by the Company in purchase accounting at fair value less the cost to selldeferred payments was $21 and ~~totaled $14. All of these assets were sold by the Company~~$17 as of March 31, ~~2020.~~

~~Note 5. Divestitures~~2024 and ~~Held~~December 31, 2023, respectively, and is included in contingent consideration and compensation liabilities in the condensed consolidated balance sheets for ~~Sale~~

all periods presented.

NOTE 4. RESTRUCTURING

During 2022, the Company announced its multi-year Chubb restructuring program designed to drive efficiencies and synergies and optimize operating margin. The Chubb restructuring program includes expenses related to workforce reductions, lease termination costs, and other facility rationalization costs through fiscal year 2025.

Table of Contents

During the ~~fourth quarter 2019,~~three months ended March 31, 2024, the Company ~~determined its intent to sell or otherwise discontinue operations of two subsidiaries in its Industrial~~incurred pre-tax restructuring costs within the Safety Services segment ~~and classified~~of $1 in connection with the ~~net book value~~Chubb restructuring program. Since the Chubb Acquisition, the Company has incurred aggregate restructuring costs of ~~those companies as held for sale in the consolidated balance sheet.~~$68. As of March 31, ~~2020,~~2024, the Company ~~has completed the divestiture of one of the subsidiaries and the~~had $24 in restructuring liabilities recorded in other ~~subsidiary remains classified as held for sale. The sale was completed for $10, for which the Company recorded a note receivable within prepaid expense and other current assets~~accrued liabilities on the condensed consolidated balance ~~sheet. The divestiture resulted in no gain or loss on sale.~~

sheets for this plan. In addition, the Company has incurred $4 of related costs which include lease impairment charges, asset write-downs, and consulting fees.

~~APi Group Corporation~~

~~Notes~~In total, the Company estimates that it will recognize approximately $125 of restructuring and other costs related to ~~Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares~~the Chubb restructuring program by the end of fiscal year 2025.

For the restructuring program, employee-related costs consist of termination benefits provided to employees who have been involuntarily terminated and ~~where noted otherwise)~~

~~(Unaudited)~~

voluntary early retirement benefits. Program related costs include costs incurred as a direct result of the restructuring program such as consulting fees and facility relocation costs.

The following table ~~presents information related to~~summarizes the ~~major classes of assets that were classified as assets held for sale in the consolidated balance sheets:~~

   March 31,
2020
(Successor)    December 31,
2019
(Successor)
Property and equipment, net
   $ —      $ 9
Goodwill
   —      1
Intangible assets, net⁽¹⁾
   5    10




Total assets held for sale
   $ 5    $ 20

~~(1)~~

~~During the three months ended March 31, 2020, the Company recorded an impairment of $5 on the intangible assets of a subsidiary held for sale as a result of the triggering events associated with theCOVID-19~~ ~~pandemic.~~

~~Note 6. Revenue~~

~~Under ASC 606,~~~~Revenue from Contracts with Customers (“ASC 606”)~~, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is primarily recognized by the Company over time utilizing the~~cost-to-cost~~ ~~measure of progress, consistent with the Company’s previous revenue recognition practices. Revenue recognized at a point in time relates primarily to distribution contracts and was not material~~Company's restructuring program for the three months ended March 31, ~~2020 (Successor)~~2024 and ~~2019 (Predecessor), respectively.~~

2023:

Employee termination benefits Program related costs Asset write-downs Total
December 31, 2023 $ 32 $ — $ 6 $ 38
Charges 1 4 — 5
Payments (8) (4) — (12)
Currency translation adjustment (1) — — (1)
March 31, 2024 $ 24 $ — $ 6 $ 30

Employee termination benefits Program related costs Asset write-downs Total
December 31, 2022 $ 22 $ — $ — $ 22
Charges — — — —
Payments (5) — — (5)
March 31, 2023 $ 17 $ — $ — $ 17

NOTE 5. NET REVENUES

Contracts with ~~customers:~~customers

The Company derives ~~revenue~~net revenues primarily from ~~Safety Services, Specialty Services and Industrial Services~~ contracts with a duration of less than one week to three years ~~with~~(with the majority of contracts with durations of less than six ~~months,~~months), which are subject to multiple pricing options, including fixed price, unit price, time and ~~materials,~~material, or cost plus a markup. Net revenues are primarily recognized by the Company over time utilizing the cost-to-cost measure of progress. Net revenues recognized at a point in time primarily relate to distribution contracts and short-term time and material contracts. The Company also enters into fixed-price service contracts related to monitoring, maintenance, and inspection of safety systems. ~~The Company may utilize subcontractors in the fulfillment~~

Table of ~~its performance obligations. When doing so, the Company is considered the principal in these transactions and revenue is recognized on a gross basis.~~

~~Revenue for fixed price agreements is generally recognized over time using thecost-to-cost~~ ~~method of accounting, which measures progress based on the cost incurred to total expected cost in satisfying its performance obligation. Thecost-to-cost~~ method is used as it best depicts the continuous transfer of control of goods or services to the customer. Costs incurred include direct materials, labor and subcontract costs, and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. These contract costs are included in the results of operations under cost of revenues. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed.

Revenue from time and material contracts is recognized as the services are provided and is equal to the sum of the contract costs incurred plus an agreed upon markup. Revenue earned from distribution contracts is recognized upon shipment or performance of the service.

~~The cost estimation process for recognizing revenue over time under thecost-to-cost~~ method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s profit recognition. Changes in these factors could result in cumulative revisions to revenue in the period in which the revisions are determined, which could materially affect the Company’s consolidated results of operations for that period. Provisions for estimated losses on uncompleted contracts are recorded in the period in which such estimated losses are determined.

Contents

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

The Company disaggregates its ~~revenue~~net revenues primarily by segment, service type, and country from which revenues are invoiced, as the nature, timing, and uncertainty of cash flows are relatively consistent within each of these categories. The following tables provide disclosure of disaggregated net revenues by segment for the three months ended March 31, 2024 and 2023. Disaggregated ~~revenue~~net revenues information is as follows:

   Three Months Ended March 31, 2020 (Successor)
   Safety    Specialty    Industrial    Corporate and
   Services    Services    Services    Eliminations Consolidated
Life safety
   $ 343    $ —      $ —      $ —   $ 343
Mechanical
   81    —      —      —   81
Infrastructure/Utility
   —      170    —      —   170
Fabrication
   —      38    —      —   38
Specialty contracting
   —      92    —      —   92
Transmission
   —      —      93    —   93
Civil
   —      —      7    —   7
Inspection
   —      —      37    —   37
Corporate and eliminations
   —      —      —      (3 ) (3 )








Net revenues
   $ 424    $ 300    $ 137    $ (3 ) $ 858









   Three Months Ended March 31, 2019 (Predecessor)
   Safety    Specialty    Industrial    Corporate and
   Services    Services    Services    Eliminations Consolidated
Life safety
   $ 334    $ —      $ —      $ —   $ 334
Mechanical
   92    —      —      —   92
Infrastructure/Utility
   —      160    —      —   160
Fabrication
   —      41    —      —   41
Specialty contracting
   —      85    —      —   85
Transmission
   —      —      151    —   151
Civil
   —      —      2    —   2
Inspection
   —      —      60    —   60
Corporate and eliminations
   —      —      —      (3 ) (3 )








Net revenues
   $ 426    $ 286    $ 213    $ (3 ) $ 922








   Three Months Ended March 31, 2020 (Successor)
   Safety    Specialty    Industrial    Corporate and
   Services    Services    Services    Eliminations Consolidated
United States
   $ 376    $ 300    $ 131    $ (3 ) $ 804
Canada and United Kingdom
   48    —      6    —   54








Net revenues
   $ 424    $ 300    $ 137    $ (3 ) $ 858









   Three Months Ended March 31, 2019 (Predecessor)
   Safety    Specialty    Industrial    Corporate and
   Services    Services    Services    Eliminations Consolidated
United States
   $ 374    $ 286    $ 186    $ (3 ) $ 843
Canada and United Kingdom
   52    —      27    —   79








Net revenues
   $ 426    $ 286    $ 213    $ (3 ) $ 922

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~The Company’s~~
Three Months Ended March 31, 2024
Safety
Services Specialty
Services Consolidated
Life Safety $ 1,103 $ — $ 1,103
Heating, Ventilation, and Air Conditioning ("HVAC") 111 — 111
Infrastructure/Utility — 205 205
Fabrication — 50 50
Specialty Contracting — 134 134
Corporate and Eliminations — — (2)
Net revenues $ 1,214 $ 389 $ 1,601


	Three Months Ended March 31, 2023
	Safety Services		Specialty Services		Consolidated
Life Safety	$	1,068	$	—	$	1,068
HVAC	123		—		123
Infrastructure/Utility	—		240		240
Fabrication	—		55		55
Specialty Contracting	—		135		135
Corporate and Eliminations	—		—		(7)
Net revenues	$	1,191	$	430	$	1,614


	Three Months Ended March 31, 2024
	Safety Services		Specialty Services		Corporate and Eliminations		Consolidated
United States	$	581	$	384	$	(2)	$	963
France	162		—		—		162
Other	471		5		—		476
Net revenues	$	1,214	$	389	$	(2)	$	1,601


	Three Months Ended March 31, 2023
	Safety Services		Specialty Services		Corporate and Eliminations		Consolidated
United States	$	560	$	417	$	(7)	$	970
France	156		—		—		156
Other	475		13		—		488
Net revenues	$	1,191	$	430	$	(7)	$	1,614

For in-process contracts, with its customers generally require significant services to integrate complex activities and equipment into a single deliverable, and are therefore generally accounted for as a single performance obligation to provide a single contracted service for the duration of the project. For contracts with multiple performance obligations, the transaction price of a contract is allocated to each performance obligation and recognized as revenue when or as the performance obligation is satisfied using the estimated stand-alone selling price of each distinct good or service. The stand-alone selling price is estimated using the expected cost plus a margin approach for each performance obligation. The aggregate amount of transaction price allocated to the unsatisfied performance obligations ~~that are unsatisfied as of~~at March 31, ~~2020,~~2024 was ~~$1,433.~~

~~When more than one contract is entered into with a customer~~$2,894. The Company expects to recognize revenue on or close to the same date, management evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as one, or more than one, performance obligation. This evaluation requires significant judgment and is based on the facts and circumstancesapproximately 86% of the ~~various contracts.~~

Contracts are often modified through change orders to account for changes in the scope and price of the goods or services being provided. Although the Company evaluates each change order to determine whether such modification creates a separate performance obligation, the majority of change orders are for goods or services that are not distinct within the context of the original contract and, therefore, are not treated as separateremaining performance obligations ~~but rather as a modification~~over the next twelve months.

Table of ~~the existing contract and performance obligation.~~

~~Variable consideration:~~ Transaction prices for customer contracts may include variable consideration, which comprises items such as early completion bonuses and liquidated damages provisions. Management estimates variable consideration for a performance obligation utilizing estimation methods that are believed to best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

~~Changes in the estimates of transaction prices are recognized in revenue on a cumulativecatch-up~~ basis in the period in which the revisions to the estimates are made. Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate. For the three months ended March 31, 2020 (Successor) and 2019 (Predecessor), the Company did not recognize significant revenue associated with the final settlement of contract value for any projects that were completed in prior periods. In addition, for the three months ended March 31, 2020 (Successor) and 2019 (Predecessor), there were no significant reversals of revenue recognized associated with the revision of transaction prices. The Company typically does not incur any returns, refunds or similar obligations after the completion of the performance obligation since any deficiencies are corrected during the course of performance.

Contents

Contract assets and ~~liabilities:~~ The Company typically invoices customers with payment terms of net due in 30 days. It is also common for the contract in the industry to specify that a general contractor is not required to submit payments to a subcontractor until it has received those funds from the owner or funding source. In most instances, the Company receives payment of invoices between 30 to 90 days of the date of the invoice.

~~The timing of revenue recognition may differ from the timing of invoicing to customers.~~ liabilities

Contract assets ~~include unbilled amounts from the Company’s projects when revenues recognized under thecost-to-cost~~ ~~measure of progress exceed the amounts invoiced to the Company’s customers, as the amounts cannot be billed under the terms of the Company’s contracts. In addition, many of the Company’s time~~ and ~~materials arrangements are billed in arrears pursuant to~~ contract ~~terms, resulting in contract assets being recorded, as revenue is recognized in advance of billings.~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

The Company utilizes the practical expedient under ASC 606 and does not adjust for a significant financing component if the time between payment and the transfer of the related good or service is expected to be one year or less. The Company’s revenue arrangements are typically accounted for under such expedient as payments are within one year of performance for the Company’s services. As of March 31, 2020, none of the Company’s contracts contained a significant financing component. Contract liabilities from the Company’s construction contracts arise when amounts invoiced to the Company’s customers exceed revenues recognized under the~~cost-to-cost~~ measure of progress. Contract liabilities also include advance payments from the Company’s customers on certain contracts. Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation. Contact assets and liabilities are classified as current in the condensed consolidated balance sheets as all amounts are expected to be relieved within one year.

The ~~opening and closing~~ balances of accounts receivable, net of allowances, contract assets, and contract liabilities from contracts with customers as of March 31, ~~2020~~2024 and December 31, ~~2019~~2023 are as follows:

   March 31,    December 31, December 31,
   2020    2019 2018
   (Successor)    (Successor) (Predecessor)
Accounts receivable, net of allowances
   $ 662    $ 730 $ 765
Contract assets
   251    245 240
Contract liabilities
   205    193 203


	Accounts receivable, net of allowances		Contract assets		Contract liabilities
Balance at March 31, 2024	$	1,256	$	458	$	542
Balance at December 31, 2023	1,395		436		526

The Company did not recognize significant ~~revenue~~revenues associated with the final settlement of contract value for any projects ~~that were~~ completed in prior periods. In accordance with industry practice, accounts receivable includes retentions receivable, a portion of which may not be received within one year. At March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, retentions receivable were ~~$116~~$146 and ~~$133,~~$156, respectively, while the portions that may not be received within one year were ~~$24~~$30 and ~~$28,~~$25, respectively. There were no other significant changes due to business acquisitions or significant changes in estimates of contract progress or transaction price. There was no significant impairment of contract assets recognized during the period.

~~Costs to obtain or fulfill a contract:~~ The Company generally does not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project. The Company may incur certain fulfilment costs such as initial design or mobilization costs which are capitalized if: (i) they relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the Company’s performance obligation under the contract, and (iii) are expected to be recovered through revenue generated under the contract. Such costs, which are amortized over the life of the respective project, were not material for any period presented. The Company generally does not incur any significant costs related to obtaining a contract with a customer.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~Note 7.~~

NOTE 6. GOODWILL AND INTANGIBLES

Goodwill

The following table provides disclosure of goodwill by segment as of March 31, 2024 and ~~Intangibles~~

~~Goodwill:~~December 31, 2023. The changes in the ~~preliminary~~ carrying amount of goodwill by reportable segment for the three months ended March 31, ~~2020~~2024 are as ~~follows (amounts primarily represent~~follows:


	Safety Services		Specialty Services		Total Goodwill
Goodwill as of December 31, 2023	$	2,294	$	177	$	2,471
Acquisitions	21		7		28
Foreign currency translation and other, net (1)	(28)		—		(28)
Goodwill as of March 31, 2024	$	2,287	$	184	$	2,471

(1) Other includes measurement period adjustments recorded during the ~~preliminary estimate of goodwill attributable~~three months ended March 31, 2024 related to acquisitions for which the ~~APi Acquisition):~~

   Safety    Specialty    Industrial    Total
   Services    Services    Services    Goodwill
Goodwill as of December 31, 2019
   $ 639    $ 290    $ 51    $ 980
Acquisitions
   —      2    —      2
Impairments⁽¹⁾
   (34 )    (120 )    (49 )    (203 )
Measurement period adjustments
   (6 )    (4 )    (2 )    (12 )








Goodwill as of March 31, 2020
   $ 599    $ 168    $ —      $ 767

~~(1) During~~measurement period ended during the ~~first quarter of 2020, the Company concluded that a triggering event had occurred for all of its reporting units (See~~three months ended March 31, 2024 (see Note ~~2 – “Basis of Presentation and Significant Accounting Policies”~~3 - "Business Combinations"). ~~Pursuant to the authoritative literature, the Company performed an impairment test and recorded an impairment charge of $203 to reflect the impairment of its goodwill.~~

Intangibles

The impairment charge of $34 recorded within the Safety Services segment was recorded within the Mechanical reporting unit. The impairment charge of $120 recorded within the Specialty Services segment was recorded within the Infrastructure/Utility reporting unit, Fabrication reporting unit and Specialty Contracting reporting unit for $80, $17 and $23, respectively. The impairment charge of $49 recorded within the Industrial Services segment was recorded within the Transmission reporting unit and Civil reporting unit for $45 and $4, respectively. The impairment charge was recorded based on preliminary estimates of each reporting unit’s carrying values, and may change in future periods as the accounting for the APi Acquisition is finalized (See Note 2 – “Basis of Presentation and Significant Accounting Policies”).

~~Intangibles:~~ ~~The Company has the following~~Company’s identifiable intangible assets are comprised of the following as of March 31, ~~2020~~2024 and December 31, ~~2019 (amounts primarily represent the preliminary estimate~~2023:


	March 31, 2024
	Weighted Average Remaining Useful Lives (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangibles:
Contractual backlog	0.0	$	154	$	(154)	$	—
Customer relationships	9.2	1,536		(553)		983
Trade names and trademarks	11.9	713		(147)		566
Total		$	2,403	$	(854)	$	1,549

Table of ~~intangibles attributable to the APi Acquisition):~~

   March 31, 2020
   Weighted-Average    Gross
   Useful Lives    Carrying    Accumulated    Net Carrying
   (Years)    Amount    Amortization    Amount
Amortized intangibles:

Backlog intangibles
   1    $ 112    $ (45 )    $ 67
Customer relationships
   8    755    (48 )    707
Trade names
   15    305    (10 )    295






Total
      $ 1,172    $ (103 )    $ 1,069






   December 31, 2019
   Weighted-Average    Gross
   Useful Lives    Carrying    Accumulated    Net Carrying
   (Years)    Amount    Amortization    Amount
Amortized intangibles:

Backlog intangibles
   1    $ 112    $ (22 )    $ 90
Customer relationships
   8    755    (24 )    731
Trade names
   15    305    (5 )    300






Total
      $ 1,172    $ (51 )    $ 1,121

Contents

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

December 31, 2023
Weighted Average Remaining
Useful Lives
(in Years) Gross
Carrying
Amount Accumulated
Amortization Net Carrying
Amount
Amortized intangibles:
Contractual backlog 0.5 $ 155 $ (154) $ 1
Customer relationships 9.4 1,552 (518) 1,034
Trade names and trademarks 12.1 722 (137) 585
Total $ 2,429 $ (809) $ 1,620

Amortization expense recognized on ~~intangibles was~~identifiable intangible assets is as follows:

   Three Months Ended March 31,
   2020
(Successor)       2019
(Predecessor)
Cost of revenues
   $ 22       $ —
Selling, general, and administrative expense
   30       9




Total intangible asset amortization expense
   $ 52       $ 9


	Three Months Ended March 31,
	2024		2023
Cost of revenues	$	—	$	7
Selling, general, and administrative expenses	50		48
Total intangible asset amortization expense	$	50	$	55

~~Note 8. Fair Value of Financial Instruments~~

NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS

U.S. GAAP defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ~~Management considers debt to approximate fair value.~~ The authoritative guidance discusses valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:

~~Level~~ 1:

~~Observable inputs such as quoted prices for identical assets or liabilities in active markets.~~

~~Level~~ 2:

Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

~~Level~~ 3:

~~Unobservable inputs that reflect the reporting entity’s own assumptions.~~

Level 1:Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2:Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3:Unobservable inputs that reflect the Company's own assumptions.

Recurring ~~Fair Value Measurements:~~fair value measurements

The Company’s financial assets and liabilities ~~adjusted~~(adjusted to fair value at least ~~annually~~quarterly) are derivative instruments and contingent consideration ~~which~~obligations. In the condensed consolidated balance sheets, derivative instruments are primarily included in other assets and other noncurrent liabilities, and contingent consideration obligations are primarily included in contingent consideration and compensation liabilities.

Table of Contents

The following tables summarize the fair values and levels within the fair value hierarchy in which the measurements fall for assets and liabilities measured on a recurring basis as of March 31, ~~2020~~2024 and December 31, ~~2019:~~

   Fair Value Measurements at March 31, 2020
   Level 1    Level 2    Level 3    Total
Derivatives
   $ —      $ (36 )    $ —      $ (36 )
Contingent consideration obligations
   —      —      (9 )    (9 )








   $ —      $ (36 )    $ (9 )    $ (45 )








   Fair Value Measurements at December 31, 2019
   Level 1    Level 2    Level 3    Total
Derivatives
   $ —      $ —      $ —      $ —
Contingent consideration obligations
   —      —      (7 )    (7 )








   $ —      $ —      $ (7 )    $ (7 )

2023:


	Fair Value Measurements at March 31, 2024
Financial assets:	Level 1		Level 2		Level 3		Total
Derivatives designated as hedge instruments
Cash flow hedges - interest rate swaps	$	—	$	22	$	—	$	22
Cash flow hedges - cross currency contracts	—		11		—		11
Cash flow hedges - foreign currency forward contracts	—		—		—		—
Net investment hedges - cross currency contracts	—		22		—		22
Fair value hedges - cross currency contracts	—		30		—		30
Derivatives not designated as hedge instruments
Foreign currency forward contracts	—		—		—		—
Total	$	—	$	85	$	—	$	85

Financial liabilities:
Derivatives not designated as hedge instruments
Foreign currency forward contracts	—		—		—		—
Contingent consideration obligations	—		—		(6)		(6)
Total	$	—	$	—	$	(6)	$	(6)


	Fair Value Measurements at December 31, 2023
Financial assets:	Level 1		Level 2		Level 3		Total
Derivatives designated as hedge instruments
Cash flow hedges - interest rate swaps	$	—	$	7	$	—	$	7
Cash flow hedges - cross currency contracts	—		10		—		10
Net investment hedges - cross currency contracts	—		20		—		20
Fair value hedges - cross currency contracts	—		17		—		17
Derivatives not designated as hedge instruments
Foreign currency forward contracts	—		—		—		—
Total	$	—	$	54	$	—	$	54

Financial liabilities:
Derivatives not designated as hedge instruments
Foreign currency forward contracts	—		—		—		—
Contingent consideration obligations	—		—		(6)		(6)
Total	$	—	$	—	$	(6)	$	(6)

The Company determines the fair value of its ~~interest rate swaps (“Derivatives”)~~derivative instruments designated as hedge instruments using standard pricing models and market-based assumptions for all inputs such as yield curves and quoted spot and forward exchange rates. Accordingly, the Company’s derivative instruments are classified as Level 2.

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

Contingent consideration obligations

The value of the contingent consideration obligations is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts ~~due, etc.)~~due) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows, and a discount rate. Depending on the

Table of Contents

contractual terms of the purchase agreement, the ~~probability~~probabilities of achieving future cash flows or earnings generally represent the only significant unobservable inputs. The contingent consideration obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

The table below presents a reconciliation of the fair value of the Company’s contingent consideration obligations that use unobservable inputs (Level 3), as well as other information about the contingent consideration obligations:

   Three
Months
Ended
March 31,
2020
Balances at beginning of period
   $ 7
Acquisitions
   —
Issuances
   —
Settlements
   —
Adjustments to fair value
   2


Balance at end of period
   $ 9


Number of open contingent consideration arrangements at the end of period
   6
Maximum potential payout at end of period
   $ 11


	Three Months Ended March 31, 2024
Balance as of December 31, 2023	$	6
Issuances	—
Settlements	—
Balance as of March 31, 2024	$	6
Number of open contingent consideration arrangements at the end of the period	2
Maximum potential payout at the end of the period	$	6

At March 31, ~~2020,~~2024, the remaining open contingent consideration arrangements are set to expire at various dates through ~~March 2023.~~2025. Level 3 unobservable inputs were used to calculate the fair value adjustments shown in the table above. The fair value adjustments and the related unobservable inputs were not considered significant for the three months ended March 31, ~~2020.~~

2024.

Fair value estimates

The following table presents the carrying amount and fair value of the Company’s variable and non-variable interest rate debt (instruments defined in Note ~~9. Derivatives~~

~~From time~~10 – “Debt”), including current portions and excluding unamortized debt issuance costs. Fair value is estimated by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to ~~time,~~be Level 2 inputs under the fair value hierarchy. The interest rates of the variable interest rate long-term debt instruments are generally reset monthly. During the three months ended March 31, 2024, the Company ~~(Successor) enters into derivative transactions~~upsized the 2021 Term Loan by an aggregate principal amount equal to ~~hedge its exposures to~~$300.


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
2019 Term Loan	$	330	$	330	$	330	$	331
2021 Term Loan	1,707		1,711		1,407		1,407
4.125% Senior Notes	337		302		337		305
4.750% Senior Notes	277		254		277		257

NOTE 8. DERIVATIVES

The Company uses foreign currency forward contracts, cross-currency swaps, and interest rate ~~fluctuations.~~swap agreements to manage risks associated with foreign currency exchange rates, net investments in foreign operations, and interest rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the condensed consolidated balance sheets at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge under ASC 815, Derivatives and Hedging. Cash flows from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the cash flows from items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.

The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts, cross currency swaps, and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major global banks and financial institutions as counterparties. The Company does not enter into derivative transactions for trading ~~purposes.~~ purposes, and is not party to any derivatives that require collateral to be posted prior to settlement.

Table of Contents

Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements do not call for collateral and no cash collateral had been received or pledged related to the underlying derivatives as of March 31, 2024.

The following table presents the fair value of derivative instruments:


	March 31, 2024						December 31, 2023
	Outstanding Gross Notional Amount		Other Assets		Other Noncurrent liabilities		Outstanding Gross Notional Amount		Other Assets		Other Noncurrent liabilities
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swaps	$	1,120	$	22	$	—	$	1,120	$	7	$	—
Cross currency contracts	120		11		—		120		10		—
Foreign currency forward contracts	8		—		—		—		—		—
Fair value hedges:
Cross currency contracts	721		30		—		721		17		—
Net investment hedges:
Cross currency contracts	230		22		—		230		20		—
Total derivatives designated as hedging instruments	2,199		85		—		2,191		54		—

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	121		—		—		73		—		1
Total derivatives not designated as hedging instruments	121		—		—		73		—		1

Total derivatives	$	2,320	$	85	$	—	$	2,264	$	54	$	1

Table of Contents

The following table presents the after tax effect of derivatives on the condensed consolidated statements of operations:


		Amount of income (expense) recognized in income
Derivatives	Location of income (expense) recognized in the condensed consolidated statements of operations	Three Months Ended March 31,
		2024		2023
Cash flow hedging relationships:
Interest rate swaps	Interest expense, net	$	9	$	2
Cross currency contracts	Investment expense (income) and other, net	2		(1)
Cross currency contracts	Interest expense, net	1		1
Foreign currency forward contracts	Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross currency contracts	Investment expense (income) and other, net	12		(8)
Cross currency contracts	Interest expense, net	1		1
Net investment hedging relationships:
Cross currency contracts	Interest expense, net	1		1
Not designated as hedging instruments:
Foreign currency forward contracts	Investment expense (income) and other, net	—		—

Currency Effects

The income (expense) from derivatives designed to offset foreign currency exposure and recorded in investment expense (income) and other, net were offset by foreign currency transaction gains and losses resulting in a net (loss) gain of $(1) and $0 for the three months ended March 31, 2024 and 2023, respectively.

The following table presents the effect of cash flow and fair value hedge accounting on accumulated other comprehensive income (loss) ("AOCI"):


	Amount of gain (loss) recognized in other comprehensive income				Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) reclassified from AOCI into income
	Three Months Ended March 31,					Three Months Ended March 31,
Derivatives	2024		2023			2024		2023
Cash flow hedging relationships:
Interest rate swaps	$	11	$	(13)	Interest expense, net	$	4	$	(4)
Cross currency contracts	(1)		1		Investment expense (income) and other, net	2		1
Forward currency forward contracts	—		—		Investment expense (income) and other, net	—		—
Fair value hedging relationships:
Cross currency contracts	—		—		Investment expense (income) and other, net	13		7
Net investment hedging relationships:
Cross currency contracts	2		(1)		Interest expense, net	(1)		(3)

Table of Contents

Cash flow hedges

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Interest rate swaps

The Company manages its fixed and floating rate debt mix using interest rate swaps. ~~Interest~~The Company uses interest rate swap contracts ~~are used by the Company~~ to separate interest rate risk management from the debt funding decision. The ~~cash paid and received from the settlement~~Company elected a method that does not require continuous evaluation of ~~interest rate swaps is included in interest expense in the consolidated statement of operations.~~

~~At March 31, 2020,~~hedge effectiveness.

During 2022, the Company ~~had a~~terminated the previously outstanding $720 notional amount interest rate swap ~~that fixes LIBOR at 1.62%~~with a maturity date in October 2024 ("2024 Interest Rate Swap"). ~~This~~The present value as of the date of termination of the 2024 Interest Rate Swap is recorded in AOCI on the condensed consolidated balance sheets. The fair value previously recognized in AOCI related to interest rate movements of the 2024 Interest Rate Swap is being amortized to interest expense on a straight-line basis through October 2024. As of March 31, 2024, approximately $10 of unrealized pre-tax gains remained in AOCI.

The Company has an aggregate $720 notional amount interest rate swap is("2026 Interest Rate Swap") and aggregate $400 notional swaps ("2028 Interest Rate Swap"), each amended on May 19, 2023 in connection with the transition to the Secured Overnight Financing Rate ("SOFR"). Refer to Note 10 - "Debt" for additional information. The 2026 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.59% over the term of the agreement, which matures in October 2026. The 2028 Interest Rate Swap exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.41% over the term of the agreements, which mature in January 2028.

As of March 31, 2024, the Company had $1,120 notional amount outstanding in the 2028 Interest Rate Swap and the 2026 Interest Rate Swap. The Company has designated these swaps as a cash flow ~~hedge~~hedges of the interest rate risk attributable to ~~the Company’s~~ forecasted variable interest (SOFR) payments ~~and has maturity dates through October 2024. The effective portion~~for its SOFR based term loans of ~~theafter-tax~~ ~~fair value unrealized gains or losses on this swap is included as a component of accumulated other comprehensive income (loss).~~

~~The fair value of the interest rate swap designated as an effective hedge was a liability of $36 and an asset of less than $1 as~~$2,037. As of March 31, ~~2020~~2024, the weighted average fixed rate of interest on these swaps was approximately 3.52%. Variations in the assets and ~~December 31, 2019, respectively. The increase in the~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

liability ~~was~~balances are primarily driven by changes in the applicable ~~LIBOR rate which was 0.99% at March 31, 2020 compared~~forward yield curves related to ~~1.76% at December 31, 2019.~~ SOFR.

Cross-currency swaps

The Company enters into cross-currency exchange contracts utilized to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to hedge exposures of certain intercompany loans subject to changes in foreign currency exchange rates. The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is ~~not a party to any derivatives that require collateral~~determined to be ~~posted prior~~no longer effective as a hedge, the Company discontinues hedge accounting prospectively.

During 2021, the Company entered into two cross-currency swaps designated as cash flow hedges with gross notional U.S. dollar equivalent amounts of $26 and $94 with maturity dates of September 2027 and 2030, respectively.

Foreign currency forward contracts

The Company utilizes foreign currency forward contracts to ~~settlement.~~

hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany charges and other payments. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in other comprehensive income until the hedged items affect earnings, at which time the hedge gain or loss is reclassified into current earnings.

The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.

Fair value hedges

The Company has certain intercompany loans subject to changes in foreign currency exchange rates. In 2022, to hedge these exposures, the Company entered into three cross-currency swaps each with maturity dates of January 2027 and are designated

Table of Contents

as fair value hedges with gross notional U.S. dollar equivalents of $271, $241, and $209 in GBP, CAD, and EUR, respectively. The Company measures the effectiveness of fair value hedges on a spot-to-spot basis. Accordingly, the spot-to-spot change in the derivative fair values are recorded in the condensed consolidated statements of operations and perfectly offset the spot-to-spot change in the underlying intercompany loans, and as such, these hedges are deemed highly effective. The excluded component of the fair values of these derivatives is reported in AOCI within shareholders’ equity in the condensed consolidated balance sheets. Any cash flows associated with these instruments are included in operating activities in the condensed consolidated statements of cash flows.

Net investment hedges

The Company has net investments in foreign subsidiaries subject to changes in foreign currency exchange rates. During 2021, the Company entered into a $230 notional foreign currency swap designated as a net investment hedge for a portion of the Company’s net investments in Euro-denominated subsidiaries. Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and are included in AOCI in the condensed consolidated balance sheets.

During 2021, the Company amended the critical terms of the foreign currency swap by extending the maturity date to July 2029 and modifying the U.S. dollar and Euro coupons. The amended swap was redesignated as a net investment hedge and is recorded at fair value with changes recorded in AOCI. The initial net investment hedge was dedesignated. The amended net investment hedge reduces the Company’s interest expense by approximately $3 annually and reduces its overall effective interest rate by approximately 24 basis points.

The fair value previously recognized in AOCI related to interest rate movements of the dedesignated swap is being amortized to interest expense on a straight-line basis through the third quarter of 2029.

Foreign currency contracts

The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on confirmed foreign currency transactions, including inventory purchases and intercompany charges and other payments. These forward contracts are undesignated for hedge accounting purposes. The changes in fair value of these contracts are recorded in investment expense (income) and other, net.

~~Note 10. Property and Equipment, Net~~

NOTE 9. PROPERTY AND EQUIPMENT, NET

The components of property and equipment atas of March 31, ~~2020~~2024 and December 31, ~~2019~~2023 are as follows:

   Estimated
Useful Lives
(In Years)    March 31,
2020    December 31,
2019
Land
   N/A    $ 20    $ 19
Building
   40    64    66
Machinery and equipment
   3–15    179    174
Autos and trucks
   5    73    67
Office equipment
   3–7    67    66
Leasehold improvements
   2–10    28    28




Total cost
      431    420
Accumulated depreciation
      (34 )    (18 )




Property and equipment, net
      $ 397    $ 402


	Estimated Useful Lives (In Years)	March 31, 2024		December 31, 2023
Land	N/A	$	21	$	27
Building	39	101		105
Machinery, equipment, and office equipment	1-20	359		353
Autos and trucks	4-10	112		112
Leasehold improvements	1-15	33		35
Total cost		626		632
Accumulated depreciation		(251)		(247)
Property and equipment, net		$	375	$	385

Depreciation expense related to property and equipment, including ~~capital~~finance leases, was ~~$18~~$19 and ~~$16 for~~$19 during the three months ended March 31, ~~2020 (Successor)~~2024 and ~~2019 (Predecessor), respectively, and~~2023, respectively. Depreciation expense is included within cost of revenues and selling, general, and administrative expenses in the ~~unaudited~~ condensed consolidated statements of operations.

~~Note 11. Debt~~

Table of Contents

NOTE 10. DEBT

Debt obligations consist of the following:

Description
   Maturity Date    March 31,
2020    December 31,
2019
Term Loan Facility

Term Loan
   October 1, 2026    $ 1,197    $ 1,200
Revolving Credit Facility
   October 1, 2024    200    —
Other Obligations
      10    14




Total debt obligations
      1,407    1,214
Less unamortized deferred financing costs
      (23 )    (24 )




Total debt, net of deferred financing costs
      1,384    1,190
Less current portion of long-term debt
      (217 )    (19 )




Long-term debt
      $ 1,167    $ 1,171


	Maturity Date	March 31, 2024		December 31, 2023
Term loan facility
2019 Term Loan	October 1, 2026	$	330	$	330
2021 Term Loan	January 3, 2029	1,707		1,407
Revolving Credit Facility	October 1, 2026	100		—
Senior notes
4.125% Senior Notes	July 15, 2029	337		337
4.750% Senior Notes	October 15, 2029	277		277
Other obligations		5		5
Total debt obligations		2,756		2,356
Less: unamortized deferred financing costs		(27)		(29)
Total debt, net of deferred financing costs		2,729		2,327
Less: short-term and current portion of long-term debt		(105)		(5)
Long-term debt, less current portion		$	2,624	$	2,322

Term loan facility

During the three months ended March 31, 2024, the Company completed its Fifth Amendment to its credit agreement, upsizing its 2021 Term Loan by an aggregate principal amount equal to $300. The loan proceeds were directed as consideration for a portion of the purchase price for the Series B Preferred Stock Conversion. For additional information regarding the Series B Preferred Stock Conversion, see Note 15 - "Shareholders' Equity and Redeemable Convertible Preferred Stock."

As of March 31, ~~2020, there was $1,197~~2024, the Company had $330 of principal outstanding under the $1,200 term loan (the "2019 Term ~~Loan bearing interest~~Loan") with a maturity date of ~~3.49% per annum based onone-month~~ ~~LIBOR plus 250 basis points.~~

October 1, 2026. The interest rate applicable to ~~borrowings~~the 2019 Term Loan is, at the Company's option, either (a) a base rate plus an applicable margin equal to 1.25% or (b) Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a credit spread adjustment ("CSA").

As of March 31, 2024, the Company had $1,707 of principal outstanding under the incremental term loan used to finance the Chubb acquisition (the "2021 Term Loan") with a maturity date of January 3, 2029. The interest rate applicable to the 2021 Term Loan is, at the Company's option, either (1) a base rate plus an applicable margin equal to 1.50% or (2) Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.50% plus a CSA.

As of March 31, 2024, the Company had $100 outstanding under the $500 five-year senior secured revolving credit facility (the “Revolving Credit Facility”). The interest rate applicable to the Revolving Credit Facility is, at the Company’s option, either (1) a base rate plus an applicable margin equal to 1.25%, or (2) a ~~Eurocurrency~~Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25%~~. The weighted-average interest rate on the Revolving Credit Facility was 4.56% as~~ plus a CSA.

Swap activity

As of March 31, ~~2020.~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~During March 2020,~~2024, the Company ~~drew $200~~had the 2026 Interest Rate Swap with $720 of notional value, exchanging one-month SOFR for a fixed rate of 3.59% per annum, and the 2028 Interest Rate Swap with aggregate $400 notional value, exchanging one-month SOFR for a rate of 3.41%. Accordingly, the Company's fixed interest rate per annum on ~~its Revolving Credit Facility, which was subsequently paid down during April 2020. At~~the first swapped $400 notional value of the term loans is 3.41% and the second swapped $720 notional value of the term loans is 3.59% through their maturity. The remaining $917 of the term loans balance will bear interest based on one month SOFR plus CSA plus 225 basis points or SOFR plus CSA plus 250 basis points, but the rate will fluctuate as SOFR fluctuates. Refer to Note 8 - "Derivatives" for additional information.

As of March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, the Company had ~~$200~~$100 and $0 outstanding under ~~this~~the Revolving Credit Facility, respectively, and ~~$33~~$396 and ~~$235~~$495 was available at March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, respectively, after giving effect to ~~$67~~$4 and ~~$65~~$5 of outstanding letters of ~~credit.~~

credit, respectively.

Table of Contents

As of March 31, ~~2020~~2024 and December 31, ~~2019,~~2023, the Company was in compliance with ~~the~~all applicable debt covenants.

Senior notes

4.125% Senior Notes

During 2021, the Company completed a private offering of $350 aggregate principal amount of 4.125% Senior Notes (the “4.125% Senior Notes”) issued under an indenture dated June 22, 2021. The 4.125% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company’s subsidiaries. The balance as of March 31, 2024 was $337.

4.750% Senior Notes

During 2021, the Company completed a private offering of $300 aggregate principal amount of 4.750% Senior Notes due 2029 (the "4.750% Senior Notes") issued under an indenture dated October 21, 2021, as supplemented by a supplemental indenture dated January 3, 2022. The 4.750% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company's subsidiaries. The balance as of March 31, 2024 was $277.

The Company was in compliance with all covenants contained in the ~~Credit Agreement.~~

~~One of~~indentures for the ~~Company’s Canadian operations has a $20 unsecuredline-of-credit~~ ~~agreement with a variable-interest rate based upon the prime rate. The Company had no amounts outstanding under the line of credit~~4.125% Senior Notes and 4.750% Senior Notes as of March 31, ~~2020~~2024, and December 31, ~~2019.~~

2023.

Other obligations

As of March 31, ~~2020,~~2024 and December 31, ~~2019,~~2023, the Company had ~~$10~~$5 and ~~$14~~$5 in notes outstanding, respectively, for working capital purposes and the acquisition of equipment and ~~vehicles, respectively.~~

~~Note 12. Income Taxes~~

Historically, APi Group has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code for federal tax purposes. As a result, APi Group’s income was not subject to U.S. federal income taxes or state income taxes in those states where the S Corporation status is recognized. In Predecessor periods, no provision or liability for federal or state income tax has been provided in its consolidated financial statements except for those taxing jurisdictions where the S Corporation status is not recognized. In connection with the APi Acquisition, APi Group’s S Corporation status was terminated and APG will be treated as a C Corporation under Subchapter C of the Internal Revenue Code and will be part of the consolidated tax group of the Company. The termination of the “S” Corporation election has had a material impact on the Company’s results of operations, financial condition, and cash flows as reflected in the March 31, 2020 consolidated financial statements. The effective tax rate has increased, and net income has decreased as compared to the Company’s “S” Corporation tax years, since the Company is now subject to U.S. federal and state corporate income taxes in addition to foreign corporate income taxes on its earnings.

vehicles.

NOTE 11. INCOME TAXES

The Company’s quarterly income tax provision is measured using an estimate of its consolidated annual effective tax rate, adjusted in the current period for discrete income tax items, within the periods presented. The comparison of the Company’s income tax provision between periods may be impacted by the level and mix of earnings and losses by tax jurisdiction, foreign income tax rate differentials, and discrete items. The Company’s effective tax rate was ~~20.9%~~28.0% and ~~6.0%~~30.6% for the three months ended March 31, ~~2020~~2024 and ~~2019,~~2023, respectively. ~~The most significant item contributing to the change in the effective tax rate relate to the Company’s change in “S” Corporation to “C” Corporation status.~~ The difference between the effective tax rate and the statutory U.S. ~~Federal~~federal income tax rate of 21.0% for the ~~quarter~~three months ended March 31, ~~2020~~2024 and 2023 is due to ~~an asset impairment charge benefit offsetting state taxes and~~nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax ~~rates.~~

rates, and state taxes.

As of March 31, ~~2020,~~2024, the Company’s deferred tax assets included a valuation allowance of $1$110 primarily related to certain ~~deferred~~net operating loss, capital loss, and tax ~~assets~~credit carryforwards of the Company’s foreign subsidiaries. The factors used to assess the likelihood of realization were the past performance of the related entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of March ~~30, 2020,~~31, 2024, the Company had gross federal, state, and foreign net operating loss carryforwards of approximately ~~$248,~~ $0, $19, and ~~$8,~~$112, respectively. The ~~federal~~state net operating losses have ~~carryback~~carryforward periods of five to twenty years ~~that can offset 100% of taxable income for periods~~and begin to expire in ~~which the Company was a “C” Corporation and can be carried forward indefinitely. The~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

~~carryforwards will be able to offset 80% of future taxable income for years beginning after 2020.~~2027. The foreign net operating losses have carryback periods of three years, carryforward periods of twenty years, or are indefinite, and begin to expire in ~~2034.~~

2036.

The Company’s liability for unrecognized tax benefits is recorded within other~~non-current~~ noncurrent liabilities in the condensed consolidated balance sheets and recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes in the ~~income statement.~~condensed consolidated statements of operations. As of March 31, ~~2020~~2024, and December 31, ~~2019,~~2023, the total gross unrecognized tax benefits were $3$8 and ~~$4,~~$7, respectively. The Company had accrued gross interest and penalties as of each of March 31, ~~2020~~2024 and December 31, ~~2019~~2023 of $1$3 and ~~$1, respectively.~~$2. During the ~~periods~~three months ended March 31, ~~2020~~2024 and ~~March 31, 2019,~~2023, the Company ~~recognized~~did not recognize net interest ~~expense of $0 and $0, respectively.~~

expense.

If all of the Company’s unrecognized tax benefits as of March 31, ~~2020~~2024, were recognized, ~~the entire balance~~$10 would impact the Company’s effective tax rate. WeThe Company does not expect ~~for $2 of~~any unrecognized tax benefits to expire in the next twelve ~~months due to lapses in the statute~~months.

Table of ~~limitations.~~

Contents

The Company files income tax returns in the U.S. federal jurisdiction, and various state, local, and foreign jurisdictions. For periods ended September 30, 2019 (predecessor) and prior, the Company, including its domestic subsidiaries, filed state income tax returns for those states that do not recognize Subchapter S corporations. As of March 31, ~~2020,~~2024, with few exceptions, neither the Company ornor its subsidiaries are ~~no longer~~ subject to examination prior to tax year 2014. ~~The U.S. federal jurisdiction is under~~There are various other audits in state and foreign jurisdictions, including an ongoing IRS exam ~~for~~related to the ~~period ended December 31, 2017.~~2019 final S Corporation return. No adjustments have been proposed and the Company does not expect the results of the ~~audit~~audits to have a material impact on the ~~consolidated financial statements.~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law making several changes to the Internal Revenue Code. The CARES Act, among other things, permits Net Operating Loss (“NOL“) carryovers to offset 100% of taxable income for tax years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding tax years to generate a refund of previously paid income taxes. The CARES Act contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. The CARES Act also accelerates the refund of AMT credits that were previously accumulated. The tax law changes in the CARES Act did not have a material impact on the Company’s income tax provision.

Interim Statements.

~~Note 13. Employee Benefit Plans~~

~~Certain~~

NOTE 12. EMPLOYEE BENEFIT PLANS

Defined benefit pension plans

The Company sponsors both funded and unfunded foreign defined benefit pension plans that cover a portion of the ~~Company’s~~Company's employees, and the largest plans are closed to new participants and frozen for accrual of future service.

The components of the net periodic pension cost (benefit) for the defined benefit pension plans are as follows:


	Three Months Ended March 31,
	2024		2023
Service cost	$	1	$	1
Interest cost	15		15
Expected return on plan assets	(10)		(18)
Net periodic pension cost (benefit)	$	6	$	(2)

Multiemployer pension plans

Certain subsidiaries ~~including certain subsidiaries in Canada,~~of the Company contribute amounts to multiemployer pension plans and other multiemployer benefit plans and trusts, ~~(“MEPPs”),~~ which are recorded as a component of employee wages and salaries within ~~costs~~cost of ~~revenue.~~revenues on the condensed consolidated statements of operations. Contributions are generally based on fixed amounts per hour per employee for employees covered under these plans. Multiemployer plan contribution rates are determined annually and assessed on a~~“pay-as-you-go”~~ pay-as-you-go basis based on union employee payrolls. Union payrolls cannot be determined for future periods because the number of union employees employed at a given time and the plans in which they participate vary depending upon the location, ~~and~~the number of ongoing projects, and the need for union resources in connection with those projects. Total consolidated contributions to multiemployer plans were $19 and ~~the related number of employees covered by these plans, including with respect to the Company’s Canadian operations, were $21 and $20~~$23 during the three months ended March 31, ~~2020~~2024 and ~~2019,~~2023, respectively.

~~Note 14. Related-Party Transactions and Investments~~

Profit sharing plans

The Company ~~(Successor) paid~~has a ~~quarterly management fee~~trustee-administered profit-sharing retirement plan covering substantially all of the Company's employees in the U.S. not covered by collective bargaining agreements and a profit sharing plan for employees in Canada (collectively, “Profit Sharing Plans”). The Profit Sharing Plans provide for annual discretionary contributions in amounts based on a performance grid as determined by the Company’s directors, which may be settled in shares of the Company's common stock or in cash. In connection with these plans, the Company recognized $6 and $5 in expense for shares distributed to eligible employees during the three months ended March 31, 2024 and 2023, respectively.

Employee stock purchase plan

Most of the Company’s employees in the U.S. and Canada, including named executive officers, are eligible to participate in the Company’s Employee Stock Purchase Plan (the “ESPP”). Sales of shares of the Company’s common stock under the ESPP are generally made pursuant to offerings that are intended to satisfy the requirements of Section 423 of the Internal Revenue Code. The ESPP permits employees of the Company to purchase common stock at a price equal to 85% of the lesser of (i) the market value of the common stock on the first day of the offering period, or (ii) the market value of the common stock on the purchase date, whichever is lower. Participants are subject to eligibility requirements and may not purchase more than 500 shares in any offering period or more than ten thousand dollars of common stock in a year under the ESPP. The Company recognized $1 and $2 of expense during the three months ended March 31, 2024 and 2023, respectively.

Table of Contents

NOTE 13. RELATED-PARTY TRANSACTIONS

The Company incurred advisory fees of $1 during both the three months ended March 31, 2024 and 2023, in each case payable to Mariposa Capital, LLC, an entity owned by ~~Sir Martin E. Franklin.~~

~~APi Group Corporation~~

~~Notes~~a co-chair of the Company’s Board of Directors. In addition, dividends for Series A Preferred Stock were declared as of December 31, 2023 and settled in 7,944,104 shares issued during January 2024. The shares were issued to ~~Condensed Consolidated Financial Statements~~

~~(Amounts~~Mariposa Acquisition IV, LLC, a related entity that is controlled by a co-chair of the Company's Board of Directors.

During 2022, the Company issued and sold 800,000 shares of the Company’s 5.5% Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) for an aggregate purchase price of $800. Of the 800,000 shares issued and sold, 200,000 shares were sold to Viking Global Equities Master Ltd. and Viking Global Equities II LP ("Viking Purchasers"), which is the aggregate owner of more than 5% of the Company's outstanding stock, for an aggregate purchase price of $200. During the three months ended March 31, 2024, the Company issued dividends of 155,059 shares of common stock on the Series B Preferred Stock held by Viking Purchasers, with 70,798 shares declared in ~~millions, except~~February 2024 and 84,261 shares declared in December 2023. The Company declared and ~~where noted otherwise)~~

~~(Unaudited)~~

issued dividends of 124,573 shares of common stock on the Series B Preferred Stock held by the Viking Purchasers during the three months ended March 31, 2023.

During the three months ended March 31, 2024, the Company executed an agreement with the Viking Purchasers which allowed the exercise of their right to convert all of their Series B Preferred Stock into common stock. For additional information regarding the Series B Preferred Stock Conversion, see Note 15 - "Shareholders' Equity and Redeemable Convertible Preferred Stock."

From time to time, the Company also enters other immaterial related-party transactions.

NOTE 14. COMMITMENTS AND CONTINGENCIES

The Company is involved in various litigation matters and is subject to claims from time to time from customers and various government entities. While it is not feasible to determine the outcome of any of these uncertainties, it is the opinion of management that their outcomes will not have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

Environmental obligations

The Company's operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to, investigatory, remediation, operating and maintenance costs, and performance guarantees, and periodically reassess these amounts. Management believes that the likelihood of incurring losses materially in excess of the amounts accrued is remote.

The outstanding liability for these obligations was $16 and $17, and was included in other noncurrent liabilities on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.

NOTE 15. ~~Earnings (Loss) Per Share~~

SHAREHOLDERS’ EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK

Shareholders' equity

Series A Preferred Stock

The Company had 4,000,000 shares of Series A Preferred Stock issued and outstanding as of March 31, 2024 ("Series A Preferred Stock"). The Series A Preferred Stock will be automatically converted into shares of common stock on a one-for-one basis on December 31, 2026.

Stock Repurchases

During the three months ended March 31, 2024, the Company's Board of Directors authorized a stock repurchase program ("SRP") to purchase up to an aggregate of $1,000 of shares of the Company's common stock. This stock repurchase program is indefinite, unless otherwise modified or terminated by the Board of Directors at any time in its sole discretion. The SRP authorizes open market, private, and accelerated share repurchase transactions.

Table of Contents

During the three months ended March 31, 2024, and 2023, the Company repurchased 16,260,160 and 541,316 shares of common stock for aggregate payments of approximately $600 and $12, respectively. The repurchases during the three months ended March 31, 2024 were related to the Series B Preferred Stock Conversion, see below for more information. As of March 31, 2024, the Company had approximately $400 of authorized repurchases remaining under the SRP.

During 2022, the Board of Directors authorized the Company to purchase up to an aggregate of $250 of shares of the Company’s common stock pursuant to the stock repurchase program ("2022 SRP"). The 2022 SRP expired on February 29, 2024.

Redeemable Convertible Preferred Stock

Series B Preferred Stock

During 2022, the Company authorized, issued, and sold, for an aggregate purchase price of $800, 800,000 shares of the Company’s 5.5% Series B Preferred Stock, par value $0.0001 per share.

On February 28, 2024, the Company entered into a Conversion and Repurchase Agreement with Juno Lower Holdings L.P. ("Juno Lower Holdings"), FD Juno Holdings L.P. ("FD Juno Holdings", and together with Juno Lower Holdings, "Blackstone"), Viking Global Equities Master Ltd. ("VGEM") and Viking Global Equities II L.P. (VGE II, and collectively with VGEM, "Viking" and collectively with the Blackstone, the "Series B Holders") pursuant to which Blackstone and Viking agreed to convert all of the outstanding shares of the Series B Preferred Stock that they hold, which represents all of the Series B Preferred Stock outstanding. The transactions contemplated by the agreement (the "Series B Preferred Stock Conversion") were also consummated on February 28, 2024.

Under the terms of the agreement, (i) the Series B Holders each agreed to exercise their respective right to convert all of their Series B Preferred Stock into common stock, resulting in a total of 800,000 shares of Series B Preferred Stock being converted into approximately 32,803,519 shares of common stock of the Company (inclusive of approximately 283,196 shares attributable to accrued and unpaid dividends thereon (the "Conversion Shares") and (ii) upon issuance of the Conversion Shares, the Company agreed to immediately repurchase one-half of the Conversion Shares, on a pro rata basis, from the Series B Holders for an aggregate purchase price of $600. The fair value of the issued one-half of the remaining Conversion Shares was $569.

The repurchase price was financed by (i) an incremental term facility of $300 funded exclusively by Blackstone in the amount of $225 and Viking in the amount of $75 and (ii) cash and available credit from the balance sheet.

Dividends

Following the Series B Preferred Stock Conversion there are no Series B Preferred Shares issued or outstanding and the holders of Series B Preferred Stock are no longer entitled to receive cumulative dividends. The Company declared a pro rata Series B Preferred Stock dividend of $7, or 283,196 shares of common stock, during the three months ended March 31, 2024 for the Series B Preferred Stock outstanding through February 28, 2024. The Company declared and issued a Series B Preferred Stock dividend of $11, or 498,293 shares of common stock, during the three months ended March 31, 2023. The Company declared a Series B Preferred Stock dividend of $11 or 337,044 shares of common stock in December 2023 and $11 or 584,584 shares of common stock in December 2022 and issued the shares in January 2024 and January 2023, respectively.

NOTE 16. EARNINGS PER SHARE

Net income is allocated between the Company’s ~~ordinary~~common shares and other participating securities based on their participation rights. The ~~Founder~~Series A Preferred ~~Shares represent~~Stock represents participating securities. Earnings attributable to ~~Founder~~Series A Preferred ~~Shares~~Stock are not included in earnings attributable to ~~ordinary~~common shares in calculating earnings per ~~ordinary~~common share (the ~~“two class method”)~~two-class method). For periods of net loss, there is no impact from thetwo-class method on earnings ~~(loss)~~ per share (“EPS”) as net loss is allocated to ~~ordinary~~common shares because ~~Founder~~Series A Preferred ~~Shares~~Stock shares are not contractually obligated to share the loss.

The following table sets forth the computation of earnings ~~(loss)~~ per ~~ordinary~~common share using thetwo-class method. The dilutive effect of outstanding ~~Founder~~Series A Preferred ~~Shares~~Stock, and ~~restricted stock units (“RSUs”) issued by~~ the ~~Company~~Series A Preferred Stock dividend, is reflected in diluted EPS using theif-converted method and options, restricted shares, performance shares and market shares are reflected using the treasury stock method. For periods of net loss, basic and diluted EPS are the same, as the assumed exercise of ~~Founder~~Series A Preferred ~~Shares, RSUs, warrants~~Stock,

Table of Contents

restricted, performance shares, market shares and stock options are anti-dilutive. ~~(amounts~~(Amounts in millions, except share and per share ~~amounts)~~amounts.):

   Three Months
Ended
March 31,
2020
Numerator:

Net loss
   $ (194 )
Adjustment for vested participating Founder Preferred shares
   —


Net loss attributable to ordinary shares
   $ (194 )


Denominator:

Weighted average shares outstanding - basic
   169,822,082
Dilutive securities⁽¹⁾
   —


Weighted average shares outstanding - diluted
   169,822,082


Basic and diluted loss per ordinary share
   $ (1.14 )
Ordinary shares issuable upon conversion of Founder Preferred Shares
   4,000,000

~~(1)~~

There are 4,000,000 Founder Preferred Shares, 1,441,546 RSUs, 162,500 stock options to purchase the same number of ordinary shares, and 64,546,077 warrants exercisable to purchase ordinary shares on a 3:1 basis (21,515,359 ordinary share equivalents) that represent potentially dilutive securities that are excluded as their effect would be anti-dilutive.

~~Predecessor~~


	Three Months Ended March 31,
	2024		2023
Basic (loss) earnings per common share:
Net income	$	45	$	26
Less income allocable to Series A Preferred Stock	—		(1)
Less income allocable to Series B Preferred Stock	—		(2)
Less stock dividend attributable to Series B Preferred Stock	(7)		(11)
Less conversion of Series B Preferred Stock	(372)		—
Net (loss) income attributable to common shareholders	$	(334)	$	12

Weighted average shares outstanding - basic	249,744,275		234,386,758
(Loss) income per common share - basic	$	(1.34)	$	0.05

Diluted (loss) earnings per common share:
Net income	$	45	$	26
Less income allocable to Series A Preferred Stock	—		(1)
Less stock dividend attributable to Series B Preferred Stock	(7)		(11)
Less conversion of Series B Preferred Stock	(372)		—
Net (loss) income attributable to common shareholders - diluted	$	(334)	$	14

Weighted average shares outstanding - basic	249,744,275		234,386,758
Dilutive securities: (1)
Restricted stock units, warrants, and stock options	—		265,515
Shares issuable upon conversion of Series B Preferred Shares	—		32,520,000
Weighted average shares outstanding - diluted	249,744,275		267,172,273
(Loss) income per common share - diluted	$	(1.34)	$	0.05

1.The ~~Company has not~~following items were excluded from the calculation of diluted shares as their inclusion would be anti-dilutive:

a.For all periods presented, ~~Predecessor earnings per member unit information because it is not meaningful or comparable~~4,000,000 shares of Series A Preferred Stock, which are convertible to the ~~required Successor EPS information presented above, as well as~~same number of common shares.

b.For the ~~fact that Predecessor units were not publicly traded.~~

three months ended March 31, 2024, 125,000 stock options to purchase the same number of common shares.

c.For the three months ended March 31, 2024, 1,188,112 time-based, performance-based, and market-based restricted stock units.

~~Note 16. Segment Information~~

NOTE 17. SEGMENT INFORMATION

The Company manages its operations under ~~three~~two operating segments which represent the Company’s ~~three~~two reportable segments: Safety Services and Specialty ~~Services,~~Services. This structure is generally focused on various businesses related to contracting services and ~~Industrial Services. The~~maintenance of industrial and commercial facilities. Both reportable segments derive their ~~revenue~~revenues from installation, inspection, maintenance, service and repair, retrofitting and upgrading, engineering and design, distribution, fabrication, and various types of ~~service and contracts, primarily~~other services in ~~the United States as well as Canada and the United Kingdom.~~

over 20 countries.

The Safety Services segment focuses onend-to-end integrated occupancy systems (fire protection services, HVAC, and entry systems), including design, installation, inspection, and service of these integrated systems. ~~This segment also provides mission critical services, including life safety, emergency communication systems and specialized mechanical services.~~ The work performed within this segment spans across industries and facilities and includes commercial, education, healthcare, high-tech, industrial ~~residential, medical andspecial-hazard~~ ~~settings.~~

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares~~ and ~~where noted otherwise)~~

~~(Unaudited)~~

special-hazard settings.

The Specialty Services segment provides ~~utility~~a variety of infrastructure services and specialized industrial plant services, ~~including~~which include maintenance and repair of critical infrastructure such as underground electric, gas, water, sewer, ~~telecom~~ and ~~broadband~~telecommunications infrastructure. ~~Customers within this segment vary from public~~This segment’s services include engineering and ~~private utilities, communications, industrial plants~~design, fabrication, installation,

Table of Contents

maintenance service and ~~governmental agencies throughout the United States.~~

~~The Industrial Services segment provides a variety of specialty contracting services~~repair, retrofitting and ~~solutions to the energy industry focused on transmission and distribution. Services within this segment include oil and gas~~upgrading, pipeline infrastructure, access and road construction, supporting facilities, and performing ongoing integrity management and ~~maintenance.~~

maintenance to customers within the energy industry. Customers within this segment vary from private and public utilities, communications, healthcare, education, transportation, manufacturing, industrial plants, and governmental agencies throughout North America.

The accounting policies of the reportable segments are the same as those described in Note 21 – “Basis of Presentation and Significant Accounting ~~Policies”.~~Policies.” All intercompany transactions and balances are eliminated in consolidation. Intercompany ~~revenue~~revenues and costs between entities within a reportable segment are eliminated to arrive at segment totals and eliminations between segments are separately presented. Corporate results include amounts related to corporate functions such as administrative costs, professional fees, acquisition-related transaction costs (exclusive of acquisition integration costs, which are included within the segment results of the acquired businesses), and other discrete items.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. As appropriate, the Company supplements the reporting of consolidated financial information determined in accordance with U.S. GAAP with certainnon-U.S. GAAP financial measures, including EBITDA. The Company believes thesenon-U.S. GAAP measures provide meaningful information and help investors understand the Company’s financial results and assess its prospects for future performance. The Company uses EBITDA to evaluate its performance, both internally and as compared with its peers because it excludes certain items that may not be indicative of the Company’s core operating results for its reportable segments. Segment EBITDA is calculated in a manner consistent with consolidated EBITDA.

Summarized financial information for the Company’s reportable segments ~~are~~is presented and reconciled to consolidated financial information in the following tables, including a reconciliation of consolidated operating income (loss) to ~~EBITDA. The tables below may contain slight summation differences due to rounding:~~

   Three Months Ended March 31, 2020 (Successor)
   Safety
Services Specialty
Services Industrial
Services Corporate and
Eliminations Consolidated
Net revenues
   $ 424 $ 300 $ 137 $ (3 ) $ 858
EBITDA Reconciliation

Operating loss
   $ (10 ) $ (136 ) $ (58 ) $ (30 ) $ (234 )
Plus:

Investment income and other, net
   1 2 —   —   3
Depreciation
   3 8 4 3 18
Amortization
   24 18 9 1 52


EBITDA
   $ 18 $ (108 ) $ (45 ) $ (26 ) $ (161 )


Total assets
   $ 1,721 $ 1,160 $ 441 $ 564 $ 3,886
Capital expenditures
   1 6 4 —   11

EBITDA:


	Three Months Ended March 31, 2024
	Safety Services		Specialty Services		Corporate and Eliminations		Consolidated
Net revenues	$	1,214	$	389	$	(2)	$	1,601
EBITDA Reconciliation
Operating income (loss)	$	125	$	7	$	(32)	$	100
Plus:
Investment (expense) income and other, net	(6)		2		1		(3)
Depreciation	8		11		—		19
Amortization	36		13		1		50
EBITDA	$	163	$	33	$	(30)	$	166
Total assets	$	5,671	$	1,110	$	411	$	7,192
Capital expenditures	5		10		7		22


	Three Months Ended March 31, 2023
	Safety Services		Specialty Services		Corporate and Eliminations		Consolidated
Net revenues	$	1,191	$	430	$	(7)	$	1,614
EBITDA Reconciliation
Operating income (loss)	$	96	$	—	$	(23)	$	73
Plus:
Investment income and other, net	3		2		—		5
Loss on extinguishment of debt, net	—		—		(3)		(3)
Depreciation	6		12		1		19
Amortization	41		13		1		55
EBITDA	$	146	$	27	$	(24)	$	149
Total assets	$	6,001	$	1,247	$	518	$	7,766
Capital expenditures	5		15		1		21

~~APi Group Corporation~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions, except shares and where noted otherwise)~~

~~(Unaudited)~~

   Three Months Ended March 31, 2019 (Predecessor)
   Safety
Services    Specialty
Services    Industrial
Services Corporate and
Eliminations Consolidated
Net revenues
   $ 426    $ 286    $ 213 $ (3 ) $ 922
EBITDA Reconciliation

Operating income (loss)
   $ 52    $ —      $ (9 ) $ (17 ) $ 26
Plus:

Investment income and other, net
   —      1    —   1 2
Depreciation
   1    8    4 3 16
Amortization
   2    5    2 —   9






EBITDA
   $ 55    $ 14    $ (3 ) $ (13 ) $ 53






Total assets
   $ 780    $ 813    $ 356 $ 116 $ 2,065
Capital expenditures
   4    11    7 —   22

Table of Contents

~~Note 17. Subsequent Events~~

NOTE 18. SUBSEQUENT EVENTS

On April ~~28, 2020,~~15, 2024, the Company ~~changed its jurisdiction~~signed a definitive agreement to acquire Elevated Facility Services Group (“Elevated”), a premier provider of ~~incorporation~~contractually based services for all major brands of elevator and escalator equipment. Elevated will be acquired from a fund managed by L Squared Capital Partners for approximately $570 in cash, subject to working capital and other standard adjustments. The transaction is expected to close in the ~~British Virgin Islands~~second quarter of 2024, subject to customary closing conditions and regulatory approvals.

On April 16, 2024, the Company entered into an underwriting agreement relating to the ~~State~~underwritten public offering of Delaware (“the Domestication”). The business, and assets and liabilities of the Company and its subsidiaries were the same immediately after the Domestication as they were immediately prior to the Domestication. As a result of the Domestication, ordinary shares and Founder Preferred Shares were converted to11,000,000 shares of common stock at a public offering price of $37.50 per share. The offering closed on April 19, 2024. The underwriters exercised the option in the agreement to purchase an additional 1,650,000 shares of common stock on April 23, 2024. The net proceeds to the Company from the offering were $457 after deducting underwriting discounts, commissions, and ~~Series A Preferred Stock, respectively. Each holder~~offering expenses.

On April 30, 2024, the Company began a process to reprice its 2021 Term Loan with a remaining principal of $1,707. The Company expects that the repricing will reduce the applicable margin on all outstanding amounts. Additionally, the Company expects to increase the existing 2021 Term Loan by approximately $550 on the same terms as the current 2021 Term Loan. The Company expects to use the proceeds of approximately $550 to refinance the 2019 Term Loan with a ~~warrant, option or restricted stock unit became a holder~~remaining principal balance of ~~a warrant, option or restricted stock unit~~$330 and repay the $100 Revolving Credit Facility borrowing as well as to provide funds for general corporate purposes, including the acquisition of Elevated. The Company expects the ~~domesticated Company. The number~~transaction to close in May 2024.

Table of ~~shares outstanding did not change as a result of the Domestication, and the proportional equity interest of each shareholder remained the same.~~

Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). These forward-looking statements are based on beliefs and assumptions as of the date such statements are made and are subject to risks and uncertainties. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including ~~“expect,” “anticipate,” “project,” “will,” “should,” “believe,” “intend,” “plan,” “estimate,” “potential,” “target,” “would,”~~“expect”, “anticipate”, “project”, “will”, “should”, “believe”, “intend”, “plan”, “estimate”, “potential”, “target”, “would”, and similar expressions, although not all forward-looking statements contain these identifying terms.

These forward-looking statements are based on our current expectations and assumptions and on information currently available to management and include, among others, statements regarding, as of the date such statements are made:

•our beliefs and expectations regarding our business strategies and competitive strengths;

•our beliefs regarding procurement challenges and the ~~impact~~nature of ~~theCOVID-19~~ ~~pandemic~~our contractual arrangements and renewal rates and their impact on our ~~business, including~~future financial results;

•our beliefs regarding our acquisition platform and ability to execute on and successfully integrate strategic acquisitions;

•our beliefs regarding the future demand for our services, the seasonal and cyclical volatility of our business, financial condition, results of operations, and ~~future financial results, the precautionary measures we are taking in response to the pandemic and the impact of those measures on our business and future financial results;~~

cash flows;

•our beliefs regarding the recurring and repeat nature of our ~~business;~~

~~our expectations regarding industry trends~~business, customers and ~~their~~revenues, and its impact on our ~~business,~~cash flows and organic growth opportunities and our ~~ability to capitalize on~~belief that it helps mitigate the ~~opportunities presented in the markets we serve;~~

impact of economic downturns;

•our intent to continue to grow our business, both organically and through acquisitions, and our beliefs regarding the impact of our business strategies on our growth;

•our beliefs regarding our customer ~~relationships;~~

relationships and plans to grow existing business and expand service offerings;

•our beliefs regarding our ability to pass along commodity price increases to our customers;

•our expectations regarding the cost of compliance with laws and regulations;

•our expectations regarding labor matters;

•our beliefs regarding market risk, including our exposure to foreign currency fluctuations, and our ability to mitigate that risk;

•our expectations and beliefs regarding accounting and tax matters;

•our beliefs regarding the effectiveness of the steps taken to remediate previously reported material weaknesses in our internal control over financial reporting and

the timing of remediation;

•our expectations regarding future capital expenditures;

•our expectations regarding future expenses in connection with our multi-year restructuring program, including those related to workforce reductions;

•our expectations regarding future pension contributions;

•our expectations regarding the acquisition (the "Chubb Acquisition") of the Chubb fire and security business (the "Chubb business" or "Chubb"), including the operational challenges and the expected benefits of the acquisition and future growth, expansion, cross-selling and other value creation opportunities; and

•our beliefs regarding the sufficiency of our current sources of liquidity, including access to capital markets, to fund our future liquidity requirements, our expectations regarding the types of future liquidity requirements and our expectations regarding the availability and terms of future sources of ~~liquidity.~~

liquidity to satisfy our liquidity needs on terms favorable to us.

These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this quarterly report and in our Annual Report on Form~~S-4,~~ ~~effective as~~ 10-K, filed on February 28, 2024,

Table of ~~May 1, 2020,~~ Contents

including those described under “Cautionary Note Regarding ~~Forward-Looking~~Forward Looking Statements” and “Risk Factors” in such Form~~S-4,~~ 10-K, and other filings we make with the SEC. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this quarterly report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Important factors that may materially affect the forward-looking statements include the following:

~~the impact of theCOVID-19~~ ~~pandemic on our business, markets, supply chain, customers and workforce, on the credit and financial markets, and on the global economy generally;~~

•adverse developments in the credit markets that could adversely affect funding of construction projects;

•exposure to global economic, political and legal risks related to our international operations, including geopolitical instability;

•the ability and willingness of customers to invest in infrastructure projects;

•a decline in demand for our services or for the products and services of our customers;

•the fact that our revenues are derived primarily from contracts with durations of less than six months and the risk that customers will not renew or enter into new contracts;

•our ability to successfully acquire other businesses, successfully integrate acquired businesses into our operations and manage the risks and potential liabilities associated with those acquisitions;

•the impact of our regional, decentralized business model on our ability to execute on our business strategies and operate our business successfully;

•our ability to compete successfully in the industries and markets we serve;

•our ability to properly manage and accurately estimate costs associated with specific customer projects, in particular for arrangements with fixed price terms;

•supply chain constraints and interruptions, and the resulting increases in the cost, or reductions in the supply, of the materials and commodities we use in our business and for which we bear the risk of such increases;

•the impact of inflation;

•our relationship with our employees, a large portion of which are covered by collective bargaining arrangements, and our ability to effectively manage and utilize our workforce;

•the inherently dangerous nature of the services we provide and the risks of potential liability;

•the impact of customer consolidation;

•the loss of the services of key senior management personnel and the availability of skilled personnel;

•the seasonality of our business and the impact of weather conditions;

•the variability of our operating results between periods and the resulting difficulty in forecasting future operating results;

•litigation that results from our business, including costs related to any damages we may be required to pay as a result of general liability or workmanship claims brought ~~against~~by our customers;

•the impact of health, safety, and environmental laws and regulations, and the costs associated with compliance with such laws and regulations;

•our substantial level of indebtedness and the effect of restrictions on our operations set forth in the documents that govern such indebtedness;

•our expectations regarding the acquisition of the Chubb business, including the expected benefits of the acquisition and

future value creation opportunities; and

•our compliance with certain financial maintenance covenants in our credit agreement and the effect on our liquidity of any failure to comply with such covenants.

The factors identified above are believed to be important factors, but not necessarily all of the important factors, ~~that~~which could cause actual results to differ materially from those expressed in any forward-looking statement made by us. Other factors not discussed herein could also have a material adverse effect on us. You should not rely upon forward-looking statements as predictions of future events. Although we believe ~~that~~ the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. These forward-looking statements speak only as of the date of this quarterly report. We assume no obligation to update or revise these ~~forward-looking~~forward-

Table of Contents

looking statements for any reason, even if new information becomes available in the future, except as required by applicable law.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in this quarterly report and hereafter in our other SEC filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

Table of Contents

~~Item~~

ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section should be read in conjunction with the ~~Interim Statements~~interim unaudited condensed consolidated financial statements (the "Interim Statements") and related notes included in this quarterly report, and the ~~Consolidated Financial Statements,~~Company's 2023 audited annual consolidated financial statements, the related notes thereto and under the ~~“APG Management’s~~heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of ~~Operations” section~~Operations" and other disclosures contained in our ~~Registration Statement~~Annual Report on Form~~S-4~~ ~~effective May 1, 2020 (the “FormS-4”),~~ 10-K, including financial results for the year ended December 31, ~~2019.~~2023. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under the “Cautionary Note Regarding ~~Forward-Looking~~Forward Looking Statements” section of this quarterly report.

We prepare our financial statements in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“U.S. GAAP”). To supplement our financial results presented in accordance with U.S. GAAP in this ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MD&A section, we present EBITDA, which is anon-U.S. GAAP financial measure, to assist readers

in understanding our performance and provide an additional perspective on trends and underlying operating results on aperiod-to-period comparable basis.Non-U.S. GAAP financial measures either exclude or include amounts ~~that are~~ not reflected in the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Where anon-U.S. GAAP financial measure is used, we have provided the most directly comparable measure calculated and presented in accordance with U.S. GAAP, a reconciliation to the U.S. GAAP measure and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.

Unless the context otherwise requires, all references in this section to “APG”, the “Company”, “we”, “us”, ~~“our”,~~ and ~~“Successor”~~“our” refer to APi Group Corporation and its ~~subsidiaries for all periods subsequent to the APi Acquisition (as defined below). All references in this quarterly report on Form10-Q~~ ~~to our “Predecessor” refer to APi Group Inc., (“APi Group”) and its subsidiaries for all periods prior to the APi Acquisition.~~

subsidiaries.

Overview

We were incorporated with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on September 18, 2017 under the name J2 Acquisition Limited. We were originally formed for the purpose of acquiringare a target company or business. On October 10, 2017, we raised gross proceeds of approximately $1.25 billion in connection with our initial public offering in the United Kingdom. On October 1, 2019, we completed our acquisition of APi Group (the “APi Acquisition”) and changed our name to APi Group Corporation in connection with the APi Acquisition. With over 90 years of history operating from over 200 locations, APi Group is a market leadingglobal, market-leading business services provider of safety and specialty ~~and industrial~~ services ~~operating primarily~~ in the United States, as well as in Canada and the United Kingdom with consolidated net revenues of approximately $985 million for the Successor in 2019, $3.1 billion for the Predecessor in 2019, and approximately $3.7 billion for the Predecessor in 2018. APi Group provides a variety of specialty contracting services, including engineering and design, fabrication, installation, inspection, maintenance, service and repair, and retrofitting and upgrading. APi providesover 500 locations worldwide. We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries. We ~~also~~ have ~~an experienced management team and~~ a ~~strong~~winning leadership ~~development culture.~~

culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers.

We operate our business under ~~three~~two primary operating segments, which are also our reportable segments:

•

~~Safety Services~~ ~~– A leading provider of safety services in North America, focusing onend-to-end~~ integrated occupancy systems (fire protection solutions, HVAC and entry systems), including design, installation, inspection and service of these integrated systems. This segment also provides mission critical services, including life safety, emergency communication systems and specialized mechanical services. The work performed within this segment spans across industries and facilities and includes commercial, industrial, residential, medical and~~special-hazard~~ ~~settings.~~

•

~~Specialty Services~~ – A leading provider of diversified, single-source infrastructure and specialty contractor solutions, focusing on infrastructure services and specialized industrial plant solutions, including maintenance and repair of water, sewer and telecom infrastructure. The customers in this segment vary from public and private utilities, communications, industrial plants and governmental agencies throughout the United States.

•

~~Industrial Services~~ – A leading provider of a variety of specialty contracting services to the energy industry focused on transmission and distribution. This segment’s services include oil and gas pipeline infrastructure, access and road construction, supporting facilities, and performing ongoing integrity management and maintenance.

•Safety Services – Our Safety Services segment is a leading provider of safety services in North America, Europe, and Asia Pacific focusing on end-to-end integrated occupancy systems (fire protection, Heating, Ventilation, and Air Conditioning (“HVAC”) and entry), including service, monitoring, inspection, design and installation of these integrated systems. The work performed within this segment spans across industries and facilities and includes commercial, education, healthcare, high-tech, industrial, and special-hazard settings.

•Specialty Services – Our Specialty Services segment is a leading provider of a variety of infrastructure services and specialized industrial plant services, which include maintenance and repair of critical infrastructure such as underground electric, gas, water, sewer, and telecommunications infrastructure. Our services include engineering and design, fabrication, installation, maintenance service and repair, retrofitting and upgrading, pipeline infrastructure, access and road construction, supporting facilities, and performing ongoing integrity management and maintenance to customers within the energy industry. Customers within this segment vary from private and public utilities, communications, healthcare, education, transportation, manufacturing, industrial plants, and governmental agencies throughout North America.

We focus on growing our recurring ~~revenue~~revenues and repeat business from our diversified long-standing customers across a variety of end markets, which we believe provides us with stable cash flows and a platform for organic growth. ~~Maintenance~~We believe maintenance and service revenues are generally more predictable through contractual arrangements with typical terms ranging from days to three years, with the majority having short durations ~~of less than six months,~~ and are often recurring due to consistent renewal rates and long-standing customer relationships.

For financial information about our operating segments, see Note 1617 – “Segment Information” to our condensed consolidated financial statements included herein.

~~Prior~~

Table of Contents

RECENT DEVELOPMENTS AND CERTAIN FACTORS AND TRENDS AFFECTING OUR RESULTS OF OPERATIONS

Restructuring

During 2022, we announced our multi-year Chubb restructuring program designed to drive efficiencies and synergies and optimize operating margin. The Chubb restructuring program includes expenses related to workforce reductions, lease termination costs, and other facility rationalization costs through fiscal year 2025.

During the three months ended March 31, 2024, we have incurred pre-tax restructuring costs within the Safety Services segment of $1 million in connection with the Chubb restructuring program. In total, we estimate that we will recognize approximately $125 million of restructuring and other costs related to the ~~APi Acquisition,~~Chubb restructuring program by the end of fiscal year 2025.

For additional information about our restructuring activity, see Note 4 – “Restructuring" to our condensed consolidated financial statements included herein.

Economic, Industry and Market Factors

We closely monitor the effects of general changes in economic and market conditions on our customers. General economic and market conditions can negatively affect demand for our customers’ products and services, which can affect their planned capital and maintenance budgets in certain end markets. Market, regulatory, and industry factors could affect demand for our services. Availability of transportation and transmission capacity and fluctuations in market prices for energy and other fuel sources can also affect demand for our services for pipeline and power generation construction services. These fluctuations, as well as the highly competitive nature of our industries, have resulted and may continue to result, in lower proposals and lower profit on the services we ~~had no revenue~~provide. In the face of increased pricing pressure on key materials, such as steel, or other market developments, we strive to maintain our profit margins through productivity improvements, cost reduction programs, pricing adjustments, and business streamlining efforts. Increased competition for skilled labor resources and higher labor costs can reduce our profitability and impact our ability to deliver timely service to our customers. We have experienced supply chain disruptions, which have negatively impacted the source and supply of materials needed to perform our work. In addition, fluctuations in foreign currencies may have an impact on our financial position and the results of operations. However, we believe that our exposure to transactional gains or losses resulting from changes in foreign currencies is limited because our foreign operations ~~other than~~primarily invoice and collect receivables in their respective local or functional currencies, and the ~~active solicitation of a target business~~expenses associated with ~~which to complete a business combination. We generated small amounts ofnon-operating~~ ~~income~~these transactions are generally contracted and paid for in the ~~form~~same local currencies. In cases where operational transactions represent a material currency risk, we generally enter into cross-currency swaps. Refer to Note 8 – "Derivatives" to our condensed consolidated financial statements included in this quarterly report for additional information on our hedging activities. While we actively monitor economic, industry, and market factors that could affect our business, we cannot predict the effect that changes in such factors may have on our future consolidated results of ~~unrealized and realized gains on marketable securities and interest income on cash~~operations, liquidity, and cash ~~equivalents. We relied upon the proceeds~~flows, and we may be unable to fully mitigate, or benefit from the initial public offering to fund our limited acquisition-related operations prior to the closing of the APi Acquisition. The historical financial information prior to the APi Acquisition has not been discussed below as these historical amounts are not considered meaningful.

such changes.

Effect of Seasonality and Cyclical Nature of Business

Our ~~revenue~~net revenues and results of operations can be subject to variability stemming from seasonal and other variations. ~~These~~Seasonal variations ~~are~~can be influenced by weather conditions impacting customer spending patterns, ~~bidding~~contract award seasons, and project schedules, ~~holidays and~~as well as the timing ~~in particular,~~of holidays. Consequently, net revenues for ~~large,non-recurring~~ ~~projects. Typically,~~ our ~~revenue is lowest at the beginning of the year and during the winter months in North America~~businesses are typically lower during the first ~~quarter because cold, snowy or wet~~and second quarters due to the prevalence of unfavorable weather conditions within our North America companies, which can cause project ~~delays. Revenue is generally higher during the summer~~delays and fall months during the third and fourth quarters, due to increased demand for our services when favorable weather conditions exist in many of the regions in which we operate. Continued cold and wet weather can often affect ~~second quarter~~ productivity. In the fourth quarter, many projects tend to be completed by customers seeking to spend their capital budgets before the end of the year, which generally has a positive effect on our revenue. However, the holiday season and inclement weather can cause delays, which can reduce revenue and increase costs on affected projects. The effects of the~~COVID-19~~ ~~pandemic could also result in greater seasonal and cyclical volatility than would otherwise exist under normal conditions.~~

Additionally, the industries we serve can be cyclical. Fluctuations inend-user demand, ~~within those industries,~~ or in the supply of services within those industries, can affect demand for our services. As a result, our business may be adversely affected by industry declines or by delays in new projects. Variations or unanticipated changes in project schedules in connection with large projects can create fluctuations in ~~revenue.~~

~~Recent Developments~~

~~Impairment of Goodwill and Intangibles~~

~~During the first quarter of 2020, we concluded that a triggering event had occurred for all of our reporting units as a result of theCOVID-19~~ global pandemic and we recorded total non-cash charges of $208 million to reflect the impairment of our goodwill and intangible assets as preliminary carrying values exceeded fair value. Pursuant to the authoritative literature, we performed impairment tests and determined that, as a result of the impact of~~COVID-19,~~ which has negatively impacted our operations, suppliers and other vendors, customer base, the demand for work within the oil and gas industry as a result of the volatility in oil prices and other factors outside of the control of management, certain of our goodwill and intangible assets were impaired. Specifically, we determined the goodwill associated with our Mechanical, Infrastructure/Utility, Fabrication, Specialty Contracting, Transmission and Civil reporting units were impaired by $34 million, $80 million, $17 million, $23 million, $45 million and $4 million, respectively. We also determined that intangible assets of a business classified as held for sale were impaired by $5 million.

net revenues.

~~The circumstances and global disruption caused byCOVID-19~~ has affected, and we believe it will continue to affect, our businesses, operating results, cash flows and financial condition, however the scope and duration of the impact is highly uncertain. In addition, some of the inherent estimates and assumptions used in determining the fair value of our reporting units are outside the control of management, including interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates, and labor inflation. Given the uncertainty of these factors, as well as the inherent difficulty in predicting the severity and duration of the~~COVID-19~~ global pandemic and associated recovery and the uncertainties regarding the potential financial impact on our business and the overall economy, there can be no assurance that our estimates and assumptions made for purposes of the goodwill impairment testing performed during the first quarter of 2020 will prove to be accurate predictions of the impact in future periods.

While we believe we have made reasonable estimates and assumptions to calculate the fair values of our reporting units which were based on facts and circumstances known at such time, it is possible that existing or new events may result in forecasted cash flows, revenue and earnings that differ from those that formed the basis of our estimates and assumptions. For each of our reporting units, particularly if the global pandemic caused by~~COVID-19~~ continues to persist for an extended period of time, a reporting unit’s actual results could be materially different from our estimates and assumptions used to calculate fair value. If so, we may be required to recognize material impairments to goodwill or other long-lived assets. We will continue to monitor our reporting units for any triggering events or other signs of impairment. We may be required to perform additional impairment testing based on further deterioration of the global economic environment, continued disruptions to our businesses, further declines in operating results of our reporting units and/or tradenames, sustained deterioration of our market capitalization, and other factors, which could result in additional impairment charges in the future. Although we cannot predict when improvements in macroeconomic conditions will occur, if consumer confidence and consumer spending decline significantly in the future or if economic activity experiences a sustained deterioration from current levels, it is reasonably likely we will be required to record additional impairment charges in the future.

As of March 31, 2020, there was one reporting unit, Life Safety, with fair value exceeding its carrying value by less than 10%. Since the goodwill balances for each reporting unit are still preliminary, pending finalizing purchase price allocation from the APi Acquisition, it is possible the Life Safety reporting unit may experience an impairment charge even if there are no changes to the aforementioned discount rates. Based on a sensitivity analysis, a 10% increase in the carrying value of the Life Safety reporting unit would have resulted in an impairment charge of $27 million.

~~See Note 2 – “Basis of Presentation and Significant Accounting Policies” and Note 7 – “Goodwill and Intangibles” of the Interim Statements for additional information.~~

~~Credit Facilities~~

In late March 2020, we drew down $200 million under our $300 million Revolving Credit Facility. As of March 31, 2020, $33 million was available after giving effect to $67 million of outstanding letters of credit, which reduce availability. We were in compliance with all covenants contained in the Credit Agreement as of March 31, 2020. During April 2020, we repaid the $200 million of borrowings on the Revolving Credit Facility.

~~Income Taxes~~

~~The three months ended March 31, 2020 were also impacted by certain discrete ornon-recurring~~ tax items. The income tax benefit of $51 for the three months ended March 31, 2020 was primarily due to impairment of goodwill and intangible assets. The tax law changes in the CARES Act had an impact of $0 on the Company’s income tax provision.

~~COVID-19~~ ~~Update~~

~~We continue to monitor the short- and long-term impacts ofCOVID-19,~~ ~~a global pandemic that has caused a significant slowdown in the global economy beginning in March 2020. While we had some slowdown impact in March, the impacts ofCOVID-19~~ were not seen as significant at that time. During the three months ended March 31, 2020, we continued to provide services to our customers and saw a relatively minor impact to our business. To date, the services we provide have been deemed to be essential in most instances. However, as the~~COVID-19~~ ~~situation has evolved in April and May, we have seen various disruptions in our work due to the domino effects of the various local, state and national jurisdictional“shelter-in-place”~~ ~~orders, including but not limited to the impact on our efficiency to perform our work while adhering to physical distancing protocols demanded byCOVID-19,~~ ~~customers deferring inspection and service projects, and temporary shutdowns of active projects as they work throughCOVID-19~~ related matters. Due to the statutory nature of much of our work and the long-term investments being made across the public and private utility sector, to date we have not experienced significant cancellations. However, we are experiencing delays in certain projects and disruptions to the flow of our work to meet~~COVID-19~~ working protocols. We are actively quoting new work for customers such as schools, universities, hotels, casinos and other customers that may be temporarily operating at less than capacity or closed. Should the macro economy continue to be negatively impacted by the~~COVID-19~~ ~~pandemic, it is possible that some projects could be delayed indefinitely or cancelled, or that we are not successful in accelerating inspection and service projects.~~

~~As we have monitored our activity in April and May 2020, revenue period over period has been impacted by the level ofshelter-in-place~~ ~~orders and outbreaks ofCOVID-19,~~ ~~which for certain larger projects, caused customers to temporarily halt work to put inCOVID-19~~ working protocols. Subsequent to March 31, 2020, all of our segments have seen volume declines. Recently we are seeing indications of stabilizing and some volume improvements off previous lows as our teams and customers are adapting to working in the~~COVID-19~~ ~~environment and with the easing of someshelter-in-place~~ ~~orders. There can be no assurance that this will continue in a positive manner.~~

~~To date, we have been able to source the supply and materials needed for our business with minimal disruptions. However, the continued impact ofCOVID-19~~ ~~on our vendors is evolving and could make it difficult to obtain needed materials.~~

~~We have also implemented a preemptive cost reduction plan, which we expect will save both expense and cash in 2020 if market conditions require us to maintain them throughout the rest of the year.~~

~~While we cannot estimate the duration or future negative financial impact of theCOVID-19~~ ~~pandemic on our business, we are currently experiencing some negative impact, which we expect to continue in the future.~~

Recent Accounting Pronouncements

A summary of recent accounting pronouncements is included in Note 32 – “Recent Accounting Pronouncements” to our ~~Interim Statements~~condensed consolidated financial statements included ~~in this quarterly report.~~

~~Description~~herein.

Table of ~~Key Line Items~~

Contents

DESCRIPTION OF KEY LINE ITEMS

Net ~~Revenues~~

~~Revenue is~~revenues

Net revenues are generated from the sale of various types of contracted services, fabrication, and distribution. We derive ~~revenue~~net revenues primarily from ~~construction~~ services under contractual arrangements with

durations ranging from days to three years, with the majority having durations of less than six months, and which may provide the customer with pricing options that include a combination of fixed, unit, or time and ~~materials~~material pricing. ~~Revenue~~Net revenues for fixed price agreements isare generally recognized over time using thecost-to-cost method of accounting which measures progress based on the cost incurred to total expected cost in satisfying our performance obligation.

~~Revenue~~

Net revenues from time and material contracts isare recognized as the services are provided. ~~Revenue~~Net revenues earned isare based on total contract costs incurred plus an ~~agreed-upon~~agreed upon markup. ~~Revenue~~Net revenues for these cost-plus contracts isare recognized over time on an input basis as labor hours are incurred, materials are utilized, and services are performed. ~~Revenue~~Net revenues from wholesale or retail unit sales isare recognized at apoint-in-time upon shipment.

Cost of ~~Revenues~~

revenues

Cost of revenues consists of direct labor, materials, subcontract costs and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed.

Gross ~~Profit~~

profit

Our gross profit is influenced by direct labor, materials, and subcontract costs. Our profit margins are also influenced by raw material costs, contract mix, weather, and proper coordination with contract providers. ~~Labor intensive~~Labor-intensive contracts usually drive higher margins than those contracts that include material, subcontract, and equipment costs.

~~Selling, General and Administrative Expenses~~

Selling, general, and administrative expenses ("SG&A")

Selling expenses consist primarily of compensation and associated costs for sales and advertising, trade shows, and corporate marketing. General and administrative expenses consist primarily of compensation and associated costs for executive management, personnel, facility leases, ~~advertising and marketing expenses,~~ administrative expenses associated with accounting, finance, legal, information systems, leadership development, human resources, and risk management, and overhead associated with these functions. ~~Selling expenses consist primarily of compensation and associated costs for sales and marketing personnel, costs of advertising, trade shows and corporate marketing.~~ General and administrative expense consists primarily of compensation and associated costs for executive management, finance, legal, information systems, leadership development and other administrative personnel, facility leases,expenses also include outside professional fees and other corporate expenses.

Amortization of ~~Intangible Assets~~

intangible assets

Amortization expense reflects the charges incurred to amortize our finite-lived identifiable intangible assets, such as customer relationships, which are amortized over their estimated useful lives.

~~Impairment~~ There is a portion of ~~Goodwill, Intangibles and Long-Lived Assets~~

~~Goodwill is tested for impairment annually, or more frequently as events and circumstances change. Expenses for impairment charges~~amortization expense related to the ~~write-down of goodwill balances and identifiable~~backlog intangible assets ~~balances are recorded to~~reflected in cost of revenues in the ~~extent their~~condensed consolidated statements of operations.

Loss on extinguishment of debt, net

Loss on extinguishment of debt, net reflects the difference between the repurchase price and carrying ~~values exceed their estimated fair values. Expenses for impairment charges related to~~amount of debt at the ~~write-down~~time of ~~other long-lived assets (which includes amortizable intangibles) are recorded when triggering events indicate their carrying values may exceed their estimated fair values.~~

~~Critical Accounting Policies and Estimates~~

extinguishment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For information regarding our Critical Accounting Policies, see the “Critical Accounting Policies” section of the ~~“APG Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of

Operations” in our Annual Report on Form~~S-4.~~ ~~Additionally, see~~ 10-K for the ~~“Use~~fiscal year ended December 31, 2023.

Table of ~~estimates and risks and uncertainty ofCOVID-19”~~ ~~section of Note 2 – “Basis of Presentation and Significant Accounting Policies” to the Interim Statements for a discussion about the impact of theCOVID-19~~ ~~pandemic on asset impairment.~~

~~Results of Operations~~

Contents

RESULTS OF OPERATIONS

The following is a discussion of our financial condition and results of operations during the three months ended March 31, ~~2020 (the “Successor Period”)~~2024 and the three months ended March 31, 2019 (the “Predecessor Period”). We did not own APi Group for the Predecessor period. Consequently, these results may not be indicative of the results that we would expect to recognize for future periods.

2023.

Three ~~Months Ended~~months ended March 31, ~~2020 (Successor)~~2024 compared to ~~Three Months Ended~~the three months ended March 31, ~~2019 (Predecessor)~~

   Three Months Ended March 31,
   2020    2019    Change
($ in millions)
   (Successor)    (Predecessor)    $            %
Net revenues
   $ 858    $ 922    $ (64 )    (6.9)%
Cost of revenues
   696    759    (63 )    (8.3)%







Gross profit
   162    163    (1 )    (0.6)%
Selling, general, and administrative expenses
   188    137    51    37.2%
Impairment of goodwill, intangibles and long-lived assets
   208    —      208 ��    NM







Operating income (loss)
   (234 )    26    (260 )    NM







Interest expense, net
   14    6    8    133.3%
Investment income and other, net
   (3 )    (2 )    (1 )    50.0%







Other expense, net
   11    4    7    175.0%







Income (loss) before income taxes
   (245 )    22    (267 )    NM
Income tax provision (benefit)
   (51 )    1    (54 )    NM







Net income (loss)
   $ (194 )    $ 21    $ (215 )    NM

~~NM = Not meaningful~~

2023

Three Months Ended March 31, Change
($ in millions) 2024 2023 $ %
Net revenues $ 1,601 $ 1,614 $ (13) (0.8) %
Cost of revenues 1,109 1,189 (80) (6.7) %
Gross profit 492 425 67 15.8 %
Selling, general, and administrative expenses 392 352 40 11.4 %
Operating income 100 73 27 37.0 %
Interest expense, net 34 37 (3) (8.1) %
Loss on extinguishment of debt, net — 3 (3) (100.0) %
Investment expense (income) and other, net 3 (5) 8 (160.0) %
Other expense, net 37 35 2 5.7 %
Income before income taxes 63 38 25 65.8 %
Income tax provision 18 12 6 50.0 %
Net income $ 45 $ 26 $ 19 73.1 %

Net revenues

Net revenues for the three months ended March 31, ~~2020~~2024 were ~~$858~~$1,601 million compared to ~~$922~~$1,614 million for the same period in ~~2019,~~2023, a decrease of ~~$64~~$13 million or ~~6.9%~~0.8%. The decrease in net revenues was primarily ~~attributable to a decrease in volume of~~driven by disciplined project and customer selection on our longer term projects in ~~the Industrial Services segment of $76 million due to more focused project selection during the current year. This was partially offset by~~ the Specialty Services segment, ~~which increased revenues~~partially offset by ~~$14 million,~~growth in inspection, service, and ~~consistent performance~~monitoring revenue in the Safety Services ~~segment, despite the impact ofCOVID-19~~ ~~during the first quarter of 2020.~~

segment.

Gross profit

The following table presents our gross profit (net revenues less cost of revenues), and gross ~~profit~~ margin (gross profit as a percentage of net revenues) for ~~APG for~~ the three months ended March 31, ~~2020 (Successor)~~2024 and ~~2019 (Predecessor),~~2023, respectively:

   Three Months Ended March 31,
   2020 2019 Change
($ in millions)
   (Successor) (Predecessor) $            %
Gross profit
   $ 162 $ 163 $ (1 )    (0.6)%
Gross profit margin
   18.9 % 17.7 %

Three Months Ended March 31, Change
($ in millions) 2024 2023 $ %
Gross profit $ 492 $ 425 $ 67 15.8 %
Gross margin 30.7 % 26.3 %

Our gross profit for the three months ended March 31, ~~2020~~2024 was ~~$162~~$492 million compared to ~~$163~~$425 million for the same period in ~~2019, a decrease~~2023, an increase of $1$67 million, or ~~0.6%~~15.8%. ~~The decrease~~Gross margin for the three months ended March 31, 2024 was 30.7%, an increase of 440 basis points compared to the prior year period, primarily due to disciplined project and customer selection, pricing improvements in gross profit was primarily attributable to $22 million recognized in cost of revenues from the amortization of backlog assets related to purchase accounting, offset by a more favorable contract mix with a greater percentage of our ~~revenues in 2020 coming from our higher margin segment,~~ Safety Services segment, and an improved ~~gross profit in the Industrial Services segment~~mix of ~~715 basis points due to improved project selection, conditions~~inspection, service, and ~~execution. This resulted in a~~monitoring revenue, which generates higher ~~gross profit margin~~margins.

Table of ~~18.9% in 2020 versus 17.7% in 2019. The gross profit margin was negatively impacted by 2.5% due to the $22 million backlog amortization.~~

Contents

Operating expenses

The following table presents operating expenses and operating margin (operating income ~~(loss)~~ as a percentage of net revenues) for ~~APG for~~ the three months ended March 31, ~~2020 (Successor)~~2024 and ~~2019 (Predecessor),~~2023, respectively:

   Three Months Ended March 31,
   2020 2019 Change
($ in millions)
   (Successor) (Predecessor) $            %
Selling, general, and administrative expenses
   $ 188 $ 137 $ 51    37.2%
Impairment of goodwill, intangibles and long-lived assets
   208 —   208    NM



Total operating expenses
   $ 396 $ 137 $ 259    189.1%



Operating expenses as a percentage of net revenues
   46.2 % 14.9 %
Operating margin
   (27.3 %) 2.8 %


	Three Months Ended March 31,						Change
($ in millions)	2024			2023			$		%
Selling, general, and administrative expenses	$	392		$	352		$	40	11.4	%
SG&A expenses as a % of net revenues	24.5		%	21.8		%
Operating margin	6.2		%	4.5		%

SG&A expenses (excluding amortization) (Non-GAAP)	$	342		$	304		$	38	12.5	%
SG&A expenses (excluding amortization) as a % of net revenues (Non-GAAP)	21.4		%	18.8		%

Selling, general, and administrative expenses

Our ~~operating~~SG&A expenses for the three months ended March 31, ~~2020~~2024 were ~~$396~~$392 million compared to ~~$137~~$352 million for the same period in ~~2019,~~2023, an increase of ~~$259~~$40 million. ~~Operating~~SG&A expenses as a percentage of net revenues ~~were 46.2% for 2020~~was 24.5% during the three months ended March 31, 2024 compared to ~~14.9%~~21.8% for ~~2019. The increase in operating expenses is primarily attributable to impairment charges of $208 million, intangible asset amortization expense, which increased $21 million over~~ the same period in 2023. The increase in SG&A expenses as a percentage of net revenues was primarily driven by investments to support our Safety Services and Specialty Services segments in the ~~prior year, increases of $17 million~~three months ended March 31, 2024 compared to 2023. The increase was also due to business growth focused on compensation and additional resources to drive our organic growth strategy, unabsorbed overhead costs of $3 million, and non-cash share-based compensation of $1 million. Additionally, we incurred $6 million of non-recurring business process transformation and public company registration, listing and compliance costs of $6 million, and corporatethird party advisor costs related to ~~being a public company of $3 million.~~

~~Operating income and EBITDA~~

   Three Months Ended March 31,
   2020    2019    Change
($ in millions)
   (Successor)    (Predecessor)    $            %
Operating income (loss)
   $ (234 )    $ 26    $ (260 )    NM
EBITDA
   (161 )    53    (214 )    (403.8)%

the Series B Preferred Stock Conversion that are non-recurring in nature. Our ~~operating loss~~SG&A expenses excluding amortization for the three months ended March 31, ~~2020 was $234~~2024 were $342 million, or 21.4% of net revenues, compared to ~~income~~$304 million, or 18.8% of ~~$26 million~~net revenues, for the same period of 2023. The increase in 2020, a decrease of $260 million. Operating margin decreased to approximately (27.3)% in 2020 from 2.8% in 2019. The decrease was primarily attributable to impairment expense of $208 million, increasedSG&A expenses ~~related to intangible asset~~excluding amortization ~~expense, which increased $43 million over the prior year, and other increases in operating expenses discussed above. EBITDA~~ as a percentage of net revenues ~~decreased~~is primarily due to ~~(18.8)% in 2020 from 5.7% in 2019. The decrease was primarily driven by~~ the ~~increased operating expenses~~factors discussed above.

See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Interest expense, net

Interest expense was ~~$14~~$34 million and $37 million for the three months ended March 31, ~~2020 compared to $6 million for the same period of the prior year.~~2024 and 2023, respectively. The ~~$8 million increase~~decrease in interest expense was primarily due to the decrease in the average outstanding principal amounts of our floating rate debt, partially offset by an increase in ~~average~~interest rates on our floating interest rate debt.

Loss on extinguishment of debt, net

During 2023, we made aggregate payments of $200 million to pay down outstanding ~~borrowings~~principal amounts of the 2019 Term Loan and ~~higher average borrowing costs reflecting~~2021 Term Loan. In connection with the ~~APi Acquisition in which APi Group’s previous~~payments, we recognized a net loss on debt ~~totaling $595~~extinguishment of $3 million.

Investment expense (income) and other, net

Investment expense and other, net was $3 million ~~as of~~for the three months ended March 31, ~~2019,~~2024 compared to income of $5 million the prior year. The increase in investment expense and other was ~~settled and replaced by our Credit Facilities that include~~primarily due to an increase in non-service pension costs in the ~~issuance of a $1.2 billion Term Loan.~~

current year.

Income tax provision

The effective tax rate for the three months ended March 31, ~~2020~~2024 was ~~20.9%~~28.0%, ~~after~~compared to 30.6% in the same period of 2023. The difference in the effective tax rate was driven by changes to the forecasted geographical income mix offset by discrete ~~and non-recurring tax~~ items. The difference between the effective tax rate and the statutory U.S. federal income tax ~~benefit~~rate of ~~$51 million~~21.0% is due to the nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, and state taxes.

The Organization for Economic Co-operation and Development has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with

Table of Contents

certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted the legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The Company is continuing to evaluate and monitor but does not expect for Pillar 2 to have a material impact on the effective tax rate or the consolidated financial statements.

Net income and EBITDA

The following table presents net income and EBITDA for the three months ended March 31, ~~2020 related to the impairment of goodwill~~2024 and ~~intangible assets. The tax law changes in the CARES Act had an immaterial impact on the Company’s~~2023, respectively:


	Three Months Ended March 31,						Change
($ in millions)	2024			2023			$		%
Net income	$	45		$	26		$	19	73.1	%
EBITDA (non-GAAP)	166			149			$	17	11.4	%
Net income as a % of net revenues	2.8		%	1.6		%
EBITDA as a % of net revenues	10.4		%	9.2		%

Our net income ~~tax provision during~~for the three months ended March 31, ~~2020.~~

2024 was $45 million compared to $26 million for the same period in 2023, an increase of $19 million. Net income as a percentage of net revenues for the three months ended March 31, 2024 and 2023 was 2.8% and 1.6%, respectively. The improvement is primarily attributable to growth in inspection, service, and monitoring revenue and pricing improvements in our Safety Services segment, in addition to improved operating margin due to disciplined project and customer selection in our Specialty Services segment. The net income increase was partially offset by an increase in non-service pension costs of approximately $7 million. EBITDA for the three months ended March 31, 2024 was $166 million compared to $149 million for the same period in 2023, an increase of $17 million. The increase in EBITDA was primarily driven by the factors previously discussed. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Operating Segment Results for the three months ended March 31, 2024 compared to the three months ended March 31, 2023

Net Revenues
Three Months Ended March 31, Change
($ in millions) 2024 2023 $ %
Safety Services $ 1,214 $ 1,191 $ 23 1.9 %
Specialty Services 389 430 $ (41) (9.5) %
Corporate and Eliminations (2) (7) NM NM
$ 1,601 $ 1,614 $ (13) (0.8) %

Operating Income (Loss)
Three Months Ended March 31, Change
($ in millions) 2024 2023 $ %
Safety Services $ 125 $ 96 $ 29 30.2 %
Safety Services operating margin 10.3 % 8.1 %
Specialty Services $ 7 $ — $ 7 NM
Specialty Services operating margin 1.8 % — %
Corporate and Eliminations $ (32) $ (23) NM NM
$ 100 $ 73 $ 27 37.0 %

Table of Contents
EBITDA
Three Months Ended March 31, Change
($ in millions) 2024 2023 $ %
Safety Services $ 163 $ 146 $ 17 11.6 %
Safety Services EBITDA as a % of net revenues 13.4 % 12.3 %
Specialty Services $ 33 $ 27 $ 6 22.2 %
Specialty Services EBITDA as a % of net revenues 8.5 % 6.3 %
Corporate and Eliminations $ (30) $ (24) NM NM
$ 166 $ 149 $ 17 11.4 %
NM = Not meaningful
The following discussion breaks down the net revenues, operating income (loss), and EBITDA by operating segment for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Safety Services
Safety Services net revenues for the three months ended March 31, 2024 increased by $23 million or 1.9% compared to the same period in 2023. The increase was primarily driven by increased inspection, service, and monitoring revenue. This increase was also due to continued strength in our new and existing end markets and strategic pricing improvements.
Safety Services operating margin for the three months ended March 31, 2024 and 2023 was approximately 10.3% and 8.1%, respectively. The increase was primarily the result of disciplined project and customer selection, pricing improvements, improved mix of inspection, service and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program. Safety Services EBITDA as a percentage of net revenues for the three months ended March 31, 2024 and 2023 was approximately 13.4% and 12.3%, respectively. This increase was primarily related to the factors discussed above.
Specialty Services
Specialty Services net revenues for the three months ended March 31, 2024 decreased by $41 million or 9.5% compared to the same period in 2023. The decrease was primarily due to continued disciplined project and customer selection on longer term projects and the planned exit of a customer relationship in the Infrastructure/Utility reporting unit.
Specialty Services operating margin was approximately 1.8% and 0% for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily the result of disciplined project and customer selection. Specialty Services EBITDA as a percentage of net revenues for the three months ended March 31, 2024 and 2023 was approximately 8.5% and 6.3%, respectively, due to the factors discussed above.

Non-GAAP Financial Measures ~~(Unaudited)~~

We supplement our reporting of consolidated financial information determined in accordance with U.S. GAAP with ~~earnings before interest, taxes, depreciation~~SG&A expenses (excluding amortization) and ~~amortization (“EBITDA”)~~EBITDA (defined below), which ~~is a~~are non-U.S. GAAP financial ~~measure. Management believes this measure provides meaningful information and helps investors understand our financial results and assess our prospects for future performance.~~measures. We use ~~EBITDA~~these non-U.S. GAAP financial measures to evaluate our performance, both internally and as compared with our peers because ~~it excludes~~they exclude certain items that may not be indicative of our core operating results.

~~This~~ Management believes these measures are useful to investors since they (a) permit investors to view our performance using the same tools that management uses to evaluate our past performance, reportable business segments, and prospects for future performance, (b) permit investors to compare us with our peers, and (c) in the case of EBITDA, determines certain elements of management’s incentive compensation.

These non-U.S. GAAP financial ~~measure,~~measures, however, ~~has~~have limitations as an analytical ~~tool~~tools and should not be considered in isolation from, a substitute for, or superior to, the related financial information ~~that~~ we report in accordance with U.S. GAAP. The principal limitation of ~~this~~these non-U.S. GAAP financial ~~measure~~measures is that ~~it excludes~~they exclude significant expenses ~~that are~~ required by U.S. GAAP to be recorded in our financial statements and may not be comparable to similarly titled measures of other companies due to potential differences in calculation methods. In addition, ~~this measure is~~these measures are subject to inherent limitations as ~~it reflects~~they reflect the exercise of judgment by management about which items are excluded or included in determining ~~thisnon-~~ ~~U.S.~~these non-U.S. GAAP financial ~~measure.~~measures. Investors are encouraged to review the ~~reconciliation~~following reconciliations of ~~this~~

Table of Contents

these non-U.S. GAAP financial ~~measure~~measures to ~~its~~the most comparable U.S. GAAP financial ~~measure included in this quarterly report~~measures and not to rely on any single financial measure to evaluate our business.

SG&A expenses (excluding amortization)

SG&A expenses (excluding amortization) is a measure of operating costs used by management to manage the business and its segments. We believe this non-U.S. GAAP measure provides meaningful information and helps investors understand our core selling, general, and administrative expenses excluding acquisition-related amortization expense charges to better enable investors to understand our financial results and assess our prospects for future performance.

The following tables present reconciliations of SG&A expenses to SG&A expenses (excluding amortization) for the periods indicated:


	Three Months Ended March 31,
($ in millions)	2024		2023
Reported SG&A expenses	$	392	$	352
Adjustments to reconcile to SG&A expenses to SG&A expenses (excluding amortization)
Amortization expense	(50)		(48)
SG&A expenses (excluding amortization)	$	342	$	304

EBITDA

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. We supplement the reporting of our consolidated financial information with EBITDA. We believe this non-U.S. GAAP measure provides meaningful information and helps investors understand our financial results and assess our prospects for future performance. Consolidated EBITDA is calculated in a manner consistent with segment EBITDA, which is a measure of segment profitability.

The following table presents a reconciliation of net income ~~(loss)~~ to EBITDA for the periods indicated:

   Three Months Ended March 31,
($ in millions)
   2020
(Successor)    2019
(Predecessor)
Reported net income (loss)
   $ (194 )    $ 21
Adjustments to reconcile net income (loss) to EBITDA:

Interest expense, net
   14    6
Income tax provision (benefit)
   (51 )    1
Depreciation
   18    16
Amortization
   52    9




EBITDA
   $ (161 )    $ 53

~~Operating Segment Results for the Three Months Ended March 31, 2020 (Successor) versus Three Months Ended March 31, 2019 (Predecessor)~~

   Net Revenues
   Three Months Ended March 31,
   2020    2019    Change
($ in millions)
   (Successor)    (Predecessor)    $            %
Safety Services
   $ 424    $ 426    $ (2 )    (0.5)%
Specialty Services
   300    286    14    4.9%
Industrial Services
   137    213    (76 )    (35.7)%
Corporate and Eliminations
   (3 )    (3 )    —      0.0%







   $ 858    $ 922    $ (64 )    (6.9)%







   Operating Income (loss)
   Three Months Ended March 31,
   2020    2019    Change
($ in millions)
   (Successor)    (Predecessor)    $            %
Safety Services
   $ (10 )    $ 52    $ (62 )    (119.2)%
Specialty Services
   (136 )    —      (136 )    NM
Industrial Services
   (58 )    (9 )    (49 )    NM
Corporate and Eliminations
   (30 )    (17 )    (13 )    76.5%







   $ (234 )    $ 26    $ (260 )    NM







   EBITDA
   Three Months Ended March 31,
   2020    2019    Change
($ in millions)
   (Successor)    (Predecessor)    $            %
Safety Services
   $ 18    $ 55    $ (37 )    (67.3)%
Specialty Services
   (108 )    14    (122 )    NM
Industrial Services
   (45 )    (3 )    (42 )    NM
Corporate and Eliminations
   (26 )    (13 )    (13 )    100.0%







   $ (161 )    $ 53    $ (214 )    NM

~~The following discussion breaks down the net revenues, operating income and EBITDA by operating segment for the three months ended March 31, 2020 compared to the three months ended March 31, 2019.~~

~~Safety Services~~

Safety Services net revenues for the three months ended March 31, 2020 decreased by $2 million, or 0.5% compared to the same period in the prior year. This is due to timing of larger contract revenues during the year-over-year period, combined with some impact of~~COVID-19~~ ~~andshelter-in-place~~ ~~orders during the last half of March.~~

Safety Services operating margin for the three months ended March 31, 2020 and 2019 was approximately (2.4)% and 12.2%, respectively. The decrease was primarily driven by impairment charges of $34 million and intangible asset amortization expense, which was $22 million higher for the three months ended March 31, 2020 compared to the same period in the prior year as a result of the APi Acquisition and the step up in fair values for intangible assets. Safety Services EBITDA as a percentage of net revenues for the three months ended March 31, 2020 and 2019 was approximately 4.2% and 12.9%, respectively. The decrease was primarily driven by impairment charges.


	Three Months Ended March 31,
($ in millions)	2024		2023
Reported net income	$	45	$	26
Adjustments to reconcile net income to EBITDA:
Interest expense, net	34		37
Income tax provision	18		12
Depreciation	19		19
Amortization	50		55
EBITDA	$	166	$	149

~~Specialty Services~~

Specialty Services net revenues for the three months ended March 31, 2020 increased by $14 million, or 4.9% compared to the same period in the prior year. Segment revenue growth was primarily driven by increased demand from our customers and timing of projects, slightly offset by negative impacts of COVID-19 during the last half of March.

Specialty Services operating margin for the three months ended March 31, 2020 and 2019 was approximately (45.3)% and 0.0%, respectively. The decrease was primarily driven by impairment charges of $120 million, and intangible asset amortization expense, which was $13 million higher for the three months ended March 31, 2020 compared to the same period in the prior year as a result of the APi Acquisition and the step up in fair values for intangible assets and contract mix. Specialty Services EBITDA as a percentage of net revenues for the three months ended March 31, 2020 and 2019 was approximately (36.0)% and 4.9%, respectively. The decrease was primarily driven by impairment charges.

~~Industrial Services~~

Industrial Services net revenues for the three months ended March 31, 2020 decreased by $76 million, or 35.7% compared to the same period in the prior year. This decrease was primarily due to decreased volume of projects as a result of our focus on project selection and reduced market demand in our Canadian operations.

Industrial Services operating margin for the three months ended March 31, 2020 and 2019 was approximately (42.3)% and (4.2)%, respectively. The decline was primarily driven by impairment charges of $49 million, and intangible asset amortization expense, which was $7 million higher for the three months ended March 31, 2020 compared to the same period in the prior year as a result of the APi Acquisition and the step up in fair values for intangible assets. This was partially offset by productivity increases due to better project selection and jobsite conditions. Industrial Services EBITDA as a percentage of net revenues, was (32.8)% and (1.4)% for the three months ended March 31, 2020 and 2019, respectively. The decrease was primarily driven by impairment charges, partially offset by contract selection, productivity and favorable jobsite conditions.

~~Liquidity and Capital Resources~~

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of liquidity are cash flows from the operating activities of our consolidated subsidiaries, available cash and cash equivalents, ~~and~~ our access to our ~~Revolving~~$500 million five year senior secured revolving credit facility (the "Revolving Credit ~~Facility.~~Facility") and the proceeds from debt offerings. We believe ~~that~~ these sources will be sufficient to fund our liquidity requirements for at least the next twelve months. As of March 31, 2020, we had $499 million of total liquidity, comprising $436 million in cash and cash equivalents and $33 million ($100 million less outstanding letters of credit of approximately $67 million) of available borrowings under our Revolving Credit Facility.

~~Given the uncertainties regarding theCOVID-19~~ global pandemic and in preparation for its potential unforeseen impacts, in late March 2020, we drew down $200 million under our Revolving Credit Facility. As of March 31, 2020, we had $1.2 billion of indebtedness outstanding under the Term Loan, and $200 million outstanding under the $300 million Revolving Credit Facility. As of March 31, 2020, $33 million was available after giving effect to $67 million of outstanding letters of credit, which reduce availability. Subsequently, in April 2020, we repaid the full amount borrowed on the Revolving Credit Facility.

We also expect to continue to raise cash through equity and debt offerings when capital market conditions are favorable and other sources of liquidity are not sufficient. Our principal liquidity requirements have been, and we expect will be, any contingent consideration due to selling shareholders, including tax payments in connection therewith, for working capital and general corporate purposes,

including capital expenditures and debt service, as well as to identify, execute and integrate strategic acquisitions and business transformation. Our capital expenditures were approximately $11 and $22 million in the three months ended March 31, 2020 and 2019, respectively.

~~Including our current assessment of the potential effects of theCOVID-19~~ pandemic on our results of operations, we anticipate that funds generated from operations, available borrowings under our Credit Facility and our cash balances will be sufficient to meet our working capital requirements, anticipated capital expenditures, debt service obligations, insurance and performance collateral requirements, letter of credit needs,~~earn-out~~ ~~obligations, required income tax payments, acquisition and other investment funding requirements, share repurchase activity and other liquidity needs for at least the next twelve months.~~

~~Credit Facilities~~

We have a credit agreement which provides for (1) a term loan facility, pursuant to which we incurred a $1.2 billion Term Loan, which we used to fund a part of the cash portion of the purchase price in the APi Acquisition and (2) a $300 million Revolving Credit Facility of which up to $150 million can be used for the issuance of letters of credit.

Although we believe we have sufficient resources to fund our future cash requirements, there are many factors with the potential to influence our cash flow position including weather, seasonality, commodity prices, market conditions, and ~~prolonged impacts ofCOVID-19~~ ~~andshelter-in-place~~ ~~governmental action,~~inflation, over which we have no control.

~~Effective October 1, 2019,~~

Table of Contents

As of March 31, 2024, we had $643 million of total liquidity, comprising $247 million in cash and cash equivalents and $396 million ($400 million less outstanding letters of credit of approximately $4 million, which reduce availability) of available borrowings under our Revolving Credit Facility.

During 2022, we entered into an amendment to our credit agreement. As part of this amendment, we entered into a ~~$720~~$1,100 million seven year incremental term loan ("2021 Term Loan"), the Revolving Credit Facility was upsized by $200 million to $500 million, the maturity date of the Revolving Credit Facility was extended five years, and the letter of credit limit was increased by $100 million to $250 million.

During 2023, we completed the Fourth Amendment to our credit agreement, repricing our 2019 Term Loan and 2021 Term Loan. The repricing reduced the applicable margin on all outstanding amounts by 25 basis points. Additionally, $422 million of ~~notional value5-year~~ ~~interest rate swap, exchangingone-month~~ ~~LIBOR~~the 2019 Term Loan was extended to the 2021 Term Loan and assumed all the same terms as the repriced 2021 Term Loan. We made a repayment of $100 million on the 2019 Term Loan concurrent with the close of this transaction.

During the three months ended March 31, 2024, we upsized our 2021 Term Loan by $300 million with a Fifth Amendment to our credit agreement. The loan proceeds were directed as consideration for a ~~fixed rate~~portion of ~~1.62% per annum. Accordingly,~~the purchase price for the Series B Preferred Stock Conversion.

During the three months ended March 31, 2024, we drew $100 million under the Revolving Credit Facility to fund a portion of the purchase price for the Series B Preferred Stock Conversion.

We expect to continue to be able to access the capital markets through equity and debt offerings for liquidity purposes as needed. Our principal liquidity requirements have been, and we expect will continue to be, for working capital and general corporate purposes, including capital expenditures and debt service, any accrued consideration and compensation due to selling shareholders, including tax payments in connection therewith, as well as to identify, execute, and integrate strategic acquisitions and business transformation transactions or initiatives.

On February 26, 2024, our ~~fixed interest rate per annum on the swapped $720~~Board of Directors authorized a stock repurchase program ("SRP") to purchase up to an aggregate of $1,000 million of ~~Term Debt~~shares of our common stock. This stock repurchase program is ~~4.12%.~~

~~One~~indefinite, unless otherwise modified or terminated by our Board of ~~APi Group’s Canadian subsidiaries~~Directors at any time in its sole discretion. During the three months ended March 31, 2024, we repurchased 16,260,160 shares of common stock for approximately $600 million. As of March 31, 2024, we had ~~a $20~~approximately $400 million ~~unsecured line~~ of ~~credit agreement with a variable interest rate based upon the prime rate. APi Group had no amounts outstanding~~authorized repurchases remaining under the ~~line~~SRP.

In 2022, our Board of ~~credit at March 31, 2020.~~

~~We were in compliance~~Directors authorized a stock repurchase program ("2022 SRP"), authorizing the purchase of up to an aggregate of $250 million of common stock through February 2024. The 2022 SRP expired on February 29, 2024.

Cash Flows

The following table summarizes net cash flows with ~~all covenants contained in~~respect to our operating, investing and financing activities for the ~~Credit Agreement as of December 31, 2019 and March 31, 2020.~~

~~Cash Flows~~

   Three Months Ended March 31,
   2020    2019
($ in millions)
   (Successor)    (Predecessor)
Net cash provided by operating activities
   $ 55    $ 25
Net cash used in investing activities
   (15 )    (22 )
Net cash provided by (used in) financing activities
   139    (16 )
Effect of foreign currency exchange rate change on cash and cash equivalents
   1    —




Net increase (decrease) in cash and cash equivalents
   $ 180    $ (13 )




Cash and cash equivalents at the end of the period
   $ 436    $ 41

periods indicated:

Three Months Ended March 31,
($ in millions) 2024 2023
Net cash provided by (used in) operating activities $ 7 $ (1)
Net cash used in investing activities (22) (27)
Net cash used in financing activities (213) (216)
Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash (4) 2
Net decrease in cash, cash equivalents, and restricted cash $ (232) $ (242)
Cash, cash equivalents, and restricted cash, end of period $ 248 $ 365

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities was ~~$55~~$7 million for the three months ended March 31, ~~2020~~2024 compared to ~~$25~~$1 million of cash used for the same period in ~~2019.~~2023. The increase in cash provided by operating activities is primarily due to an increase in net income in the period. This increase in cash provided by operating activities is also driven by lower working capital needs associated with the various services we provided in the three months ended March 31, 2024 compared to the

Table of Contents

same period of the prior year. Cash flow from operations is primarily ~~influenced~~driven by changes in the mix and timing of demand for our services and working capital needs associated with the various services we provide. Working capital is primarily affected by changes in total accounts receivable, accounts payable, accrued expenses, and contract assets and contract liabilities, all of which tend to be related and are affected by changes in the timing and volume of work performed. ~~The increase in cash flows provided by operating activities in 2020 compared to the same period in 2019 was primarily driven by changes in working capital levels.~~

Net Cash Used in Investing Activities

Net cash used in investing activities was ~~$15~~$22 million for the three months ended March 31, ~~2020~~2024 compared to ~~$22~~$27 million for the same period in ~~2019. The decrease in cash used in investing activities was attributed to reduction in purchases~~2023. We had proceeds on the sale of property and equipment of $23 million during the ~~current year.~~

~~Net Cash Provided by (Used in) Financing Activities~~

~~Net cash provided by financing activities was $139 million for~~ three months ended March 31, ~~2020~~2024 compared to ~~net cash used in financing activities of $16~~$4 million for the same period in ~~2019.~~2023, partially offset by cash used in acquisitions of $23 million and $10 million in the three months ended March 31, 2024 and 2023, respectively.

Net Cash Used in Financing Activities

Net cash used in financing activities was $213 million for the three months ended March 31, 2024 compared to $216 million used in financing activities for the same period in 2023. The ~~increase~~consistent use of cash in ~~cash provided by~~ financing activities was primarily ~~due~~driven by equity and stock repurchases in the three months ended March 31, 2024 related to the Series B Preferred Stock Conversion. In the three months ended March 31, 2024, $400 million of proceeds from the 2021 Term Loan and Revolving Credit Facility were used for share repurchases of $600 million during the Series B Preferred Stock Conversion. The cash used in financing activities in the three months ended March 31, 2023 was driven by $202 million of aggregate payments on the 2019 Term Loan and 2021 Term Loan.

Financing Activities

Credit Agreement

We have entered into a Credit Agreement by and among APi Group DE, Inc., our wholly-owned subsidiary, as borrower ("APi Group DE"), APG as a guarantor, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank N.A., as administrative agent and as collateral agent (the “Credit Agreement”) which provides for: (1) a term loan facility, pursuant to which we incurred the $1,200 million term loan ("2019 Term Loan") used to fund a part of the cash portion of the purchase price in the APi Acquisition, and a $1,100 million seven-year incremental term loan ("2021 Term Loan") used to fund a portion of the purchase price in the Chubb acquisition, and (2) a $500 million Revolving Credit Facility of which up to $250 million can be used for the issuance of letters of credit.

During the three months ended March 31, 2024, we completed the Fifth Amendment to our ~~borrowing~~credit agreement, upsizing our 2021 Term Loan by an aggregate principal amount equal to $300. The loan proceeds were directed as consideration for a portion of ~~$200~~the purchase price for the Series B Preferred Stock Conversion.

In 2023, we completed repricing of our 2019 Term Loan and 2021 Term Loan. The repricing reduces the applicable margin on all outstanding amounts by 25 basis points. Additionally, $422 million of the 2019 Term Loan was extended to the 2021 Term Loan and assumed all the same terms as the repriced 2021 Term Loan.

The amended interest rate applicable to the 2019 Term Loan is, at our option, either (a) a base rate plus an applicable margin equal to 1.25% or (b) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a credit spread adjustment ("CSA"). Principal payments on the 2019 Term Loan are due in quarterly installments on the last day of each fiscal quarter, unless prepayments are made, for a total total annual amount equal to 1.00% of the initial aggregate principal amount of the 2019 Term Loan. The 2019 Term Loan matures on October 1, 2026. Based on the early prepayments we have made, we do not owe any quarterly principal amounts for the remainder of the 2019 Term Loan.

The amended interest rate applicable to the 2021 Term Loan is, at our option, either (a) a base rate plus an applicable margin equal to 1.50% or (b) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.50% plus a CSA. Principal payments on the 2021 Term Loan will be made in quarterly installments on the last day of each fiscal quarter, for a total total annual amount equal to 1.00% of the initial aggregate principal amount of the 2021 Term Loan. The 2021 Term Loan matures on January 3, 2029. The 2021 Term Loan is subject to the same mandatory prepayment provisions as the 2019 Term Loan. Based on the early prepayments we have made, we do not owe any quarterly principal amounts for the remainder of the 2021 Term Loan.

Table of Contents

The interest rate applicable to borrowings under the Revolving Credit Facility ~~during March 2020 due~~is, at our option, either (a) a base rate plus an applicable margin equal to 1.25% or (2) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a CSA.

The Credit Agreement contains customary representations and warranties, and affirmative and negative covenants, including covenants that, among other things, restrict our, and our restricted subsidiaries’, ability to (i) incur additional indebtedness; (ii) pay dividends or make other distributions or repurchase or redeem capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) make loans and investments; (v) sell, transfer and otherwise dispose of assets; (vi) incur or permit to exist certain liens; (vii) enter into transactions with affiliates; (viii) enter into agreements restricting subsidiaries’ ability to pay dividends; and (ix) consolidate, amalgamate, merge or sell all or substantially all assets. The Credit Agreement also contains customary events of default. Furthermore, with respect to the ~~uncertainty~~revolving credit facility, we must maintain a first lien net leverage ratio that does not exceed (i) 4.00 to 1.00 for each fiscal quarter ending in 2021, and ~~unforeseen potential consequences associated~~(ii) 3.75 to 1.00 for each fiscal quarter ending thereafter, if on the last day of any fiscal quarter the outstanding amount of all revolving loans and letter of credit obligations (excluding undrawn letters of credit up to $40 million) under the Credit Agreement is greater than 30% of the total revolving credit commitments thereunder subject to a right of cure. Our first lien net leverage ratio as of March 31, 2024 was 2.09:1.00.

As of March 31, 2024, the 2019 Term Loan and the 2021 Term Loan have remaining principal amounts of $330 million and $1,707 million, respectively. We had $100 million outstanding under the Revolving Credit Facility, under which $396 million was available after giving effect to $4 million of outstanding letters of credit, which reduces availability.

On April 30, 2024, we began a process to reprice our 2021 Term Loan with a remaining principal balance of $1,707 million. We expect that the~~COVID-19~~ ~~pandemic, which~~ repricing will reduce the applicable margin on all outstanding amounts. Additionally, we ~~subsequently repaid~~expect to increase the existing 2021 Term Loan by approximately $550 million on the same terms as the current 2021 Term Loan. We expect to use the proceeds of approximately $550 million to refinance the 2019 Term Loan with a remaining principal of $330 million and repay the $100 million Revolving Credit Facility borrowing as well as to provide funds for general corporate purposes, including the acquisition of Elevated Facility Services Group. We expect the transaction to close in ~~April 2020.~~

~~Off-Balance~~ ~~Sheet Financing Arrangements~~

early May 2024.

Senior Notes

On June 22, 2021, APi Group DE completed a private offering of $350 million aggregate principal amount of 4.125% Senior Notes due 2029 (the “4.125% Senior Notes”), issued under an indenture, dated June 22, 2021. The 4.125% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by us and certain of our subsidiaries. The 4.125% Senior Notes will mature on July 15, 2029, unless redeemed earlier, and bear interest at a rate of 4.125% per year until maturity, payable semi-annually in arrears. We ~~have no obligations, assets or liabilities which would be consideredoff-balance~~ ~~sheet arrangements.~~used the net proceeds from the sale of the 4.125% Senior Notes to repay a previously outstanding term loan, prepay a portion of the 2019 Term Loan and for general corporate purposes. As of March 31, 2024, we had $337 million aggregate principal amount of 4.125% Senior Notes outstanding.

On October 21, 2021, a wholly-owned subsidiary of the Company, completed a private offering of $300 million aggregate principal amount of 4.750% Senior Notes due 2029 (the “4.750% Senior Notes”) issued under an indenture dated October 21, 2021, as supplemented by a supplemental indenture dated January 3, 2022. The 4.750% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by us and certain of our subsidiaries. The 4.750% Senior Notes will mature on October 15, 2029, unless earlier redeemed, and bear interest at a rate of 4.750% per year until maturity, payable semi-annually in arrears. We ~~do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred~~used the net proceeds from the sale of the 4.750% Senior Notes to ~~as variable interest entities, which would have been established~~finance a portion of the consideration for the ~~purpose~~Chubb Acquisition. As of ~~facilitatingoff-balance~~ ~~sheet arrangements.~~

March 31, 2024, we had $277 million aggregate principal amount of 4.750% Senior Notes outstanding.

Debt Covenants

We were in compliance with all covenants contained in the indentures governing the 4.125% Senior Notes and 4.750% Senior Notes and Credit Agreement as of March 31, 2024 and December 31, 2023.

Issuance and Conversion of Series B Preferred Stock

During 2022, we issued and sold 800,000 shares of our 5.5% Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (the "Series B Preferred Stock"), for an aggregate purchase price of $800 million, pursuant to

Table of Contents

securities purchase agreements entered into on July 26, 2021 with certain investors. The net proceeds from the Series B Preferred Stock issuance were used to fund a portion of the consideration for the Chubb Acquisition.

On February 28, 2024, we entered into a Conversion and Repurchase Agreement with Juno Lower Holdings L.P. ("Juno Lower Holdings"), FD Juno Holdings L.P. ("FD Juno Holdings", and together with Juno Lower Holdings, "Blackstone"), Viking Global Equities Master Ltd. ("VGEM") and Viking Global Equities II L.P. (VGE II, and collectively with VGEM, "Viking" and collectively with the Blackstone, the "Series B Holders") pursuant to which Blackstone and Viking agreed to convert all of the outstanding shares of the Series B Preferred Stock that they hold, which represents all of the Series B Preferred Stock outstanding. The transactions contemplated by the agreement (the "Series B Preferred Stock Conversion") were also consummated on February 28, 2024.

Under the terms of the agreement, (i) the Series B Holders each agreed to exercise their respective right to convert all of their Series B Preferred Stock into common stock, resulting in a total of 800,000 shares of Series B Preferred Stock being converted into approximately 32,803,519 shares of common stock (inclusive of approximately 283,196 shares attributable to accrued and unpaid dividends thereon (the "Conversion Shares") and (ii) upon issuance of the Conversion Shares, we agreed to immediately repurchase one-half of the Conversion Shares, on a pro rata basis, from the Series B Holders for an aggregate purchase price of $600.

Material Cash Requirements from Known Contractual and Other Obligations

Our material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the Interim Statements and expected to be satisfied using cash generated from operations:

•Operating and Finance Leases – See Note 12 – "Leases" in the Annual Report on Form 10-K filed on February 28, 2024. We have not ~~entered into anyoff-balance~~ ~~sheet financing arrangements, established any special purpose entities, guaranteed any~~had material changes to our lease obligations during the three months ended March 31, 2024.

•Debt – See Note 10 – "Debt" for future principal payments and interest rates on our debt ~~or commitments~~instruments.

•Tax Obligations – See Note 11 – "Income Taxes."

•Pension obligations – See Note 12 – "Employee Benefit Plans."

We make investments in our properties and equipment to enable continued expansion and effective performance of ~~other entities, or entered into anynon-financial~~ ~~agreement involving assets.~~

our business. Our capital expenditures are typically less than 1.5% of annual net revenues.

~~Item~~

ITEM 3. ~~Quantitative~~QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

As of March 31, 2024, our outstanding variable interest rate debt was primarily related to our 2019 Term Loan and ~~Qualitative Disclosures about Market Risk~~

~~There~~our 2021 Term Loan. As of March 31, 2024, we had $330 million outstanding on the 2019 Term Loan and $1,707 million outstanding on the 2021 Term Loan. To mitigate increases in variable interest rates, we have ~~been no material changes~~a $720 million interest rate swap, exchanging one-month SOFR for a rate of 3.59% per annum and a $400 million interest rate swap exchanging one-month SOFR for a rate of 3.41% per annum. In addition, interest expense will be offset by the amortization through October 2024 of the remaining gain of $10 million recognized from the ~~information~~termination of the previously ~~reported~~outstanding $720 million notional amount interest rate swap. The remaining floating rate portfolio will bear interest based on one-month SOFR plus CSA plus 225 basis points (for the 2019 Term Loan) or one-month SOFR plus CSA plus 250 basis points (for the 2021 Term Loan). As of March 31, 2024, excluding letters of credit outstanding of $4 million, we had $100 million of outstanding revolving loans under our Credit Agreement.

Foreign currency risk

We have operations in over 20 countries globally. Revenues generated from foreign operations represented approximately 40% of our consolidated net revenues for three months ended March 31, 2024. Net revenues and expenses related to our foreign operations are, for the ~~heading “APG Management’s~~most part, denominated in the functional currency of the foreign operation, which

Table of Contents

minimizes the impact fluctuations in exchange rates would have on net income or loss. We are subject to fluctuations in foreign currency exchange rates when transactions are denominated in currencies other than the functional currencies. Such transactions were not material to our operations during the three months ended March 31, 2024. These foreign currency transaction gains and losses, including hedging impacts, are classified in investment expense (income) and other, net, in the condensed consolidated statements of operations and were a (loss) gain of $(1) million and $— million for three months ended March 31, 2024 and 2023, respectively. These net foreign currency transaction gains and losses include derivative instruments designed to reduce foreign currency exchange rate risks. Translation gains or losses, which are recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets, result from translation of the assets and liabilities of our foreign subsidiaries into U.S. dollars. Foreign currency translation (losses) gains totaled approximately $(42) million and $14 million for the three months ended March 31, 2024 and 2023, respectively.

Our exposure to fluctuations in foreign currency exchange rates has increased as a result of our international presence and may continue to increase in the future if we continue to expand our operations outside of the U.S. We seek to manage foreign currency exposure by minimizing our consolidated net assets and liability positions in currencies other than the functional currency of our foreign subsidiaries. However, we believe that our exposure to transactional gains or losses resulting from fluctuations in foreign currencies is limited because our foreign operations primarily invoice and collect receivables in their respective local or functional currencies, and the expenses associated with these transactions are generally contracted and paid for in the same local currencies. In order to manage foreign currency risk related to transactions in foreign currencies and the intercompany financing structure, we entered into cross-currency swaps to manage the foreign currency risk of certain intercompany loans. We also use foreign currency contracts as a way to mitigate foreign currency exposure.

Other market risk

We are also exposed to market risks impacting our customer base due to the potential related impact on accounts receivable or contract assets on uncompleted contracts. The amounts recorded may be at risk if our customers’ ability to pay these obligations is negatively impacted by economic conditions. We continually monitor the creditworthiness of our customers and maintain ongoing discussions with customers regarding contract status with respect to change orders and billing terms. Therefore, management believes it takes appropriate action to manage market and other risks, but there is no assurance management will be able to reasonably identify all risks with respect to the collectability of these assets. See also “Revenue Recognition from Contracts with Customers” under Critical Accounting Estimates within Item 7, "Management's Discussion and Analysis of Financial ~~Condition—Qualitative~~Condition and ~~Quantitative Disclosures about Market Risk”~~Results of Operations" in our Annual Report on Form~~S-4.~~

10-K for the fiscal year ended December 31, 2023.

In addition, we are exposed to various supply chain risks, including the market risk of price fluctuations or availability of copper, steel, cable optic fiber, and other materials used as components of supplies or materials utilized in our operations. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our vehicle fleet. Disruptions in our supply chain can occur due to market inefficiencies but can also be driven by other events, like cybersecurity breaches, pandemics, or similar disruptive events. While we believe we can increase our contract prices to adjust for some price increases in commodities, there can be no assurance that such price increases, if they were to occur, would be recoverable. Additionally, some of our fixed price contracts do not allow us to adjust prices and, as a result, increases in material costs could reduce profitability with respect to projects in progress.

Significant declines in market prices for oil, gas, and other fuel sources may also impact our operations. Prolonged periods of low oil and gas prices may result in projects being delayed or canceled, and in a low oil and gas price environment, certain of our businesses could become less profitable or incur losses.

~~Item~~

ITEM 4. ~~Controls and Procedures~~

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information ~~which is~~ required to be disclosed by ~~the~~ us in the reports ~~that~~ we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, ~~processed,~~processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Table of Contents

As required by Rule13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective atas of March 31, ~~2020,~~2024 due to the material ~~weakness~~weaknesses in internal control over financial reporting described below, which ~~was~~were previously disclosed in ~~the “Risk Factors” section~~Item 9A. “Controls and Procedures” of our ~~FormS-4.~~

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detectedAnnual Report on ~~a timely basis.~~

~~As indicated above, control deficiencies in our internal control over financial reporting have been identified which constitute material weaknesses relating to inadequate design and implementation of:~~

~~information technology general controls that prevent~~Form 10-K for the ~~information systems from providing complete and accurate information consistent with financial reporting objectives and current needs;~~

~~internal controls over the preparation of the financial statements, including the insufficient review and oversight over financial reporting, journal entries along with related file documentation;~~

~~internal controls to identify and manage segregation of certain accounting duties;~~

~~internal controls over estimated costs of completion on contracts where revenue is recognized over time; and~~

~~management review controls over projected financial information used in fair value financial models used for purchase accounting and intangible asset valuations.~~

Management is in the process of developing a remediation plan. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. We will monitor the effectiveness of our remediation plans and will make changes management determines to be appropriate.

~~Changes in Internal Control Over Financial Reporting~~

We are developing a remediation plan to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there were no material changes to our internal control over financial reporting (as defined in Rules~~13a-15(f)~~ ~~and15d-15(f)~~ ~~under the Exchange Act) that occurred during the quarter~~year ended ~~March~~December 31, ~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.~~

~~Inherent Limitations on Effectiveness of Controls and Procedures~~

2023.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all ~~error~~errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our ~~company~~Company have been detected.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a‑15(f) and 15d-15(f) under the Exchange Act. Under the supervision of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2024 based on the guidelines established in Internal Control — Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of March 31, 2024 due to the material weaknesses in internal control over financial reporting identified and further described below.

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We continue to have previously identified control deficiencies that are not remediated as of March 31, 2024 related to user access controls specific to segregation of duties in the Company’s change management process in certain information technology systems of the Chubb fire and security business that was acquired in 2022, which resulted from ineffective risk assessment. We also continue to have previously identified control deficiencies that are not remediated as of March 31, 2024 related to adequate controls to ensure the completeness and accuracy of time keeping and service order information used in the financial reporting processes of certain businesses that is processed and hosted by a third-party service organization. These control deficiencies constitute material weaknesses in our internal control over financial reporting as of March 31, 2024.

Ongoing Remediation Plan

Management has undertaken various steps to continue remediating such control deficiencies and has seen improved results versus December 31, 2023. Steps taken by us during the three months ended March 31, 2024 include the following:

•Obtained a final attestation report for the year 2023 over the design effectiveness of controls operated by the third-party service organization, noting it was issued with an unqualified opinion; and

•Continued to map conflicts within certain information technology systems of the Chubb fire and security business in order to perform further analysis on transactions within the system.

We plan to continue our efforts to strengthen our internal control over financial reporting and are committed to ensuring that such controls are operating effectively. We are implementing process and control improvements to address the above material weakness as follows:

•Continue to conduct ongoing training with control owners and reviewers within operations and finance with a specific focus on sufficient documentation and evidence in the execution of the controls.

As anticipated, and we have made progress with the Company’s remediation plans. In addition, under the direction of the Audit Committee of the Board of Directors, we will continue to review and make necessary changes to the overall

Table of Contents~~Part~~

design of the Company’s internal control environment, as well as to refine policies and procedures to improve the overall effectiveness of internal control over financial reporting of the Company.

The material weaknesses in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls will be met, and no evaluation of controls can provide absolute assurance that all control deficiencies or material weaknesses have been or will be detected. There is no assurance that the remediation will be fully effective. As described above, these material weaknesses have not been remediated as of the filing date of this quarterly report. If these remediation efforts do not prove effective and control deficiencies and material weaknesses persist or occur in the future, the accuracy and timing of our financial reporting may be adversely affected.

Changes in Internal Control over Financial Reporting

We are executing our remediation plans to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Other than changes described above, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

~~Item~~

ITEM 1A. ~~Risk Factors~~

~~The following disclosures update certain risk factors previously disclosed in our FormS-4.~~ ~~Other than as set forth below, there were~~RISK FACTORS

There have been no material changes to ~~the~~our risk factors ~~disclosed~~contained in ~~the section entitled “Risk Factors”~~Part I, Item 1A. "Risk Factors" of our Form~~S-4.~~

10-K for the year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The ~~impact~~following table provides information about the Company's purchase of equity securities during the three months ended March 31, 2024:

During the Three Months Ended March 31, 2024 Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Maximum Approximate Dollar Value of
Shares that May Yet Be Purchased Under
the Plans or Programs (in millions)
January 1, 2024 - January 31, 2024 — $ — — $ —
February 1, 2024 - February 29, 2024 16,260,160 36.90 16,260,160 400
March 1, 2024 - March 31, 2024 — — —
Total 16,260,160 $ 36.90 16,260,160 $ 400

(1)During the three months ended March 31, 2024, our Board of Directors authorized a stock repurchase program (“SRP”) to purchase up to an aggregate of $1,000 million of shares of our common stock. Acquisitions pursuant to the SRP may be made from time to time through a combination of open market repurchases in compliance with Rule 10b-18 under the Exchange Act, privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions, at our discretion, as permitted by securities laws and other legal requirements. In connection with the SRP, we may enter into Rule 10b5-1 trading plans which would generally permit us to repurchase shares at times when it might otherwise be prevented from doing so under the securities laws. The SRP is indefinite, unless otherwise modified or earlier terminated by our Board of Directors at any time in its sole discretion.

ITEM 4. MINE SAFETY DISCLOSURES

Information regarding mine safety violations and other regulatory matters required by Section 1503(a) of the ~~coronavirus(COVID-19)~~ ~~pandemic or similar global health concerns, could lead~~Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to ~~project delays or cancellations, could adversely affect our ability to timely complete projects and source~~this quarterly report.

ITEM 5. OTHER INFORMATION

During the supplies we need, and may impact labor availability and productivity, and could result in impairment risks, each of which could adversely impact our business, financial condition and results of operations.

~~The coronavirus outbreak in China in December 2019 and the subsequent spread~~three months ended March 31, 2024, Sir Martin E. Franklin, a director of the ~~virus throughout~~Company, adopted a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

On March 8, 2024, Mr. Franklin adopted a Rule 10b5-1 trading arrangement providing for the ~~world has resulted in widespread infections and fatalities. Governments in affected countries, including~~sale of the ~~United States, have launched measures~~Company's common stock (a "Rule 10b5-1 Trading Plan") that is intended to ~~combat~~satisfy the ~~spread~~affirmative defense conditions of~~COVID-19,~~ ~~including travel bans, quarantines and lock-downs~~ Exchange Act Rule 10b5-1(c). Mr. Franklin’s Rule 10b5-1 Trading Plan provides for the sale of ~~affected areas that include closures ofnon-essential~~ ~~businesses. We rely on the availability~~up to 1,980,000 shares of our ~~skilled workforce and third-party contractors~~common stock pursuant to ~~meet contractual milestones and timely complete projects. If~~one or more limit orders until December 13, 2024, or earlier if all transactions under the~~COVID-19~~ ~~pandemic~~ trading arrangement are completed.

No other officers or ~~similar outbreak were to require us to discontinue operations,~~ directors, as defined in Rule 16a-1(f), adopted and/or ~~to cause shortages of our workforce~~terminated a “Rule 10b5-1 trading arrangement” or ~~third-party contractors, it could result~~a “non-Rule 10b5-1 trading arrangement,” as defined in cancellations or deferrals of project work, which could lead to a decline in revenue and an increase in costs. In addition, such outbreak may impact the availability of the commodities, supplies and materials needed for projects, and we may experience difficulties obtaining such commodities, supplies and materials from suppliers or vendors whose supply chains are impacted by the outbreak. If we are unable to source the essential commodities, supplies and materials in adequate quantities, at acceptable prices and in a timely manner, our business, financial condition and results of operations could be adversely affected. Similarly, our customers may be impacted by the~~COVID-19~~ ~~pandemic, which could cause them to cancel or defer project work, which could have a negative impact on our business.~~

In addition, our results of operations are materially affected by conditions in the credit and financial markets and the economy generally. Global credit and financial markets have experienced extreme volatility and disruptions as a result of the~~COVID-19~~ pandemic including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that deterioration in credit and financial markets and confidence in economic conditions will not occur or be sustained as a result of the~~COVID-19~~ pandemic. Any protracted economic disruption or recession could lead customers to delay or cancel projects, which would negatively impact our revenues, earnings and financial condition. In addition, our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure by us or our customers to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon current or expected projects.

Our collective bargaining agreements generally require us to participate with other companies in multiemployer pension plans. Our future contribution obligations and potential withdrawal liability exposure with respect to these plans could increase significantly based on the investment and actuarial performance of those plans, the insolvency of other companies that contribute to those plans and other factors, which could be negatively impacted as a result of the unfavorable and uncertain economic and financial market conditions resulting from the ongoing~~COVID-19~~ ~~pandemic and related issues.~~

Furthermore, some of the inherent estimates and assumptions used in determining the fair value of our reporting units are outside the control of management, including interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates, and labor inflation. As a result of the impact of~~COVID-19~~ which has negatively impacted our operations, suppliers and other vendors, customer base, and other factors outside of the control of management, in the first quarter of 2020 we determined that certain of our goodwill and intangible assets were impaired as the preliminary carrying values exceeded fair value and we recorded a~~non-cash~~ ~~charge of approximately $208 million. Given the uncertainty of~~

~~these factors, as well as the inherent difficulty in predicting the severity and duration of theCOVID-19~~ global pandemic and associated recovery and the uncertainties regarding the potential financial impact on our business and the overall economy, there can be no assurance that our estimates and assumptions made for purposes of the goodwill testing performedRegulation S-K Item 408, during the ~~first~~ quarter ended March 31, 2024.

Table of 2020 will prove to be accurate predictions of the impact in future periods. While we believe we have made reasonable estimates and assumptions to calculate the fair values of our reporting units which were based on facts and circumstances known at such time, it is possible that existing or new events may result in forecasted cash flows, revenue and earnings that differ from those that formed the basis of our estimates and assumptions, which could be materially different from our estimates and assumptions. If so, we may be required to record additional impairment charges in the future, which could be material.

~~The circumstances and global disruption caused byCOVID-19~~ has affected, and we believe will continue to affect, our businesses, operating results, cash flows and financial condition, however the scope and duration of the impact is highly uncertain. The full extent to which the~~COVID-19~~ pandemic impacts our business, markets, supply chain, customers and workforce will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the~~COVID-19~~ ~~pandemic and the actions to treat or contain it or to otherwise limit its impact, among others.~~

Contents

~~Item~~

ITEM 6. ~~Exhibits~~

EXHIBITS


Exhibit No.						Description of Exhibits

3.1						Certificate of Elimination of 5.5% Series B Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on March 5, 2024).
31.1*
10.1						Conversion and Repurchase Agreement, dated February 28, 2024, by and among APi Group Corporation, Juno Lower Holdings L.P., FD Juno Holdings L.P., Viking Global Equities Master Ltd. and Viking Global Equities II LP. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on February 28, 2024).

10.2						Amendment No. 5, dated February 28, 2024, by and among APi DE, Inc., APi Group Corporation, the subsidiary guarantors from time to time party thereto, Citibank, N.A. as administrative agent and collateral agent, Juno Lower Holdings L.P., FD Juno Holdings L.P., Viking Global Equities Master Ltd. and Viking Global Equities II LP (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on February 28, 2024).

31.1*						Certification by Russell A. Becker, Chief Executive Officer, pursuant to Exchange Act Rules13a-14 and15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification by ~~Thomas Lydon,~~Kevin S. Krumm, Chief Financial Officer, pursuant to Exchange Act Rules13a-14 and15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						~~Certifications~~Certification by Russell A. Becker, Chief Executive Officer, ~~and Thomas Lydon,~~pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Certification by Kevin S. Krumm, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95.1*						Mine Safety Disclosures.

101.INS*						Inline XBRL Instance Document.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	~~Filed herewith~~

**	~~Furnished herewith~~

*Filed herewith

**Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized.


			APi GROUP CORPORATION

~~June~~May 2, ~~2020~~2024			/s/ Russell A. Becker
			Russell A. Becker
			Chief Executive Officer
			(Duly Authorized Officer)

May 2, 2024		/s/ Kevin S. Krumm
~~June 2, 2020~~			~~/s/ Thomas Lydon~~ Kevin S. Krumm
			~~Thomas Lydon~~
	Chief Financial Officer
			(Principal Financial Officer)


PART I. FINANCIAL INFORMATION		1	3

Item 1. Financial Statements		1	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29	32
Item 3. Quantitative and Qualitative Disclosures about Market Risk		41	43
Item 4. Controls and Procedures		41	44

PART II. OTHER INFORMATION		43	47

Item 1A. Risk Factors		43	47
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	47
Item 4. Mine Safety Disclosures	47
Item 5. Other Information	47
Item 6. Exhibits		44	48

SIGNATURES		45	49


	March 31, 2020 (Successor)			December 31, 2019 (Successor)
Assets

Current assets:
Cash and cash equivalents	$	436		$	256
Accounts receivable, net of allowances of $1 and $0 at March 31, 2020 and December 31, 2019, respectively		662			730
Inventories		59			58
Contract assets		251			245
Prepaid expenses and other current assets		37			33
Assets held for sale		5			20

Total current assets		1,450			1,342

Property and equipment, net		397			402
Operating lease right of use asset		103			105
Goodwill		767			980
Intangible assets, net		1,069			1,121
Preferred tax assets		64			—
Other assets		36			61

Total assets	$	3,886		$	4,011

Liabilities and Shareholders’ Equity

Current liabilities:
Short-term and current portion of long-term debt	$	217		$	19
Accounts payable		152			156
Contingent consideration and compensation liabilities		47			49
Accrued salaries and wages		104			149
Deferred consideration		35			73
Other accrued liabilities		132			157
Contract liabilities		205			193
Operating and finance leases		27			27

Total current liabilities		919			823

Long-term debt, less current portion		1,167			1,171
Contingent consideration and compensation liabilities		22			15
Operating and finance leases		93			95
Deferred tax liabilities		24			23
Deferred consideration		53			78
Other noncurrent liabilities		83			49

Total liabilities		2,361			2,254
Shareholders’ equity:
Preferred shares, no par value; unlimited authorized shares; 4 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		—			—
Ordinary shares; no par value, unlimited authorized shares, 169 and 170 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		—
Additionalpaid-in capital		1,880			1,885
Accumulated deficit		(325	)		(131	)
Accumulated other comprehensive income (loss)		(30	)		3

Total shareholders’ equity		1,525			1,757

Total liabilities and shareholders’ equity	$	3,886		$	4,011


	Three months ended March 31,
	2020			2019
	(Successor)			(Predecessor)
Net revenues	$	858		$	922
Cost of revenues		696			759

Gross profit		162			163
Selling, general, and administrative expenses		188			137
Impairment of goodwill and intangible assets		208			—

Operating income (loss)		(234	)		26

Interest expense, net		14			6
Investment income and other, net		(3	)		(2	)

Other expense, net		11			4

Income (loss) before income tax provision		(245	)		22
Income tax provision (benefit)		(51	)		1

Net income (loss)	$	(194	)	$	21

Net loss per ordinary share:
Basic	$	(1.14	)		n/a
Diluted	$	(1.14	)		n/a
Weighted average shares outstanding:
Basic		170			n/a
Diluted		170			n/a
Pro forma income information (See Note 2):
Historical income before income taxes		n/a		$	22
Pro forma provision for income taxes		n/a			6

Pro forma net income		n/a		$	16


	Successor
																Accumulated
	Preferred Shares Issued				Ordinary Shares Issued					Additional						Other			Total
	and Outstanding				and Outstanding					Paid-In			Accumulated			Comprehensive			Shareholders’
	Shares		Amount		Shares			Amount		Capital			Deficit			Income (Loss)			Equity
Balance, December 31, 2019		4,000,000	$	—		169,902,260		$	—	$	1,885		$	(131	)	$	3		$	1,757
Net loss		—		—		—			—		—			(194	)		—			(194	)
Share cancellations		—		—		(608,016	)		—		(6	)		—			—			(6	)
Share-based compensation		—		—		—			—		1			—			—			1
Fair value change - derivatives		—		—		—			—		—			—			(27	)		(27	)
Foreign currency translation adjustment		—		—		—			—		—			—			(6	)		(6	)

Balance, March 31, 2020		4,000,000	$	—		169,294,244		$	—	$	1,880		$	(325	)	$	(30	)	$	1,525



			Predecessor
													Accumulated			Note
			Common Stock Issued					Additional					Other			Receivable			Total
			and Outstanding					Paid-In		Retained			Comprehensive			From			Stockholders’
			Shares		Amount			Capital		Earnings			Income (Loss)			Stockholder			Equity
Balance, December 31, 2018				11,000,000	$	—		$	—	$	663		$	(28	)	$	(2	)	$	633
Net income				—		—			—		21			—			—			21
Distributions and other				—		—			—		(15	)		—			—			(15	)
Foreign currency translation adjustment				—		—			—		—			3			—			3

Balance, March 31, 2019				11,000,000	$	—		$	—	$	669		$	(25	)	$	(2	)	$	642


Cash paid at closing	$	2,703
Deferred consideration		135
Share consideration—28,373,000 APG ordinary shares		291

Total consideration	$	3,129


Cash	$	138
Accounts receivable		770
Contract assets		350
Other current assets		182
Property and equipment		416
Finance and operating lease right of use assets		102
Other noncurrent assets		72
Assets held for sale		14
Intangibles		1,182
Goodwill		969
Accounts payable		(188	)
Contract liabilities		(206	)
Accrued expenses		(392	)
Other current liabilities		(57	)
Operating lease liability		(101	)
Finance lease liability		(18	)
Deferred tax liability		(25	)
Other noncurrent liabilities		(79	)

Net assets aquired	$	3,129


Contractual backlog	$	112
Customer relationships		762
Tradenames and trademarks		308

Total intangibles	$	1,182


	Three Months Ended March 31, 2019 (Predecessor)
Net revenue	$	922
Net loss		(10	)


	Employee termination benefits		Program related costs		Asset write-downs		Total
December 31, 2023	$	32	$	—	$	6	$	38
Charges	1		4		—		5
Payments	(8)		(4)		—		(12)
Currency translation adjustment	(1)		—		—		(1)
March 31, 2024	$	24	$	—	$	6	$	30


	Three Months Ended March 31, 2020 (Successor)
	Safety		Specialty		Industrial		Corporate and
	Services		Services		Services		Eliminations			Consolidated
Life safety	$	343	$	—	$	—	$	—		$	343
Mechanical		81		—		—		—			81
Infrastructure/Utility		—		170		—		—			170
Fabrication		—		38		—		—			38
Specialty contracting		—		92		—		—			92
Transmission		—		—		93		—			93
Civil		—		—		7		—			7
Inspection		—		—		37		—			37
Corporate and eliminations		—		—		—		(3	)		(3	)

Net revenues	$	424	$	300	$	137	$	(3	)	$	858



	Three Months Ended March 31, 2019 (Predecessor)
	Safety		Specialty		Industrial		Corporate and
	Services		Services		Services		Eliminations			Consolidated
Life safety	$	334	$	—	$	—	$	—		$	334
Mechanical		92		—		—		—			92
Infrastructure/Utility		—		160		—		—			160
Fabrication		—		41		—		—			41
Specialty contracting		—		85		—		—			85
Transmission		—		—		151		—			151
Civil		—		—		2		—			2
Inspection		—		—		60		—			60
Corporate and eliminations		—		—		—		(3	)		(3	)

Net revenues	$	426	$	286	$	213	$	(3	)	$	922


	Three Months Ended March 31, 2020 (Successor)
	Safety		Specialty		Industrial		Corporate and
	Services		Services		Services		Eliminations			Consolidated
United States	$	376	$	300	$	131	$	(3	)	$	804
Canada and United Kingdom		48		—		6		—			54

Net revenues	$	424	$	300	$	137	$	(3	)	$	858



	Three Months Ended March 31, 2019 (Predecessor)
	Safety		Specialty		Industrial		Corporate and
	Services		Services		Services		Eliminations			Consolidated
United States	$	374	$	286	$	186	$	(3	)	$	843
Canada and United Kingdom		52		—		27		—			79

Net revenues	$	426	$	286	$	213	$	(3	)	$	922


	March 31,		December 31,		December 31,
	2020		2019		2018
	(Successor)		(Successor)		(Predecessor)
Accounts receivable, net of allowances	$	662	$	730	$	765
Contract assets		251		245		240
Contract liabilities		205		193		203


	March 31, 2020
	Weighted-Average		Gross
	Useful Lives		Carrying		Accumulated			Net Carrying
	(Years)		Amount		Amortization			Amount
Amortized intangibles:
Backlog intangibles		1	$	112	$	(45	)	$	67
Customer relationships		8		755		(48	)		707
Trade names		15		305		(10	)		295

Total			$	1,172	$	(103	)	$	1,069


	December 31, 2019
	Weighted-Average		Gross
	Useful Lives		Carrying		Accumulated			Net Carrying
	(Years)		Amount		Amortization			Amount
Amortized intangibles:
Backlog intangibles		1	$	112	$	(22	)	$	90
Customer relationships		8		755		(24	)		731
Trade names		15		305		(5	)		300

Total			$	1,172	$	(51	)	$	1,121


	Three Months Ended March 31,
	2020 (Successor)		2019 (Predecessor)
Cost of revenues	$	22	$	—
Selling, general, and administrative expense		30		9

Total intangible asset amortization expense	$	52	$	9


	Three Months Ended March 31, 2020
Balances at beginning of period	$	7
Acquisitions		—
Issuances		—
Settlements		—
Adjustments to fair value		2

Balance at end of period	$	9

Number of open contingent consideration arrangements at the end of period		6
Maximum potential payout at end of period	$	11


	Estimated Useful Lives (In Years)		March 31, 2020			December 31, 2019
Land		N/A	$	20		$	19
Building		40		64			66
Machinery and equipment		3–15		179			174
Autos and trucks		5		73			67
Office equipment		3–7		67			66
Leasehold improvements		2–10		28			28

Total cost				431			420
Accumulated depreciation				(34	)		(18	)

Property and equipment, net			$	397		$	402


Description	Maturity Date		March 31, 2020			December 31, 2019
Term Loan Facility
Term Loan		October 1, 2026	$	1,197		$	1,200
Revolving Credit Facility		October 1, 2024		200			—
Other Obligations				10			14

Total debt obligations				1,407			1,214
Less unamortized deferred financing costs				(23	)		(24	)

Total debt, net of deferred financing costs				1,384			1,190
Less current portion of long-term debt				(217	)		(19	)

Long-term debt			$	1,167		$	1,171


	Three Months Ended March 31, 2020
Numerator:
Net loss	$	(194	)
Adjustment for vested participating Founder Preferred shares		—

Net loss attributable to ordinary shares	$	(194	)

Denominator:
Weighted average shares outstanding - basic		169,822,082
Dilutive securities⁽¹⁾		—

Weighted average shares outstanding - diluted		169,822,082

Basic and diluted loss per ordinary share	$	(1.14	)

Ordinary shares issuable upon conversion of Founder Preferred Shares		4,000,000


During the Three Months Ended March 31, 2024	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
January 1, 2024 - January 31, 2024	—	$	—	—	$	—
February 1, 2024 - February 29, 2024	16,260,160	36.90		16,260,160	400
March 1, 2024 - March 31, 2024	—			—	—
Total	16,260,160	$	36.90	16,260,160	$	400