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What changed in APi Group Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of APi Group Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+344 added−309 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in APi Group Corp's 2024 10-K

344 paragraphs added · 309 removed · 249 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeTalent Development and Engagement We believe our success in attracting and retaining qualified team members will be based on the quality of our training, leadership development and opportunities for growth and advancement. We offer multiple accelerated development programs focusing on advancing the business and leadership skills of team members.
Biggest changeGrowing and Developing our People Our number one value and priority is the safety, health and well-being of all of our approximately 29,000 team members, all of whom are critical to the execution of our strategies and achieving business success. 9 Table of Contents Talent Development and Engagement We believe our success in attracting and retaining qualified team members will be based on the quality of our training, leadership development and opportunities for growth and advancement.
We believe that we can continue to grow our businesses organically and capture additional market share across each of our segments by focusing on growing maintenance, inspection, monitoring, and service revenue and maximizing cross-selling opportunities. • Grow Maintenance, Inspection, and Service Revenue - We believe that we can drive substantial organic growth by focusing on growing our maintenance, inspection, and service revenue, which is a component of our business in each of our segments.
We believe that we can continue to grow our businesses organically and capture additional market share across each of our segments by focusing on growing maintenance, inspection, monitoring, and service revenue and maximizing cross-selling opportunities. • Grow Maintenance, Inspection, Monitoring, and Service Revenue - We believe that we can drive substantial organic growth by focusing on growing our maintenance, inspection, monitoring, and service revenue, which is a component of our business in each of our segments.
Lambert held increasingly senior legal roles at 3M Company and then General Mills, where he focused on global M&A, joint ventures, and various general counseling roles. Mr. Lambert began his career as an associate at Faegre & Benson (now Faegre Drinker) in its corporate finance group.
Lambert held increasingly senior legal roles at 3M Company and then General Mills, where he focused on global M&A, joint ventures, and various general counseling roles. Mr. Lambert began his career as an associate at Faegre & Benson (now Faegre Drinker) in its corporate finance group. Mr.
Leverage Our Scale and Services Portfolio. We believe that we can grow our businesses and increase our market position by leveraging our scale and broad portfolio of services offerings to capitalize on demand for single-source national and international providers.
We believe that we can grow our businesses and increase our market position by leveraging our scale and broad portfolio of services offerings to capitalize on demand for single-source national and international providers.
We have low customer concentration with no single customer accounting for more than 5% of our total net revenues for 2023. Our focus on providing high quality service promotes deep, long-term relationships with our customers which often results in continued opportunities for new business and a reliable source of recurring revenue for ongoing inspection, maintenance, and monitoring services.
We have low customer concentration with no single customer accounting for more than 5% of our total net revenues for 2024. Our focus on providing high quality service promotes deep, long-term relationships with our customers which often results in continued opportunities for new business and a reliable source of recurring revenue for ongoing inspection, maintenance, and monitoring services.
Nearly all facilities that have existing life safety systems are required by law to have that system inspected on an annual basis. This strategy differentiates us from our peers and ultimately creates a stickier client relationship that we believe leads to recurring revenue, higher margins, and growth opportunities. Attractive Industry Fundamentals.
Nearly all facilities that have existing life safety systems are required by law to have that system inspected on at least an annual basis. This strategy differentiates us from our peers and we believe ultimately creates a stickier client relationship that we believe leads to recurring revenue, higher margins, and growth opportunities. Attractive Industry Fundamentals.
Supply We have multiple supply sources in various markets at competitive pricing for substantially all of our raw material and installed components. The raw materials and various purchased components we use such as piping, steel, sheet metal, fire suppression/detection components, and HVAC equipment have generally been available in sufficient quantities in a timely manner.
Supply We have multiple supply sources in various markets at competitive pricing for substantially all of our raw material and installed components. The raw materials and various purchased components we use such as piping, steel, sheet metal, fire suppression/detection, elevator/escalator components, and HVAC equipment have generally been available in sufficient quantities in a timely manner.
We have implemented our safety program, STEPS (Striving Toward Excellence and Professionalism in Safety), within North America which promotes safety culture awareness throughout our operations. Outside of North America, we have established a security program, SAFE (Scan, Assess, Fix, Execute) which is linked to the need for preventive actions before starting work.
We have implemented our safety program, STEPS (Striving Toward Excellence and Professionalism in Safety), globally, which promotes safety culture awareness throughout our operations. Outside of North America, we have established a security program, SAFE (Scan, Assess, Fix, Execute) which is linked to the need for preventive actions before starting work.
Consequently, net revenues for our businesses are typically lower during the first and second quarters due to the prevalence of unfavorable weather conditions within our North America companies, which can cause project delays and affect productivity. Additionally, the industries we serve can be cyclical.
Consequently, net revenues for our businesses are typically lower during the first and second quarters due to the prevalence of unfavorable weather conditions within our North American companies, which can cause project delays and affect productivity. Additionally, the industries we serve can be cyclical.
These laws and regulations involve matters including compliance with codes or regulations governing our services, licensing and certification requirements, environmental and substance control, workplace safety, privacy, data use, data security and protection of personal information, data storage and retention, biometrics, intellectual property, advertising, marketing, distribution, electronic contracts and other communications, competition, taxation, economic or other trade prohibitions or sanctions, anti-corruption and political law compliance, securities law compliance, and financial services.
These laws and regulations involve matters including compliance with codes or regulations governing our services, licensing and certification requirements, environmental and substance control, workplace safety, privacy, data use, data security and protection of personal information, data storage and retention, biometrics, intellectual property, advertising, marketing, distribution, electronic contracts and other communications, competition, taxation, economic or other trade prohibitions or sanctions, anti-corruption and political law compliance, securities law compliance, 7 Table of Contents and financial services.
In North America, we provide a single point of contact for customers with a regional or national portfolio of properties through our National Service Group (“NSG”) team within our Safety Services segment, which 8 Table of Contents enhances our understanding of customers on a national scale and allows us to build more meaningful relationships with our customers.
In North America, we provide a single point of contact for customers with a regional or national portfolio of properties through our National Service Group (“NSG”) team within our Safety Services segment, which enhances our understanding of customers on a national scale and allows us to build more meaningful relationships with our customers.
We plan to capitalize on our broad base of installed projects, cross-selling opportunities, and customer relationships to continue to grow maintenance, inspection, and service revenue. • Maximize Cross-Selling Opportunities - With diverse businesses, a broad reach across a variety of different industries, geographies, and end markets and a culture of collaboration, we believe that we have significant cross-selling opportunities to service more of the project life cycle and, once a project is completed, to continue to grow attractive recurring revenue streams.
We plan to capitalize on our broad base of installed projects, cross-selling opportunities, and customer relationships to continue to grow maintenance, inspection, monitoring, and service revenue. 6 Table of Contents • Maximize Cross-Selling Opportunities - With diverse businesses, a broad reach across a variety of different industries, geographies, and end markets, and a culture of collaboration, we believe that we have significant cross-selling opportunities to service more of the project life cycle and, once a project is completed, to continue to grow attractive recurring revenue streams.
Specifically, the Uniform Building Codes written by the National Fire Protection Association and the International Code Council regulate fire suppression and sprinkler systems. Among other things, these codes require testing, inspections, repair, maintenance and specific retrofits of building fire suppression and sprinkler systems, which generates recurring revenue related to those services.
For example, the Uniform Building Codes written by the National Fire Protection Association and the International Code Council regulate fire suppression and sprinkler systems. Among other things, these codes require testing, inspections, repair, maintenance and specific retrofits of building fire suppression and sprinkler systems, which generates recurring revenue related to those services.
In addition, we have multiple programs geared towards increasing everyone’s 9 Table of Contents awareness of our safety culture and to empower employees to stop work if risks are unmanageable. We are very focused on improving our fleet performance through defensive driver training, fleet technology, and company fleet assessments.
In addition, we have multiple programs geared towards increasing everyone’s awareness of our safety culture and to empower employees to stop work if risks are unmanageable. We are very focused on improving our fleet performance through defensive driver training, fleet technology, and company fleet assessments.
In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations. Our contracts with customers may also impose liabilities on us regarding environmental issues that arise through the performance of our 7 Table of Contents services.
In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations. Our contracts with customers may also impose liabilities on us regarding environmental issues that arise through the performance of our services.
Accelerate Growth through Acquisitions. We have a well-established acquisition platform with a track record of executing accretive acquisitions through our selective approach to targeting and assessing potential acquisitions that we believe align with our values and strategic priorities. We believe that the markets in which we operate, which are expanding internationally, are fragmented and lend themselves to continued opportunistic acquisitions.
Accelerate Growth through Acquisitions. We have a well-established acquisition platform with a track record of executing accretive acquisitions through our selective approach to targeting and assessing potential acquisitions that we believe align with our values and strategic priorities. We believe that the global markets and platforms in which we operate are fragmented and lend themselves to continued opportunistic acquisitions.
Mr. 10 Table of Contents Lambert earned his JD from Rutgers School of Law—Newark and a bachelor’s degree from the University of Michigan in Ann Arbor. Kristina M. Morton has served as Senior Vice President and Chief People Officer of the Company since February 2022. Prior to joining the Company, Ms.
Lambert earned his JD from Rutgers School of Law—Newark and a bachelor’s degree from the University of Michigan in Ann Arbor. Kristina M. Morton has served as Senior Vice President and Chief People Officer of the Company since February 2022. Prior to joining the Company, Ms.
In addition, our increasing international footprint enhances our services platform with complementary offerings and cross-selling opportunities. 6 Table of Contents Customers We have long-standing relationships with many customers in each of the industries we serve.
In addition, our increasing international footprint enhances our services platform with complementary offerings and cross-selling opportunities. Customers We have long-standing relationships with many customers in each of the industries we serve.
Our average project duration is relatively short, which helps mitigate inflationary exposure to cost of goods sold or changes in labor expense that some peers may experience in an inflationary environment. 5 Table of Contents Historically, we have managed inflationary pressure through cost efficiency and cost saving actions, when needed.
Our average project duration is relatively short, which helps mitigate inflationary exposure to cost of goods sold or changes in labor expense that some peers may experience in an inflationary environment. Historically, we have managed inflationary pressure through cost efficiency, cost saving actions, and price increases, when needed.
We believe this presents attractive opportunities for us to drive growth in our businesses and enhance our market share positions. Disciplined Acquisition Platform with History of Strategic Acquisitions. We have a disciplined acquisition platform through which we systematically target, execute, and integrate strategic acquisitions. Since 2005, we have completed over 100 acquisitions.
We believe this presents attractive opportunities for us to drive growth in our businesses and enhance our market share positions. 5 Table of Contents Disciplined Acquisition Platform with History of Strategic Acquisitions. We have a disciplined acquisition platform through which we systematically target, execute, and integrate strategic acquisitions. Since 2005, we have completed over 125 acquisitions.
We operate our business under two primary operating segments, which are also our reportable segments: • Safety Services – A leading provider of safety services in North America, Europe, and Asia Pacific, focusing on end-to-end integrated occupancy systems (fire protection solutions, Heating, Ventilation, and Air Conditioning (“HVAC”), and entry systems), including design, installation, inspection, and service of these integrated systems.
We operate our business under three primary operating segments, which aggregate to our two reportable segments: • Safety Services – A leading provider of safety services in North America, Europe, and Asia-Pacific, focusing on end-to-end integrated occupancy systems (fire protection solutions, Heating, Ventilation, and Air Conditioning (“HVAC”), entry systems, and elevators and escalators), including design, installation, inspection, and service of these integrated systems.
Morton 49 Senior Vice President and Chief People Officer Russell A. Becker has served as a director of the Company since October 2019. Mr. Becker joined APi Group, Inc. in 2002 as its President and Chief Operating Officer and became its Chief Executive Officer in 2004. Prior to leading APi Group, Inc., Mr.
Morton 50 Senior Vice President and Chief People Officer 10 Table of Contents Russell A. Becker has served as a director of the Company since October 2019. Mr. Becker joined APi Group, Inc. in 2002 as its President and Chief Operating Officer and became its Chief Executive Officer in 2004. Prior to leading APi Group, Inc., Mr.
Lambert served as vice president, legal, and assistant secretary of Polaris Inc., where he had responsibility for corporate governance, SEC compliance, M&A, executive compensation, and was general counsel for multiple global business units. Prior to that, Mr.
Lambert was Vice President and Assistant General Counsel for Polaris Inc., a powersports manufacturing company. Prior to joining APi, Mr. Lambert served as vice president, legal, and assistant secretary of Polaris Inc., where he had responsibility for corporate governance, SEC compliance, M&A, executive compensation, and was general counsel for multiple global business units. Prior to that, Mr.
The life safety industry is highly regulated at the federal, state, and local levels and continuous regulatory changes, including mandated building codes and inspections and maintenance requirements, continue to generate increasing demand for our services, often on a recurring basis.
The life safety and elevator industries are highly regulated at the federal, state, and local levels and continuous regulatory changes, including mandated building codes and inspections and maintenance requirements, continue to generate increasing demand for our services, often on a recurring basis.
Occupational Safety and Health Administration ("OSHA") per one hundred employees per year, also known as the OSHA recordable rate, was 0.96 during 2023 and 1.0 during 2022, respectively. Our rate of 0.96 is considerably less than the most recently published OSHA rate for our industry of 2.4.
Occupational Safety and Health Administration ("OSHA") per one hundred employees per year, also known as the OSHA recordable rate, was 0.97 during 2024 and 0.96 during 2023. Our rate of 0.97 is considerably less than the most recently published OSHA rate for our industry of 2.3.
We believe that our revenue diversification across customers, end markets, geographies and projects, combined with our go-to-market strategy of selling inspection work first, regional approach to operating our businesses, specialty operations in niche markets, strong commitment to leadership development, long-standing customers with a robust reputation in the industries we serve, and strong safety track record differentiates us from our competitors. 3 Table of Contents We have a disciplined acquisition platform which has historically provided strategic acquisitions that are integrated into our operations.
We believe that our revenue diversification across customers, end markets, geographies, and projects, combined with our go-to-market strategy of selling inspection work first, regional approach to operating our businesses, specialty operations in niche markets, strong commitment to leadership development, long-standing customers with a robust reputation in the industries we serve, and strong safety track record differentiates us from our competitors.
Executive Officers Set forth below is certain information relating to our current executive officers. Name Age Title Russell A. Becker 58 Chief Executive Officer and President Kevin S. Krumm 49 Executive Vice President and Chief Financial Officer Louis B. Lambert 48 Senior Vice President, General Counsel and Secretary Kristina M.
Executive Officers Set forth below is certain information relating to our current executive officers. Name Age Title Russell A. Becker 59 Chief Executive Officer and President Glenn David Jackola 45 Interim Chief Financial Officer Louis B. Lambert 49 Senior Vice President, General Counsel and Secretary Kristina M.
Our field-based leadership has the opportunity to participate in a development program focused on building foundational leadership skills. In addition, we offer structured tools and opportunities for development, including individual development plans, executive coaching, strategic leadership advisory services and on-demand learning opportunities hosted on our learning management platform, our intranet site and through podcasts.
In addition, we offer structured tools and opportunities for development, including individual development plans, executive coaching, strategic leadership advisory services and on-demand learning opportunities hosted on our learning management platform, on our intranet site, and through podcasts.
We believe that a culture where every team member can grow, thrive, and feel they belong is a differentiator and enables us to attract and retain people who also build inclusive relationships with our customers. We are committed to all dimensions of diversity including gender identity, race, sexual orientation, ability, backgrounds, and beliefs.
We believe that a culture where every team member can grow, thrive, and feel they belong is a differentiator and enables us to attract and retain people who also build inclusive relationships with our customers.
Health & Safety We have a safety culture that is grounded in our commitment to zero incidents. We have established safety standards covering the risks particular to our business, deployed through specific training and monitored by country-level inspection programs.
Our continued success will depend, in part, on our ability to continue to attract, motivate, retain, and reward high-quality, skilled employees. Health & Safety We have a safety culture that is grounded in our commitment to zero incidents. We have established safety standards covering the risks particular to our business, deployed through specific training and monitored by country-level inspection programs.
Becker served as a project manager for Ryan Companies from 1993 to 1995 and as a field engineer with Cherne Contracting from 1991 to 1993. Since July 2017, Mr. Becker has served on the board of directors of Liberty Diversified Industries and since January 2019 has served on the board of directors for Marvin Companies, each a private company. Mr.
Becker served as a project manager for Ryan Companies from 1993 to 1995 and as a field engineer with Cherne Contracting from 1991 to 1993. Since January 2019, Mr. Becker has served on the board of directors for Marvin Companies, a private company. Mr. Becker also serves on the advisory board for the Construction Management Program at Michigan Technical University.
We believe that we are one of the go-to-market leaders in each of the niche industries we serve, including the industry leader in fire protection and sprinkler services, among the top five specialty contractors in North America, and a large provider of fire and security solutions in many of 4 Table of Contents the international markets we serve.
We believe that we are one of the go-to-market leaders in each of the niche industries we serve, including the industry leader in life safety and security services, among the top five specialty contractors in North America, and a premier provider of services for elevator and escalator equipment.
We are building and evolving our culture of inclusion through our day-to-day work through our leadership, learning and development. We monitor team member engagement through annual engagement assessments and provide recommendations for follow up based on this assessment. Our continued success will depend, in part, on our ability to continue to attract, motivate, retain and reward high-quality, skilled employees.
We are committed to equity and inclusion and are building and evolving our culture of inclusion through our day-to-day work through our leadership, learning and development. We monitor team member engagement through annual engagement assessments and provide recommendations for follow up based on this assessment.
The accruals are based upon known facts, historical trends, and industry averages using the assistance of an actuary to project the extent of these obligations and management believes such accruals are adequate. Growing and Developing our People Our number one value and priority is the safety, health and well-being of all of our team members.
The accruals are based upon known facts, historical trends, and industry averages using the assistance of an actuary to project the extent of these obligations and management believes such accruals are adequate.
We compete based on a variety of factors, including price, service, technical expertise and experience, quality, safety record, response time, and reputation for customer service. A portion of our revenue is derived from agreements with customers that contain fixed price or per unit terms, and price is often an important factor in the contract award process for such work.
A portion of our revenue is derived from agreements with 8 Table of Contents customers that contain fixed price or per unit terms, and price is often an important factor in the contract award process for such work.
ITEM 1. BUSINESS Our Business We are a global, market-leading business services provider of safety and specialty services in over 500 locations worldwide. We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries. We have a winning leadership culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers.
ITEM 1. BUSINESS Our Business We are a global, market-leading business services provider of fire and life safety, security, elevator and escalator, and specialty services with a substantial recurring revenue base and over 500 locations worldwide. We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries.
Our programmatic training and development curriculum focuses on a range of topics from enhancing technical capabilities to developing soft skills, and decision-making training to enable independent company leadership. We believe that this culture will continue to support our decentralized operating model, which combines the personal attention of a small-to-medium sized company with the strength and support of an industry leader.
We believe that this culture will continue to support our decentralized operating model, which combines the personal attention of a small- to medium-sized company with the strength and support of an industry leader. Leverage Our Scale and Services Portfolio.
Since 2005, we have completed over 100 acquisitions. We target companies that align with our strategic priorities and demonstrate key value drivers such as culture, geography, end markets and client base, capabilities, and leadership. Our priorities are unified around maintaining business continuity while identifying and implementing operational efficiencies, cost synergies, and integration of organizational processes to drive margin expansion.
We have a disciplined acquisition platform which has historically provided strategic acquisitions that are integrated into our operations. Since 2005, we have completed over 125 acquisitions. We target companies that align with our strategic priorities and demonstrate key value drivers such as culture, geography, end markets and client base, capabilities, and leadership.
Our Industry The industries in which we operate are highly fragmented and comprised of national, regional, and local companies that provide services to customers across various end markets and geographies. We believe the following industry trends are affecting, and will continue to affect, demand for our services. Increased Regulation.
After reviewing the businesses in our portfolio, we have made the decision to realign our segments beginning in 2025 by moving our HVAC business from Safety Services to Specialty Services. 4 Table of Contents Our Industry The industries in which we operate are highly fragmented and comprised of national, regional, and local companies that provide services to customers across various end markets and geographies.
Lambert has served as Senior Vice President, General Counsel and Secretary of the Company since July 2022. Most recently, Mr. Lambert was Vice President and Assistant General Counsel for Polaris Inc., a powersports manufacturing company. Prior to joining APi, Mr.
Jackola received his bachelor’s degree in Economics from Carleton College and his Master of Business Administration in Finance from the University of Chicago Booth School of Business. Louis B. Lambert has served as Senior Vice President, General Counsel and Secretary of the Company since July 2022. Most recently, Mr.
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Our team members are critical to the execution of our strategies and achieving business success. As of December 31, 2023, we had approximately 29,000 team members, of which approximately 14,000 were represented by unions or were subject to various collective bargaining agreements.
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We have a winning leadership culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers.
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We have not experienced and do not expect any significant strikes or work stoppages and believe our relations with team members covered by collective bargaining agreements are in good standing.
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Our priorities are unified around maintaining business continuity while identifying and implementing operational efficiencies, cost synergies, and integration of organizational processes to drive margin expansion.
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Becker also serves on the advisory board for the Construction Management Program at Michigan Technical University. Kevin S. Krumm has served as Executive Vice President and Chief Financial Officer of the Company since September 2021. Prior to joining the Company, Mr. Krumm served as Corporate Treasurer and Senior Vice President of Global Business Services for Ecolab Inc.
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We believe the following industry trends are affecting, and will continue to affect, demand for our services. Evolving Regulation.
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During his 15-year tenure there, he also held roles leading the Industrial segment finance team, regional finance teams in Europe, the Middle East and Africa, Asia and Latin America and leading international integration efforts for a major acquisition. Mr.
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In addition, the growing strategic importance of semiconductor technology in industries like defense, automotive, and telecommunications has caused the U.S. to boost domestic semiconductor production and reduce reliance on foreign supply chains. The CHIPS and Science Act, passed in 2022, allocates funds for semiconductor research, development, and manufacturing, including $39 billion for building new U.S. facilities and equipment.
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Krumm began his career in public accounting working for consulting firms PwC, Arthur Andersen and Deloitte with a heavy emphasis on M&A/corporate finance. Mr. Krumm earned his bachelor’s degree from the University of Northern Iowa and his master’s degree in Business Administration from the University of Chicago Booth School of Business. Louis B.
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Our programmatic training and development curriculum focuses on a range of topics, from enhancing technical capabilities to developing soft skills, and decision-making training to enable independent company leadership.
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We compete based on a variety of factors, including price, service, technical expertise and experience, quality, safety record, response time, and reputation for customer service.
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We offer multiple accelerated development programs focusing on advancing the business and leadership skills of team members. Our field-based leadership has the opportunity to participate in a development program focused on building foundational leadership skills.
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Glenn David Jackola has served as Interim Chief Financial Officer since December 2024 and previously served as the Chief Financial Officer and Vice President of Transformation at APi International since November 2022.
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Prior to his current role, he held the position of Vice President, Controller and Chief Accounting Officer at the Company from March 2022 to November 2022, and as Vice President, Corporate Planning and Analysis since joining the Company in October 2021. Prior to joining the Company, Mr.
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Jackola was the Vice President of Finance of James Hardie Building Products where he served as head of finance for the North American business. Prior to that, Mr. Jackola was Vice President of Finance – Europe for Ecolab and also held other roles of significant responsibility within Ecolab since joining in July 2008. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAcquisitions involve numerous other risks, including: (i) diversion of management’s time and attention from daily operations; (ii) difficulties integrating acquired businesses, technologies and personnel into our business; (iii) inability to obtain required regulatory approvals; (iv) inability to obtain required financing on favorable terms or, if so obtained, risks associated with incurrence of additional indebtedness; (iv) potential loss of key employees, key contractual relationships, or key customers of acquired companies or from our existing businesses; and (v) assumption of the liabilities and exposure to unforeseen liabilities of acquired companies (including environmental, employee benefits, safety and health and third party property and casualty liabilities).
Biggest changeAcquisitions involve numerous other risks, including: • diversion of management’s time and attention from daily operations; • difficulties and unanticipated issues integrating acquired businesses, operations, systems, technology infrastructure, and personnel into our business; • inability to obtain required regulatory approvals; • inability to obtain required financing on favorable terms or, if so obtained, risks associated with incurrence of additional indebtedness; • potential loss of key employees, key contractual relationships, or key customers of acquired companies or from our existing businesses; • costs and expenses of acquisitions, including fees paid to financial, legal and accounting advisors, facilities and systems implementation or consolidation costs, severance and other potential employment-related costs, including severance payments that may be made to former employees of acquired businesses; • an increase in the scope, geographic diversity and complexity of our current operations, and the need to coordinate geographically dispersed organizations; • becoming subject to, and future changes in, additional laws and regulations as a result of an acquisition; • complexities that may arise from any entry into new or adjacent markets or business lines as a result of an acquisition; • failure to recognize the expected synergies of any acquisition; • failure of the acquired business to meet our expectations, which may cause our financial results to differ from our own or the investment community’s expectations; • potential need to negotiate with labor unions of the employees of acquired companies; • assumption of the liabilities and exposure to unforeseen liabilities of acquired companies (including environmental, employee benefits, safety and health and third party property and casualty liabilities); • other risks and liabilities arising from the prior operations of an acquired business, such as performance, operational, safety, cybersecurity, environmental, workforce or other compliance or tax issues, some of which we may not have discovered or accurately estimated during our due diligence and may not be covered by indemnification obligations or insurance.
Acquisitions and investments may involve significant cash expenditures, the incurrence of debt, operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Acquisitions and investments may involve significant cash expenditures, the incurrence of debt, expenses, and operating losses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The amount of distributions and dividends, if any, which may be paid from APG and its subsidiaries to us will depend on many factors, including APG’s results of operations and consolidated financial condition, its constitutional documents, documents governing any indebtedness of us or APG, limits on dividends under applicable law, and other factors which may be outside of our control.
The amount of distributions and dividends, if any, which may be paid from APG and its subsidiaries to us will depend on many factors, including APG’s results of operations and consolidated financial condition, its constitutional documents, documents governing any indebtedness of APG or its subsidiaries, limits on dividends under applicable law, and other factors which may be outside of our control.
Pursuant to our certificate of incorporation, unless we consent in writing to an alternative forum, the Delaware Court of Chancery is the sole and exclusive forum for: (1) derivative actions or proceedings brought on behalf of us; (2) actions asserting a claim of fiduciary duty owed by any of our directors, officers or employees to us or our stockholders; (3) civil actions to interpret, apply, enforce or determine the validity of the our certificate of incorporation or bylaws; or (4) actions asserting a claim governed by the internal affairs doctrine.
Pursuant to our certificate of incorporation, unless we consent in writing to an alternative forum, the Delaware Court of Chancery is the sole and exclusive forum for: (1) derivative actions or proceedings brought on behalf of us; (2) actions asserting a claim of fiduciary duty owed by any of our directors, officers or employees to us or our stockholders; (3) civil actions to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (4) actions asserting a claim governed by the internal affairs doctrine.
In addition, applicable U.S. and non-U.S. anti-corruption laws, including but not limited to the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act, generally prohibit us from, among other things, corruptly making payments for the purpose of obtaining or retaining business.
In addition, applicable U.S. and non-U.S. anti-corruption laws, including but not limited to the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, generally prohibit us from, among other things, corruptly making payments for the purpose of obtaining or retaining business.
In connection with our preparation of our consolidated financial statements for the years ended December 31, 2023, 2022, and 2021, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
In connection with our preparation of our consolidated financial statements for the years ended December 31, 2023 and 2022, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
The market price of our common stock on the NYSE may fluctuate as a result of several factors, including the following: • our operating and financial performance and prospects; • variations in our quarterly operating results or those of other companies in our industries; • volatility in our industries, the industries of our customers and suppliers and the securities markets; • risks relating to our businesses and industries, including those discussed above; • strategic actions by us or our competitors; • damage to our reputation, including as a result of issues relating to the quality or safety of the services we provide and systems we install; • actual or expected changes in our growth rates or our competitors’ growth rates; • investor perception of us, the industries in which we operate, the investment opportunity associated with the common stock and our future performance; • addition to or departure of our executive officers; • changes in financial estimates or publication of research reports by analysts regarding our common stock, other comparable companies, or our industries generally, or termination of coverage of our common stock by analysts; • our failure to meet estimates or forecasts made by analysts, if any; • trading volume of our common stock; 26 Table of Contents • future sales of our common stock by us or our stockholders; • economic, legal and regulatory factors unrelated to our performance; • adverse or new pending litigation against us; or • issuance of future annual Series A Preferred Stock dividends and quarterly Series B Preferred Stock dividends which are intended to be settled in common stock.
The market price of our common stock on the NYSE may fluctuate as a result of several factors, including the following: • our operating and financial performance and prospects; • variations in our quarterly operating results or those of other companies in our industries; • volatility in our industries, the industries of our customers and suppliers and the securities markets; • risks relating to our businesses and industries, including those discussed above; • strategic actions by us or our competitors; • damage to our reputation, including as a result of issues relating to the quality or safety of the services we provide and systems we install; • actual or expected changes in our growth rates or our competitors’ growth rates; • investor perception of us, the industries in which we operate, the investment opportunity associated with the common stock and our future performance; • addition to or departure of our executive officers; • changes in financial estimates or publication of research reports by analysts regarding our common stock, other comparable companies, or our industries generally, or termination of coverage of our common stock by analysts; • our failure to meet estimates or forecasts made by analysts, if any; • trading volume of our common stock; • future sales of our common stock by us or our stockholders; • economic, legal and regulatory factors unrelated to our performance; • adverse or new pending litigation against us; or • issuance of future annual Series A Preferred Stock dividends, which are intended to be settled in common stock.
In addition, Section 203 of the DGCL restricts certain “business combinations” with “interested stockholders” for three years following the date that a person becomes an interested stockholder unless: (1) the “business combination” or the transaction which caused the person or entity to become an interested stockholder is approved by the Board of Directors prior to such business combination or transactions; (2) upon the completion of the transaction in which the person or entity becomes an “interested stockholder,” such interested stockholder holds at least 85% of our voting stock not including (i) shares held by officers and directors and (ii) shares held by employee benefit plans under certain circumstances; or (3) at or after the person or entity becomes an “interested stockholder,” the “business combination” is approved by the Board of 25 Table of Contents Directors and holders of at least 66 2/3% of the outstanding voting stock, excluding shares held by such interested stockholder.
In addition, Section 203 of the DGCL restricts certain “business combinations” with “interested stockholders” for three years following the date that a person becomes an interested stockholder unless: (1) the “business combination” or the transaction which caused the person or entity to become an interested stockholder is approved by the Board of Directors prior to such business combination or transactions; (2) upon the completion of the transaction in which the person or entity becomes an “interested stockholder,” such interested stockholder holds at least 85% of our voting stock not including (i) shares held by officers and directors and (ii) shares held by employee benefit plans under certain circumstances; or (3) at or after the person or entity becomes an “interested stockholder,” the “business combination” is approved by the Board of Directors and holders of at least 66 2/3% of the outstanding voting stock, excluding shares held by such interested stockholder.
Additionally, delays on a particular project, including delays in designs, engineering information or materials provided to us by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, delays from failure to timely obtain permits or rights-of-way or to meet other regulatory requirements, weather-related delays, governmental, industry, political and other factors, some of which are beyond our control, could result in cancellations or deferrals of project work, which 12 Table of Contents could lead to a decline in revenue, or, for project deferrals, could cause us to incur costs for standby pay, and could lead to personnel shortages on other projects scheduled to commence at a later date.
Additionally, delays on a particular project, including delays in designs, engineering information or materials provided to us by the customer or a third party, delays or difficulties in equipment and material delivery, schedule changes, delays from failure to timely obtain permits or rights-of-way or to meet other regulatory requirements, weather-related delays, governmental, industry, political and other factors, some of which are beyond our control, could result in cancellations or deferrals of project work, which could lead to a decline in revenue, or, for project deferrals, could cause us to incur costs for standby pay, and could lead to personnel shortages on other projects scheduled to commence at a later date.
If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable when required in the future to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
We pursue opportunities in certain parts of the world and in certain industries that may experience corruption, and in certain circumstances, compliance with these laws may conflict with longstanding local customs and practices. Our policies mandate compliance with all applicable anti-corruption laws.
We pursue opportunities in certain parts of the world and in certain industries that may experience corruption, and in certain circumstances, compliance with these laws may conflict with longstanding local customs and practices. Our policies mandate compliance with all applicable anti-corruption and trade controls laws.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP").
As previously disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2022 and 2021, management identified material weaknesses related to our internal control over financial reporting.
As previously disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2023 and 2022, management identified material weaknesses related to our internal control over financial reporting.
Neither the Delaware nor the Securities Act forum provisions are intended by us to limit the forums available to our stockholders for actions or proceedings asserting claims arising under the Exchange Act. Our stock price may be volatile and, as a result, you could lose a significant portion or all of your investment.
Neither the Delaware nor the Securities Act forum provisions are intended by us to limit the forums available to our stockholders for actions or proceedings asserting claims arising under the Exchange Act. 27 Table of Contents Our stock price may be volatile and, as a result, you could lose a significant portion or all of your investment.
In addition, we could be adversely affected if any of our significant customers or suppliers experiences any similar events that disrupt their business operations or damage their reputation. We maintain monitoring practices and protections of our information technology to reduce these risks and test our systems on an ongoing basis for potential threats.
In addition, we could be adversely affected if any of our significant customers or suppliers experiences any similar events that disrupt their business operations or damage their reputation. We maintain 28 Table of Contents monitoring practices and protections of our information technology to reduce these risks and test our systems on an ongoing basis for potential threats.
Certain of our coverages are subject to large deductibles or have high self-insured retention amounts, our policies do not cover all possible claims, and certain legacy risks at Chubb were assumed without insurance coverage. Accordingly, 16 Table of Contents we are effectively self-insured for a substantial number of actual and potential claims.
Certain of our coverages are subject to large deductibles or have high self-insured retention amounts, our policies do not cover all possible claims, and certain legacy risks at Chubb were assumed without insurance coverage. Accordingly, we are effectively self-insured for a substantial number of actual and potential claims.
These areas include underground environments and areas in proximity to rivers, lakes, and wetlands. Likewise, we perform directional drilling operations below certain environmentally-sensitive terrains and water bodies. It is possible that such directional drilling may cause a surface fracture, resulting in the release of subsurface materials.
These areas include underground environments and areas in proximity to rivers, lakes, and wetlands. Likewise, we perform directional drilling operations below certain environmentally-sensitive terrains and water bodies. It is possible that such directional drilling may cause a 24 Table of Contents surface fracture, resulting in the release of subsurface materials.
We believe our accruals are adequate. The determination of such estimated liabilities and their appropriateness are reviewed and updated at least quarterly. In connection with the Chubb claims, we estimated the exposure to loss presented by such claims, negotiated an adjustment to the purchase price in connection with these anticipated costs and made associated accruals.
We believe our accruals are adequate. The determination of such estimated liabilities and their appropriateness are reviewed and updated at least quarterly. In connection with the Chubb claims, we estimated the exposure to loss presented by such claims, 17 Table of Contents negotiated an adjustment to the purchase price in connection with these anticipated costs and made associated accruals.
The amount of additional funds, if any, that we may be obligated to contribute to these plans in the future cannot be estimated due to uncertainty of the future levels of work that 18 Table of Contents require the specific use of union employees covered by these plans, as well as the future contribution levels and possible surcharges on contributions applicable to these plans.
The amount of additional funds, if any, that we may be obligated to contribute to these plans in the future cannot be estimated due to uncertainty of the future levels of work that require the specific use of union employees covered by these plans, as well as the future contribution levels and possible surcharges on contributions applicable to these plans.
Any period of economic recession affecting the volume or size of those projects is likely to adversely impact our business. Many of the projects that require our services involve long timelines from conception to completion, and many of the services that we offer are required later in the project’s lifecycle.
Any period of economic recession affecting the volume or size of those projects is likely to adversely impact our business. Many of the projects that require our services involve long timelines from conception to completion, and many of the services that we offer are 23 Table of Contents required later in the project’s lifecycle.
If the field location maps supplied to us are not accurate, or if objects are present in the soil that are not indicated on the 23 Table of Contents field location maps, our underground work could strike objects in the soil, some of which may contain pollutants. These objects may also rupture, resulting in the discharge of pollutants.
If the field location maps supplied to us are not accurate, or if objects are present in the soil that are not indicated on the field location maps, our underground work could strike objects in the soil, some of which may contain pollutants. These objects may also rupture, resulting in the discharge of pollutants.
(closed to new members and future benefit accrual). The funded plan in Canada (closed to new members) is financed predominantly through externally invested pension plan assets via externally managed funds and insurance companies, which investments are subject to market, interest rate and inflation risks.
The funded plan in Canada (closed to new members) is financed predominantly through externally invested pension plan assets via externally managed funds and insurance companies, which investments are subject to market, interest rate and inflation risks.
Furthermore, we operate in an environment in which there are different and potentially conflicting data privacy laws in effect in the various U.S. states and foreign jurisdictions in which we operate, we must understand and comply with each law and standard in each of these jurisdictions while ensuring the data is secure and we could be subject to potentially substantial fines and penalties for non- 27 Table of Contents compliance for major breach, theft or loss of personal data.
In addition, we operate in an environment in which there are different and potentially conflicting data privacy laws in effect in the various U.S. states and foreign jurisdictions in which we operate, we must understand and comply with each law and standard in each of these jurisdictions while ensuring the data is secure and we could be subject to potentially substantial fines and penalties for non-compliance for major breach, theft or loss of personal data.
As of December 31, 2023, approximately 48% of our employees were covered by collective bargaining agreements in the U.S. or similar employment and labor obligations in other countries in which we conduct business. The terms of these agreements limit our discretion in the management of covered employees and our ability to nimbly implement changes to meet business needs.
As of December 31, 2024, approximately 50% of our employees were covered by collective bargaining agreements in the U.S. or similar employment and labor obligations in other countries in which we conduct business. The terms of these agreements limit our discretion in the management of covered employees and our ability to nimbly implement changes to meet business needs.
We are also exposed to increases in energy prices, including as they relate to gasoline prices for our rolling-stock fleet of approximately 12,200 vehicles. Additionally, the price of fuel required to run our vehicles and equipment is unpredictable and fluctuates based on events outside our control.
We are also exposed to increases in energy prices, including as they relate to gasoline prices for our rolling-stock fleet of approximately 11,700 vehicles. Additionally, the price of fuel required to run our vehicles and equipment is unpredictable and fluctuates based on events outside our control.
For example, it may: • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends, innovation, and other general corporate purposes; • cause credit rating agencies to view our debt level negatively; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; • limit our ability to make strategic acquisitions, introduce new technologies or pursue business opportunities; and • place us at a competitive disadvantage compared to our competitors that have less indebtedness. 15 Table of Contents In addition, the Credit Agreement governing the credit facilities contains covenants that restrict our operations.
For example, it may: • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends, innovation, and other general corporate purposes; • cause credit rating agencies to view our debt level negatively; • increase our vulnerability to general adverse economic and industry conditions; 16 Table of Contents • limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; • limit our ability to make strategic acquisitions, introduce new technologies or pursue business opportunities; and • place us at a competitive disadvantage compared to our competitors that have less indebtedness.
Government enforcement actions can be costly and interrupt the regular operation of our business, and violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial results. The E.U.-U.S. and the Swiss-U.S.
Government enforcement actions can be costly and interrupt the regular operation of our business, and violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial results.
Our substantial indebtedness could have significant effects on our operations.
Our indebtedness could have significant effects on our operations.
In addition, to the extent we intend to pay dividends on our common stock, we will pay such dividends at such times (if any) and in such amounts (if any) as the Board determines appropriate. 24 Table of Contents We have equity instruments outstanding that would require us to issue additional shares of common stock.
Moreover, to the extent we intend to pay dividends on our common stock, we will pay such dividends at such times (if any) and in such amounts (if any) as the Board determines appropriate. We have equity instruments outstanding that would require us to issue additional shares of common stock.
As of December 31, 2023, the Company had $1,120 million notional amount outstanding in interest rate swap agreements that exchange a variable rate of interest for a fixed rate over the term of the agreement.
As of December 31, 2024, the Company had $1,840 million notional amount outstanding in interest rate swap agreements that exchange a variable rate of interest for a fixed rate over the term of the agreement.
Our substantial indebtedness may adversely affect our cash flow and our ability to operate our business and fulfill our obligations under our indebtedness. As of December 31, 2023, on a consolidated basis, we had $1,737 million in principal amount of debt outstanding under our credit facilities, $614 million of senior notes, and other indebtedness totaling approximately $5 million.
Our indebtedness may adversely affect our cash flow and our ability to operate our business and fulfill our obligations under our indebtedness. As of December 31, 2024, on a consolidated basis, we had $2,157 million in principal amount of debt outstanding under our credit facilities, $614 million of senior notes, and other indebtedness totaling approximately $5 million.
Accordingly, our business is and will in the future be subject to risks associated with doing business internationally, including: • laws and regulations that dictate how we conduct business; • changes or instability in a specific country’s or region’s political or economic conditions, including inflation or currency devaluation; • political, financial market or economic instability relating to epidemics or pandemics; • laws and regulations that tax or otherwise restrict repatriation of earnings or other funds or otherwise limit distributions of capital; • changes to existing or new domestic or international tax laws; • trade protection measures, such as tariff increases, and import and export licensing and control requirements; • potentially negative consequences from fluctuations in foreign currency exchange rates; • difficulties repatriating income or capital, whether due to temporary blocking, taxes, tariffs or otherwise, where income from work outside the United States in non-U.S. dollars exceed our local currency needs; • expropriation and governmental regulation restricting foreign ownership or requiring reversion or divestiture; • laws and regulations governing our employee relations, including occupational health and safety matters and employee compensation and benefits matters; • our ability to comply with, and the costs of compliance with, anti-bribery laws such as the Foreign Corrupt Practices Act and similar local anti-bribery laws; • uncertainties regarding legal or judicial systems, including inconsistencies between and within laws, regulations and decrees, and judicial application thereof, and delays in the judicial process; and 11 Table of Contents • difficulty in recruiting and retaining trained personnel in our international operations.
Accordingly, our business is and will in the future be subject to risks associated with doing business internationally, including: • laws and regulations that dictate how we conduct business; • changes or instability in a specific country’s or region’s political or economic conditions, including inflation or currency devaluation; 11 Table of Contents • political, financial market or economic instability relating to epidemics or pandemics; • laws and regulations that tax or otherwise restrict repatriation of earnings or other funds or otherwise limit distributions of capital; • changes to existing or new domestic or international tax laws; • trade protection measures, such as tariff increases, and import and export licensing and control requirements, which may, among other things, increase commodity prices of materials used as components of supplies or materials utilized in all of our operations, particularly in light of the stated trade policies of the new U.S. presidential administration; • potentially negative consequences from fluctuations in foreign currency exchange rates; • difficulties repatriating income or capital, whether due to temporary blocking, taxes, tariffs or otherwise, where income from work outside the United States in non-U.S. dollars exceed our local currency needs; • expropriation and governmental regulation restricting foreign ownership or requiring reversion or divestiture; • laws and regulations governing our employee relations, including occupational health and safety matters and employee compensation and benefits matters; • uncertainties regarding legal or judicial systems, including inconsistencies between and within laws, regulations and decrees, and judicial application thereof, and delays in the judicial process; • difficulty in recruiting and retaining trained personnel in our international operations; and • our ability to comply with, and the costs of compliance with, laws and regulations governing international business operations, including restrictions on transactions with certain countries, governments, entities and individuals subject to U.S. economic sanctions or export restrictions, and anti-bribery laws such as the Foreign Corrupt Practices Act and similar local anti-bribery laws.
Additionally, the adoption of new or revised accounting principles could require that we make significant changes to our systems, processes and controls. We cannot predict the effect of future changes to accounting principles, which could have a significant effect on our financial condition, results of operations, and cash flows.
Additionally, the adoption of new or revised accounting principles could require that we make significant changes to our systems, processes and controls. We cannot predict the effect of future changes to accounting principles, which could have a significant effect on our financial condition, results of operations, and cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
We are and may become subject to periodic regulatory proceedings, including Fair Labor Standards Act (“FLSA”) and state wage and hour class action lawsuits, which may adversely affect our business and financial performance. Pending and future wage and hour litigation, including claims relating to the U.S.
C LAIMS A ND L ITIGATION R ISKS We are and may become subject to periodic regulatory proceedings, including Fair Labor Standards Act (“FLSA”) and state wage and hour class action lawsuits, which may adversely affect our business and financial performance. Pending and future wage and hour litigation, including claims relating to the U.S.
We cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. If we fail to remediate the material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.
While we believe we have remediated all material weaknesses previously identified, we cannot assure that we will not have additional material weaknesses in the future. If we have additional material weaknesses in the future and fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.
We have 4,000,000 shares of Series A Preferred Stock and 800,000 shares of our 5.5% Series B Redeemable Convertible Preferred Stock ("Series B Preferred Stock"), which are convertible into shares of our common stock, at any time at the option of the holder.
We have 4,000,000 shares of Series A Preferred Stock which are convertible into shares of our common stock, at any time at the option of the holder.
Adverse developments in the credit markets, including reduced liquidity or rising interest rates, could reduce the availability of funding for large capital projects that require our services.
Adverse developments in the credit markets could adversely affect the funding of significant projects and therefore reduce demand for our services. Adverse developments in the credit markets, including reduced liquidity or rising interest rates, could reduce the availability of funding for large capital projects that require our services.
These covenants restrict, among other things, our ability to incur additional debt, grant liens, pay cash dividends, enter new lines of business, redeem our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
In addition, the Credit Agreement governing the credit facilities contains covenants that restrict our operations. These covenants restrict, among other things, our ability to incur additional debt, grant liens, pay cash dividends, enter new lines of business, redeem our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
In connection with the Chubb Acquisition, we also maintain defined benefit pension plans outside of the U.S. Our non-U.S. defined benefit pension plans include both funded and unfunded plans. We completed a pension buy-in transaction during 2023 and entered into insurance contracts with a global insurance company for the funded plan in the U.K.
We also maintain defined benefit pension plans outside of the U.S. Our non-U.S. defined benefit pension plans include both funded and unfunded plans. We completed a pension buy-in transaction during 2023 and entered into insurance contracts with a global insurance company for the funded plan in the U.K. (closed to new members and future benefit accrual).
Fluctuations in end-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.
Furthermore, the industries we serve can be cyclical in nature. Fluctuations in end-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 25 Table of Contents may be adversely affected by industry declines or by delays in new projects.
Our energy and infrastructure businesses depend on energy industry participants’ willingness to make operating and capital expenditures to build pipelines to transport oil and natural gas and the development and production of oil and natural gas in the United States.
Our energy and infrastructure businesses depend on energy and other industries' participants’ willingness to make operating and capital expenditures to build pipelines to transport oil and natural gas and the development and production of oil and natural gas, as well as other infrastructure-related projects, in the United States.
In addition, we have various outstanding equity awards to employees and directors under the APi Group Corporation 2019 Equity Incentive Plan. As of December 31, 2023, we had 12,625,337 shares of common stock available under this Plan.
In addition, we have various outstanding equity awards to employees and directors under the APi Group Corporation 2019 Equity Incentive Plan. As of December 31, 2024, we had 11,998,287 shares of common stock available under this Plan.
In addition to the disruptions that may occur from interruptions in our information technology systems, cybersecurity threats and sophisticated and targeted cyberattacks pose a risk to our information technology systems and the systems that we design and install.
In addition to the disruptions that may occur from interruptions in our information technology systems, cybersecurity threats and sophisticated and targeted cyberattacks, including the potential use of artificial intelligence tools, pose a risk to our information technology systems and the systems that we design and install.
However, there can be no assurance that such policies, procedures and other requirements will protect us from liability under the FCPA or other similar laws for actions taken by our employees or intermediaries; moreover, detecting, investigating and resolving actual or alleged violations of such laws is expensive and could consume significant time and attention of our senior management, in-country management, and other personnel.
However, there can be no assurance that such policies, procedures and other requirements will protect us from violating these regulations in every transaction in which we may engage, or protect us from liability under U.S. or international laws for actions taken by our employees or intermediaries; moreover, detecting, investigating and resolving actual or alleged violations of such laws is expensive and could consume significant time and attention of our senior management, in-country management, and other personnel.
Our business is subject to operational hazards due to the nature of services we provide and the conditions in which we operate, including electricity, fires, explosions, mechanical failures and weather-related incidents.
R ISKS R ELATED T O O UR O CCUPATIONAL H AZARDS Our business is subject to operational hazards due to the nature of services we provide and the conditions in which we operate, including electricity, fires, explosions, mechanical failures and weather-related incidents.
We rely on manufacturers and other suppliers to provide us with most of the products we install. Because we do not have direct control over the quality of such products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of such products including the potential to be impacted by product recalls.
Because we do not have direct control over the quality of such products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of such products including the potential to be impacted by product recalls.
The occurrence of accidents in the course of our business could result in significant liabilities, employee turnover, increase the costs of our projects or harm our ability to perform under our contracts or enter into new customer contracts, all of which may subject us to liabilities, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover and could materially adversely affect our profitability and our financial condition. 20 Table of Contents C LAIMS A ND L ITIGATION R ISKS We are and may become subject to periodic litigation which may adversely affect our business and financial performance.
The occurrence of accidents in the course of our 21 Table of Contents business could result in significant liabilities, employee turnover, increase the costs of our projects or harm our ability to perform under our contracts or enter into new customer contracts, all of which may subject us to liabilities, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover and could materially adversely affect our profitability and our financial condition.
Our future contribution obligations and potential withdrawal liability exposure with respect to our pension plans could increase significantly based on the investment and actuarial performance of those plans, the insolvency of other companies that contribute to those plans (in the case of multiemployer plans), and other factors. We maintain a workforce based upon current and anticipated workloads.
Our future contribution obligations and potential withdrawal liability exposure with respect to our pension plans could increase significantly based on the investment and actuarial performance of those plans, the insolvency of other companies that contribute to those plans (in the case of multiemployer plans), and other factors. Our unionized workforce and related obligations could adversely affect our operations.
As a result, an increase in interest rates will reduce our cash flow available for other corporate purposes. Higher interest rates could also limit our ability to refinance existing indebtedness and increase interest costs on any indebtedness that is refinanced.
Interest payments for certain of our indebtedness, including borrowings under the credit facilities are based on floating rates. As a result, an increase in interest rates will reduce our cash flow available for other corporate purposes. Higher interest rates could also limit our ability to refinance existing indebtedness and increase interest costs on any indebtedness that is refinanced.
Additionally, an increased volume of alleged statutory violations or matters referred to an agency for potential resolution 21 Table of Contents could result in significant attorney fees and settlement costs that could, in the aggregate, materially impact our financial condition.
Additionally, an increased volume of alleged statutory violations or matters referred to an agency for potential resolution could result in significant attorney fees and settlement costs that could, in the aggregate, materially impact our financial condition. We are and may become subject to periodic litigation which may adversely affect our business and financial performance.
As a result, our backlog as of any particular date is an uncertain indicator of the amount of or timing of future revenues and earnings. R ISKS R ELATED T O O UR W ORKFORCE Our unionized workforce and related obligations could adversely affect our operations.
As a result, our backlog as of any particular date is an uncertain indicator of the amount of or timing of future revenues and earnings. R ISKS R ELATED T O O UR W ORKFORCE We maintain a workforce based upon current and anticipated workloads.
For example, in connection with the Chubb Acquisition, in January 2022 we issued shares of Series B Preferred Stock which have quarterly dividend rights and are convertible into common stock.
For example, in connection 26 Table of Contents with the Chubb Acquisition, in January 2022 we issued shares of Series B Preferred Stock which had quarterly dividend rights and were ultimately converted into common stock in February 2024.
We will be obligated to pay dividends on our 4,000,000 outstanding shares of Series A Preferred Stock based on the market price of our common stock if such market price exceeds certain trading price minimums and we are obligated to pay dividends on our 800,000 shares of Series B Preferred Stock on a quarterly basis at 5.5% per annum.
We will be obligated to pay dividends on our 4,000,000 outstanding shares of Series A Preferred Stock based on the market price of our common stock if such market price exceeds certain trading price minimums. These dividends are payable in cash or shares of our common stock, at our sole option.
The success of the Chubb Acquisition depends, in part, on our ability to successfully integrate and operate the Chubb business in conjunction with our existing life safety businesses and transition from the services and systems provided by the seller.
Elevated is a premier provider of contractually based services for all major brands of elevator and escalator equipment. The success of the Elevated Acquisition depends, in part, on our ability to successfully integrate and operate the Elevated business in conjunction with our existing life safety businesses and transition from the services and systems provided by the seller.
Our pension commitments and obligations to make cash contributions to meet our obligations in certain pension plans subject us to risks. Certain collective bargaining agreements in the U.S. require us to participate with other companies in multiemployer pension plans.
Certain collective bargaining agreements in the U.S. require us to participate with other companies in multiemployer pension plans.
Any such arrangements could, in turn, increase the risk that our leverage may adversely affect our future financial and operating flexibility and thereby impact our ability to pay cash distributions at expected rates.
Any such arrangements could, in turn, increase the risk that our leverage may adversely affect our future financial and operating flexibility and thereby impact our ability to pay cash distributions at expected rates. We are self-insured against many potential liabilities. We are insured through a wholly-owned insurance captive and third party carriers.
Continued increases in healthcare costs or additional costs created by future health care reform laws adopted by Congress, state legislatures, or municipalities could adversely affect our consolidated results of operations and financial position.
Continued increases in healthcare costs or additional costs created by future health care reform laws adopted by Congress, state legislatures, or municipalities could adversely affect our consolidated results of operations and financial position. 29 Table of Contents We are subject to many laws and regulations in the jurisdictions in which we operate, and changes to such laws and regulations may result in additional costs and impact our operations.
Liability for such actions could result in severe criminal or civil fines, penalties, forfeitures, disgorgements or other sanctions. This in turn could have a material adverse effect on our financial condition, results of operations, and cash flows. We are a decentralized company and place significant decision-making authority with our subsidiaries’ management, supported by certain integrated policies and processes.
Liability for such actions could result in severe criminal or civil fines, penalties, forfeitures, disgorgements or other sanctions. This in turn could have a material adverse effect on our financial condition, results of operations, and cash flows. We are implementing new enterprise resource planning systems.
In addition, the Chubb business may not meet our expectations, causing our financial results to differ from our own or the investment community’s expectations.
We may not accomplish the integration of the Elevated business smoothly, successfully or within the anticipated costs or timeframe. In addition, the Elevated business may not meet our expectations, causing our financial results to differ from our own or the investment community’s expectations.
As a result, seasonal changes and adverse weather conditions can adversely affect our business operations through declines in demand for our services and alterations and delays in applicable schedules.
As a result, seasonal changes and adverse weather conditions can adversely affect our business operations through declines in demand for our services and alterations and delays in applicable schedules. Adverse weather conditions can reduce demand for our services and reduce sales or render our contracting operations less efficient resulting in under-utilization of crews and equipment and lower contract profitability.
The potential difficulties of integrating the operations of the Chubb business include, among others: • continued unanticipated issues in integrating personnel, operations, systems and technology infrastructure, particularly after the end of the transitional services provided by the seller; • coordinating geographically dispersed organizations; • changes in applicable laws and regulations or conditions imposed by regulators; • deploying internal controls over financial reporting; • operating risks inherent in the Chubb business and our existing life safety businesses; and • realizing the expected synergies from the Chubb Acquisition.
The potential difficulties of integrating the operations of the Elevated business include, among others: continued unanticipated issues in integrating personnel, operations, systems and technology infrastructure; changes in applicable laws and regulations or conditions imposed by regulators in a market we are not experienced in; deploying internal controls over financial reporting; operating risks inherent in the Elevated business and our existing businesses.
On a historical basis, we believe that we have made reasonably reliable estimates of the progress towards completion on our long-term contracts. However, given the uncertainties associated with these types of contracts, it is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded revenue and profits.
However, given the uncertainties associated with these types of contracts, it is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded revenue and profits. 15 Table of Contents We carry a significant amount of goodwill and identifiable intangible assets on our consolidated balance sheets.
An uninsured claim, either in part or in whole, if successful and of a material magnitude, could have a substantial impact on our business, financial condition, results of operations and cash flows.
In addition, customers, subcontractors or suppliers who have agreed to indemnify us against any such liabilities or losses might refuse or be unable to pay us. An uninsured claim, either in part or in whole, if successful and of a material magnitude, could have a substantial impact on our business, financial condition, results of operations and cash flows.
Any impairment in the value of our goodwill would have an adverse non-cash impact on our results of operations and reduce our net worth.
Any impairment in the value of our goodwill would have an adverse non-cash impact on our results of operations and reduce our net worth. As of December 31, 2024, we had goodwill of $2,894 million, which is maintained in various reporting units.
Our business involves professional judgments regarding the planning, design, development, construction, operations and management of electric power transmission, communications and pipeline infrastructure. Because our projects are often technically complex, our failure to make judgments and recommendations in accordance with applicable professional standards, including engineering standards, could result in damages.
Because our projects are often technically complex, our failure to make judgments and recommendations in accordance with applicable professional standards, including engineering standards, could result in damages.
Government contractors must comply with many regulations and other requirements that relate to the award, administration and performance of these contracts, and government contracts are subject to audit.
Government contractors must comply with many regulations and other requirements that relate to the award, administration and performance of these contracts, and government contracts are subject to audit. A violation of these laws and regulations could result in imposition of fines and penalties, the termination of a government contract or debarment from proposing on government contracts in the future.
We carry a significant amount of goodwill and identifiable intangible assets on our consolidated balance sheets. Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses.
Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill and identifiable intangible assets for impairment each year, or more frequently if circumstances suggest an impairment may have occurred.
Variations or unanticipated changes in project schedules in connection with large projects can create fluctuations in revenue and could adversely affect our business, financial condition, results of operations and cash flows. A failure in the systems we construct and install, whether due to employee acts or omissions or faulty workmanship or design, may subject us to significant liability.
Variations or unanticipated changes in project schedules in connection with large projects can create fluctuations in revenue and could adversely affect our business, financial condition, results of operations and cash flows.
As a result, reduced or delayed spending, including the impact of government sequestration programs or other changes in budget priorities could result in the deferral, delay or disruption of our projects.
As a result, reduced or delayed spending, including the impact of government sequestration programs or other changes in budget priorities could result in the deferral, delay or disruption of our projects. These potential events could also impact our ability to be timely paid for our current services, which could adversely affect our cash flows and margins.
R ISKS R ELATED T O O UR C USTOMER B ASE We serve customers who are involved in energy exploration, production and transportation, and adverse developments affecting activities in these industries, reduced demand for oil and natural gas products, or increased regulation of exploration and production, could have a material adverse effect on our results of operations.
Moreover, certain of our customers, where permissible by law, may require or prefer a non-union workforce, and they may reduce the amount of work assigned to us if our non-union labor crews become unionized, which could negatively affect our financial condition, results of operations and cash flows. 20 Table of Contents R ISKS R ELATED T O O UR C USTOMER B ASE We serve customers who are involved in construction. technology, energy exploration, production and transportation, and adverse developments affecting activities in these industries, reduced demand for oil and natural gas products, or increased regulation of exploration and production, could have a material adverse effect on our results of operations.
Competition in the market for labor could drive up our costs, reduce our profitability, or impact our ability to deliver timely service to our customers.
Competition in the market for labor could drive up our costs, reduce our profitability, or impact our ability to deliver timely service to our customers. 19 Table of Contents Our pension commitments and obligations to make cash contributions to meet our obligations in certain pension plans subject us to risks.
We are subject to many laws and regulations in the jurisdictions in which we operate, and changes to such laws and regulations may result in additional costs and impact our operations. We are committed to upholding the highest standards of corporate governance and legal compliance. We are subject to many laws and regulations in the jurisdictions in which we operate.
We are committed to upholding the highest standards of corporate governance and legal compliance. We are subject to many laws and regulations in the jurisdictions in which we operate. We expect to be subject to various laws and regulations that apply specifically to U.S. public companies.
For example, in September 2021, we issued 22,716,049 shares of common stock in an underwritten public offering for capital raising purposes. Future sales by us of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of our common stock.
Future sales by us of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of our common stock. We may issue preferred stock in the future, and the terms of the preferred stock may reduce the value of our common stock.
New laws, rules and regulations, or changes to existing laws or their interpretations, could create added legal and financial costs and uncertainty for us.
New laws, rules and regulations, or changes to existing laws or their interpretations, could create added legal and financial costs and uncertainty for us. In addition, the recent change in the U.S. presidential administration could impact U.S. trade and other policies and result in substantial changes that may impact our business.
This balance presents certain risks, including the risk we would be slower to identify a misalignment between a subsidiary’s and our overall business strategy or shared processes. If an operating subsidiary fails to follow our shared company policies and processes, including those relating to compliance with applicable laws, we could be subjected to risks of noncompliance with applicable regulations.
If an operating subsidiary fails to follow our shared company policies and processes, including those relating to compliance with applicable laws, we could be subjected to risks of noncompliance with applicable regulations. R ISKS R ELATED T O A CQUISITIONS Our business strategy includes acquiring companies and making investments that complement our existing businesses or expand into adjacent industries.
As of December 31, 2023, we had goodwill of $2,471 million, which is maintained in various reporting units. 14 Table of Contents Additionally, we have a significant amount of identifiable intangible assets and fixed assets that could also be subject to impairment.
Additionally, we have a significant amount of identifiable intangible assets and fixed assets that could also be subject to impairment.
Acquisitions that do not achieve the intended strategic or operational benefits could adversely affect our operating results and may result in an impairment charge. Under certain circumstances, it may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our current business operations.
Failure to consummate future acquisitions could negatively affect our business and growth strategies. 13 Table of Contents Under certain circumstances, it may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our current business operations, and we may not be able to do so successfully or within the anticipated costs or timeframe.
Higher interest rates increase the interest costs on our credit facilities and on our other floating rate indebtedness and could impact adversely our ability to refinance existing indebtedness or to sell assets. Interest payments for certain of our indebtedness, including borrowings under the credit facilities are based on floating rates.
Any of these factors could have a negative effect on our financial condition, results of operations, and cash flows. 14 Table of Contents F INANCIA L R ISKS Higher interest rates increase the interest costs on our credit facilities and on our other floating rate indebtedness and could impact adversely our ability to refinance existing indebtedness or to sell assets.
Additionally, because of our decentralized nature, we face risks in maintaining compliance with all local, state and federal government contracting requirements. Prohibition against proposing on future government contracts could have an adverse effect on our consolidated financial condition and results of operations.
Further, despite our decentralized nature, a violation at one of our locations could impact other locations’ ability to propose on and perform government contracts. Additionally, because of our decentralized nature, we face risks in maintaining compliance with all local, state and federal government contracting requirements.
We believe our practice of conferring significant authority upon the management of our subsidiaries has been important to our successful growth and has allowed us to be responsive to opportunities and to our customers’ needs. We seek to maintain business continuity within our subsidiaries while identifying and implementing operational efficiencies, cost synergies, and integration of organizational processes across these companies.
We are a decentralized company and place significant decision-making authority with our subsidiaries’ management, supported by certain integrated policies and processes. We believe our practice of conferring significant authority upon the management of our subsidiaries has been important to our successful growth and has allowed us to be responsive to opportunities and to our customers’ needs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur risk management program also assesses third party risks to attempt to identify and mitigate risks from third parties such as vendors, suppliers, and other business partners associated with our use of third-party service providers. As part of our cybersecurity risk management program, we also gather Threat Intelligence through our multiple security partners and tools.
Biggest changeWe routinely assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation. Our risk management program also assesses third party risks to attempt to identify and mitigate risks from third parties such as vendors, suppliers, and other business partners associated with our use of third-party service providers.
The responsibilities of the Chief Information Officer ("CIO") include overseeing cybersecurity measures with the global Chief Information Security Officer ("CISO"). The CIO's background includes nearly 18 years of IT leadership at a major medical technology company and experience in various industries such as financial services, manufacturing, oil and gas, and chemicals.
The responsibilities of the Chief Information Officer ("CIO") include overseeing cybersecurity measures with the global Chief Information Security Officer ("CISO"). The CIO's background includes nearly 19 years of IT leadership at a major medical technology company and experience in various industries such as financial services, manufacturing, oil and gas, and chemicals.
Our IT security team monitors alerts and meets as needed to discuss threat levels, trends, and remediation. 29 Table of Contents We periodically perform simulations and tabletop exercises with the senior leadership team and incorporate external resources and advisors as needed.
Our IT security team monitors alerts and meets as needed to discuss threat levels, trends, and remediation. We periodically perform simulations and tabletop exercises with the senior leadership team and incorporate external resources and advisors as needed.
Assessment of our Program We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third parties.
Incidents are evaluated to determine materiality for external reporting purposes as well as operational and business impact. Assessment of our Program We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third parties.
The CISO and the cybersecurity team are committed to ongoing education and professional development, regularly participating in training programs and industry conferences to stay abreast of the latest cybersecurity trends, threats, and mitigation strategies. The CISO has appointed experienced security leaders over the North America and International regions to create additional alignment and collaboration.
The CISO and the cybersecurity team are committed to ongoing education and professional development, regularly participating in training programs and industry conferences to stay abreast of the latest cybersecurity trends, threats, and mitigation strategies.
This intelligence (including tactics, techniques and procedures used by cyber criminals) provides insights into potential threats and vulnerabilities, which helps us to defend against cyber-attacks. As part of our cybersecurity risk management system, our incident management teams track and log privacy and security incidents across the Company.
As part of our cybersecurity risk management program, we also gather Threat Intelligence through our multiple security partners and tools. This intelligence (including tactics, techniques and procedures used by cyber criminals) provides insights into potential threats and vulnerabilities, which helps us to defend against cyber-attacks.
The ECMT maintains an ongoing relationship with third-party advisors, such as forensic and incident management, crisis communications, and legal advisors, which we engage as necessary based on the specific facts of an incident. Incidents are evaluated to determine materiality for external reporting purposes as well as operational and business impact.
Any cybersecurity incident that meets certain pre-established criteria is reported to our Executive Crisis Management Team ("ECMT"), which includes members of the Company’s senior leadership team. The ECMT maintains an ongoing relationship with third-party advisors, such as forensic and incident management, crisis communications, and legal advisors, which we engage as necessary based on the specific facts of an incident.
Significant incidents are reviewed by a cross-functional and multi-disciplinary working group to determine whether further escalation is appropriate. Any cybersecurity incident that meets certain pre-established criteria is reported to our Executive Crisis Management Team ("ECMT"), which includes members of the Company’s senior leadership team.
As part of our cybersecurity risk management system, our incident management teams track and log privacy and security incidents across the Company. Significant incidents are reviewed by a cross-functional and multi-disciplinary working group to determine whether further escalation is appropriate.
Removed
Risk Management and Strategy Our cybersecurity risk management program primarily leverages the National Institute of Standards and Technology Cybersecurity framework (NIST CSF). We routinely assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation.
Added
The CISO has appointed experienced security leaders over the North American and International regions to create additional alignment and collaboration. 30 Table of Contents Risk Management and Strategy Our cybersecurity risk management program primarily leverages the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF").

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, we owned approximately 50 facilities and leased approximately 500 facilities in the U.S., France, the United Kingdom, Australia, the Netherlands, and over 15 other countries. We believe that our existing facilities are sufficient for our current needs.
Biggest changeAs of December 31, 2024, we owned approximately 50 facilities and leased approximately 500 facilities in the U.S., France, the United Kingdom, 31 Table of Contents Australia, the Netherlands, and over 15 other countries. We believe that our existing facilities are sufficient for our current needs.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES Information regarding mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Annual Report. 30 Table of Contents PART II
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Information regarding mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Annual Report. 32 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+6 added−2 removed5 unchanged
Biggest changeQuarterly dividends were paid to those holders in shares of common stock for each quarter of 2023. Refer to Note 19 – “Shareholders’ Equity and Redeemable Convertible Preferred Stock” to our consolidated financial statements for additional information.
Biggest changeRefer to Note 19 – “Shareholders’ Equity and Redeemable Convertible Preferred Stock” to our consolidated financial statements included in this Annual Report for additional information. Stock Repurchase Program On February 26, 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.
Because our services are diverse across our operating segments, APG does not believe that any single published industry index is appropriate for comparing shareholder return. Therefore, the peer group used in the performance graph combines publicly traded 31 Table of Contents companies that have similar characteristics as one or more of APG’s segments.
Because our services are diverse across our operating segments, APG does not believe that any single published industry index is appropriate for comparing shareholder return. Therefore, the peer group used in the performance graph combines publicly traded companies that have similar characteristics as one or more of APG’s segments.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES M ARKET AND D IVIDEND I NFORMATION Our common stock is listed on the NYSE under symbol “APG.” Common Stock As of February 21, 2024, there were approximately 15 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES M ARKET AND D IVIDEND I NFORMATION Our common stock is listed on the NYSE under symbol “APG.” Common Stock As of February 19, 2025, there were approximately 15 holders of record of our common stock.
In addition, our Credit Agreement (as later defined), in certain situations, prohibits us from paying cash dividends or making other distributions on our common stock without prior consent of the lender. See Item 7.
In addition, our Credit Agreement (as later defined), in certain situations, prohibits us from paying cash dividends or making other distributions on our common stock without prior consent of the lender.
Performance Graph The following graph summarizes the cumulative return on $100 invested in APG’s common stock, the S&P 500, the Russell 2000 Stock Index, and the common stock of a selected peer group of companies if invested on October 1, 2019, the date of the acquisition of APi Group (the "APi Acquisition"), until December 31, 2023.
Performance Graph The following graph summarizes the cumulative return on $100 invested in APG’s common stock, the S&P 500, the Russell 2000 Stock Index, and the common stock of a selected peer group of companies if invested on January 1, 2020 until December 31, 2024.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.” The holders of our Series B Preferred Stock are entitled to receive quarterly dividends in cash or (subject to the satisfactions of certain conditions) shares of our common stock, at our sole option (which we intend to settle in shares of common stock).
Prior to the conversion of our Series B Preferred Stock into common stock in February 2024 ("Series B Preferred Stock Conversion"), the holders of our Series B Preferred Stock were entitled to receive quarterly dividends in cash or (subject to the satisfactions of certain conditions) shares of our common stock, at our sole option (which we intended to settle in shares of common stock).
As of December 31, 2023, we had approximately $165 million of authorized repurchases remaining under the SRP. On February 26, 2024, our Board of Directors authorized a stock repurchase program to purchase up to an aggregate of $1,000 million of shares of our common stock.
In 2022, our Board of 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. During 2023, we repurchased 1,626,493 shares of common stock for approximately $41 million.
The SRP will expire on February 29, 2024 unless otherwise modified or earlier terminated by our Board of Directors at any time in its sole discretion. During the twelve months ended December 31, 2023 and 2022, we repurchased 1,626,493 and 2,505,723 shares of common stock for approximately $41 million and $44 million, respectively.
This stock repurchase program will expire when the authorized amount is exhausted, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion. During the year ended December 31, 2024, we repurchased 16,260,160 shares of common stock for approximately $600 million.
(1) Peer group includes Cintas Corporation, Comfort Systems USA, Inc., EMCOR Group Inc., Jacobs Engineering Group Inc., Johnson Controls International plc, MasTec Inc., Otis Worldwide, and Quanta Services, Inc. ITEM 6. [RESERVED] 32 Table of Contents
The peer group includes Cintas Corporation, Comfort Systems USA, Inc., Dycom Industries, Inc., EMCOR Group Inc., FirstService Corp, Johnson Controls International plc, MasTec Inc., Otis Worldwide, and Quanta Services, Inc. In 2024, FirstService Corp was added to the peer group to provide exposure to non-residential services including fire protection services.
Removed
Stock Repurchase Program On March 9, 2022, we announced that our Board of Directors authorized a stock repurchase program (“SRP”) to purchase up to an aggregate of $250 million of shares of our common stock.
Added
See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” Holders of shares of our Series A Preferred Stock are entitled to receive an annual stock dividend, payable in stock or cash at the election of our Board of Directors, based on the appreciated stock price compared to the highest dividend price previously used in calculating the Series A Preferred Stock dividends.
Removed
This stock repurchase program is indefinite, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion. Issuer Purchases of Equity Securities The Company did not have any purchases of equity securities during the quarter ended December 31, 2023.
Added
We intend to settle these dividends in shares of Common Stock.
Added
We declared a pro rata Series B Preferred Stock dividend of $7 million, or 283,196 shares of common stock, during the year ended December 31, 2024 for the Series B Preferred Stock outstanding through February 28, 2024.
Added
The repurchases during the year ended December 31, 2024 were related to the Series B Preferred Stock Conversion (see Note 19 – "Shareholders' Equity and Redeemable Convertible Preferred Stock" to our consolidated financial statements). As of December 31, 2024, we had approximately $400 million of authorized repurchases remaining under the SRP.
Added
The 2022 SRP expired on February 29, 2024. 33 Table of Contents Issuer Purchases of Equity Securities The Company did not have any purchases of equity securities during the quarter ended December 31, 2024.
Added
Further, Dycom Industries, Inc. was added to the peer group and Jacob Engineering Group Inc. was removed from the peer group to better reflect the businesses of our Specialty Services segment. ITEM 6. [RESERVED] 34 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+45 added−17 removed66 unchanged
Biggest changeOperating Segment Results Net Revenues Years Ended December 31, Change ($ in millions) 2023 2022 $ % Safety Services $ 4,871 $ 4,575 $ 296 6.5 % Specialty Services 2,079 2,030 49 2.4 % Corporate and Eliminations (22) (47) NM NM $ 6,928 $ 6,558 $ 370 5.6 % Operating Income (Loss) Years Ended December 31, Change ($ in millions) 2023 2022 $ % Safety Services $ 396 $ 256 $ 140 54.7 % Safety Services operating margin 8.1 % 5.6 % Specialty Services $ 108 $ 97 $ 11 11.3 % Specialty Services operating margin 5.2 % 4.8 % Corporate and Eliminations $ (145) $ (191) NM NM $ 359 $ 162 $ 197 121.6 % 37 Table of Contents EBITDA Years Ended December 31, Change ($ in millions) 2023 2022 $ % Safety Services $ 607 $ 492 $ 115 23.4 % Safety Services EBITDA as a % of net revenues 12.5 % 10.8 % Specialty Services $ 217 $ 206 $ 11 5.3 % Specialty Services EBITDA as a % of net revenues 10.4 % 10.1 % Corporate and Eliminations $ (144) $ (176) NM NM $ 680 $ 522 $ 158 30.3 % NM = Not meaningful The following discussion breaks down the net revenues, operating income (loss), and EBITDA by operating segment for the years ended December 31, 2023 and 2022.
Biggest changeOperating Segment Results Net Revenues Year Ended December 31, Change ($ in millions) 2023 2022 $ % Safety Services $ 4,871 $ 4,575 $ 296 6.5 % Specialty Services 2,079 2,030 49 2.4 % Corporate and Eliminations (22) (47) NM NM $ 6,928 $ 6,558 $ 370 5.6 % Segment Earnings Year Ended December 31, Change ($ in millions) 2023 2022 $ % Safety Services $ 664 $ 559 $ 105 18.8 % Safety Services segment earnings as a % of net revenues 13.6 % 12.2 % Specialty Services $ 239 $ 210 $ 29 13.8 % Specialty Services segment earnings as a % of net revenues 11.5 % 10.3 % Corporate and Eliminations $ (121) $ (96) NM NM Adjusted EBITDA (non-GAAP) $ 782 $ 673 $ 109 16.2 % NM = Not meaningful The following discussion breaks down the net revenues and segment earnings by reportable segment for the years ended December 31, 2023 and 2022. 43 Table of Contents Safety Services Safety Services net revenues for the year ended December 31, 2023 were $4,871 million compared to $4,575 million during the same period in the prior year.
Issuance 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 securities purchase agreements entered into on July 26, 2021 with certain investors.
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 securities purchase agreements entered into on July 26, 2021 with certain investors.
The 4.750% Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by us and certain 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.
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.
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 certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025.
The Organization for Economic Co-operation and Development ("OECD") 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 certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025.
The improvement is primarily attributable to disciplined project and customer selection, pricing improvements within our Safety Services and Specialty Services segments and growth in inspection, service, and monitoring revenue, as well as savings in our Safety Services segment related to the Chubb restructuring program.
The improvement is primarily attributable to planned disciplined project and customer selection, pricing improvements within our Safety Services and Specialty Services segments, and growth in inspection, service, and monitoring revenue, as well as savings in our Safety Services segment related to the Chubb restructuring program.
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 consolidated financial statements and expected to be satisfied using cash generated from operations: • Operating and Finance Leases – See Note 12 – "Leases." • Debt – See Note 13 – "Debt" for future principal payments and interest rates on our debt instruments. • Tax Obligations – See Note 14 – "Income Taxes." • Pension obligations – See Note 16 – "Pension." We make investments in our properties and equipment to enable continued expansion and effective performance of our business.
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 consolidated financial statements and expected to be satisfied using cash generated from operations: • Operating and Finance Leases – See Note 12 – "Leases." • Debt – See Note 13 – "Debt" for future principal payments and interest rates on our debt instruments. • Tax Obligations – See Note 14 – "Income Taxes." • Pension obligations – See Note 16 – "Pension." 49 Table of Contents We make investments in our properties and equipment to enable continued expansion and effective performance of our business.
Our SG&A expenses excluding amortization and impairment for the year ended December 31, 2023 was $1,372 million, or 19.8% of net revenues, compared to $1,355 million or 20.7% of net revenues for 2022, primarily due to the factors discussed above. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.
Our SG&A expenses excluding amortization and impairment for the year ended December 31, 2023 was $1,372 million, or 19.8% of net revenues, compared to $1,355 million or 20.7% of net revenues for 2022, primarily due to the factors discussed above. See "Non-GAAP Financial Measures" below for a discussion and reconciliation of our non-GAAP financial measures.
Estimated discount rates were determined using the weighted average cost of capital for each reporting unit at the time of the analysis, taking into consideration the risks inherent within each reporting unit individually. For the year ended December 31, 2023, we performed our annual goodwill impairment assessment as of October 1, 2023.
Estimated discount rates were determined using the weighted-average cost of capital for each reporting unit at the time of the analysis, taking into consideration the risks inherent within each reporting unit individually. For the year ended December 31, 2024, we performed our annual goodwill impairment assessment as of October 1, 2024.
R ESULTS OF O PERATIONS The following is a discussion of our financial condition and results of operations for the years ended December 31, 2023 and 2022. The following financial information has been extracted from our audited consolidated financial statements included in this Annual Report.
R ESULTS OF O PERATIONS The following is a discussion of our financial condition and results of operations for the years ended December 31, 2024 and 2023. The following financial information has been extracted from our audited consolidated financial statements included in this Annual Report.
While we believe we have made reasonable estimates and assumptions to calculate the fair values of the reporting units, it is possible changes could occur. We will continue to monitor reporting units in 2024 for any triggering events or other indicators of impairment.
While we believe we have made reasonable estimates and assumptions to calculate the fair values of the reporting units, it is possible changes could occur. We will continue to monitor reporting units in 2025 for any triggering events or other indicators of impairment.
As of December 31, 2023, we had $277 million aggregate principal amount of 4.750% Senior Notes outstanding. Debt Covenants As of December 31, 2023 and 2022, we were in compliance with all covenants contained in the indentures governing the 4.125% Senior Notes and the 4.750% Senior Notes, and the Credit Agreement.
As of December 31, 2024, we had $277 million aggregate principal amount of 4.750% Senior Notes outstanding. Debt Covenants As of December 31, 2024 and 2023, we were in compliance with all covenants contained in the indentures governing the 4.125% Senior Notes and 4.750% Senior Notes and the Credit Agreement.
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 the $1,100 million 2021 41 Table of Contents 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.
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 47 Table of Contents 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.
Although we believe our calculations for tax returns are correct and the positions taken thereon are reasonable, the final outcome of income tax examinations could be materially different from our expectations and the estimates that are reflected in our consolidated financial statements, which could have a material effect on our results of operations, cash flows and liquidity.
Although we believe our calculations for tax returns are correct and the positions taken thereon are reasonable, the final outcome of income tax examinations could be materially different from our expectations and the estimates that are reflected in our consolidated financial statements, which could have a material effect on our results of operations, cash flows and liquidity. 52 Table of Contents
During 2023, we completed the Fourth Amendment to our Credit Agreement, repricing our 2019 Term Loan and 2021 Term Loan. The repricing reduces the applicable margin on all outstanding amounts by 25 basis points.
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.
Investors are encouraged to review the following reconciliations of these non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measures and not to rely on any single financial measure to evaluate our business.
Investors are encouraged to review the following reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures and not to rely on any single financial measure to evaluate our business.
The decrease in SG&A expenses as a percentage of net revenues was primarily driven by lower acquisition and integration related expenses incurred, partially offset by an impairment charge of $12 million related to assets sold in the current year and investments to support our Safety Services and Specialty Services segments.
The decrease in SG&A expenses as a percentage of net revenues was primarily driven by lower acquisition and integration related expenses incurred, partially offset by an impairment charge of $12 million related to assets sold in 2023 and investments to support our Safety Services and Specialty Services segments.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and year-to-year comparisons of APG’s financial condition and results of operations for the years ended December 31, 2023 and 2022.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and year-to-year comparisons of APG’s financial condition and results of operations for the years ended December 31, 2024 and 2023.
When the current estimate of total costs for a performance obligation indicates a loss, a 44 Table of Contents provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. The timing of revenue recognition may differ from the timing of invoicing to customers.
When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. The timing of revenue recognition may differ from the timing of invoicing to customers.
These performance obligations use the cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on the contracts.
These performance obligations use the cost-to-cost input method to measure our progress towards complete satisfaction of the performance 50 Table of Contents obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on the contracts.
We incurred pre-tax restructuring costs within the Safety Services segment of $37 million and $30 million in connection with the Chubb restructuring program in 2023 and 2022, respectively. In total, we estimate that we will recognize an aggregate of approximately $125 million of restructuring and other costs related to the Chubb restructuring program by the end of fiscal year 2025.
We incurred pre-tax restructuring costs within the Safety Services segment of $12 million and $37 million in connection with the Chubb restructuring program in 2024 and 2023, respectively. In total, we estimate that we will recognize an aggregate of approximately $125 million of restructuring and other costs related to the Chubb restructuring program by the end of fiscal year 2025.
The increase in interest expense was primarily due to higher interest rates on our floating interest rate debt in the current year, partially offset by a decrease in the outstanding principal amounts of floating rate debt reflecting the debt repayments described below.
The increase in interest expense was primarily due to higher interest rates on our floating interest rate debt in 2023, partially offset by a decrease in the outstanding principal amounts of floating rate debt reflecting the debt repayments described below.
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.
General economic and market conditions can positively or negatively affect demand for our customers’ products and services, which can impact their planned capital and maintenance budgets in certain end markets. Market, regulatory, and industry factors could affect demand for our services.
We used the net proceeds from the sale of the 4.125% Senior Notes to repay the previously outstanding term loan, prepay a portion of the 2019 Term Loan and for general corporate purposes.
We used the net proceeds from the sale of the 4.125% Senior Notes to 48 Table of Contents repay the previously outstanding term loan, prepay a portion of the 2019 Term Loan and for general corporate purposes.
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 provide.
These fluctuations, as well as the highly competitive nature of our industries, have resulted, and may 35 Table of Contents continue to result, in lower proposals and lower profit on the services we provide.
Non-service pension benefit Non-service pension benefit reflects the sum of the components of pension expense not related to service cost, i.e. interest cost, expected return on assets, and amortizations of prior service costs and actuarial gains and losses.
Non-service pension expense (benefit) reflects the sum of the components of pension expense not related to service expense, i.e. interest expense, expected return on assets, and amortizations of prior service expenses and actuarial gains and losses.
The net income increase was partially offset by an impairment charge of $12 million related to assets sold in the current year, an increase in interest expense of $20 million, and an increase in the income tax provision of $59 million.
The net income increase was partially offset by an impairment charge of $12 million related to assets sold in 2023, an increase in interest expense of $20 million, and an increase in the income tax provision of $59 million.
Our principal liquidity requirements have been, and we expect will continue to be, for working capital and general corporate purposes, including capital expenditures and debt service, any accrued consideration and compensation due to selling shareholders, including tax payments in connection therewith, as well as to identify, execute, and integrate strategic acquisitions and business transformation transactions or initiatives.
Our principal liquidity requirements have been, and we expect will continue to be, for working capital and general corporate purposes, including capital expenditures and debt service, identifying, executing, and integrating strategic acquisitions and business transformation transactions or initiatives, as well as any accrued consideration and compensation due to selling shareholders, including tax payments in connection therewith.
Years Ended December 31, Change ($ in millions) 2023 2022 $ % Net revenues $ 6,928 $ 6,558 $ 370 5.6 % Cost of revenues 4,988 4,844 144 3.0 % Gross profit 1,940 1,714 226 13.2 % Selling, general, and administrative expenses 1,581 1,552 29 1.9 % Operating income 359 162 197 121.6 % Interest expense, net 145 125 20 16.0 % Loss (gain) on extinguishment of debt, net 7 (5) (12) NM Non-service pension benefit (12) (42) (30) (71.4 %) Investment income and other, net (13) (9) 4 44.4 % Other expense, net 127 69 58 84.1 % Income before income taxes 232 93 139 149.5 % Income tax provision 79 20 59 295.0 % Net income $ 153 $ 73 $ 80 109.6 % NM = Not meaningful Year ended December 31, 2023 versus year ended December 31, 2022 Net revenues Net revenues for the year ended December 31, 2023 were $6,928 million compared to $6,558 million for the year ended December 31, 2022, an increase of $370 million or 5.6%.
Year Ended December 31, Change ($ in millions) 2023 2022 $ % Net revenues $ 6,928 $ 6,558 $ 370 5.6 % Cost of revenues 4,988 4,844 144 3.0 % Gross profit 1,940 1,714 226 13.2 % Selling, general, and administrative expenses 1,581 1,552 29 1.9 % Operating income 359 162 197 121.6 % Interest expense, net 145 125 20 16.0 % Loss (gain) on extinguishment of debt, net 7 (5) 12 NM Investment income and other, net (25) (51) 26 NM Other expense, net 127 69 58 84.1 % Income before income taxes 232 93 139 149.5 % Income tax provision 79 20 59 295.0 % Net income $ 153 $ 73 $ 80 109.6 % NM = Not meaningful Net revenues Net revenues for the year ended December 31, 2023 were $6,928 million compared to $6,558 million for the year ended December 31, 2022, an increase of $370 million or 5.6%.
N ON -G AAP F INANCIAL M EASURES We supplement our reporting of consolidated financial information determined in accordance with U.S. GAAP with SG&A expenses (excluding amortization and impairment) and EBITDA (defined below), which are non-U.S. GAAP financial measures. We use these non-U.S.
N ON -G AAP F INANCIAL M EASURES We supplement our reporting of consolidated financial information determined in accordance with GAAP with SG&A expenses (excluding amortization and impairment) and adjusted EBITDA (defined below), which are non-GAAP financial measures.
GAAP financial measures to evaluate our performance, both internally and as compared with our peers, because they exclude certain items that may not be indicative of our core operating results.
We use these non-GAAP financial measures to evaluate our performance, both internally and as compared with our peers, because they exclude certain items that may not be indicative of our core operating results.
On October 11, 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.
In 2023, we completed repricing of 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 the 2019 Term Loan was extended to the 2021 Term Loan and assumed all the same terms as the repriced 2021 Term Loan.
Year ended December 31, 2022 versus year ended December 31, 2021 For a discussion of our Liquidity and Capital Resources for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021, refer to Part I, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023.
Year ended December 31, 2023 versus year ended December 31, 2022 For a discussion of our Liquidity and Capital Resources for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022, refer to Part I, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
During the year ended December 31, 2022, we repurchased $13 million of outstanding principal amount of the 4.125% Senior Notes and recognized a net gain of $2 million on the debt extinguishment.
During the year ended December 31, 2022, we repurchased $13 million of outstanding principal amount of the 4.125% Senior Notes and recognized a net gain of $2 million on the debt extinguishment. As of December 31, 2024, we had $337 million aggregate principal amount of 4.125% Senior Notes outstanding.
We had total goodwill of $2,471 million as December 31, 2023. Based on the annual test, no goodwill impairment was indicated for any of the reporting units: Life Safety, Heating, Ventilation and Air Conditioning ("HVAC"), Infrastructure/Utility, Fabrication, and Specialty Contracting.
We had total goodwill of $2,894 million as December 31, 2024. Based on the annual test, no goodwill impairment was indicated for any of the reporting units: North American Life Safety, International Life Safety, Heating, Ventilation and Air Conditioning ("HVAC"), Infrastructure/Utility, Fabrication, and Specialty Contracting.
Our capital expenditures were approximately $86 million and $79 million in the years ended December 31, 2023 and 2022, respectively. In 2022, our Board of Directors authorized a stock repurchase program ("SRP"), authorizing the purchase of up to an aggregate of $250 million of common stock through February 2024.
Our capital expenditures were approximately $84 million and $86 million in the years ended December 31, 2024 and 2023, respectively. In 2022, our Board of Directors authorized a stock repurchase program, authorizing the purchase of up to an aggregate of $250 million, which expired in February 2024.
On February 26, 2024, our Board of Directors authorized a stock repurchase program to purchase up to an aggregate of $1,000 million of shares of our common stock.
As a result of the program's expiration, on February 26, 2024, our Board of Directors authorized a stock repurchase program to purchase up to an aggregate of $1,000 million of shares of our common stock.
General and administrative expenses consist primarily of compensation and associated costs for executive management, personnel, facility leases, impairment, administrative expenses associated with accounting, finance, legal, information systems, leadership development, human resources, and risk management and overhead associated with these functions.
General and administrative expenses consist primarily of compensation and associated costs for executive management, personnel, facility leases, impairment, administrative expenses associated with accounting, finance, legal, information systems, leadership development, human resources, and risk management and overhead associated with these functions. General and administrative expenses also include outside professional fees, and other corporate expenses.
We have identified the following as our critical accounting estimates: Revenue Recognition from Contracts with Customers We recognize net revenues from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606.
Actual results could materially differ from those estimates. We have identified the following as our critical accounting estimates: Revenue Recognition from Contracts with Customers We recognize net revenues from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606.
The increase in cash flows 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 provide.
The increase in cash provided by operating activities was primarily due to an increase in net income in the period. This increase in cash was also driven by lower working capital needs associated with the various services we provided in 2024 compared to 2023.
As of December 31, 2023, we had $337 million aggregate principal amount of 4.125% Senior Notes outstanding. 42 Table of Contents 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.
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.
SG&A expenses (excluding amortization and impairment) SG&A expenses (excluding amortization and impairment) is a measure of operating costs used by management to manage the business and its segments. We believe this non-U.S.
SG&A expenses (excluding amortization and impairment) SG&A expenses (excluding amortization and impairment) is a measure of operating costs used by management to manage the business and its segments.
Our capital expenditures are typically less than 1.5% of annual net revenues. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS We review new accounting standards to determine the expected impact, if any, of the adoption of such standards will have on our financial position and/or results of operations.
Our capital expenditures are typically less than 1.5% of annual net revenues. R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS We review new accounting standards to determine the expected impact, if any, of the adoption of such standards will have on our financial position and/or results of operations.
We have recorded goodwill in connection with our 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. 45 Table of Contents The components are aligned to one of our two reportable segments, Safety Services or Specialty Services.
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 our two reportable segments, Safety Services or Specialty Services.
Management’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates, which could result in impairment charges in the future. Due to the time required to obtain the necessary data for each acquisition, U.S.
Management’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates, which could result in impairment charges in the future.
GAAP provides a “measurement period” of up to one year from the date of acquisition in which to finalize these fair value determinations.
Due to the time required to obtain the necessary data for each acquisition, GAAP provides a “measurement period” of up to one year from the date of acquisition in which to finalize these fair value determinations.
C ERTAIN F ACTORS AND T RENDS A FFECTING OUR R ESULTS OF O PERATIONS 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.
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.
Gross profit Years Ended December 31, Change ($ in millions) 2023 2022 $ % Gross profit $ 1,940 $ 1,714 $ 226 13.2 % Gross margin 28.0 % 26.1 % 35 Table of Contents Our gross profit for the year ended December 31, 2023 was $1,940 million compared to $1,714 million in the year ended December 31, 2022, an increase of $226 million, or 13.2%.
Gross profit The following table presents our gross profit (net revenues less cost of revenues) and gross margin (gross profit as a percentage of net revenues) for the years ended December 31, 2023 and 2022, respectively: Year Ended December 31, Change ($ in millions) 2023 2022 $ % Gross profit $ 1,940 $ 1,714 $ 226 13.2 % Gross margin 28.0 % 26.1 % Our gross profit for the year ended December 31, 2023 was $1,940 million compared to $1,714 million in the year ended December 31, 2022, an increase of $226 million, or 13.2%.
The increase was primarily the result of disciplined project and customer selection during the year ended December 31, 2023 compared to the same period in 2022. Specialty Services EBITDA as a percentage of net revenues for the years ended December 31, 2023 and 2022 was 10.4% and 10.1%, respectively, due to the factors discussed above.
Specialty Services segment earnings as a percentage of net revenues was 11.5% and 10.3% for the years ended December 31, 2023 and 2022, respectively. The increase was primarily the result of planned disciplined project and customer selection during the year ended December 31, 2023 compared to the same period in 2022.
EBITDA for the years ended December 31, 2023 and 2022 was $680 million and $522 million, respectively, an increase of $158 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.
Adjusted EBITDA for the years ended December 31, 2024 and 2023 was $893 million and $782 million, respectively, an increase of $111 million. The increase in Adjusted EBITDA was primarily driven by the factors previously discussed. See "Non-GAAP Financial Measures" below for a discussion and reconciliation of our non-GAAP financial measures.
We focus on growing our recurring 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.
We have a winning leadership culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers. We focus on growing our recurring 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.
GAAP financial measures, however, have limitations as analytical 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 these non-U.S. GAAP financial measures is that they exclude significant expenses that are required by U.S.
These non-GAAP financial measures, however, have limitations as analytical 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 GAAP.
Gross 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 contracts usually drive higher margins than those contracts that include material, subcontract, and equipment costs.
Gross 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.
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.
We supplement the reporting of our consolidated financial information with Adjusted EBITDA. We believe this non-GAAP measure provides meaningful information and helps investors understand our financial results and assess our prospects for future performance.
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. 38 Table of Contents These non-U.S.
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 and prospects for future performance, (b) permit investors to compare us with our peers, (c) in the case of adjusted EBITDA, determine certain elements of management’s incentive compensation, and (d) provide more consistent period-to-period comparisons of the results.
Investment income and other, net Investment income and other, net was $13 million and $9 million for the years ended December 31, 2023 and 2022, respectively.
Investment expense (income) and other, net Investment expense (income) and other, net was $7 million and $(25) million for the years ended December 31, 2024 and 2023, respectively.
See Note 3 – “Recent Accounting Pronouncements” for 43 Table of Contents further information regarding new accounting standards, including the anticipated dates of adoption and the effects on our consolidated financial position, results of operations or liquidity. CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements and related disclosures in conformity with U.S.
See Note 3 – “Recent Accounting Pronouncements” for further information regarding new accounting standards, including the anticipated dates of adoption and the effects on our consolidated financial position, results of operations or liquidity.
Selling, general, and administrative expenses The following table presents operating expenses and operating margin (operating income as a percentage of net revenues) for the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, Change ($ in millions) 2023 2022 $ % Selling, general, and administrative expenses $ 1,581 $ 1,552 $ 29 1.9 % SG&A expenses as a % of net revenues 22.8 % 23.7 % Operating margin 5.2 % 2.5 % SG&A expenses (excluding amortization and impairment) (Non-GAAP) $ 1,372 $ 1,355 $ 17 1.3 % SG&A expenses (excluding amortization and impairment) as a % of net revenues (Non-GAAP) 19.8 % 20.7 % Our SG&A expenses for the year ended December 31, 2023, were $1,581 million compared to $1,552 million for the same period in 2022, an increase of $29 million.
Selling, general, and administrative expenses The following table presents selling, general, and administrative expenses for the years ended December 31, 2024 and 2023, respectively: Year Ended December 31, Change ($ in millions) 2024 2023 $ % Selling, general, and administrative expenses $ 1,694 $ 1,581 $ 113 7.1 % SG&A expenses as a % of net revenues 24.1 % 22.8 % SG&A expenses (excluding amortization and impairment) (non-GAAP) $ 1,478 $ 1,372 $ 106 7.7 % SG&A expenses (excluding amortization and impairment) as a % of net revenues (non-GAAP) 21.1 % 19.8 % Our SG&A expenses for the year ended December 31, 2024, were $1,694 million compared to $1,581 million for 2023, an increase of $113 million.
The increase in investment income was primarily due to an increase in earnings from joint ventures. 36 Table of Contents Income tax provision The effective tax rate for the year ended December 31, 2023 was 33.9% compared to an effective tax rate of 22.0% for the year ended December 31, 2022.
Income tax provision The effective tax rate for the year ended December 31, 2023 was 33.9% compared to an effective tax rate of 22.0% for the year ended December 31, 2022. The increase was primarily due to changes in 2023 to the geographical income mix and valuation allowance positions.
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.
In the face of increased pricing pressure on key materials 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 are 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.
Therefore, we have considered Pillar 2 tax within the provisions for income taxes and do not expect Pillar 2 to have a material impact on the effective tax rate or the consolidated financial statements.
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, these measures are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-U.S. GAAP financial measures.
In addition, these measures are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-GAAP financial measures.
Following the debt repricing transaction, 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.
As of December 31, 2024, the amended interest rate applicable to the 2021 Term Loan was, at our option, either (a) a base rate plus an applicable margin equal to 1.00% or (b) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.00%. The 2021 Term Loan matures on January 3, 2029.
Net cash (used in) provided by financing activities Net cash used in financing activities was $532 million for the year ended December 31, 2023 compared to $1,756 million provided by financing activities for the same period in 2022.
Net cash provided by (used in) financing activities Net cash provided by financing activities was $245 million for the year ended December 31, 2024 compared to $532 million used in financing activities in 2023. The increase in cash provided by financing activities was primarily driven by equity and debt issuances in 2024.
O VERVIEW We are a global, market-leading business services provider of safety and specialty services in over 500 locations worldwide. We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries. We have a winning leadership culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers.
O VERVIEW We are a global, market-leading business services provider of fire and life safety, security, elevator and escalator, and specialty services with a substantial recurring revenue base and over 500 locations worldwide. We provide statutorily mandated and other contracted services to a strong base of long-standing customers across industries.
Net cash used in investing activities Net cash used in investing activities was $115 million and $2,901 million in the years ended December 31, 2023 and 2022, respectively. During 2023, we utilized $83 million for acquisitions, compared to $2,839 million for the Chubb Acquisition for the same period in 2022.
Net cash used in investing activities Net cash used in investing activities was $829 million and $115 million in the years ended December 31, 2024 and 2023, respectively. During 2024, we completed the Elevated acquisition and several other acquisitions, resulting in the use of $778 million for acquisitions, compared to $83 million in 2023.
Safety Services Safety Services net revenues for the year ended December 31, 2023 were $4,871 million compared to $4,575 million during the same period in the prior year. The increase was driven by increased inspection, service, and monitoring revenue. This increase was also due to continued strength in our end markets and strategic pricing improvements.
Safety Services Safety Services net revenues for the year ended December 31, 2024 were $5,227 million compared to $4,871 million during the same period in the prior year. The increase was primarily driven by revenue from acquisitions, increased inspection, service, and monitoring revenues, and pricing improvements, partially offset by a decline in project revenues in the HVAC business.
Significant changes in the assumptions or estimates used in the underlying valuations, including the expected profitability or cash flows of an acquired business, could materially affect our operating results in the period such changes are recognized.
Significant changes in the assumptions or estimates used in the underlying valuations, including the expected profitability or cash flows of an acquired business, could materially affect our operating results in the period such changes are recognized. 51 Table of Contents The Periodic Assessment of Potential Impairment of Goodwill Goodwill represents the excess of cost over the fair market value of net tangible and identifiable intangible assets of acquired businesses.
The following table presents a reconciliation of net income to EBITDA for the periods indicated: Years Ended December 31, ($ in millions) 2023 2022 Reported net income $ 153 $ 73 Adjustments to reconcile net income to EBITDA: Interest expense, net 145 125 Income tax provision 79 20 Depreciation 79 77 Amortization 224 227 EBITDA $ 680 $ 522 39 Table of Contents L IQUIDITY AND C APITAL R ESOURCES Overview Our primary sources of liquidity are cash flows from the operating activities of our consolidated subsidiaries, available cash and cash equivalents, our access to our $500 million five-year senior secured revolving credit facility (the “Revolving Credit Facility”), and the proceeds from debt offerings.
The following table presents a reconciliation of net income to Adjusted EBITDA for the periods indicated: Year Ended December 31, ($ in millions) 2024 2023 2022 Reported net income $ 250 $ 153 $ 73 Adjustments to reconcile net income to adjusted EBITDA: Interest expense, net 146 145 125 Income tax provision 80 79 20 Depreciation 80 79 77 Amortization 222 224 227 Contingent consideration and compensation 3 14 9 Non-service pension cost (benefit) 22 (12) (42) Inventory step-up — — 9 Business process transformation expenses 52 30 31 Acquisition related expenses 13 7 121 Loss (gain) on extinguishment of debt, net 1 7 (5) Restructuring program related costs 32 46 30 Other (8) 10 (2) Adjusted EBITDA $ 893 $ 782 $ 673 L IQUIDITY AND C APITAL R ESOURCES Overview Our primary sources of liquidity are cash flows from the operating activities of our consolidated subsidiaries, available cash and cash equivalents, our access to our $500 million five-year senior secured revolving credit facility (the “Revolving Credit Facility”), and the proceeds from debt and equity offerings.
Gross margin for the year ended December 31, 2023 was 28.0%, an increase of 190 basis points compared to the prior year, primarily due to disciplined project and customer selection, pricing improvements in our Safety Services segment, and an improved mix of inspection, service, and monitoring revenue, which generates higher margins.
Gross margin for the year ended December 31, 2024 was 31.0%, an increase of 300 basis points compared to the prior year, primarily driven by planned disciplined customer and project selection, pricing improvements in our Safety Services segment, and savings from the Chubb restructuring program.
Safety Services operating margin for the years ended December 31, 2023 and 2022 was 8.1% and 5.6%, 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.
The increase was primarily the result of planned disciplined project and customer selection, pricing improvements, and improved mix of inspection, service, and monitoring revenue, which generates higher margins. Specialty Services Specialty Services net revenues for the years ended December 31, 2023 and 2022 were $2,079 million and $2,030 million, respectively.
This stock repurchase program is indefinite, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion. 40 Table of Contents Cash Flows The following table summarizes net cash flows with respect to our operating, investing, and financing activities for the periods indicated: Years Ended December 31, (in millions) 2023 2022 Net cash provided by operating activities $ 514 $ 270 Net cash used in investing activities (115) (2,901) Net cash (used in) provided by financing activities (532) 1,756 Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash 6 (9) Net decrease in cash, cash equivalents, and restricted cash $ (127) $ (884) Cash, cash equivalents, and restricted cash, end of period $ 480 $ 607 Net cash provided by operating activities Net cash provided by operating activities was $514 million in the year ended December 31, 2023 compared to $270 million of cash provided for the same period in 2022.
As of December 31, 2024, we had approximately $400 million of authorized repurchases remaining under the stock repurchase program. 46 Table of Contents Cash Flows Cash Flows The following table summarizes net cash flows with respect to our operating, investing, and financing activities for the periods indicated: Year Ended December 31, ($ in millions) 2024 2023 Net cash provided by operating activities $ 620 $ 514 Net cash used in investing activities (829) (115) Net cash provided by (used in) financing activities 245 (532) Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash (15) 6 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 21 $ (127) Cash, cash equivalents, and restricted cash, end of period $ 501 $ 480 Net cash provided by operating activities Net cash provided by operating activities was $620 million for the year ended December 31, 2024 compared to $514 million of cash provided in 2023.
Selling, general, and administrative ("SG&A") expenses Selling expenses consist primarily of compensation and associated costs for sales and advertising, trade shows, and corporate marketing.
Labor intensive contracts usually drive higher margins than those contracts that include material, subcontract, and equipment costs. 36 Table of Contents Selling, general, and administrative ("SG&A") expenses Selling expenses consist primarily of compensation and associated costs for sales and advertising, trade shows, and corporate marketing.
Net income and EBITDA Years Ended December 31, Change ($ in millions) 2023 2022 $ % Net income $ 153 $ 73 $ 80 109.6 % EBITDA (non-GAAP) 680 522 158 30.3 % Net income as a % of net revenues 2.2 % 1.1 % EBITDA as a % of net revenues 9.8 % 8.0 % Net income for the year ended December 31, 2023 was $153 million compared to $73 million for the year ended December 31, 2022, an increase of $80 million.
Additionally, a benefit for withholding taxes on foreign earnings reduced the effective tax rate in the prior year. 42 Table of Contents Net income and Adjusted EBITDA The following table presents net income and Adjusted EBITDA for the years ended December 31, 2023 and 2022, respectively: Year Ended December 31, Change ($ in millions) 2023 2022 $ % Net income $ 153 $ 73 $ 80 109.6 % Adjusted EBITDA (non-GAAP) 782 673 109 16.2 % Net income as a % of net revenues 2.2 % 1.1 % Adjusted EBITDA as a % of net revenues 11.3 % 10.3 % Net income for the year ended December 31, 2023 was $153 million compared to $73 million for the year ended December 31, 2022, an increase of $80 million.
In addition, fluctuations in foreign currencies may have an impact on our financial position and results of operations.
We have experienced supply chain disruptions, which have negatively impacted the source and supply of materials needed to perform our work. In addition, fluctuations in foreign currencies may have an impact on our financial position and results of operations.
For additional information about our restructuring activity, see Note 6 – “Restructuring" to our consolidated financial statements included in this Annual Report. Acquisitions During 2023, we completed seven acquisitions.
For additional information about our restructuring activity, see Note 6 – “Restructuring" to our consolidated financial statements included in this Annual Report. Economic, Industry and Market Factors We closely monitor the effects of general changes in economic and market conditions on our customers.
The following tables present reconciliations of SG&A expenses to SG&A expenses (excluding amortization and impairment) for the periods indicated: Years Ended December 31, ($ in millions) 2023 2022 Reported SG&A expenses $ 1,581 $ 1,552 Adjustments to reconcile to SG&A expenses to SG&A expenses (excluding amortization and impairment) Amortization expense (197) (197) Impairment of goodwill, intangibles, and other assets (12) — SG&A expenses (excluding amortization and impairment) $ 1,372 $ 1,355 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 believe this non-GAAP measure provides meaningful information and helps investors understand our operational selling, general, and administrative expenses excluding acquisition-related amortization expense and impairment charges to better enable investors to understand our financial results and assess our prospects for future performance. 44 Table of Contents The following tables present reconciliations of SG&A expenses to SG&A expenses (excluding amortization and impairment) for the periods indicated: Year Ended December 31, ($ in millions) 2024 2023 2022 Reported SG&A expenses $ 1,694 $ 1,581 $ 1,552 Adjustments to reconcile SG&A expenses to SG&A expenses (excluding amortization and impairment) Amortization expense (216) (197) (197) Impairment of goodwill, intangibles, and other assets — (12) — SG&A expenses (excluding amortization and impairment) $ 1,478 $ 1,372 $ 1,355 Adjusted EBITDA Adjusted Earnings before interest, taxes, depreciation and amortization after adjustments for non-recurring items (“Adjusted EBITDA”) is the measure of profitability used by management.
General and administrative expenses also include outside professional fees, and other corporate expenses. 34 Table of Contents Amortization of 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.
Amortization of 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. There is a portion of amortization expense related to the backlog intangible assets reflected in cost of revenues in the consolidated statements of operations.
There is a portion of amortization expense related to the backlog intangible assets reflected in cost of revenues in the consolidated statements of operations. Loss (gain) on extinguishment of debt, net Loss (gain) on extinguishment of debt, net reflects the difference between the repurchase price and carrying amount of debt at the time of extinguishment.
Loss (gain) on extinguishment of debt, net Loss (gain) on extinguishment of debt, net reflects the difference between the repurchase price and the carrying amount of debt at the time of extinguishment.
Based on the early prepayments we have made, we do not owe any quarterly principal amounts for the remainder of 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. In February 2025, we completed the Seventh Amendment to our credit agreement, repricing the 2021 Term Loan. The repricing reduced the applicable margin on the 2021 Term Loan by 25 basis points.
Our first lien net leverage ratio as of December 31, 2023 was 1.54:1.00. During 2023, we repaid an aggregate amount of $375 million and $100 million to the 2019 Term Loan and 2021 Term Loan, respectively.
Our first lien net leverage ratio as of December 31, 2024 was 1.6:1.0. During 2024, we made a repayment of $100 million to the 2021 Term Loan. As a result, as of December 31, 2024, we had no principal outstanding under the 2019 Term Loan and $2,157 million of principal outstanding under the 2021 Term Loan.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+2 added−4 removed6 unchanged
Biggest changeIn addition, we are exposed to various supply chain risks, including market risk of 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.
Biggest changeSee also “Revenue Recognition from Contracts with Customers” under Critical Accounting Estimates within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, we are exposed to various supply chain risks, including market risk of fluctuations or availability of copper, steel, cable optic fiber, and other materials used as components of supplies or materials utilized in our operations.
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.
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 forward contracts as a way to mitigate foreign currency exposure.
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. 47 Table of Contents Significant declines in market prices for oil and gas and other fuel sources may also impact our operations.
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 and gas and other fuel sources may also impact our operations.
These foreign currency transaction gains and losses, including hedging impacts, are classified in investment income and other, net, in the consolidated statements of operations and were a gain (loss) of $1 million, $(2) million and $(3) million for the years ended December 31, 2023, 2022 and 2021, respectively.
These foreign currency transaction gains and losses, including hedging impacts, are classified in investment expense (income) and other, net, in the consolidated statements of operations and were a (loss) gain of $(2) million, $1 million, and $(2) million for the years ended December 31, 2024, 2023 and 2022, respectively.
Prolonged periods of low oil and gas prices may result in projects being delayed or cancelled and in a low oil and gas price environment, certain of our businesses could become less profitable or incur losses. 48 Table of Contents
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. 54 Table of Contents
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.
While we believe we can increase our contract prices to 53 Table of Contents adjust for some price increases in commodities, there can be no assurance that such price increases, if they were to occur, would be recoverable.
Foreign currency translation gains (losses) totaled approximately $61 million, $(164) million and $(11) million for the years ended December 31, 2023, 2022, and 2021, respectively.
Foreign currency translation (losses) gains totaled approximately $(107) million, $61 million, and $(164) million for the years ended December 31, 2024, 2023, and 2022, respectively.
To mitigate increases in variable interest rates, we have a $720 million interest 46 Table of Contents 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.
To mitigate increases in variable interest rates, we have a $720 million interest rate swap exchanging one-month SOFR for a rate of 3.59% per annum, maturing October 2026, and a $400 million interest rate swap exchanging one-month SOFR for a rate of 3.41% per annum, maturing January 2028.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2023, our outstanding variable interest rate debt was primarily related to our 2019 Term Loan and our 2021 Term Loan. As of December 31, 2023, we had $330 million outstanding on the 2019 Term Loan, and $1,407 million outstanding on the 2021 Term Loan.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2024, our outstanding variable interest rate debt was primarily related to our $2,157 million 2021 Term Loan.
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.
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.
Net revenues and expenses related to our foreign operations are, for the most part, denominated in the functional currency of the foreign operation, which 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.
Revenues generated from foreign operations represented approximately 38% of our consolidated net revenues for the year ended December 31, 2024. Net revenues and expenses related to our foreign operations are, for the most part, denominated in the functional currency of the foreign operation, which minimizes the impact fluctuations in exchange rates would have on net income or loss.
As of December 31, 2023, excluding letters of credit outstanding of $5 million, we had no amounts of outstanding revolving loans under our Credit Agreement. A one percentage point increase in the average interest rate on our floating rate debt at December 31, 2023 would increase future interest expense by approximately $6 million per year.
A one percentage point increase in the average interest rate on our floating rate debt at December 31, 2024 would increase future interest expense by approximately $10 million per year. Foreign Currency Risk We have operations in over 20 countries globally.
Such transactions were not material to our operations during the year ended December 31, 2023.
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 year ended December 31, 2024.
Removed
In addition, interest expense will be offset by the amortization through October 2024 of the remaining gain of $14 million recognized from the termination of the previously outstanding $720 million notional amount interest rate swap.
Added
During 2024, we entered into a $720 million notional amount forward starting interest rate swap commencing in October 2026 and maturing in January 2029 that exchanges a variable rate of interest (SOFR) for an average fixed rate of interest of approximately 3.13% over the term of the agreement.
Removed
After the repricing transaction, 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).
Added
The remaining floating rate portfolio will bear interest based on one-month SOFR plus 200 basis points. As of December 31, 2024, excluding letters of credit outstanding of $6 million, we had no outstanding revolving loans under our Credit Agreement.
Removed
Foreign Currency Risk We have operations are in over 20 countries globally. Revenues generated from foreign operations represented approximately 37% of our consolidated net revenues for the year ended December 31, 2023.
Removed
See also “Revenue Recognition from Contracts with Customers” under Critical Accounting Estimates within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Other APG 10-K year-over-year comparisons