APi Group Shares Slip After Q2 Results, Warns Of Supply Chain Issues

APi Group Corp APG reported a second-quarter adjusted net revenue increase of 15.2% year-over-year to $978 million, exceeding the consensus of $939.51 million. Reported net revenues increased by 10% Y/Y.
Adjusted net revenues by segments: Safety Services $512 million (+38% Y/Y), Specialty Services $415 million (+18.9% Y/Y), and Industrial Services $68 million (-48.9% Y/Y).
Adjusted EPS decreased to $0.31 from $0.34 in 2Q20, beating the consensus of $0.30.
The gross margin expanded by 415 bps to 23.7%, and the adjusted gross margin contracted by 27 bps to 24.2%.
The operating income increased by 74.1% Y/Y to $47 million, and the margin expanded by 177 bps to 4.8%.
APi Group generated cash from operating activities year-to-date of $19 million, compared to $232 million a year ago.
Adjusted EBITDA was $106 million, compared to $101 million in 2Q20, and margin contracted by 106 bps to 10.8%, driven by supply chain disruptions and inflation.
APi Group believes the recent acquisition of Chubb Fire & Security Business from Carrier Global Corp CARR, which will close around year-end, will help realize revenue and cost synergies.
The company expects negative variables due to COVID-19 impact, coupled with supply chain disruptions and inflation, to continue through the balance of the year.
Price Action: APG shares traded lower by 5.43% at $21.59 on the last check Wednesday.

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