APi Group (NYSE:APG) reported second-quarter revenue growth, margin expansion and record backlog, while raising its full-year revenue and adjusted EBITDA outlook following a strong first half of 2026.
Reported net revenues rose 13.3% year over year to $2.25 billion for the quarter ended June 30, driven by 10.1% organic growth, inspection and service revenue growth, project activity and pricing improvements. Adjusted EBITDA increased 14.3% to produce a 13.8% adjusted EBITDA margin, up 10 basis points from a year earlier. Adjusted diluted earnings per share increased 12.8% to $0.44.
Safety and Specialty Services Results
Safety Services revenue increased 8.8% to $1.48 billion, with 4.7% organic growth. The segment’s adjusted gross margin rose 20 basis points to 37.4%, helped by customer and project selection as well as pricing improvements. Segment earnings increased 8.6%, while the segment earnings margin was unchanged at 17% as gross-margin gains were offset by increased selling, general and administrative expenses.
Becker said North American Safety Services delivered high-single-digit organic growth, supported by growth in both project and service revenue. International Safety Services was flat for the quarter, although he said the business returned to organic growth in the latter portion of the period.
The company is working to further develop its international “Inspection First” strategy, emphasizing recurring inspection, service and monitoring revenue. Becker said global-account investments are gaining traction internationally, with both pipeline and backlog increasing during the quarter. The company also received new data-center project awards outside the U.S.
Specialty Services revenue climbed 22.9% to $773 million, including 22% organic growth. Adjusted gross margin expanded 120 basis points to 19.3%, while segment earnings increased 29.6% and the segment earnings margin rose 60 basis points to 11.9%.
Chief Financial Officer David Jackola attributed Specialty Services margin gains to disciplined customer and project selection, pricing and lower contract losses. Becker said the majority of the segment’s organic growth came from market share gains and volume rather than price.
Data centers were a notable contributor to Specialty Services demand, according to Becker. APi provides HVAC and mechanical work, structured cabling, structural steel and insulated paneling, among other services, for data-center customers. The company also cited semiconductors, advanced manufacturing, healthcare and critical national infrastructure as targeted end markets.
Project Activity and Backlog
Becker said larger projects are contributing to growth, particularly in fire protection and life safety work for data centers. He said a large data-center fire project that may have been valued at $7 million to $8 million several years ago can now approach $20 million.
While project work generally carries gross margins roughly 10 percentage points below inspection, service and monitoring work, Becker said certain larger and more complex projects can command better pricing and narrower margin differences. He said APi remains on track toward its long-term target of at least a 16% adjusted EBITDA margin by 2028.
The company’s record backlog is diversified across its business lines and end markets. Becker said the quality of the current backlog should generate better gross margins than the backlog a year ago, though larger projects are extending average project durations to roughly nine to 12 months from a historical range of about six to nine months.
Jackola estimated that data centers accounted for roughly 15% to 20% of the increase in backlog during the quarter, while cautioning that the figure was a rough estimate. He said data centers could represent about 10% to 12% of 2026 revenue.
Cash Flow, Capital Allocation and Acquisitions
Adjusted free cash flow totaled $228 million for the first six months of the year, up $42 million from the prior-year period. The company reported adjusted free-cash-flow conversion of 68% on adjusted net income and said it remains on track for approximately 115% conversion for the full year.
APi ended the quarter with a net leverage ratio of 2.2 times, below its long-term target range of 2.5 to 3 times. During the quarter, the company issued $500 million of 5.75% senior unsecured notes due 2034, expanded its revolving credit facility to $1 billion and extended the maturity of its Term Loan B to 2033.
The company also repurchased about 1.6 million shares for $66 million under its existing $1 billion share repurchase authorization.
On the acquisition front, APi closed the acquisition of Onyx-Fire in June and WTech in early July, while completing three additional bolt-on acquisitions during the quarter. Becker said the bolt-ons included the first acquisition in the company’s elevator and escalator services business and one in international safety services.
APi continues to target $250 million in bolt-on acquisition spending this year and is building capabilities to scale annual deployment toward $350 million. Becker said the company’s priorities include fire and life safety, security, elevator and escalator services, and potentially HVAC services when suitable opportunities arise.
Raised 2026 Outlook
APi raised its full-year 2026 outlook, now expecting net revenues of $8.875 billion to $9.025 billion, compared with prior guidance of $8.66 billion to $8.86 billion. The updated range implies organic revenue growth of 7% to 9%.
The company raised its adjusted EBITDA forecast to $1.205 billion to $1.245 billion, from $1.177 billion to $1.237 billion previously. At the midpoint, the outlook implies a 13.7% adjusted EBITDA margin and annual adjusted EBITDA growth of 16% to 20%.
For the third quarter, APi expects revenue of $2.375 billion to $2.425 billion, representing organic growth of about 8% to 10%, and adjusted EBITDA of $325 million to $335 million. The company said its outlook reflects continued strength in North American Safety Services, modest improvement in international safety operations and continued growth in Specialty Services.
About APi Group (NYSE:APG)
APi Group Corp. is a global specialty contractor that provides fire protection, security, mechanical insulation and energy services to commercial, industrial and institutional clients. Headquartered in New Brighton, Minnesota, the company designs, installs, inspects, tests, maintains and repairs a wide range of safety and infrastructure systems. Through its network of operating subsidiaries, APi Group delivers end-to-end solutions for new construction, facility renovations and ongoing maintenance requirements.
Its service portfolio spans life safety and industrial services—such as fire suppression systems, fire alarms and emergency lighting—and specialized offerings including technical insulation, access solutions, passive fire protection and energy efficiency upgrades.
