APi Group Corporation
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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. We have a winning leadership culture driven by entrepreneurial business leaders that deliver innovative solutions to our customers.
We believe that our core strategies of driving sustainable organic growth, growing through accretive acquisitions, promoting the sharing of best practices across all of our businesses, and leveraging our scale and service offerings place us in a unique position to capitalize on opportunities in the industries we serve and advance our position in each of our markets. We believe that our revenue diversification across customers, end markets, geographies, and projects, combined with our inspection-first go-to-market strategy, decentralized operating model, enduring commitment to leadership development, long-standing customer relationships, and strong safety track record differentiates us from our competitors.
We have a disciplined acquisition strategy and have completed 140 acquisitions since 2005. We target companies that align with our strategic priorities and demonstrate key value drivers such as the geographies they serve, the culture, value, and fit of the business being acquired, the services they offer, and the financial profile of the business. A key component of our acquisition strategy is to strengthen and expand our existing service offerings in geographies where our capabilities in certain service offerings are limited. Post acquisition, we prioritize maintaining business continuity while identifying and implementing our inspection-first strategy, operational efficiencies, cost synergies, and integration of organizational processes to drive margin expansion.
We have a decentralized operating model designed to improve speed and responsiveness to our customers across our businesses, empower leadership of our businesses to drive business performance and execute key decisions, and foster cross-functional sharing of best practices. This structure promotes a business-owner mindset among our individual leaders and combines the personal attention of a small-to-medium-sized company with the strength and support of a global industry leader. It also allows each of our businesses to remain highly focused on best positioning itself within the markets in which it competes and reinforces strong accountability for operational and financial performance.
We operate our business under three primary operating segments, two of which are aggregated into a single reportable segment, resulting in two reportable segments:
•Safety Services – A leading provider of safety services in North America, Europe, and Asia-Pacific, focusing on fire protection solutions, electronic security systems, and elevators and escalators, including design, installation, inspection, service, and monitoring of these systems. The work performed within this segment spans across a diverse mix of end markets with a focus on high tech services, advanced manufacturing, healthcare, fulfillment and distribution centers, and critical infrastructure.
•Specialty Services – A leading provider of a variety of specialty contracting, fabrication and distribution, and infrastructure and utility services. The work within this segment spans across a diverse mix of end markets with a focus on high tech services, healthcare, and critical infrastructure throughout North America.
Our Industry
The industries in which we operate are highly fragmented and comprised of international, 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.
Evolving Regulation. 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. 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. As these associations and government agencies continue to adopt new, more stringent regulations, the demand for our services increases.
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Deferred Infrastructure Investment. Following several years of deferred investment, the aging United States ("U.S.") infrastructure system requires significant maintenance, repair and retrofit services which has spurred demand in our industry. State and local municipalities have deferred infrastructure spending for many years which has resulted in the need to rebuild or retrofit a large portion of the U.S. infrastructure. The Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, includes $550 billion of newly authorized infrastructure spending through 2026. In addition, the growing adoption of artificial intelligence and high-performance computing is causing an increase in large-scale infrastructure projects, aligning with our end markets of high tech services and advanced manufacturing.
Our Competitive Strengths
We believe the following are our key competitive strengths:
Benefits of Scale in a Fragmented Market with Limited Businesses of Size. Our scale provides meaningful advantages across our platform. We leverage shared technology, centralized back-office support, and common processes to drive consistency, efficiency, and quality in our service delivery. Our size also supports disciplined investment in leadership development and broader learning programs, enabling us to attract, develop, and retain talent at all levels of the organization. We believe these scale-driven investments in our people, systems, and support functions enhance our ability to serve our customers, support growth, and improve long-term operating performance.
Leading Market Positions in Diverse Set of Niche Industries. We believe that we are one of the go-to-market leaders in each of the diverse set of end markets we serve, including the industry leader in life safety and electronic security services, among the top five specialty contractors in North America, and a premier provider of services for elevators and escalators. We have strong revenue diversification across customers, end markets, geographies, and projects. Our go-to-market strategy of selling inspection work first, our focus on recurring revenue streams, and our regional approach to operating our businesses differentiate us from our competitors. Additionally, we have strong cross-selling opportunities, commitment to leadership development, long-standing customer relationships, robust reputation in the industries we serve, as well as a strong safety track record. As a result of our global brand recognition, we believe we have better access to new business opportunities, allowing us to maintain and advance our market share positions.
Repeat Revenue with Diverse Mix of Customers, End Markets, Geographies and Projects. We have repeat revenue from a diverse set of long-standing blue-chip customers who are spread across a variety of end markets and geographies with low concentration. Many of our customers have high creditworthiness in a direct service relationship or contracting role, providing stable cash flows and a platform for organic growth. Inspections are often required by legislation or insurance mandates, providing a strong recurring revenue stream. Our broad geographic footprint reaches more than 500 locations throughout over 20 countries and allows us to maintain relationships with local decision makers while also having the ability to execute multi-site services for national and international account customers.
Differentiated Business Model Focused on Growing Service Revenue. Our go-to-market strategy in life safety is inspection-first, because we estimate that every dollar sold can lead to subsequent service work. In most cases, our inspection work is required by statutory or insurance obligations. 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 this ultimately creates a stickier customer relationship that leads to recurring revenue, higher margins, and growth opportunities.
Attractive Industry Fundamentals. We believe that the diversity of the end markets we serve and the regulatorily-driven demand for certain of our services will enable us to better withstand various economic cycles. We believe that the industries in which we operate are subject to increasingly complex and evolving regulatory environments and have experienced pent-up demand resulting from years of deferred maintenance and retrofit investment. We believe this presents attractive opportunities for us to drive growth in our businesses and enhance our market share positions.
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History of Disciplined and Strategic Acquisitions and Divestitures. We have a disciplined acquisition strategy and have completed 140 acquisitions since 2005. We target acquiring companies that align with our strategic priorities and demonstrate key value drivers such as the geographies they serve, the culture, value, and fit of the business being acquired, the services they offer, and the financial profile of the business. In addition, we continuously evaluate our portfolio of businesses and to ensure our companies support our long-term strategy and growth targets and will restructure or divest those businesses that do not align. A key component of our acquisition strategy is to strengthen and expand our existing service offerings in geographies where our capabilities in certain services offerings are limited. Post acquisition, we prioritize maintaining business continuity while identifying and implementing our inspection-first strategy, operational efficiencies, cost synergies, and integration of organizational processes to drive margin expansion. Our acquired businesses benefit from direct access to the APG network, which facilitates organizational sharing of knowledge and best practices, increases collaboration across our businesses, and develops cross-brand solutions which foster enhanced experiences, quality, and efficiency.
Differentiated Leadership Culture and Operating Model. We believe that one of our core pillars of success is our distinct leadership development culture predicated on our purpose of Building Great Leaders®, which is designed to enable independent company leadership, cultivate broad management skills, enhance organizational flexibility, and empower the next cohort of leaders across our businesses. This culture of investing in leadership development at all levels of the organization has created an empowered, entrepreneurial atmosphere. Another important initiative is our field-based leadership programs. We believe our approach to field leadership is different from our peers’ field-based programs, which tend to focus on technical competence as opposed to leadership. Moreover, we employ a decentralized operating model which improves speed and responsiveness to customers in industries with strict requirements. This also empowers the leaders of our businesses to drive business performance and execute key decisions, while highlighting the significant focus we place on ensuring members of our team receive continuous investment in their development.
Resilient Business Model with Multiple Levers to Navigate Downturns. Our proactive approach to managing risk across our platform, inspection and services-focused business model focused on recurring revenue, and highly variable cost structure provide significant flexibility to effectively navigate downturns. Our significant union labor force in the U.S. and subcontract labor force internationally allow us to flex our workforce capacity as market conditions dictate without incurring significant trailing costs or severance. 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 that our broad mix of customers across many sectors and strong recurring revenue streams help us mitigate the impact of economic downturns on our business. In a downturn, we have multiple levers to pull to preserve cash due to a high proportion of variable costs.
Attractive Financial Performance and Strong Margin and Cash Flow Profile. We believe that, due to our differentiated operating model, diversified services offerings, historically strong organic growth, and disciplined acquisition strategy, we have an attractive financial performance profile. In addition, we support margin expansion by leveraging our scale to benefit from procurement savings resulting from enhanced purchasing power and serving higher-margin, diverse set of end markets. We also have a stable cash flow profile driven by our focus on recurring services-based revenue and our asset-light business model, which requires minimal ongoing capital expenditures (which are typically less than 1.5% of total net revenues). The mission-critical nature of our services and regulatorily-driven inspection requirements provide predictable, recurring revenue stream opportunities. Inspection, service, and monitoring revenue is less cyclical and reasonably recurring due to the consistent renewal rates and deep customer relationships.
Our Business Strategy
We intend to continue to grow our businesses, both organically and through acquisitions, and advance our position in each of the markets we serve by pursuing the following integrated business strategies:
Drive Organic Growth. We believe that we can continue to grow our businesses organically and capture additional market share across each of our segments by focusing on the following:
•Grow Inspection, Service, and Monitoring Revenue - We believe that we can drive substantial organic growth by focusing on growing our inspection, service, and monitoring revenue, which is a component of our business in each of our segments. We plan to capitalize on our broad base of installed projects, cross-selling opportunities, and customer relationships to continue to grow inspection, service, and monitoring revenue.
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•Project Revenue Discipline - We also drive organic growth by maintaining disciplined project selection, ensuring we pursue project work that aligns with our strategic priorities, customer profile, and targeted end markets. Our strategy emphasizes inspection, service, and monitoring activities, which support long-term customer relationships and enable consistent operational execution and technical performance. This recurring engagement strengthens our role as a trusted partner and contributes to a robust pipeline of owner-direct project opportunities.
•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.
Supplement 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. We have grown, and plan to continue to drive growth, through accretive acquisitions targeting businesses in our existing segments and those complementary to our service offerings.
Continue to Foster Leadership Development throughout All Levels and Geographies of the Organization.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section should be read in conjunction with the interim unaudited condensed consolidated financial statements (the "Interim Statements") and related notes included in this quarterly report, and the Company's 2025 audited annual consolidated financial statements, the related notes thereto and under the heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and other disclosures contained in our Annual Report on Form 10-K, including financial results for the year ended December 31, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under the “Cautionary Note Regarding Forward Looking Statements” section of this quarterly report.
We prepare our financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”). To supplement our financial results presented in accordance with GAAP in this MD&A section, we present EBITDA, which is a non-GAAP financial measure, to assist readers in understanding our performance and provide an additional perspective on trends and underlying operating results on a period-to-period comparable basis. Non-GAAP financial measures either exclude or include amounts not reflected in the most directly comparable measure calculated and presented in accordance with GAAP. Where a non-GAAP financial measure is used, we have provided the most directly comparable measure calculated and presented in accordance with GAAP, a reconciliation to the GAAP measure and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.
Unless the context otherwise requires, all references in this section to “APG,” the “Company,” “we,” “us,” and “our” refer to APi Group Corporation and its subsidiaries.
Overview
We are a global, market-leading business services company providing statutorily mandated and contracted services across our Safety Services and Specialty Services segments, including fire and life safety, electronic security, elevator and escalator, and infrastructure services. With more than 600 locations in over 20 countries, we are built on a century of expertise, a people-first culture, and our purpose of Building Great Leaders.
We operate our business under three primary operating segments, two of which aggregate into a single reportable segment, resulting in two reportable segments:
•Safety Services – A leading provider of safety services in North America, Europe, and Asia-Pacific, focusing on fire and life safety solutions, electronic security systems, and elevators and escalators, including design, installation, inspection, service, and monitoring of these systems. The work performed within this segment spans across a diverse mix of end markets with a focus on high tech services, advanced manufacturing, healthcare, fulfillment and distribution centers, and critical infrastructure.
•Specialty Services – A leading provider of a variety of specialty contracting, fabrication and distribution, and infrastructure and utility services. The work within this segment spans across a diverse mix of end markets with a focus on high tech services, healthcare, and critical infrastructure throughout North America.
We focus on growing our recurring revenue streams and repeat business from a diverse set of 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 believe inspection, service, and monitoring revenues are generally more predictable through contractual arrangements with typical terms ranging from days to five years, with the majority having short durations and are often recurring due to consistent renewal rates and long-standing customer relationships.
For financial information about our segments see Note 17 – “Segment Information” to our condensed consolidated financial statements included herein.
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RECENT DEVELOPMENTS AND CERTAIN FACTORS AND TRENDS AFFECTING OUR RESULTS OF OPERATIONS
Acquisitions
For information about our acquisition activity, see Note 3 – "Business Combinations" to our condensed consolidated financial statements included herein.
Economic, Industry, and Market Factors
We closely monitor the effects of general changes in economic and market conditions on our customers. General economic and market conditions can 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. Availability of transportation and transmission capacity and fluctuations in market prices for energy and other fuel sources can also affect demand for our services for pipeline and power generation construction services. These fluctuations, as well as the highly competitive nature of our industries, have resulted, and may continue to result, in lower proposals and lower profit on the services we provide. Increased volatility in the global economy, and the increased tariffs on imported goods by the United States, Canada, and other countries, may also impact the financial results of some of our businesses. These tariffs have a direct impact on the cost of certain materials utilized in the services we provide and will increase the overall cost of projects which could lower project activity and impact the demand for our services. In the face of increased cost 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 could experience supply chain disruptions, which could negatively impact 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. However, we believe that our exposure to transactional gains or losses resulting from changes in foreign currencies is limited because our foreign operations primarily invoice and collect receivables in their respective local or functional currencies, and the expenses associated with these transactions are generally contracted and paid for in the same local currencies. In cases where operational transactions represent a material currency risk, we generally enter into cross-currency swaps. Refer to Note 8 – "Derivatives" to our condensed consolidated financial statements included in this quarterly report for additional information on our hedging activities. While we actively monitor economic, industry, and market factors that could affect our business, we cannot predict the effect that changes in such factors may have on our future consolidated results of operations, liquidity, and cash flows, and we may be unable to fully mitigate, or benefit from, such changes.
Effect of Seasonality and Cyclical Nature of Business
Our net revenues and results of operations can be subject to variability stemming from seasonal and other variations. Seasonal variations can be influenced by weather conditions impacting customer spending patterns, contract award seasons, and project schedules, as well as the timing of holidays. 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. Fluctuations in end-user demand, or in the supply of services within those industries, can affect demand for our services. As a result, our businesses may be adversely affected by industry declines or by delays in new projects. Variations or unanticipated changes in project schedules in connection with large projects can create fluctuations in net revenues.
Recent Accounting Pronouncements
A summary of recent accounting pronouncements is included in Note 2 – “Recent Accounting Pronouncements” to our condensed consolidated financial statements included herein.
DESCRIPTION OF KEY LINE ITEMS
Net revenues
Net revenues are generated from the sale of various types of contracted services, fabrication, and distribution. We derive net revenues primarily from services under contractual arrangements with durations ranging from days to five years, with the majority having short durations, and which may provide the customer with pricing options that include a combination of fixed, unit, or time and material pricing. Net revenues for fixed price agreements are generally recognized over time using the cost-to-cost method of accounting which measures progress based on the cost incurred to total expected cost in satisfying our performance obligation.
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Net revenues from time and material contracts are recognized as the services are provided. Net revenues earned are based on total contract costs incurred plus an agreed upon markup. Net revenues for these cost-plus contracts are recognized over time on an input basis as labor hours are incurred, materials are utilized, and services are performed. Net revenues from wholesale or retail unit sales are recognized at a point-in-time upon shipment.
Cost of revenues
Cost of revenues consists of direct labor, materials, subcontract costs, and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed.
Gross profit
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.
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. 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.
Investment expense (income) and other, net
Investment expense (income) and other, net includes income and expense from foreign currency forward contracts, cross-currency swaps, joint ventures, non-service pension cost, and other miscellaneous items including gains or losses on extinguishment of debt. Non-service pension cost reflects the sum of the components of pension expense not related to service expense, i.e., interest expense, expected return on assets, and amortization of prior service costs and actuarial gains and losses.
CRITICAL ACCOUNTING ESTIMATES
For information regarding our critical accounting estimates, see the “Critical Accounting Estimates” section of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes to our critical accounting estimates during the six months ended June 30, 2026.
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RESULTS OF OPERATIONS
The following is a discussion of our financial condition and results of operations during the three and six months ended June 30, 2026 and 2025.
Three months ended June 30, 2026 compared to the three months ended June 30, 2025
| Three Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Net revenues | $ | 2,254 | $ | 1,990 | $ | 264 | 13.3 | % | ||||||||||||||||
| Cost of revenues | 1,551 | 1,375 | 176 | 12.8 | % | |||||||||||||||||||
| Gross profit | 703 | 615 | 88 | 14.3 | % | |||||||||||||||||||
| Selling, general, and administrative expenses | 528 | 472 | 56 | 11.9 | % | |||||||||||||||||||
| Operating income | 175 | 143 | 32 | 22.4 | % | |||||||||||||||||||
| Interest expense, net | 36 | 37 | (1) | (2.7) | % | |||||||||||||||||||
| Investment expense (income) and other, net | 1 | (2) | 3 | (150.0) | % | |||||||||||||||||||
| Other expense, net | 37 | 35 | 2 | 5.7 | % | |||||||||||||||||||
| Income before income taxes | 138 | 108 | 30 | 27.8 | % | |||||||||||||||||||
| Income tax provision | 39 | 31 | 8 | 25.8 | % | |||||||||||||||||||
| Net income | $ | 99 | $ | 77 | $ | 22 | ||||||||||||||||||
Net revenues
Net revenues for the three months ended June 30, 2026 were $2,254 million compared to $1,990 million for the same period in 2025, an increase of $264 million or 13.3%. The increase in net revenues was driven by solid growth in inspection, service, and monitoring revenues, robust growth in project revenues, revenues from acquisitions completed in the prior 12 months, and pricing improvements.
Gross profit
The following table presents gross profit (net revenues less cost of revenues) and gross margin (gross profit as a percentage of net revenues) for the three months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Gross profit | $ | 703 | $ | 615 | $ | 88 | 14.3 | % | ||||||||||||||||
| Gross margin | 31.2 | % | 30.9 | % | ||||||||||||||||||||
Gross profit for the three months ended June 30, 2026 was $703 million compared to $615 million for the same period in 2025, an increase of $88 million or 14.3%. Gross margin for the three months ended June 30, 2026 was 31.2%, an increase of 30 basis points compared to the prior year period. Margins increased in both project and service revenues, driven by disciplined customer and project selection and pricing improvements, offset by project and business mix.
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Operating expenses
The following table presents operating expenses for the three months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Selling, general, and administrative expenses | $ | 528 | $ | 472 | $ | 56 | 11.9 | % | ||||||||||||||||
| SG&A expenses as a % of net revenues | 23.4 | % | 23.7 | % | ||||||||||||||||||||
| SG&A expenses (excluding amortization) (non-GAAP) | $ | 461 | $ | 417 | $ | 44 | 10.6 | % | ||||||||||||||||
| SG&A expenses (excluding amortization) as a % of net revenues (non-GAAP) | 20.5 | % | 21.0 | % | ||||||||||||||||||||
Selling, general, and administrative expenses
SG&A expenses for the three months ended June 30, 2026 were $528 million compared to $472 million for the same period in 2025, an increase of $56 million. SG&A expenses as a percentage of net revenues was 23.4% during the three months ended June 30, 2026 compared to 23.7% for the same period in 2025. The increase in SG&A expenses was primarily driven by expenses from acquisitions completed during the prior 12 months, amortization of intangible assets, non-recurring systems and business enablement expenses, and investments to support growth. SG&A expenses excluding amortization for the three months ended June 30, 2026 were $461 million, or 20.5% of net revenues, compared to $417 million, or 21.0% of net revenues, for the same period of 2025. The decrease in SG&A expenses excluding amortization as a percentage of net revenues is primarily due to revenue growth outpacing growth in expenses. See the discussion and reconciliation of our non-GAAP financial measures below.
Interest expense, net
Interest expense, net was $36 million and $37 million for the three months ended June 30, 2026 and 2025, respectively. The decrease in interest expense, net was primarily driven by a decrease in floating rates and benefits from certain derivative transactions, offset by an increased volume of outstanding debt.
Investment expense (income) and other, net
Investment expense (income) and other, net was $1 million for the three months ended June 30, 2026 compared to $2 million of income for the same period of 2025. The change in investment expense (income) and other, net was primarily due to a loss on the extinguishment of debt in the current year with no similar activity in the prior year.
Income tax provision
The effective tax rate for the three months ended June 30, 2026 was 28.0% compared to 28.7% in the same period of 2025. The decrease in the effective tax rate between the periods was primarily due to the increase in windfall tax benefit for vested shares in the current year. The difference between the effective tax rate and the statutory U.S. federal income tax rate of 21.0% for the three months ended June 30, 2026 and 2025 is due to the windfall tax benefit for vested shares partially offset by nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, and state taxes.
Net income and adjusted EBITDA
The following table presents net income and adjusted EBITDA for the three months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Net income | $ | 99 | $ | 77 | $ | 22 | 28.6 | % | ||||||||||||||||
| Adjusted EBITDA (non-GAAP) | 311 | 272 | 39 | 14.3 | % | |||||||||||||||||||
| Net income as a % of net revenues | 4.4 | % | 3.9 | % | ||||||||||||||||||||
| Adjusted EBITDA as a % of net revenues | 13.8 | % | 13.7 | % | ||||||||||||||||||||
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Net income for the three months ended June 30, 2026 was $99 million compared to $77 million for the same period in 2025, an increase of $22 million. The net income improvement is primarily attributable to strong revenue growth, partially offset by the increase in SG&A expenses discussed above. Net income as a percentage of net revenues for the three months ended June 30, 2026 and 2025 was 4.4% and 3.9%, respectively. Adjusted EBITDA for the three months ended June 30, 2026 was $311 million compared to $272 million for the same period in 2025, an increase of $39 million. The growth in adjusted EBITDA was driven by the same factors discussed above.
Segment Results for the three months ended June 30, 2026 compared to the three months ended June 30, 2025
| Net Revenues | |||||||||||||||||||||||||
| Three Months Ended June 30, | Change | ||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | |||||||||||||||||||||
| Safety Services | $ | 1,482 | $ | 1,362 | $ | 120 | 8.8 | % | |||||||||||||||||
| Specialty Services | 773 | 629 | 144 | 22.9 | % | ||||||||||||||||||||
| Corporate and Eliminations | (1) | (1) | NM | NM | |||||||||||||||||||||
| $ | 2,254 | $ | 1,990 | $ | 264 | 13.3 | % | ||||||||||||||||||
| Segment Earnings | |||||||||||||||||||||||||
| Three Months Ended June 30, | Change | ||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | |||||||||||||||||||||
| Safety Services | $ | 252 | $ | 232 | $ | 20 | 8.6 | % | |||||||||||||||||
| Safety Services segment earnings as a % of net revenues | 17.0 | % | 17.0 | % | |||||||||||||||||||||
| Specialty Services | $ | 92 | $ | 71 | $ | 21 | 29.6 | % | |||||||||||||||||
| Specialty Services segment earnings as a % of net revenues | 11.9 | % | 11.3 | % | |||||||||||||||||||||
| Corporate and Eliminations | $ | (33) | $ | (31) | NM | NM | |||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 311 | $ | 272 | $ | 39 | 14.3 | % | |||||||||||||||||
NM = Not meaningful
The following discussion breaks down the net revenues and segment earnings by reportable segment for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Safety Services
Safety Services net revenues for the three months ended June 30, 2026 increased by $120 million or 8.8% compared to the same period in 2025. The increase was driven by solid growth in inspection, service, and monitoring revenues, growth in project revenues, acquisitions, pricing improvements, and impacts of foreign exchange translation.
Safety Services segment earnings as a percentage of net revenues for the three months ended June 30, 2026 was approximately 17.0%, unchanged compared to prior year, driven by disciplined customer and project selection and pricing improvements, resulting in margin expansion in inspection, service, and monitoring revenues and project revenues, partially offset by mix and increased SG&A expenses.
Specialty Services
Specialty Services net revenues for the three months ended June 30, 2026 increased by $144 million or 22.9% compared to the same period in 2025. The increase was driven by robust growth in both project and service revenues.
Specialty Services segment earnings as a percentage of net revenues for the three months ended June 30, 2026 and 2025 was approximately 11.9% and 11.3%, respectively. The increase was primarily driven by disciplined customer and project selection and pricing improvements, resulting in margin expansion in service and project revenues, partially offset by SG&A expenses, including variable compensation expense.
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Six months ended June 30, 2026 compared to the six months ended June 30, 2025
| Six Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Net revenues | $ | 4,236 | $ | 3,709 | $ | 527 | 14.2 | % | ||||||||||||||||
| Cost of revenues | 2,913 | 2,552 | 361 | 14.1 | % | |||||||||||||||||||
| Gross profit | 1,323 | 1,157 | 166 | 14.3 | % | |||||||||||||||||||
| Selling, general, and administrative expenses | 1,045 | 930 | 115 | 12.4 | % | |||||||||||||||||||
| Operating income | 278 | 227 | 51 | 22.5 | % | |||||||||||||||||||
| Interest expense, net | 66 | 75 | (9) | (12.0) | % | |||||||||||||||||||
| Investment expense (income) and other, net | 3 | (2) | (5) | (250.0) | % | |||||||||||||||||||
| Other expense, net | 69 | 73 | (4) | (5.5) | % | |||||||||||||||||||
| Income before income taxes | 209 | 154 | 55 | 35.7 | % | |||||||||||||||||||
| Income tax provision | 53 | 42 | 11 | 26.2 | % | |||||||||||||||||||
| Net income | $ | 156 | $ | 112 | $ | 44 | ||||||||||||||||||
Net revenues
Net revenues for the six months ended June 30, 2026 were $4,236 million compared to $3,709 million for the same period in 2025, an increase of $527 million or 14.2%. The increase in net revenues was driven by solid growth in inspection, service, and monitoring revenues, robust growth in project revenues, acquisitions, and pricing improvements.
Gross profit
The following table presents gross profit (net revenues less cost of revenues) and gross margin (gross profit as a percentage of net revenues) for the six months ended June 30, 2026 and 2025, respectively:
| Six Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Gross profit | $ | 1,323 | $ | 1,157 | $ | 166 | 14.3 | % | ||||||||||||||||
| Gross margin | 31.2 | % | 31.2 | % | ||||||||||||||||||||
Gross profit for the six months ended June 30, 2026 was $1,323 million compared to $1,157 million for the same period in 2025, an increase of $166 million or 14.3%. Gross margin for the six months ended June 30, 2026 was 31.2%, unchanged compared to the prior year period. Margins increased in both project and service revenues, driven by disciplined customer and project selection and pricing improvements, offset by project and business mix.
Operating expenses
The following table presents operating expenses for the six months ended June 30, 2026 and 2025, respectively:
| Six Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Selling, general, and administrative expenses | $ | 1,045 | $ | 930 | $ | 115 | 12.4 | % | ||||||||||||||||
| SG&A expense as a % of net revenues | 24.7 | % | 25.1 | % | ||||||||||||||||||||
| SG&A expenses (excluding amortization) (non-GAAP) | $ | 915 | $ | 818 | $ | 97 | 11.9 | % | ||||||||||||||||
| SG&A expenses (excluding amortization) as a % of net revenues (non-GAAP) | 21.6 | % | 22.1 | % | ||||||||||||||||||||
Selling, general, and administrative expenses
SG&A expenses for the six months ended June 30, 2026 were $1,045 million compared to $930 million for the same period in 2025, an increase of $115 million. SG&A expenses as a percentage of net revenues was 24.7% during the six
45
months ended June 30, 2026 compared to 25.1% for the same period in 2025. The increase in SG&A expenses was primarily driven by expenses from acquisitions completed during the prior 12 months, non-recurring systems and business enablement expenses, amortization of intangible assets, investments to support growth, and foreign currency translation. SG&A expenses excluding amortization for the six months ended June 30, 2026 were $915 million, or 21.6% of net revenues, compared to $818 million, or 22.1% of net revenues, for the same period of 2025. The decrease in SG&A expenses excluding amortization as a percentage of net revenues is primarily due to revenue growth outpacing growth in expenses. See the discussion and reconciliation of our non-GAAP financial measures below.
Interest expense, net
Interest expense, net was $66 million and $75 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in interest expense, net was primarily driven by a decrease in floating rates and benefits from certain derivative transactions, offset by an increased volume of outstanding debt.
Investment expense (income) and other, net
Investment expense (income) and other, net was $3 million for the six months ended June 30, 2026 compared to $2 million of income for the same period of 2025. The change in investment expense (income) and other, net was primarily due to a loss on the extinguishment of debt in the current year with no similar activity in the prior year and a loss associated with the impact of foreign currency exchange rates compared to the prior year.
Income tax provision
The effective tax rate for the six months ended June 30, 2026 was 25.2% compared to 27.1% in the same period of 2025. The difference in the effective tax rate was driven by discrete and nondeductible permanent items. The difference between the effective tax rate and the statutory U.S. federal income tax rate of 21.0% is due to the windfall tax benefit for vested shares partially offset by nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, and state taxes.
Net income and adjusted EBITDA
The following table presents net income and adjusted EBITDA for the six months ended June 30, 2026 and 2025, respectively:
| Six Months Ended June 30, | Change | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ | % | ||||||||||||||||||||
| Net income | $ | 156 | $ | 112 | $ | 44 | 39.3 | % | ||||||||||||||||
| Adjusted EBITDA (non-GAAP) | 546 | 465 | 81 | 17.4 | % | |||||||||||||||||||
| Net income as a % of net revenues | 3.7 | % | 3.0 | % | ||||||||||||||||||||
| Adjusted EBITDA as a % of net revenues | 12.9 | % | 12.5 | |||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-04 | ASHKEN IAN G H indirect | Director | Sell | -85,072 ×2 | $40.36 | -$3,433,104 |
| 2026-08-03 | ASHKEN IAN G H indirect | Director | Sell | -214,928 | $39.91 | -$8,577,776 |
| 2026-08-03 | LILLIE JAMES E indirect | Director | Sell | -285,000 ×2 | $39.84 | -$11,354,995 |
| 2026-08-03 | LILLIE JAMES E | Director | Sell | -75,000 ×2 | $39.84 | -$2,988,157 |
| 2026-06-17 | MALKIN ANTHONY E indirect | Director | Sell | -7,000 | $42.47 | -$297,304 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-29 10-Q expected by 2026-11-07 (in 46 days)
- ~2027-02-24 10-K expected by 2027-02-25 (in 164 days)
- ~2027-04-29 10-Q expected by 2027-05-08 (in 228 days)
- ~2027-07-29 10-Q expected by 2027-08-07 (in 319 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-30 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-30 10-Q Quarterly Report
- 2026-05-18 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-05-08 8-K Other Events; Financial Statements and Exhibits
- 2026-04-30 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-30 10-Q Quarterly Report
- 2026-04-30 S-3ASR S-3ASR
- 2026-02-25 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-17 8-K Earnings Release
- 2026-01-02 8-K Other Events
- 2025-10-30 10-Q Quarterly Report
- 2025-10-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-31 10-Q Quarterly Report
- 2025-07-31 8-K Earnings Release; Financial Statements and Exhibits