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+

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2021

or

 

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

For the transition period from to

Commission File Number 001-39275

 

APi Group Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

98-1510303

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

1100 Old Highway 8 NW

New Brighton, Minnesota

 

55112

(Address of principal executive offices)

 

(Zip Code)

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

APG

 

New York Stock Exchange

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 224,625,193 shares of Common Stock as of November 3, 2021.

 

 

 


 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

3

 

Item 1. Financial Statements

 

3

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

 

30

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

46

Item 4. Controls and Procedures

 

47

 

PART II. OTHER INFORMATION

 

48

 

Item 1A. Risk Factors

 

48

Item 4. Mine Safety Disclosures

 

49

Item 6. Exhibits

 

50

 

SIGNATURES

 

51

 

 

2

 


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APi Group Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share data)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,128

 

 

$

515

 

Accounts receivable, net of allowances of $3 and $4 at
    September 30, 2021 and December 31, 2020, respectively

 

 

723

 

 

 

639

 

Inventories

 

 

71

 

 

 

64

 

Contract assets

 

 

224

 

 

 

142

 

Prepaid expenses and other current assets

 

 

93

 

 

 

77

 

Total current assets

 

 

2,239

 

 

 

1,437

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

337

 

 

 

355

 

Operating lease right of use assets

 

 

102

 

 

 

107

 

Goodwill

 

 

1,099

 

 

 

1,082

 

Intangible assets, net

 

 

897

 

 

 

965

 

Deferred tax assets

 

 

86

 

 

 

89

 

Other assets

 

 

23

 

 

 

30

 

Total assets

 

$

4,783

 

 

$

4,065

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term and current portion of long-term debt

 

$

1

 

 

$

18

 

Accounts payable

 

 

205

 

 

 

150

 

Contingent consideration and compensation liabilities

 

 

22

 

 

 

41

 

Accrued salaries and wages

 

 

147

 

 

 

182

 

Deferred consideration

 

 

 

 

 

67

 

Other accrued liabilities

 

 

151

 

 

 

133

 

Contract liabilities

 

 

238

 

 

 

219

 

Operating and finance leases

 

 

28

 

 

 

31

 

Total current liabilities

 

 

792

 

 

 

841

 

 

 

 

 

 

 

 

Long-term debt, less current portion

 

 

1,469

 

 

 

1,397

 

Contingent consideration and compensation liabilities

 

 

11

 

 

 

22

 

Operating and finance leases

 

 

79

 

 

 

96

 

Deferred tax liabilities

 

 

45

 

 

 

45

 

Other noncurrent liabilities

 

 

90

 

 

 

106

 

Total liabilities

 

 

2,486

 

 

 

2,507

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Series A Preferred shares, $0.0001 par value, 7 authorized shares, 4 shares issued
    and outstanding at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common shares, $0.0001 par value, 500 authorized shares, 224 shares and 168 shares
    issued at September 30, 2021 and December 31, 2020, respectively (includes
    
12 shares declared for stock dividend at December 31, 2020)

 

 

 

 

 

 

Additional paid-in capital

 

 

2,559

 

 

 

1,856

 

Accumulated deficit

 

 

(252

)

 

 

(284

)

Accumulated other comprehensive loss

 

 

(10

)

 

 

(14

)

Total shareholders’ equity

 

 

2,297

 

 

 

1,558

 

Total liabilities and shareholders’ equity

 

$

4,783

 

 

$

4,065

 

 

See notes to condensed consolidated financial statements.

3

 


 

APi Group Corporation

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

$

1,047

 

 

$

958

 

 

$

2,828

 

 

$

2,705

 

Cost of revenues

 

 

795

 

 

 

736

 

 

 

2,163

 

 

 

2,147

 

Gross profit

 

 

252

 

 

 

222

 

 

 

665

 

 

 

558

 

Selling, general, and administrative expenses

 

 

211

 

 

 

171

 

 

 

579

 

 

 

506

 

Impairment of goodwill and intangible assets

 

 

 

 

 

(11

)

 

 

 

 

 

197

 

Operating income (loss)

 

 

41

 

 

 

62

 

 

 

86

 

 

 

(145

)

Interest expense, net

 

 

14

 

 

 

13

 

 

 

43

 

 

 

41

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

9

 

 

 

 

Investment income and other, net

 

 

(3

)

 

 

(6

)

 

 

(12

)

 

 

(20

)

Other expense, net

 

 

11

 

 

 

7

 

 

 

40

 

 

 

21

 

Income (loss) before income taxes

 

 

30

 

 

 

55

 

 

 

46

 

 

 

(166

)

Income tax provision (benefit)

 

 

11

 

 

 

28

 

 

 

14

 

 

 

(35

)

Net income (loss)

 

$

19

 

 

$

27

 

 

$

32

 

 

$

(131

)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

0.14

 

 

$

0.14

 

 

$

(0.77

)

Diluted

 

 

0.08

 

 

 

0.13

 

 

 

0.14

 

 

 

(0.77

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

205

 

 

 

169

 

 

 

199

 

 

 

170

 

Diluted

 

 

209

 

 

 

182

 

 

 

205

 

 

 

170

 

 

See notes to condensed consolidated financial statements.

4

 


 

APi Group Corporation

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

(In millions)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

19

 

 

$

27

 

 

$

32

 

 

$

(131

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Fair value change - derivatives, net of tax (expense) benefit
    of ($
1), $0, ($4), and $10, respectively

 

 

5

 

 

 

 

 

 

13

 

 

 

(30

)

Foreign currency translation adjustment

 

 

(9

)

 

 

1

 

 

 

(9

)

 

 

1

 

Comprehensive income (loss)

 

$

15

 

 

$

28

 

 

$

36

 

 

$

(160

)

 

See notes to condensed consolidated financial statements.

5

 


 

APi Group Corporation

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(In millions, except share amounts)

 

 

 

Preferred Shares Issued
and Outstanding

 

 

Common Shares Issued
and Outstanding

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance, December 31, 2020

 

 

4,000,000

 

 

$

 

 

 

168,052,024

 

 

$

 

 

$

1,856

 

 

$

(284

)

 

$

(14

)

 

$

1,558

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

 

 

 

(8

)

Fair value change - derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Preferred Share dividend

 

 

 

 

 

 

 

 

12,447,912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants exercised

 

 

 

 

 

 

 

 

19,994,203

 

 

 

 

 

 

230

 

 

 

 

 

 

 

 

 

230

 

Profit sharing plan contributions

 

 

 

 

 

 

 

 

630,109

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Share-based compensation and other, net

 

 

 

 

 

 

 

 

157,979

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Balance, March 31, 2021

 

 

4,000,000

 

 

$

 

 

 

201,282,227

 

 

$

 

 

$

2,102

 

 

$

(292

)

 

$

(19

)

 

$

1,791

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Fair value change - derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

9

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Share-based compensation and other, net

 

 

 

 

 

 

 

 

(1,140

)

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Balance, June 30, 2021

 

 

4,000,000

 

 

$

 

 

 

201,281,087

 

 

$

 

 

$

2,105

 

 

$

(271

)

 

$

(6

)

 

$

1,828

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Fair value change - derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

5

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

(9

)

Issuance of common shares

 

 

 

 

 

 

 

 

22,716,049

 

 

 

 

 

 

446

 

 

 

 

 

 

 

 

 

446

 

Share-based compensation and other, net

 

 

 

 

 

 

 

 

452,840

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Balance, September 30, 2021

 

 

4,000,000

 

 

$

 

 

 

224,449,976

 

 

$

 

 

$

2,559

 

 

$

(252

)

 

$

(10

)

 

$

2,297

 

 

 

 

Preferred Shares Issued
and Outstanding

 

 

Common Shares Issued
and Outstanding

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance, December 31, 2019

 

 

4,000,000

 

 

$

 

 

 

169,902,260

 

 

$

 

 

$

1,885

 

 

$

(131

)

 

$

3

 

 

$

1,757

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(194

)

 

 

 

 

 

(194

)

Fair value change - derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27

)

 

 

(27

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

(6

)

Share cancellations

 

 

 

 

 

 

 

 

(608,016

)