Business Breakdowns
Episode 205 APi Group: Safety Services at Scale
Business Breakdowns

Episode 205: APi Group: Safety Services at Scale

Business Breakdowns

Episode 205

APi Group: Safety Services at Scale

Adam Wyden is the Founder and Portfolio Manager of ADW Capital and Chadd Garcia is a Portfolio Manager at Ave Maria Mutual Funds. We cover APi Group's unique decentralized business model and culture of ownership, how the business has changed since Martin Franklin took over in 2019, and the impact of the acquisition of Chubb Fire & Security on its bottom line.

This episode is sponsored by:

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Show Notes

(00:00:00) Learn about Finley

(00:05:34) Overview of API Group's Business

(00:08:54) Specialty Services Division

(00:10:59) API Group's Financial Profile and Growth

(00:17:18) Company Culture and Management Structure

(00:23:12) Capital Allocation and Strategic Acquisitions

(00:29:37) Understanding Stock Gains and Share Issuance

(00:30:51) SPACs and Martin Franklin's Reputation

(00:31:19) Challenges and Successes in Acquisitions

(00:32:55) Focus on Inspection and Service Work

(00:35:04) The Chubb Acquisition and Its Impact

(00:37:10) Financial Profile and Capital Allocation

(00:42:09) Valuation and Market Perception

(00:46:47) Lessons from API Group Investment

APi Group: Safety Services at Scale

Introduction

Zack
I'm Zack Fuss and today we are breaking down APi, a leading provider of life, safety, and specialty services to buildings and construction projects. While it's not necessarily a household name, the services the company provides play a vital role in the buildings where we live and work. What started as a small plumbing company in the 1960s has evolved into a global leader in fire protection, security, and building services. With over 100 acquisitions under their belt, they've strategically built a business that exceeds a billion dollars in EBITDA and sports a market cap exceeding $10 billion.

The evolution of the business has come via an intentional shift from one-off construction projects to a recurring revenue model, generating a steady stream of income by providing essential services like inspections and maintenance of fire systems, elevators, security cameras, and more. Today, over 55% of their revenue is recurring in nature, with a near-term target of exceeding 60%. The business has enjoyed success under the guidance of its CEO, Ross Becker, who has been with the company for over 20 years. Ross started as president of one of APi Group's subsidiaries in 1998 and has been leading the company since 2004, eventually leading the business through its debut on the public markets more recently.

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