API Group Corporation Acquires Elevated Facility Services Group for $570M

API Group Corporation (NYSE: APG) has announced its acquisition of Elevated Facility Services Group for approximately $570 million in cash. This move is expected to expand API's reach into the elevator and escalator services space, adding around $220 million in annual revenue. Elevated's focus on non-discretionary services such as inspections, service, and repair aligns with API's strategy of targeting highly recurring, regulatory-driven applications.

API Group's preliminary first quarter 2024 results indicate estimated net revenues ranging between $1.590 * $1.610 billion, with adjusted EBITDA expected to range between $172 * $177 million. Notably, the company expects adjusted free cash flow to surpass last year's figures, in line with the seasonality of cash flow generation in its business.

API's President and CEO, Russ Becker, highlighted the attractiveness of the elevator and escalator service market, emphasizing the highly recurring nature of the business driven by non-discretionary, statutorily driven demand. He expressed confidence in the acquisition as a means to execute the company's bolt-on M&A strategy, leveraging API's branch-led operating model to drive sustainable shareholder value.

The acquisition is anticipated to enhance API's gross profit margin, adjusted EBITDA margin, and adjusted free cash flow, while facilitating a business mix shift towards 60% of revenues from highly recurring inspection, service, and monitoring services. Additionally, the company aims to maintain its long-term net leverage target of less than 2.5x, signaling a commitment to strategic growth through acquisitions.

API's acquisition of Elevated Facility Services Group is expected to strengthen its position in the market, providing a platform for future expansion in the fragmented elevator and escalator services space.

For further information, a presentation with additional details about Elevated and the transaction can be found on the investor relations section of API's website. The market has reacted to these announcements by moving the company's shares 2.7% to a price of $39.62. Check out the company's full 8-K submission here.

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