What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-01 · 212 added, 103 removed, 283 unchanged (53% of the section changed)

27 unchanged sentences

R ECENT D EVELOPMENTS A ND C ERTAIN F ACTORS A ND T RENDS A FFECTING O UR R ESULTS O F O PERATIONS

On February 3, 2025, we completed an acquisition in the Safety Services Segment.

The aggregate consideration paid was approximately $8 million.

On June 30, 2025, we executed a three-for-two stock split by a payment of a stock dividend of one-half of one share of common stock for each share of common stock.

For additional information about our stock split, see Note 15 – "Shareholders' Equity and Redeemable Convertible Preferred Stock" to our condensed consolidated financial statements included herein.

During the six months ended June 30, 2025, we completed seven acquisitions for aggregated consideration transferred of $128, made up of cash paid at closing of $106, cash deposited into escrow of $13, and accrued consideration of $9.

For additional information about our acquisition activity, see Note 3 – "Business Combinations" to our condensed consolidated financial statements included herein.

1 unchanged sentence

During 2022, we announced our multi-year Chubb restructuring program designed to drive efficiencies and synergies and optimize operating margin.

The Chubb restructuring program includes expenses related to workforce reductions, lease termination costs, and other facility rationalization costs through fiscal year 2025.

During the three months ended March 31, 2025, we incurred no pre-tax restructuring costs within the Safety Services segment in connection with the Chubb restructuring program.

In total, we estimate that we will recognize approximately $125 million of restructuring and other costs related to the Chubb restructuring program by the end of fiscal year 2025.

The Chubb restructuring program included expenses related to workforce reductions, lease termination costs, and other facility rationalization costs.

As of June 30, 2025, the Chubb restructuring program has ended and no additional expenses are expected.

During the six months ended June 30, 2025, we incurred no pre-tax restructuring costs within the Safety Services segment in connection with the Chubb restructuring program.

For additional information about our restructuring activity, see Note 4 – "Restructuring" to our condensed consolidated financial statements included herein.

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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 pricing 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.

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 have experienced supply chain disruptions, which have negatively impacted the source and supply of materials needed to perform our work.

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.

1 unchanged sentence

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.

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.

1 unchanged sentence

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.

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.

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Investment expense and other, net

Investment expense and other, net includes expense (income) from foreign currency forward contracts, cross-currency swaps, interest rate swaps agreements, joint ventures, non-service pension cost, and other miscellaneous items.

service pension cost reflects the sum of the components of pension expense not related to service expense, i.e.

Investment expense and other, net includes expense (income) from foreign currency forward contracts, cross-currency swaps, joint ventures, non-service pension cost, and other miscellaneous items.

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 amortizations of prior service expenses and actuarial gains and losses.

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R ESULTS O F O PERATIONS

The following is a discussion of our financial condition and results of operations during the three months ended March 31, 2025 and the three months ended March 31, 2024.

The following is a discussion of our financial condition and results of operations during the three and six months ended June 30, 2025 and the three and six months ended June 30, 2024.

During 2025, the Company moved the HVAC business from the Safety Services segment to the Specialty Services segment, and prior period amounts in this discussion have been recast to reflect the current period presentation.

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

Three Months Ended March 31, Change

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

5 unchanged sentences

Interest expense, net 37 35 2 5.7 %

Investment expense and other, net — 3 3 (100.0) %

Investment (income) expense and other, net (2) 2 4 (200.0) %

Other expense, net 35 37 (2) (5.4) %

2 unchanged sentences

Net income $ 77 $ 69 $ 8

Net revenues for the three months ended March 31, 2025 were $1,719 million compared to $1,601 million for the same period in 2024, an increase of $118 million or 7.4%.

The increase in net revenues was primarily driven by revenue from acquisitions completed, pricing improvements, growth in inspection, service, and monitoring revenue, and project revenue growth in the Safety Services segment, partially offset by an anticipated decrease in Specialty Services revenues.

The following table presents our gross profit (net revenues less cost of revenues) and gross margin (gross profit as a percentage of net revenues) for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31, Change

Net revenues for the three months ended June 30, 2025 were $1,990 million compared to $1,730 million for the same period in 2024, an increase of $260 million or 15.0%.

The increase in net revenues was driven by acquisitions, strong project revenue growth, pricing improvements, and growth in inspection, service, and monitoring revenues.

The following table presents our 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, 2025 and 2024, respectively:

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

1 unchanged sentence

Gross margin 30.9 % 31.4 %

Our gross profit for the three months ended March 31, 2025 was $542 million compared to $492 million for the same period in 2024, an increase of $50 million or 10.2%.

Gross margin for the three months ended March 31, 2025 was 31.5%, an increase of 80 basis points compared to the prior year period, primarily due to disciplined project and customer selection, pricing improvements, and savings in our Safety Services segment related to the Chubb restructuring program.

Our gross profit for the three months ended June 30, 2025 was $615 million compared to $544 million for the same period in 2024, an increase of $71 million or 13.1%.

Gross margin for the three months ended June 30, 2025 was 30.9%, a decrease of 50 basis points compared to the prior year period.

The decrease was primarily driven by mix, partially offset by pricing improvements across the business.

Operating expenses

The following table presents operating expenses and operating margin (operating income as a percentage of net revenues) for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31, Change

The following table presents operating expenses and operating margin (operating income as a percentage of net revenues) for the three months ended June 30, 2025 and 2024, respectively:

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

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Selling, general, and administrative expenses

Our SG&A expenses for the three months ended March 31, 2025 were $458 million compared to $392 million for the same period in 2024, an increase of $66 million.

SG&A expenses as a percentage of net revenues was 26.6% during the three months ended March 31, 2025 compared to 24.5% for the same period in 2024.

The increase in SG&A expenses was primarily driven by SG&A expenses from acquisitions completed, non-recurring systems and business enablement expenses, and acquisition costs that are non-recurring in nature in the three months ended March 31, 2025 compared to 2024, partially offset by savings related to the Chubb restructuring program.

Our SG&A expenses excluding amortization for the three months ended March 31, 2025 were $401 million, or 23.3% of net revenues, compared to $342 million, or 21.4% of net revenues, for the same period of 2024.

The increase in SG&A expenses excluding amortization as a percentage of net revenues is primarily due to the factors discussed above.

Our SG&A expenses for the three months ended June 30, 2025 were $472 million compared to $418 million for the same period in 2024, an increase of $54 million.

SG&A expenses as a percentage of net revenues was 23.7% during the three months ended June 30, 2025 compared to 24.2% for the same period in 2024.

The increase in SG&A expenses was primarily driven by SG&A expenses from acquisitions completed, non-recurring systems and business enablement expenses, acquisition and divestiture costs that are non-recurring in nature, and costs to support growth in our Safety Services segment in the three months ended June 30, 2025 compared to 2024.

Our SG&A expenses excluding amortization for the three months ended June 30, 2025 were $417 million, or 21.0% of net revenues, compared to $366 million, or 21.2% of net revenues, for the same period of 2024.

The decrease in SG&A expenses excluding amortization as a percentage of net revenues is primarily due to improvements in operating leverage due to higher net revenues.

See the discussion and reconciliation of our non-GAAP financial measures below.

Interest expense, net

Interest expense was $38 million and $34 million for the three months ended March 31, 2025 and 2024, respectively.

The increase in interest expense was primarily due to an increase in average debt volume and discontinuation of benefit from certain derivatives partially offset by a decrease in floating rates and the benefits from May 2024 and February 2025 repricings.

Investment expense and other, net

Investment expense and other, net was $0 million for the three months ended March 31, 2025 compared to $3 million of expense for the same period of 2024.

The decrease in investment expense and other was primarily due to a decrease in the loss associated with the impact of foreign currency exchange rates in the current year.

Interest expense was $37 million and $35 million for the three months ended June 30, 2025 and 2024, respectively.

The increase in interest expense was primarily due to the discontinuation of benefit from certain derivatives, partially offset by a decrease in floating rates and impact of repricings.

Investment (income) expense and other, net

Investment (income) expense and other, net was $(2) million for the three months ended June 30, 2025 compared to $2 million of expense for the same period of 2024.

The change in investment (income) expense and other, net was primarily due to a gain associated with the impact of foreign currency exchange rates in the current year compared to a loss in the prior year.

Income tax provision

The effective tax rate for the three months ended March 31, 2025 was 23.4% compared to 28.0% in the same period of 2024.

The difference in the effective tax rate was driven by discrete and nondeductible permanent items.

The effective tax rate for the three months ended June 30, 2025 was 28.7% compared to 22.4% in the same period of 2024.

The difference in the effective tax rate was driven by an increase in discrete and nondeductible permanent items.

The difference between the effective tax rate and the statutory U.S.

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Net income and Adjusted EBITDA

The following table presents net income and Adjusted EBITDA for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31, Change

The following table presents net income and Adjusted EBITDA for the three months ended June 30, 2025 and 2024, respectively:

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

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Adjusted EBITDA as a % of net revenues 13.7 % 13.4 %

Our net income for the three months ended March 31, 2025 was $35 million compared to $45 million for the same period in 2024, a decrease of $10 million.

The decrease is attributable to non-recurring SG&A expenses discussed above, partially offset by gross margin expansion from the factors previously referenced.

Net income as a percentage of net revenues for the three months ended March 31, 2025 and 2024 was 2.0% and 2.8%, respectively.

Adjusted EBITDA for the three months ended March 31, 2025 was $193 million compared to $175 million for the same period in 2024, an increase of $18 million.

The Adjusted EBITDA improvement is attributable to acquisitions completed in our Safety Services segment, improved operating margin due to pricing improvements and disciplined project and customer selection, and savings in our Safety Services segment related to the Chubb restructuring program.

See the discussion and reconciliation of our non-GAAP financial measures below.

Segment Results for the three months ended March 31, 2025 compared to the three months ended March 31, 2024

Three Months Ended March 31, Change

Our net income for the three months ended June 30, 2025 was $77 million compared to $69 million for the same period in 2024, an increase of $8 million.

The increase is attributable to net revenues growth previously referenced, 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, 2025 and 2024 was 3.9% and 4.0%, respectively.

Adjusted EBITDA for the three months ended June 30, 2025 was $272 million compared to $231 million for the same period in 2024, an increase of $41 million.

The growth in Adjusted EBITDA was driven by an increase in gross profit.

Segment Results for the three months ended June 30, 2025 compared to the three months ended June 30, 2024

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

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Segment Earnings

Three Months Ended March 31, Change

Three Months Ended June 30, Change

($ in millions) 2025 2024 $ %

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NM = Not meaningful

The following discussion breaks down the net revenues and segment earnings by operating segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The following discussion breaks down the net revenues and segment earnings by operating segment for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Safety Services

Safety Services net revenues for the three months ended March 31, 2025 increased by $150 million or 13.4% compared to the same period in 2024.

The increase was primarily driven by revenue from acquisitions completed during the last year, pricing improvements, and strong growth in inspection, service, and monitoring revenues as well as project revenues.

Safety Services segment earnings as a percentage of net revenues for the three months ended March 31, 2025 and 2024 was approximately 15.7% and 14.8%, respectively.

The increase was primarily due to disciplined customer and project selection, pricing improvements, and value capture initiatives.

Safety Services net revenues for the three months ended June 30, 2025 increased by $186 million or 15.8% compared to the same period in 2024.

The increase was driven by acquisitions completed in the last year, pricing improvements, and strong growth in both service and project revenues.

Safety Services segment earnings as a percentage of net revenues for the three months ended June 30, 2025 and 2024 was approximately 17.0% and 16.2%, respectively.

The increase was primarily due to disciplined customer and project selection and pricing improvements leading to margin expansion in both service and project revenues.

Specialty Services

Specialty Services net revenues for the three months ended March 31, 2025 decreased by $33 or 6.8% compared to the same period in 2024.

The decrease was driven by an anticipated decrease in project and service revenues and adverse weather impacts.

Specialty Services segment earnings as a percentage of net revenues for the three months ended March 31, 2025 and 2024 was approximately 6.4% and 8.8%, respectively.

The decrease was driven by lower fixed cost absorption due to lower net revenues from factors discussed above.

Specialty Services net revenues for the three months ended June 30, 2025 increased by $74 or 13.3% compared to the same period in 2024.

The increase was driven by strong project revenue growth.

Specialty Services segment earnings as a percentage of net revenues for the three months ended June 30, 2025 and 2024 was approximately 11.3% and 13.2%, respectively.

The decrease was driven by increased project starts, rising material costs, and weather, partially offset by favorable fixed cost absorption.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Net revenues $ 3,709 $ 3,331 $ 378 11.3 %

Cost of revenues 2,552 2,295 257 11.2 %

Gross profit 1,157 1,036 121 11.7 %

Selling, general, and administrative expenses 930 810 120 14.8 %

Operating income 227 226 1 0.4 %

Interest expense, net 75 69 6 8.7 %

Investment (income) expense and other, net (2) 5 7 (140.0) %

Other expense, net 73 74 (1) (1.4) %

Income before income taxes 154 152 2 1.3 %

Income tax provision 42 38 4 10.5 %

Net income $ 112 $ 114 $ (2)

Net revenues for the six months ended June 30, 2025 were $3,709 million compared to $3,331 million for the same period in 2024, an increase of $378 million or 11.3%.

The increase in net revenues was primarily driven by acquisitions, project revenue growth, pricing improvements, and growth in inspection, service, and monitoring revenues.

The following table presents our 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, 2025 and 2024, respectively:

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Gross profit $ 1,157 $ 1,036 $ 121 11.7 %

Gross margin 31.2 % 31.1 %

Our gross profit for the six months ended June 30, 2025 was $1,157 million compared to $1,036 million for the same period in 2024, an increase of $121 million or 11.7%.

Gross margin for the six months ended June 30, 2025 was 31.2%, an increase of 10 basis points compared to the prior year period.

The increase was driven by gross margin expansion in our Safety Services segment, partially offset by mix, and a decline in project margins in our Specialty Services segment.

Operating expenses

The following table presents operating expenses and operating margin (operating income as a percentage of net revenues) for the six months ended June 30, 2025 and 2024, respectively:

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Selling, general, and administrative expenses $ 930 $ 810 $ 120 14.8 %

SG&A expense as a % of net revenues 25.1 % 24.3 %

Operating margin 6.1 % 6.8 %

SG&A expenses (excluding amortization) (non-GAAP) $ 818 $ 708 $ 110 15.5 %

SG&A expenses (excluding amortization) as a % of net revenues (non-GAAP) 22.1 % 21.3 %

Selling, general, and administrative expenses

Our SG&A expenses for the six months ended June 30, 2025 were $930 million compared to $810 million for the same period in 2024, an increase of $120 million.

SG&A expenses as a percentage of net revenues was 25.1% during the six months ended June 30, 2025 compared to 24.3% for the same period in 2024.

Our SG&A expenses excluding amortization for the six months ended June 30, 2025 were $818 million, or 22.1% of net revenues, compared to $708 million, or 21.3% of net revenues, for the same period of 2024.

The increase in SG&A expenses excluding amortization as a percentage of net revenues is primarily due to the factors discussed above.

See the discussion and reconciliation of our non-GAAP financial measures below.

Interest expense, net

Interest expense was $75 million and $69 million for the six months ended June 30, 2025 and 2024, respectively.

The increase in interest expense was primarily due to discontinuation of benefit from certain derivatives and investment of debt and equity proceeds of 2024, partially offset by a decrease in floating rates and the benefits from May 2024 and February 2025 repricings.

Investment (income) expense and other, net

Investment (income) expense and other, net was $(2) million for the six months ended June 30, 2025 compared to $5 million of expense for the same period of 2024.

Income tax provision

The effective tax rate for the six months ended June 30, 2025 was 27.1% compared to 24.7% in the same period of 2024.

The difference in the effective tax rate was driven by an increase in 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 nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, state taxes, and discrete items.

Net income and Adjusted EBITDA

The following table presents net income and Adjusted EBITDA for the six months ended June 30, 2025 and 2024, respectively:

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Net income $ 112 $ 114 $ (2) (1.8 %)

Adjusted EBITDA (non-GAAP) 465 406 59 14.5 %

Net income as a % of net revenues 3.0 % 3.4 %

Adjusted EBITDA as a % of net revenues 12.5 % 12.2 %

Our net income for the six months ended June 30, 2025 was $112 million compared to $114 million for the same period in 2024, a decrease of $2 million.

The decrease is attributable to non-recurring SG&A expenses discussed above.

Net income as a percentage of net revenues for the six months ended June 30, 2025 and 2024 was 3.0% and 3.4%, respectively.

Adjusted EBITDA for the six months ended June 30, 2025 was $465 million compared to $406 million for the same period in 2024, an increase of $59 million.

The Adjusted EBITDA improvement is attributable to acquisitions completed in our Safety Services segment, increase in net revenues, improved operating margin due to pricing improvements and disciplined project and customer selection.

See the discussion and reconciliation of our non-GAAP financial measures below.

Segment Results for the six months ended June 30, 2025 compared to the six months ended June 30, 2024

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Safety Services $ 2,629 $ 2,293 $ 336 14.7 %

Specialty Services 1,082 1,041 41 3.9 %

Corporate and Eliminations (2) (3) NM NM

$ 3,709 $ 3,331 378 11.3 %

Segment Earnings

Six Months Ended June 30, Change

($ in millions) 2025 2024 $ %

Safety Services $ 431 $ 355 $ 76 21.4 %

Safety Services EBITDA as a % of net revenues 16.4 % 15.5 %

Specialty Services $ 100 $ 116 $ (16) (13.8 %)

Specialty Services EBITDA as a % of net revenues 9.2 % 11.1 %

Corporate and Eliminations $ (66) $ (65) NM NM

$ 465 $ 406 $ 59 14.5 %

NM = Not meaningful

The following discussion breaks down the net revenues and segment earnings by operating segment for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Safety Services

Safety Services net revenues for the six months ended June 30, 2025 increased by $336 million or 14.7% compared to the same period in 2024.

The increase was primarily driven by revenue from acquisitions completed during the last year, pricing improvements, and growth in project and inspection, service, and monitoring revenues.

Safety Services segment earnings as a percentage of net revenues for the six months ended June 30, 2025 and 2024 was approximately 16.4% and 15.5%, respectively.

The increase was primarily due to disciplined customer and project selection, and pricing improvements leading to margin expansion in both service and project revenues.

Specialty Services

Specialty Services net revenues for the six months ended June 30, 2025 increased by $41 or 3.9% compared to the same period in 2024.

The increase was driven by project revenue growth.

Specialty Services segment earnings as a percentage of net revenues for the six months ended June 30, 2025 and 2024 was approximately 9.2% and 11.1%, respectively.

The decrease was driven by mix and a decline in project margins, partially offset by favorable fixed cost absorption.

Non-GAAP Financial Measures

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The following tables present reconciliations of SG&A expenses to SG&A expenses (excluding amortization) for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

($ in millions) 2025 2024

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SG&A expenses (excluding amortization) $ 417 $ 366

Six Months Ended June 30,

($ in millions) 2025 2024

Reported SG&A expenses $ 930 $ 810

Adjustments to reconcile to SG&A expenses to SG&A expenses (excluding amortization)

Amortization expense (112) (102)

SG&A expenses (excluding amortization) $ 818 $ 708

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) is the measure of profitability used by management to manage the business.

businesses classified as assets held-for-sale and divested, and one-time and other infrequent events such as impairment charges, restructuring costs, transaction and other costs related to acquisitions, and non-service pension cost.

Adjustments include expenses that are non-recurring in nature and that may not be indicative of the Company’s core operating results, including systems and business enablement expenses, business transformation expenses, and other expenses for the integration of acquired businesses, the impact and results of businesses classified as assets held-for-sale and divested, and one-time and other infrequent events such as impairment charges, restructuring costs, transaction and other costs related to acquisitions, and non-service pension cost.

We supplement the reporting of our consolidated financial information with adjusted EBITDA.

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The following table presents a reconciliation of net income to adjusted EBITDA for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

($ in millions) 2025 2024

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Business process transformation expenses — 7

Acquisition related expenses 3 1

Acquisition and divestiture related expenses 11 8

Restructuring program related costs 11 8

Other $ 2 $ (9)

Adjusted EBITDA $ 272 $ 231

Six Months Ended June 30,

($ in millions) 2025 2024

Reported net income

Adjustments to reconcile net income to adjusted EBITDA:

Interest expense, net 75 69

Income tax provision 42 38

Depreciation 42 39

Amortization 119 105

Contingent consideration and compensation 1 4

Non-service pension cost 9 10

Systems and business enablement 30 —

Business process transformation expenses 4 13

Acquisition and divestiture related expenses 14 9

Restructuring program related costs 14 13

Adjusted EBITDA $ 465 $ 406

L IQUIDITY A ND C APITAL R ESOURCES

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Although we believe we have sufficient resources to fund our future cash requirements, there are many factors with the potential to influence our cash flow position including weather, seasonality, commodity prices, market conditions, and inflation, over which we have no control.

As of March 31, 2025, we had $954 million of total liquidity, comprising $460 million in cash and cash equivalents and $494 million ($500 million less outstanding letters of credit of approximately $6 million, which reduce availability) of available borrowings under our Revolving Credit Facility.

During 2022, we completed the Second Amendment to our credit agreement.

As part of this amendment, we entered into a $1,100 million seven year incremental term loan ("2021 Term Loan"), the Revolving Credit Facility was upsized by $200 million to $500 million, the maturity date of the Revolving Credit Facility was extended five years, and the letter of credit limit was increased by $100 million to $250 million.

During 2023, we completed the Fourth Amendment to our credit agreement, repricing our 2019 Term Loan and 2021 Term Loan.

The repricing reduced the applicable margin on all outstanding amounts by 25 basis points.

Additionally, $422 million of the 2019 Term Loan was extended to the 2021 Term Loan and assumed all the same terms as the repriced 2021 Term Loan.

We made a repayment of $100 million on the 2019 Term Loan concurrent with the close of this transaction.

As of June 30, 2025, we had $1,176 million of total liquidity, comprising $432 million in cash and cash equivalents and $744 million ($750 million less outstanding letters of credit of approximately $6 million, which reduce availability) of available borrowings under our Revolving Credit Facility.

During 2024, we completed the Fifth Amendment to our credit agreement, upsizing our 2021 Term Loan by $300 million.

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The proceeds from this offering totaled approximately $458 million, net of related expenses.

We expect to use the net proceeds from this offering for general corporate purposes, which may include future acquisitions and other business opportunities, capital expenditures and working capital.

We used the net proceeds from this offering for general corporate purposes, including acquisitions and other business opportunities, capital expenditures and working capital.

During the first quarter of 2025, we completed the Seventh Amendment to our credit agreement, repricing the 2021 Term Loan.

The repricing reduced the applicable margin on the 2021 Term Loan by 25 basis points.

During the second quarter of 2025, we completed the Eighth Amendment to our credit agreement, refinancing and upsizing the Revolving Credit Facility.

The amendment increased the Revolving Credit Facility by $250, from $500 to $750, and extended the maturity date to the fifth anniversary of the Eighth Amendment.

The amendment also reduced the applicable margin by 75 basis points and removed the credit spread adjustment.

Our principal liquidity requirements have been, and we expect will continue to be, for working capital and general corporate purposes, including capital expenditures and debt service, identifying, executing, and integrating strategic acquisitions and business transformation transactions or initiatives, as well as any accrued consideration and compensation due to selling shareholders, including tax payments in connection therewith.

In 2024, our Board of Directors authorized a stock repurchase program ("SRP") to purchase up to an aggregate of $1,000 million of shares of our common stock.

This stock repurchase program will expire when the authorized amount is exhausted, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion.

This stock repurchase program is indefinite, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion.

During 2024, we repurchased 16,260,160 shares of common stock for approximately $600 million.

During the three months ended March 31, 2025, we repurchased 2,063,715 shares of common stock for approximately $75 million.

As of March 31, 2025, we had approximately $325 million of authorized repurchases remaining under the SRP.

In April 2025, our Board of Directors authorized a new share repurchase program to purchase up to $1,000 million of shares of our common stock.

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This new authorization replaces our previous share repurchase authorization announced in 2024.

During 2024, we repurchased 24,390,240 shares of common stock for approximately $600 million.

During the six months ended June 30, 2025, we repurchased 3,095,573 shares of common stock for approximately $75 million.

As of June 30, 2025, we had approximately $1,000 million of authorized repurchases remaining under the SRP.

The following table summarizes net cash flows with respect to our operating, investing and financing activities for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

($ in millions) 2025 2024

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Net cash used in investing activities (140) (623)

Net cash used in financing activities (98) (213)

Net cash (used in) provided by financing activities (101) 357

Effect of foreign currency exchange rate change on cash, cash equivalents, and restricted cash 28 (5)

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Net Cash Provided by Operating Activities

Net cash provided by operating activities was $62 million for the three months ended March 31, 2025 compared to $7 million for the same period in 2024.

The increase in cash provided by operating activities is primarily due to improvements in working capital efficiencies associated with the various services we provided in the three months ended March 31, 2025 compared to the same period of the prior year.

Net cash provided by operating activities was $145 million for the six months ended June 30, 2025 compared to $117 million for the same period in 2024.

The increase in cash provided by operating activities is primarily due to improvements in working capital efficiencies associated with the various services we provided in the six months ended June 30, 2025 compared to the same period of the prior year.

Cash flow from operations is primarily driven by changes in the mix and timing of demand for our services and working capital needs associated with the various services we provide.

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Net Cash Used in Investing Activities

Net cash used in investing activities was $14 million for the three months ended March 31, 2025 compared to $22 million for the same period in 2024.

During the three months ended March 31, 2025, we had proceeds on the sale of property and equipment of $4 million, compared to $23 million for the same period in 2024, offset by cash used in acquisitions of $6 million and $23 million in the three months ended March 31, 2025 and 2024, respectively.

Net Cash Used in Financing Activities

Net cash used in financing activities was $98 million for the three months ended March 31, 2025 compared to $213 million for the same period in 2024.

The decrease in cash used in financing activities was primarily driven by stock repurchases.

The cash used in financing activities for the three months ended March 31, 2025 was driven by $75 million of share repurchases and $19 million of restricted shares tendered for taxes, while in the three months ended March 31, 2024, the cash used in financing activities was driven by the Series B Preferred Stock Conversion.

In the three months ended March 31, 2024, $300 million of proceeds from the 2021 Term Loan and $100 million from the Revolving Credit Facility were used for share repurchases of $600 million during the Series B Preferred Stock Conversion.

Net cash used in investing activities was $140 million for the six months ended June 30, 2025 compared to $623 million for the same period in 2024.

This decrease is primarily driven by decreased acquisition consideration in the current year.

During the six months ended June 30, 2025, we had cash used in acquisitions, net of cash acquired, of $111 million and $606 million in the six months ended June 30, 2025 and 2024, respectively.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $101 million for the six months ended June 30, 2025 compared to $357 million of cash provided by financing activities for the same period in 2024.

The cash used in financing activities for the six months ended June 30, 2025 was driven by $75 million of share repurchases and $20 million of restricted shares tendered for taxes, while in the six months ended June 30, 2024, cash provided by financing activities was driven by $850 million of proceeds from the repricing transactions of the 2021 Term Loan, and $458 million of proceeds from the issuance of common shares, partially offset by $334 million of payments on long-term borrowings and $600 million of payments for conversion of the Series B Preferred Stock.

Financing Activities

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We have entered into a Credit Agreement by and among APi Group DE, Inc., our wholly-owned subsidiary, as borrower ("APi Group DE"), APG as a guarantor, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank N.A., as administrative agent and as collateral agent (the “Credit Agreement”) which provides for:

(1) a term loan facility, pursuant to which we incurred the $1,200 million term loan ("2019 Term Loan") used to fund a part of the cash portion of the purchase price in the APi Acquisition, and a $1,100 million seven-year incremental term loan ("2021 Term Loan") used to fund a portion of the purchase price in the Chubb acquisition, and (2) a $500 million Revolving Credit Facility of which up to $250 million can be used for the issuance of letters of credit.

(1) a term loan facility, pursuant to which we incurred the $1,200 million term loan ("2019 Term Loan") used to fund a part of the cash portion of the purchase price in the APi Acquisition, and a $1,100 million seven-year incremental term loan ("2021 Term Loan") used to fund a portion of the purchase price in the Chubb acquisition, and (2) a $750 million Revolving Credit Facility (increased from $500 million in 2025) of which up to $250 million can be used for the issuance of letters of credit.

During the second quarter of 2025, we completed the Eighth Amendment to our credit agreement, refinancing and upsizing the Revolving Credit Facility.

The amendment increased the Revolving Credit Facility by $250 million, from $500

million to $750 million, and extended the maturity date to the fifth anniversary of the Eighth Amendment.

The amendment also reduced the applicable margin by 75 basis points and removed the credit spread adjustment.

During the first quarter of 2025, we completed the Seventh Amendment to our credit agreement, repricing the 2021 Term Loan.

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Based on the early prepayments we have made, we do not owe any quarterly principal amounts for the remainder of the 2021 Term Loan.

The interest rate applicable to borrowings under the Revolving Credit Facility is, at our option, either (a) a base rate plus an applicable margin equal to 1.25% or (2) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25% plus a CSA.

The interest rate applicable to borrowings under the Revolving Credit Facility is, at our option, either (a) a base rate plus an applicable margin equal to 0.50% or (2) a Term SOFR rate (adjusted for statutory reserves) plus an applicable margin equal to 1.50%.

The Credit Agreement contains customary representations and warranties, and affirmative and negative covenants, including covenants that, among other things, restrict our, and our restricted subsidiaries’, ability to (i) incur additional indebtedness;

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The Credit Agreement also contains customary events of default.

letter of credit obligations (excluding undrawn letters of credit up to $40 million) under the Credit Agreement is greater than 30% of the total revolving credit commitments thereunder subject to a right of cure.

Our first lien net leverage ratio as of March 31, 2025 was 1.7:1.0.

As of March 31, 2025, the 2021 Term Loan has $2,157 million remaining principal amount outstanding.

Furthermore, with respect to the revolving credit facility, we must maintain a first lien net leverage ratio that does not exceed (i) 4.00 to 1.00 for each fiscal quarter ending in 2021, and (ii) 3.75 to 1.00 for each fiscal quarter ending thereafter, if on the last day of any fiscal quarter the outstanding amount of all revolving loans and letter of credit obligations (excluding undrawn letters of credit up to $40 million) under the Credit Agreement is greater than 30% of the total revolving credit commitments thereunder subject to a right of cure.

Our first lien net leverage ratio as of June 30, 2025 was 1.6:1.0.

As of June 30, 2025, the 2021 Term Loan has $2,157 million remaining principal amount outstanding.

We had no amounts outstanding under the Revolving Credit Facility, under which $744 million was available after giving effect to $6 million of outstanding letters of credit, which reduces availability.

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We used the net proceeds from the sale of the 4.125% Senior Notes to repay a previously outstanding term loan, prepay a portion of the 2019 Term Loan and for general corporate purposes.

As of March 31, 2025, we had $337 million aggregate principal amount of 4.125% Senior Notes outstanding.

As of June 30, 2025, we had $337 million aggregate principal amount of 4.125% Senior Notes outstanding.

On October 21, 2021, a wholly-owned subsidiary of the Company, completed a private offering of $300 million aggregate principal amount of 4.750% Senior Notes due 2029 (the “4.750% Senior Notes”) issued under an indenture dated October 21, 2021, as supplemented by a supplemental indenture dated January 3, 2022.

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We used the net proceeds from the sale of the 4.750% Senior Notes to finance a portion of the consideration for the Chubb acquisition.

As of March 31, 2025, we had $277 million aggregate principal amount of 4.750% Senior Notes outstanding.

As of June 30, 2025, we had $277 million aggregate principal amount of 4.750% Senior Notes outstanding.

Debt Covenants

We were in compliance with all covenants contained in the indentures governing the 4.125% Senior Notes and 4.750% Senior Notes and Credit Agreement as of March 31, 2025 and December 31, 2024.

We were in compliance with all covenants contained in the indentures governing the 4.125% Senior Notes and 4.750% Senior Notes and Credit Agreement as of June 30, 2025 and December 31, 2024.

Issuance and Conversion of Series B Preferred Stock

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• Operating and Finance Leases – See Note 12 – "Leases" in the Annual Report on Form 10-K filed on February 26, 2025.

We have not had material changes to our lease obligations during the three months ended March 31, 2025.

We have not had material changes to our lease obligations during the six months ended June 30, 2025.

We make investments in our properties and equipment to enable continued expansion and effective performance of our business.

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Interest Rate Risk

As of March 31, 2025, our outstanding variable interest rate debt was primarily related to our $2,157 million 2021 Term Loan.

As of June 30, 2025, our outstanding variable interest rate debt was primarily related to our $2,157 million 2021 Term Loan.

To mitigate increases in variable interest rates, we have a $720 million interest rate swap, exchanging one-month SOFR for a rate of 3.59% per annum, maturing October 2026, and a $400 million interest rate swap exchanging one-month SOFR for a rate of 3.41% per annum, maturing January 2028.

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The remaining floating rate portfolio bears interest based on one-month SOFR plus 175 basis points.

As of March 31, 2025, excluding letters of credit outstanding of $6 million, we had no amounts of outstanding revolving loans under our Credit Agreement.

As of June 30, 2025, excluding letters of credit outstanding of $6 million, we had no amounts of outstanding revolving loans under our Credit Agreement.

Foreign Currency Risk

We have operations in over 20 countries globally.

Revenues generated from foreign operations represented approximately 37% of our consolidated net revenues for the three months ended March 31, 2025.

Revenues generated from foreign operations represented approximately 35% of our consolidated net revenues for the three and six months ended June 30, 2025.

Net revenues and expenses related to our foreign operations are, for the most part, denominated in the functional currency of the foreign operation, which minimizes the impact fluctuations in exchange rates would have on net income or loss.

We are subject to fluctuations in foreign currency exchange rates when transactions are denominated in currencies other than the functional currencies.

Such transactions were not material to our operations during the three months ended March 31, 2025.

These foreign currency transaction gains and losses, including hedging impacts, are classified in investment income and other, net, in the condensed consolidated statements of operations and were a gain (loss) of $0 million and $(1) million for the three months ended March 31, 2025 and 2024, respectively.

Such transactions were not material to our operations during the three months ended June 30, 2025.

These foreign currency transaction gains and losses, including hedging impacts, are classified in investment income and other, net, in the condensed consolidated statements of operations and were a gain (loss) of $1 million and $(1) million for the three months ended June 30, 2025 and 2024, respectively and a gain (loss) of $1 million and $(2) million for the six months ended June 30, 2025 and 2024, respectively.

These net foreign currency transaction gains and losses include derivative instruments designed to reduce foreign currency exchange rate risks.

Translation gains or losses, which are recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets, result from translation of the assets and liabilities of our foreign subsidiaries into U.S.

Foreign currency translation gains (losses) totaled approximately $59 million and $(42) million for the three months ended March 31, 2025 and 2024, respectively.

Foreign currency translation gains (losses) totaled approximately $128 million and $(1) million for the three months ended June 30, 2025 and 2024, respectively, and $187 million and $(43) million for the six months ended June 30, 2025 and 2024, respectively.

Our exposure to fluctuations in foreign currency exchange rates has increased as a result of our international presence and may continue to increase in the future if we continue to expand our operations outside of the U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis