API Group Deep Dive
Announcing the release of our 61-page Extensive Research Report on APi Group
Welcome to Speedwell Research’s Newsletter. We write about business and investing. Our paid research product can be found at SpeedwellResearch.com. You can learn more about us here.
This is a new company report announcement. Members can access Speedwell’s Reports here. You can become a Speedwell Member here.
A SPAC IPO, leverage, special privileged preferred shares, and a large “transformational” acquisition—APi Group has many of the red flags that typically steer investors away.
What would be missed though is that far from the “flash in the pan”, shoddy business models that characterized many of the businesses that got involved in Wall Street’s SPAC boom, APi Group will be a 100 year old business next year. And their business—servicing business’s fire sprinklers, surveillance systems, elevators, and HVAC units, as well as engineering & constructing a variety of items from utilities gas lines to sewer systems—is almost assured to be here 100 years for now.
Whereas competitors are either attracted to large one-off projects or distracted by their manufacturing operations, APi Group is focusing on what matters: profits. They have let their lower-margin construction business fade down in favor of buttressing their services business, which is higher margin and tends to be recurring.
While competitors pitch clients on installing six figure systems in hopes of winning the service contract thereafter, APi Group goes in first with low cost inspections. Once they earn the client’s trust with the inspection, they tend to earn 3-4x the cost of the inspection in annual recurring service.
With $7bn in revenues today, APi Group is not only set on consolidating the several fragmented life safety industries they operate in at 5x EBITDA multiples, but is also looking to expand their B2B services, most recently with an Elevator acquisition.
Though APi Group’s founder may no longer be alive, CEO Russell Becker has been at the helm since 2002. And Martin Franklin, the multi-billionaire who consolidated multiple different industries over the past few decades, making investors billions in the process, is Co-Chairman and owns over 10% of the business.
But while Martin Franklin may have identified a quality industry, he was far from alone. Forget the motley of established businesses that have been operating in this industry for decades, there is a new ring of competitors that are hungry: PE firms. Could they wreck APi Group’s economics? What about mature margins and cash conversion? And valuation? And what about those preferred shares?
All of this and much more in our 61 page, 12k deep-dive on API Group!
If you are not a Speedwell Member yet, please click the button below to join! You can also buy just the APi Group report through the link below.
(Please reach out to info@speedwellresearch.com if you have any issues or need to speak to us to become an approved research vendor in order to expense the membership).
If you are a member, you can access the APi Group report here.
The Synopsis Podcast.
We will be releasing a company episode just on APi Group in the future. Follow our Podcast below to make sure you get it when it is released!
APi Group Table of Contents
Founding History
Business History
Business
Industry & End Markets.
Competition
Safety Competition
Specialty Competition
APi Group Model
Capital Allocation & ROIC
Revenue Build and Valuation
Risks
Summary Model
Conclusion
Become a member today for access to our APi Group Report as well as many others! See our full list of coverage here.
