Specialty contractor giant APi Group, whose holdings include its base in NJ heavy contractor J. Fletcher Creamer & Son and the Minn.-based manufacturer. LeJeune Steel, has had a concentration of companies in mechanical services and fire safety. Now the parent company has added an elevator service contractor to its collection of companies and intends to acquire more.
In April, New Brighton, Minn.-based API paid $570 million for Elevated Facilities Services Group. The acquisition was made while a refinancing was carried out that included new share offers.
Russell Becker, chief executive, told investors on an earnings call last month that APi “has long viewed the elevator and escalator services market as an attractive adjacency due to the highly recurring nature of the business , driven by non-discretionary demand driven by law.”
In other words, laws and regulations require elevators to be built and maintained safely.
Net income for the first quarter of 2024 is much higher, the company reported. APi Group (NYSE: APG ) said it had net income of $45 million on revenue of $1.6 billion, compared with $26 million on $1.61 billion a year earlier.
The company is among other large engineering and construction-related holding companies, such as Quanta Services and Emcor Group, which combine well-established companies with well-known brands and clients under one corporate roof. With $6.55 billion in reported revenue by 2022, APi ranked third ENR’s top 600 specialist contractors, behind Quanta and Emcor.
Tampa-based Elevated Facilities Services joins a stable of brands at APi that already includes, in addition to J. Fletcher Creamer and LeJeune Steel, numerous mechanical and fire safety contractors and service companies, a specialty contractor supply chain services company and a garage door installation contractor.
Becker told investors that APi intends to “build a $1 billion+ long-term elevator and escalator services platform” through organic growth; cross-selling with APi’s life insurance businesses “and a strong M&A pipeline.”
The company’s recent financial changes are complex and involved an offering of shares held by two investors and a follow-on offering of 12.65 million shares sold by the company, which generated $450 million in proceeds clean APi also took out a $550 million term loan due 2029 that it expects to use to refinance a $330 million term loan due 2026 and repaid $100 million of outstanding revolving credit facility balances .
The proceeds of the refinancings will be used for general corporate purposes, including partially financing the acquisition of Elevated.
The financial changes put the company in a position to execute “a strong pipeline of mergers and acquisitions,” said CFO Kevin Krumm.
