APi Group Corp

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section should be read in conjunction with the interim unaudited condensed consolidated financial statements (the "Interim Statements") and related notes included in this quarterly report, and the Company's 2023 audited annual consolidated financial statements, the related notes thereto and under the heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and other disclosures contained in our Annual Report on Form 10-K, including financial results for theyear ended December 31, 2023. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under the “Cautionary Note Regarding Forward Looking Statements” section of this quarterly report.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section should be read in conjunction with the interim unaudited condensed consolidated financial statements (the "Interim Statements") and related notes included in this quarterly report, and the Company's 2023 audited annual consolidated financial statements, the related notes thereto and under the heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and other disclosures contained in our Annual Report on Form 10-K, including financial results for the year ended December 31, 2023. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under the “Cautionary Note Regarding Forward Looking Statements” section of this quarterly report.

Previous wording

On June 3, 2024, we completed the acquisition of Elevated Facility Services Group ("Elevated"). The total net consideration for the Elevated acquisition was $570 million. Elevated is a premier provider of contractually based services for all major brands of elevator and escalator equipment.

Current wording

On June 3, 2024, we completed the acquisition of Elevated Facility Services Group ("Elevated"). The total net consideration for the Elevated acquisition was $579 million. Elevated is a premier provider of contractually based services for all major brands of elevator and escalator equipment.

Previous wording

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

Current wording

For additional information about our acquisition activity, see Note 3 – “Business Combinations" and Note 18 – "Subsequent Events" to our condensed consolidated financial statements included herein.

Previous wording

During the six months ended June 30, 2024, we have incurred pre-tax restructuring costs within the Safety Services segment of $5 million 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.

Current wording

During the nine months ended September 30, 2024, we have incurred pre-tax restructuring costs within the Safety Services segment of $5 million 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.

Previous wording

Investment expense (income) and other, net

Current wording

Investment expense (income) and other, net includes expense (income) from foreign currency forward contracts that we use to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, joint ventures, miscellaneous items, and non-service pension cost (benefit). Non-service pension cost (benefit) reflects the sum of the components of pension expense not related to service cost, i.e. interest cost, expected return on assets, and amortizations of prior service costs and actuarial gains and losses.

Previous wording

The following is a discussion of our financial condition and results of operations during the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023.

Current wording

The following is a discussion of our financial condition and results of operations during the three and nine months ended September 30, 2024 and the three and nine months ended September 30, 2023.

Previous wording

Our gross profit for the three months ended June 30, 2024 was $544 million compared to $496 million for the same period in 2023, an increase of $48 million or 9.7%. Gross margin for the three months ended June 30, 2024 was 31.4%, an increase of 340 basis points compared to the prior year period, primarily due to disciplined project and customer selection, pricing improvements in our Safety Services segment, and an improved mix of inspection, service, and monitoring revenue, which generates higher margins.

Current wording

Our gross profit for the three months ended September 30, 2024 was $567 million compared to $511 million for the same period in 2023, an increase of $56 million or 11.0%. Gross margin for the three months ended September 30, 2024 was 31.1%, an increase of 250 basis points compared to the prior year period, primarily due to disciplined project and customer selection and an improved mix of inspection, service, and monitoring revenue in the Safety Services segment, which generates higher margins. The increase in gross margin was also driven by savings in our Safety Services segment related to the Chubb restructuring program.

Previous wording

Our SG&A expenses for the three months ended June 30, 2024 were $418 million compared to $389 million for the same period in 2023, an increase of $29 million. SG&A expenses as a percentage of net revenues was 24.2% during the three months ended June 30, 2024 compared to 22.0% for the same period in 2023. The increase in SG&A expenses was primarily driven by investments to support our Safety Services segment and acquisition costs that are non-recurring in nature in the three months ended June 30, 2024 compared to 2023. The increase in SG&A expenses was partially offset by savings in our Safety Services segment related to the Chubb restructuring program. Our SG&A expenses excluding amortization for the three months ended June 30, 2024 were $366 million, or 21.2% of net revenues, compared to $339 million, or 19.1% of net revenues, for the same period of 2023. 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-U.S. GAAP financial measures below.

Current wording

Our SG&A expenses for the three months ended September 30, 2024 were $425 million compared to $407 million for the same period in 2023, an increase of $18 million. SG&A expenses as a percentage of net revenues was 23.3% during the three months ended September 30, 2024 compared to 22.8% for the same period in 2023. The increase in SG&A expenses was primarily driven by SG&A expenses from acquisitions completed, acquisition costs that are non-recurring in nature, and investments to support our Safety Services segment in the three months ended September 30, 2024 compared to 2023. Our SG&A expenses excluding amortization for the three months ended September 30, 2024 were $368 million, or 20.2% of net revenues, compared to $345 million, or 19.3% of net revenues, for the same period of 2023. 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-U.S. GAAP financial measures below.

Previous wording

Investment expense (income) and other, net was expense of $2 million for the three months ended June 30, 2024 compared to income of $6 million for the same period of 2023. The increase in investment expense and other was primarily due to an increase in non-service pension costs in the current year.

Current wording

Investment expense (income) and other, net was expense of $1 million for the three months ended September 30, 2024 compared to income of $7 million for the same period of 2023. The increase in investment expense (income) and other was primarily due to an increase in non-service pension costs in the current year.

Previous wording

The effective tax rate for the three months ended June 30, 2024 was 22.4% compared to 37.2% in the same period of 2023. The difference in the effective tax rate was driven by 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.

Current wording

The effective tax rate for the three months ended September 30, 2024 was 30.9% compared to 25.5% in the same period of 2023. The difference in the effective tax rate was driven by 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.

Previous wording

The Organization for Economic Co-operation and Development has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted the legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The Company is continuing to evaluate and monitor but does not expect for Pillar 2 to have a material impact on the effective tax rate or the consolidated financial statements.

Current wording

The Organization for Economic Co-operation and Development has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted the legislation, and other countries are in the process of introducing legislation to implement Pillar 2. We are continuing to evaluate and monitor but does not expect for Pillar 2 to have a material impact on the effective tax rate or the consolidated financial statements.

Previous wording

Our net income for the three months ended June 30, 2024 was $69 million compared to $48 million for the same period in 2023, an increase of $21 million. The improvement is attributable to growth in inspection, service, and monitoring revenue and pricing improvements in our Safety Services segment, in addition to improved operating margin due to disciplined project and customer selection in our Safety Services and Specialty Services segments. The increase is also attributable to savings in our Safety Services segment related to the Chubb restructuring program. The net income increase was partially offset by an increase in non-service pension costs of approximately $7 million. Net income as a percentage of net revenues for the three months ended June 30, 2024 and 2023 was 4.0% and 2.7%, respectively. EBITDA for the three months ended June 30, 2024 was $199 million compared to $188 million for the same period in 2023, an increase of $11 million. The increase in EBITDA was primarily driven by the factors previously discussed. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Current wording

Our net income for the three months ended September 30, 2024 was $69 million compared to $54 million for the same period in 2023, an increase of $15 million. The improvement is attributable to acquisitions completed in our Safety Services segment, and growth in inspection, service, and monitoring revenue, in addition to improved operating margin due to disciplined project and customer selection in our Safety Services segment. The increase is also attributable to savings in our Safety Services segment related to the Chubb restructuring program. The increase in net income was partially offset by the increase in SG&A expenses from acquisitions completed. Net income as a percentage of net revenues for the three months ended September 30, 2024 and 2023 was 3.8% and 3.0%, respectively. EBITDA for the three months ended September 30, 2024 was $218 million compared to $188 million for the same period in 2023, an increase of $30 million. The increase in EBITDA was primarily driven by the factors previously discussed. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Previous wording

Safety Services net revenues for the three months ended June 30, 2024 increased by $54 million or 4.4% compared to the same period in 2023. The increase was primarily driven by increased inspection, service, and monitoring revenue and revenue from acquisitions completed during the last year. This increase was also due to continued strength in our end markets and strategic pricing improvements.

Current wording

Safety Services net revenues for the three months ended September 30, 2024 increased by $118 million or 9.7% compared to the same period in 2023. The increase was primarily driven by revenue from acquisitions completed during the last year and increased inspection, service, and monitoring revenue.

Previous wording

Safety Services operating margin for the three months ended June 30, 2024 and 2023 was approximately 10.9% and 8.0%, respectively. The increase was primarily the result of disciplined project and customer selection, pricing improvements, improved mix of inspection, service and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program. Safety Services EBITDA as a percentage of net revenues for the three months ended June 30, 2024 and 2023 was approximately 14.4% and 12.2%, respectively. This increase was primarily related to the factors discussed above.

Current wording

Safety Services operating margin for the three months ended September 30, 2024 and 2023 was approximately 11.1% and 8.1%, respectively. The increase was primarily the result of disciplined project and customer selection, pricing improvements, improved mix of inspection, service and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program. Safety Services EBITDA as a percentage of net revenues for the three months ended September 30, 2024 and 2023 was approximately 14.8% and 12.6%, respectively. This increase was primarily related to the factors discussed above.

Previous wording

Specialty Services net revenues for the three months ended June 30, 2024 decreased by $102 or 18.4% compared to the same period in 2023. The decrease was primarily due to continued disciplined project and customer selection, project delays, and the planned exit of a customer relationship in the Infrastructure/Utility reporting unit. The decrease is also due to the divestiture of an Infrastructure/Utility operating company during 2023.

Current wording

Specialty Services net revenues for the three months ended September 30, 2024 decreased by $76 or 13.4% compared to the same period in 2023. The decrease was primarily due to the divestiture of an Infrastructure/Utility operating company during 2023, project timing and delays, and the continued impact of the planned exit of a customer relationship in the Infrastructure/Utility reporting unit.

Previous wording

Specialty Services operating margin was approximately 7.7% and 7.4% for the three months ended June 30, 2024 and 2023, respectively. The increase was primarily the result of disciplined project and customer selection. Specialty Services EBITDA as a percentage of net revenues for the three months ended June 30, 2024 and 2023 was approximately 13.7% and 12.4%, respectively, due to the factors discussed above.

Current wording

Specialty Services operating margin was approximately 8.1% and 7.6% for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily the result of disciplined project and customer selection and the divestiture of an Infrastructure/Utility operating company during 2023. Specialty Services EBITDA as a percentage of net revenues for the three months ended September 30, 2024 and 2023 was approximately 13.4% and 12.3%, respectively, due to the factors discussed above.

Previous wording

Net revenues for the three months ended June 30, 2024 were $1,730 million compared to $1,771 million for the same period in 2023, a decrease of $41 million or 2.3%. The decrease in net revenues was primarily driven by disciplined project and customer selection and project delays in the Specialty Services segment and the divestiture of an Infrastructure/Utility operating company in the Specialty Services segment during 2023, partially offset by growth in inspection, service, and monitoring revenue and acquisitions completed within the Safety Services segment.

Current wording

Net revenues for the nine months ended September 30, 2024 were $5,157 million compared to $5,169 million for the same period in 2023, a decrease of $12 or 0.2%. The decrease was primarily driven by the continued impact of the planned exit of a customer relationship in the Infrastructure/Utility reporting unit and project delays in the Specialty Services segment, partially offset by revenue from acquisitions completed within the Safety Services segment and growth in inspection, service, and monitoring revenue.

Previous wording

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, 2024 and 2023, respectively:

Current wording

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 nine months ended September 30, 2024 and 2023, respectively:

Previous wording

Our gross profit for the six months ended June 30, 2024 was $1,036 million compared to $921 million for the same period in 2023, an increase of $115 million, or 12.5%. Gross margin was 31.1%, an increase of 390 basis points compared to the prior year period, primarily due to disciplined project and customer selection, pricing improvements in our Safety Services segment, and an improved mix of inspection, service, and monitoring revenue, which generates higher margins.

Current wording

Our gross profit for the nine months ended September 30, 2024 was $1,603 million compared to $1,432 million for the same period in 2023, an increase of $171 million, or 11.9%. Gross margin was 31.1%, an increase of 340 basis points compared to the prior year period, primarily due to disciplined project and customer selection in our Safety Services and Specialty Services segments, an improved mix of inspection, service, and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program.

Previous wording

The following table presents operating expenses and operating margin (operating income (loss) as a percentage of net revenues) for the six months ended June 30, 2024 and 2023, respectively:

Current wording

The following table presents operating expenses and operating margin (operating income (loss) as a percentage of net revenues) for the nine months ended September 30, 2024 and 2023, respectively:

Previous wording

Our SG&A expenses for the six months ended June 30, 2024 were $810 million compared to $741 million for the same period in 2023, an increase of $69 million. SG&A expenses as a percentage of net revenues was 24.3% during the six months ended June 30, 2024 compared to 21.9% for the same period in 2023. The increase in SG&A expenses was primarily driven by investments to support our Safety Services and Specialty Services segments in the six months ended June 30, 2024 compared to 2023. The increase was also due to acquisition costs and third party advisor costs related to the Series B Preferred Stock Conversion that are non-recurring in nature in the six months ended June 30, 2024. The increase in SG&A expenses was partially offset by savings in our Safety Services segment related to the Chubb restructuring program. Our SG&A expenses excluding amortization and impairment for the six months ended June 30, 2024 were $708 million or 21.3% of net revenues, compared to $643 million, or 19.0% of net revenues, for the same period of 2023 primarily due to the factors discussed above. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Current wording

Our SG&A expenses for the nine months ended September 30, 2024 were $1,235 million compared to $1,148 million for the same period in 2023, an increase of $87 million. SG&A expenses as a percentage of net revenues was 23.9% during the nine months ended September 30, 2024 compared to 22.2% for the same period in 2023. The increase in SG&A expenses was primarily driven by investments to support our Safety Services segment and SG&A expenses from acquisitions completed. The increase was also due to acquisition costs that are non-recurring in nature in the nine months ended September 30, 2024. The increase in SG&A expenses was partially offset by savings in our Safety Services segment related to the Chubb restructuring program. Our SG&A expenses excluding amortization and impairment for the nine months ended September 30, 2024 were $1,076 million or 20.9% of net revenues, compared to $988 million, or 19.1% of net revenues, for the same period of 2023 primarily due to the factors discussed above. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Previous wording

Interest expense was $69 million and $75 million for the six months ended June 30, 2024 and 2023, respectively. The decrease in interest expense was primarily due to the investment of the equity and debt cash proceeds prior to the Elevated acquisition and lower debt issuance cost amortization.

Current wording

Interest expense was $110 million and $112 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in interest expense was a result of interest income generated by the investment of the equity and debt cash proceeds prior to the Elevated acquisition, and the rate decrease as a result of the repricing of the Term Loans completed in October 2023 and May 2024, offset by the increase in volume of debt.

Previous wording

During the six months ended June 30, 2023, we made aggregate payments of $200 million to pay down outstanding principal amounts of the 2019 Term Loan and 2021 Term Loan. In connection with the payments, we recognized a net loss on debt extinguishment of $3 million.

Current wording

During the nine months ended September 30, 2023, we made aggregate payments of $200 million to pay down outstanding principal amounts of the 2019 Term Loan and 2021 Term Loan. In connection with the payments, we recognized a net loss on debt extinguishment of $3 million.

Previous wording

Investment expense (income) and other, net was expense of $5 million during the six months ended June 30, 2024 compared to income of $11 million for the same period in 2023 The increase in investment expense and other was primarily due to an increase in non-service pension costs in the current year.

Current wording

Investment expense (income) and other, net was expense of $6 million during the nine months ended September 30, 2024 compared to income of $18 million for the same period in 2023 The increase in investment expense (income) and other was primarily due to an increase in non-service pension costs in the current year and a decrease in earnings from joint ventures.

Previous wording

The income tax provision for the six months ended June 30, 2024 was $38 million compared to $39 million in the same period of 2023. This change was driven by increased generated income before taxes in the six months ended June 30, 2024 compared to the same period of the prior year. The effective tax rate for the six months ended June 30, 2024 was 24.7%, compared to 35.0% in the same period of 2023. The difference in the effective tax rate was driven by 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 the nondeductible permanent items, taxes on foreign earnings in jurisdictions that have higher tax rates, state taxes, and discrete items.

Current wording

The income tax provision for the nine months ended September 30, 2024 was $69 million compared to $59 million in the same period of 2023. This change was driven by increased generated income before taxes in the nine months ended September 30, 2024 compared to the same period of the prior year. The effective tax rate for the nine months ended September 30, 2024 was 27.2%, compared to 31.3% in the same period of 2023. The difference in the effective tax rate was driven by 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.

Previous wording

The following table presents net income and EBITDA for the six months ended June 30, 2024 and 2023, respectively:

Current wording

The following table presents net income and EBITDA for the nine months ended September 30, 2024 and 2023, respectively:

Previous wording

Our net income for the six months ended June 30, 2024 was $114 million compared to $74 million for the same period in 2023, an increase of $40 million. The improvement is primarily attributable to growth in inspection, service, and monitoring revenue and pricing improvements in our Safety Services segment, in addition to improved operating margin due to disciplined project and customer selection in our Safety Services and Specialty Services segments. The increase in is also attributable to savings in our Safety Services segment related to the Chubb restructuring program. The net income increase was partially offset by an increase in non-service pension costs of approximately $15 million. Net income as a percentage of net revenues for the six months ended June 30, 2024 and 2023 was 3.4% and 2.2%, respectively. EBITDA for the six months ended June 30, 2024 was $365 million compared to $337 million for the same period in 2023, an increase of $28 million. The increase in EBITDA was primarily driven by the factors previously discussed. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Current wording

Our net income for the nine months ended September 30, 2024 was $183 million compared to $128 million for the same period in 2023, an increase of $55 million. The improvement is primarily attributable to growth in inspection, service, and monitoring revenue and disciplined project and customer selection in our Safety Services and Specialty Services segments. The increase in is also attributable to income from acquisitions completed and savings in our Safety Services segment related to the Chubb restructuring program. The net income increase was partially offset by SG&A expenses from acquisitions completed. Net income as a percentage of net revenues for the nine months ended September 30, 2024 and 2023 was 3.5% and 2.5%, respectively. EBITDA for the nine months ended September 30, 2024 was $583 million compared to $525 million for the same period in 2023, an increase of $58 million. The increase in EBITDA was primarily driven by the factors previously discussed. See the discussion and reconciliation of our non-U.S. GAAP financial measures below.

Previous wording

Operating Segment Results for the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Current wording

Operating Segment Results for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Previous wording

The following discussion breaks down the net revenues, operating income (loss), and EBITDA by operating segment for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

The following discussion breaks down the net revenues, operating income (loss), and EBITDA by operating segment for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Safety Services net revenues for the six months ended June 30, 2024 increased by $77 or 3.2% compared to the same period in 2023. The increase was driven by increased inspection, service, and monitoring revenue and revenue from acquisitions completed in the last year. This increase was also due to continued strength in our end markets and strategic pricing improvements.

Current wording

Safety Services net revenues for the nine months ended September 30, 2024 increased by $195 or 5.4% compared to the same period in 2023. The increase was driven by increased inspection, service, and monitoring revenue and revenue from acquisitions completed in the last year.

Previous wording

Safety Services operating margin for the six months ended June 30, 2024 and 2023 was approximately 10.6% and 8.0%, respectively. The increase was primarily the result of disciplined project and customer selection, pricing improvements, and improved mix of inspection, service, and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program. Safety Services EBITDA as a percentage of net revenues for the six months ended June 30, 2024 and 2023 was approximately 13.9% and 12.3%, respectively. This increase was primarily related to the factors discussed above.

Current wording

Safety Services operating margin for the nine months ended September 30, 2024 and 2023 was approximately 10.8% and 8.0%, respectively. The increase was primarily the result of disciplined project and customer selection, pricing improvements, improved mix of inspection, service, and monitoring revenue, which generates higher margins, and savings in our Safety Services segment related to the Chubb restructuring program. Safety Services EBITDA as a percentage of net revenues for the nine months ended September 30, 2024 and 2023 was approximately 14.2% and 12.4%, respectively. This increase was primarily related to the factors discussed above.

Previous wording

Specialty Services net revenues for the six months ended June 30, 2024 decreased by $143 million or 14.5% compared to the same period in 2023. The decrease was primarily due to continued disciplined project and customer selection, project delays, and the planned exit of a customer relationship in the Infrastructure/Utility reporting unit. The decrease is also due to the divestiture of an Infrastructure/Utility operating company during 2023.

Current wording

Specialty Services net revenues for the nine months ended September 30, 2024 decreased by $219 million or 14.1% compared to the same period in 2023. The decrease was primarily due to the continued impact of the planned exit of a customer relationship in the Infrastructure/Utility reporting unit and project delays.

Previous wording

Specialty Services operating margin for the six months ended June 30, 2024 and 2023 was approximately 5.0% and 4.2%, respectively. The increase was primarily the result of disciplined project and customer selection during the six months ended June 30, 2024. Specialty Services EBITDA as a percentage of net revenues for the six months ended June 30, 2024 and 2023 was approximately 11.3% and 9.7%, respectively, due to the factors discussed above.

Current wording

Specialty Services operating margin for the nine months ended September 30, 2024 and 2023 was approximately 6.1% and 5.4%, respectively. The increase was primarily the result of disciplined project and customer selection during the nine months ended September 30, 2024. Specialty Services EBITDA as a percentage of net revenues for the nine months ended September 30, 2024 and 2023 was approximately 12.1% and 10.7%, respectively, due to the factors discussed above.

Previous wording

We supplement our reporting of consolidated financial information determined in accordance with U.S. GAAP with SG&A expenses (excluding amortization) and EBITDA (defined below), which are non-U.S. GAAP financial measures. We use these non-U.S. GAAP financial measures to evaluate our performance, both internally and as compared with our peers because they exclude certain items that may not be indicative of our core operating results. Management believes these measures are useful to investors since they (a) permit investors to view our performance using the same tools that management uses to evaluate our past performance, reportable business segments, and prospects for future performance, (b) permit investors to compare us with our peers, and (c) in the case of EBITDA, determines certain elements of management’s incentive compensation.

Current wording

We supplement our reporting of consolidated financial information determined in accordance with U.S. GAAP with SG&A expenses (excluding amortization) and EBITDA (defined below), which are non-U.S. GAAP financial measures. We use these non-U.S. GAAP financial measures to evaluate our performance, both internally and as compared with our peers because they exclude certain items that may not be indicative of our core operating results. Management believes these measures are useful to investors since they (a) permit investors to view our performance using the same tools that management uses to evaluate our past performance, reportable business segments, and prospects for future performance, (b) permit investors to compare us with our peers, (c) in the case of EBITDA, determine certain elements of management’s incentive compensation, and (d) provide consistent period-to-period comparisons of the results.

Previous wording

As of June 30, 2024, we had $820 million of total liquidity, comprising $324 million in cash and cash equivalents and $496 million ($500 million less outstanding letters of credit of approximately $4 million, which reduce availability) of available borrowings under our Revolving Credit Facility.

Current wording

As of September 30, 2024, we had $982 million of total liquidity, comprising $487 million in cash and cash equivalents and $495 million ($500 million less outstanding letters of credit of approximately $5 million, which reduce availability) of available borrowings under our Revolving Credit Facility.

Previous wording

During the second quarter of 2024, we completed the Sixth Amendment to our credit agreement, repaying the 2019 Term Loan and refinancing the 2021 Term Loan through an upsizing and repricing. We incurred approximately $550 million of incremental principal on our 2021 Term Loan. The proceeds were used to repay the remaining $330 million of the 2019

Current wording

During the second quarter of 2024, we completed the Sixth Amendment to our credit agreement, repaying the 2019 Term Loan and refinancing the 2021 Term Loan through an upsizing and repricing. We incurred approximately $550 million of incremental principal on our 2021 Term Loan. The proceeds were used to repay the remaining $330 million of the 2019 Term Loan, repay $100 million of the Revolving Credit Facility outstanding, and for general corporate purposes, including to partially fund the Elevated acquisition.

Previous wording

On February 26, 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 is indefinite, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion. During the six months ended June 30, 2024, we repurchased 16,260,160 shares of common stock for approximately $600 million. As of June 30, 2024, we had approximately $400 million of authorized repurchases remaining under the SRP.

Current wording

On February 26, 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 is indefinite, unless otherwise modified or terminated by our Board of Directors at any time in its sole discretion. During the nine months ended September 30, 2024, we repurchased 16,260,160 shares of common stock for approximately $600 million. As of September 30, 2024, we had approximately $400 million of authorized repurchases remaining under the SRP.

Previous wording

Net cash provided by operating activities was $117 million for the six months ended June 30, 2024 compared to $73 million for the same period in 2023. The increase in cash provided by operating activities is primarily due to an increase in net income in the period. This increase in cash provided is also driven by lower working capital needs associated with the various services we provided in the six months ended June 30, 2024 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. Working capital is primarily affected by changes in total accounts receivable, accounts payable, accrued expenses, and contract assets and contract liabilities, all of which tend to be related and are affected by changes in the timing and volume of work performed.

Current wording

Net cash provided by operating activities was $337 million for the nine months ended September 30, 2024 compared to $217 million for the same period in 2023. The increase in cash provided by operating activities is primarily due to an increase in net income in the period. This increase in cash provided is also driven by lower working capital needs associated with the various services we provided in the nine months ended September 30, 2024 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. Working capital is primarily affected by changes in total accounts receivable, accounts payable, accrued expenses, and contract assets and contract liabilities, all of which tend to be related and are affected by changes in the timing and volume of work performed.

Previous wording

Net cash used in investing activities was $623 million for the six months ended June 30, 2024 compared to $82 million for the same period in 2023. During the six months ended June 30, 2024, we completed the Elevated acquisition and several individually immaterial acquisitions, resulting in the use of $606 million for acquisitions during the six months ended June 30, 2024 compared to $45 million for the same period in 2023.

Current wording

Net cash used in investing activities was $680 million for the nine months ended September 30, 2024 compared to $108 million for the same period in 2023. During the nine months ended September 30, 2024, we completed the Elevated acquisition and several other acquisitions, resulting in the use of $647 million for acquisitions during the nine months ended September 30, 2024 compared to $57 million for the same period in 2023.

Previous wording

Net cash provided by financing activities was $357 million for the six months ended June 30, 2024 compared to $232 million used in financing activities for the same period in 2023. The increase in cash provided by financing activities was primarily driven by equity and debt issuances in the six months ended June 30, 2024 . In the six months ended June 30, 2024, cash provided by financing activities was higher due to $850 million of proceeds from the repricing transactions of the 2021 Term Loan, and $458 million of proceeds from the issuance of common shares. The increase in cash used in financing activities in the six months ended June 30, 2024 was partially offset by $334 million of payments on long-term borrowings and $600 million of payments for conversion of the Series B Preferred Stock.

Current wording

Net cash provided by financing activities was $348 million for the nine months ended September 30, 2024 compared to $253 million used in financing activities for the same period in 2023. The increase in cash provided by financing activities was primarily driven by equity and debt issuances in the nine months ended September 30, 2024. In the nine months ended September 30, 2024, cash provided by financing activities was higher due to $850 million of proceeds from the repricing transactions of the 2021 Term Loan and $458 million of proceeds from the issuance of common shares. The increase in cash used in financing activities in the nine months ended September 30, 2024 was partially offset by $335 million of payments on long-term borrowings and $600 million of payments for conversion of the Series B Preferred Stock.