ADT Reports Second Quarter 2024 Results
ADT Inc. (NYSE: ADT) reported solid Q2 2024 results with 3% revenue growth to $1.2 billion and a 2% increase in recurring monthly revenue to $355 million. The company demonstrated strong customer retention with gross revenue attrition of 12.9% and revenue payback at 2.2 years. GAAP income from continuing operations was $126 million ($0.13 per diluted share), while adjusted income was $156 million ($0.17 per diluted share). ADT generated robust operating cash flow of $563 million, up 14% year-over-year. The company affirmed its full-year 2024 guidance and continued to invest in innovative offerings like the ADT+ platform and Trusted Neighbor service. ADT also implemented AI in its operations and received recognition for its monitoring center and mental health initiatives.
ADT Inc. (NYSE: ADT) ha riportato risultati solidi per il secondo trimestre del 2024, con una crescita del fatturato del 3% a $1,2 miliardi e un incremento del 2% nei ricavi mensili ricorrenti a $355 milioni. L'azienda ha dimostrato una forte fidelizzazione della clientela, con un tasso di attrito dei ricavi del 12,9% e un periodo di recupero dei ricavi di 2,2 anni. L'utile GAAP dalle operazioni continuative è stato di $126 milioni ($0,13 per azione diluita), mentre l'utile rettificato è stato di $156 milioni ($0,17 per azione diluita). ADT ha generato un robusto flusso di cassa operativo di $563 milioni, in aumento del 14% rispetto all’anno precedente. L'azienda ha confermato le previsioni per l'intero anno 2024 e ha continuato a investire in offerte innovative come la piattaforma ADT+ e il servizio Trusted Neighbor. ADT ha inoltre implementato l'IA nelle proprie operazioni e ha ricevuto riconoscimenti per il proprio centro di monitoraggio e le iniziative sulla salute mentale.
ADT Inc. (NYSE: ADT) reportó resultados sólidos para el segundo trimestre de 2024, con un crecimiento de ingresos del 3% a $1.2 mil millones y un aumento del 2% en los ingresos mensuales recurrentes a $355 millones. La compañía demostró una fuerte retención de clientes, con una pérdida de ingresos brutos del 12.9% y un período de recuperación de ingresos de 2.2 años. Los ingresos GAAP de las operaciones continuas fueron de $126 millones ($0.13 por acción diluida), mientras que el ingreso ajustado fue de $156 millones ($0.17 por acción diluida). ADT generó un flujo de efectivo operativo robusto de $563 millones, un aumento del 14% interanual. La empresa reafirmó su guía para todo el año 2024 y continuó invirtiendo en ofertas innovadoras como la plataforma ADT+ y el servicio Trusted Neighbor. ADT también implementó IA en sus operaciones y recibió reconocimiento por su centro de monitoreo e iniciativas de salud mental.
ADT Inc. (NYSE: ADT)는 2024년 2분기 실적으로 3%의 매출 성장을 기록하여 12억 달러에 달하며, 정기 월간 수익이 2% 증가하여 3억 5,500만 달러에 도달했다고 보고했습니다. 이 회사는 12.9%의 총 매출 이탈률과 2.2년의 매출 회수 기간을 기록하며 강력한 고객 유지를 보여주었습니다. 지속적 운영의 GAAP 소득은 1억 2,600만 달러($0.13의 희석 주당순이익)였고, 조정된 소득은 1억 5,600만 달러($0.17의 희석 주당순이익)였습니다. ADT는 563백만 달러의 건전한 운영 현금 흐름을 창출했으며, 이는 전년 대비 14% 증가한 수치입니다. 이 회사는 2024년 전체 연도 가이던스를 확인하고 ADT+ 플랫폼 및 Trusted Neighbor 서비스와 같은 혁신적인 제공에 계속 투자했습니다. ADT는 또한 운영에 AI를 도입하고, 모니터링 센터와 정신 건강 이니셔티브로 인정받았습니다.
ADT Inc. (NYSE: ADT) a rendu compte de résultats solides pour le deuxième trimestre 2024, avec une croissance de 3% de son chiffre d'affaires atteignant 1,2 milliard de dollars et une augmentation de 2% des revenus récurrents mensuels atteignant 355 millions de dollars. L'entreprise a démontré une forte fidélisation des clients avec un taux d'attrition du chiffre d'affaires de 12,9% et un retour sur revenus de 2,2 ans. Le revenu GAAP des opérations continues s'élevait à 126 millions de dollars (0,13 $ par action diluée), tandis que le revenu ajusté était de 156 millions de dollars (0,17 $ par action diluée). ADT a généré un flux de trésorerie opérationnel robuste de 563 millions de dollars, en hausse de 14% par rapport à l'année précédente. L'entreprise a confirmé ses prévisions pour l'année 2024 et a continué à investir dans des offres innovantes comme la plateforme ADT+ et le service Trusted Neighbor. ADT a également intégré l'IA dans ses opérations et a reçu des éloges pour son centre de surveillance et ses initiatives en matière de santé mentale.
ADT Inc. (NYSE: ADT) berichtete über solide Ergebnisse im zweiten Quartal 2024 mit einem Umsatzwachstum von 3% auf 1,2 Milliarden US-Dollar sowie einer 2%igen Steigerung der wiederkehrenden Monatsumsätze auf 355 Millionen US-Dollar. Das Unternehmen zeigte eine starke Kundenbindung mit einem Brutto-Umsatzrückgang von 12,9% und einer Umsatzrückzahlungsdauer von 2,2 Jahren. Das GAAP-Einkommen aus fortgeführten Geschäften betrug 126 Millionen US-Dollar (0,13 US-Dollar pro verwässerter Aktie), während das bereinigte Einkommen 156 Millionen US-Dollar (0,17 US-Dollar pro verwässerter Aktie) betrug. ADT generierte einen robusten operativen Cashflow von 563 Millionen US-Dollar, was einem Anstieg von 14% im Vergleich zum Vorjahr entspricht. Das Unternehmen bestätigte seine Prognose für das gesamte Jahr 2024 und investierte weiterhin in innovative Angebote wie die ADT+-Plattform und den Trusted Neighbor-Service. ADT implementierte auch KI in seinen Operationen und erhielt Anerkennung für sein Überwachungszentrum und seine Initiativen zur psychischen Gesundheit.
- 3% increase in total revenue to $1.2 billion
- 2% growth in recurring monthly revenue to $355 million
- Strong customer retention with 12.9% gross revenue attrition
- 14% increase in operating cash flow to $563 million
- Adjusted income from continuing operations up $3 million to $156 million
- Over $150 million debt reduction in the quarter
- Affirmed full-year 2024 guidance
- GAAP income from continuing operations down $54 million to $126 million
- Adjusted EBITDA from continuing operations decreased by $12 million to $629 million
- Increase in allowance for credit losses
Insights
ADT's Q2 2024 results demonstrate a solid financial performance with some notable highlights and challenges. The 3% year-over-year revenue growth to
The company's focus on cash generation is evident, with a 14% increase in net cash provided by operating activities to
Looking ahead, ADT's decision to affirm its full-year 2024 guidance metrics indicates confidence in its business model and growth strategies. The company's focus on innovative offerings like the ADT+ platform and Trusted Neighbor service could potentially drive future growth. However, investors should monitor the impact of legal settlements and increased allowance for credit losses on future earnings.
Overall, while ADT shows resilience in its core operations, the mixed results warrant careful observation of future quarters to assess the long-term trajectory of the company's financial performance.
ADT's technological initiatives in Q2 2024 showcase a strategic focus on innovation and AI integration, positioning the company at the forefront of smart home security. The continued rollout of the ADT+ platform is a significant move, offering next-generation hardware and a proprietary app that serves as a foundation for future innovations.
The introduction of Trusted Neighbor in partnership with Google and Yale is particularly noteworthy. This feature, allowing secure, temporary access to homes through the ADT+ app, addresses a growing need in the smart home market for flexible access solutions. Its planned availability for select new customers in Q3 2024 could be a key differentiator for ADT in the competitive smart home security landscape.
ADT's leveraging of Google Cloud's AI technology for enhancing operational efficiency and customer experience is a forward-thinking approach. The focus on implementing AI in customer care operations and retention programs could lead to improved service quality and potentially lower operational costs in the long run.
The nationwide rollout of the Alarm Scoring program is another technological advancement that could enhance ADT's value proposition to both customers and first responders. By providing more precise alarm data, ADT is not only improving its service but also contributing to public safety efforts.
These technological initiatives, combined with ADT's strong partnership with Google Nest, indicate a clear strategy to stay ahead in the evolving smart home security market. However, the success of these initiatives will depend on customer adoption rates and the company's ability to effectively integrate these technologies into its existing systems.
Continued strong operating cash generation
Solid revenue growth, up
Improved leverage and over
Affirming full year 2024 guidance metrics
BOCA RATON, Fla., Aug. 01, 2024 (GLOBE NEWSWIRE) -- ADT Inc. (NYSE: ADT), the most trusted brand in smart home and small business security, today reported results for the second quarter of 2024.
Financial highlights for the second quarter are below with variances on a year-over-year basis unless otherwise noted. Results of the former commercial and solar segments are presented as discontinued operations, except for cash flow measures.
Second Quarter 2024
- Total revenue increased by
3% to$1.2 billion and end-of-period recurring monthly revenue (RMR) increased2% to$355 million ($4.3 billion on an annualized basis) - Strong customer retention with gross revenue attrition of
12.9% and revenue payback at 2.2 years - GAAP income from continuing operations of
$126 million , or$0.13 per diluted share, down$54 million - Adjusted income from continuing operations of
$156 million , or$0.17 per diluted share, up$3 million - Adjusted EBITDA from continuing operations of
$629 million , down$12 million
“ADT delivered a solid first half with continued revenue growth momentum, as well as strong operating profitability and cash flow generation. With our streamlined focus on the consumer and small business markets, we continue to expand and improve our innovative offerings, unrivaled safety, and premium experience for security and smart home customers,” said ADT Chairman, President, and CEO, Jim DeVries. “Our success is powered by our employees’ dedication to the proposition that every second counts. We are well positioned to achieve our 2024 commitments with continued focus on driving significant cash flow while continuing to invest in our future and simultaneously returning capital to our shareholders.”
Business Highlights
- ADT+ platform for professional installation – The Company continued its phased rollout of the ADT+ platform across the country in the second quarter. Customers can now take advantage of next-generation hardware and technology through a proprietary app, which is designed to be the conduit for future innovations such as Trusted Neighbor.
- ADT’s Trusted Neighbor – The Company announced its new Trusted Neighbor offering in partnership with Google and Yale. ADT’s Trusted Neighbor lets customers grant secure, temporary access to their homes based on schedules or events, such as a package delivery or water leak, through the ADT+ app. The offering is expected to become available for select new customers in the third quarter of 2024.
- Implementing AI in operations – In addition to its strong Google Nest partnership, ADT is leveraging Google Cloud’s AI technology platform to enhance efficiency in its business and enhance the customer experience. Early efforts focus on implementing AI in customer care operations and customer retention programs.
- Alarm Scoring live nationwide – ADT’s Alarm Scoring program rolled out nationwide in the second quarter. With this innovative method of classifying alarms, first responders receive the most precise and crucial alarm data to prioritize dispatch.
- Monitoring Center of the Year – ADT won The Monitoring Association’s Monitoring Center of the Year award, recognizing ADT’s significant contribution to the alarm industry, including demonstration of exceptional customer service.
- When Every Second Counts – ADT introduced its new brand promise: When Every Second Counts. The Company launched new advertisements on social media platforms, major television networks, streaming services and in theaters, as well as placements in the summer Olympic Games.
- Mental Health America certification – Mental Health America awarded ADT a Platinum-level Bell Seal certification, the highest level of certification, for its commitment to improving employee mental health.
- ADT Multifamily Partnership – ADT Multifamily announced a partnership with RPM Living, a leading multifamily property management company overseeing more than 200,000 units. ADT Multifamily is the preferred automation vendor for RPM living.
Results of Continuing Operations (1)(2)
| (in millions, except revenue payback, attrition, and per share data) | Three Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | $ Change | % Change | ||||||||||||
| GAAP | |||||||||||||||
| Monitoring and related services | $ | 1,068 | $ | 1,043 | $ | 25 | 2 | % | |||||||
| Security installation, product, and other | 136 | 125 | 12 | 9 | % | ||||||||||
| Total revenue | $ | 1,205 | $ | 1,168 | $ | 36 | 3 | % | |||||||
| Income (loss) from continuing operations | $ | 126 | $ | 180 | $ | (54 | ) | (30 | )% | ||||||
| Income (loss) from continuing operations per share - diluted | $ | 0.13 | $ | 0.19 | $ | (0.06 | ) | (32 | )% | ||||||
| Net cash provided by (used in): | |||||||||||||||
| Operating activities | $ | 563 | $ | 493 | $ | 70 | 14 | % | |||||||
| Investing activities | $ | (333 | ) | $ | (319 | ) | $ | (14 | ) | 4 | % | ||||
| Financing activities | $ | (200 | ) | $ | (217 | ) | $ | 17 | (8 | )% | |||||
| Non-GAAP Measures | |||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 629 | $ | 641 | $ | (12 | ) | (2 | )% | ||||||
| Adjusted Income (Loss) from continuing operations | $ | 156 | $ | 153 | $ | 3 | 2 | % | |||||||
| Adjusted Diluted Income (Loss) per share from continuing operations | $ | 0.17 | $ | 0.17 | $ | — | — | % | |||||||
| Adjusted Free Cash Flow (including interest rate swaps) | $ | 251 | $ | 221 | $ | 30 | 14 | % | |||||||
| Other Measures | |||||||||||||||
| Trailing twelve-month revenue payback | 2.2 years | 2.1 years | 0.1 | 5 | % | ||||||||||
| Trailing twelve-month gross customer revenue attrition | 12.9 | % | 12.9 | % | — | — | |||||||||
| End of period RMR | $ | 355 | $ | 348 | $ | 8 | 2 | % | |||||||
Total revenue was
Income from continuing operations was
Adjusted income from continuing operations was
Balance Sheet and Cash Flow
Net cash provided by operating activities during the second quarter was
The Company returned
Total cash and cash equivalents were
In April, the Company redeemed the remaining
In May, the Company amended and restated its First Lien Credit Agreement, which included the refinancing of
2024 Financial Outlook
The Company is reiterating its 2024 financial guidance for Total Revenue, Adjusted EBITDA, and Adjusted Free Cash Flow while updating the range for Adjusted EPS to reflect the presentation of the solar business as a discontinued operation.
| (in millions, except per share data) | ||
| Total Revenue | ||
| Adjusted EBITDA | ||
| Adjusted EPS | ||
| Adjusted Free Cash Flow (including interest rate swaps) | ||
| The Company is not providing forward-looking guidance for U.S. GAAP financial measures other than Total Revenue or a quantitative reconciliation to the most directly comparable GAAP measure for its non-GAAP financial guidance shown above because the GAAP measures cannot be reliably estimated and the reconciliations cannot be performed without unreasonable effort due to their dependence on future uncertainties and adjusting items that the Company cannot reasonably predict at this time but which may be material. Please see "Non-GAAP Measures" for additional information. | ||
| Total Revenue and Adjusted EBITDA reflect the results of the former CSB segment. GAAP cash flows include results of Solar discontinued operations. Adjusted Free Cash Flow excludes amounts related to the exit from the solar business, consistent with the definition of this measure. Beginning in the third quarter of 2024, all remaining cash flows attributable to activities of the solar business will be excluded from Adjusted Free Cash Flow as the business is now substantially wound down. | ||
Dividend Declaration
Effective Aug. 1, 2024, the Company’s Board of Directors declared a cash dividend of
_____________________
| (1) | All variances are year-over-year unless otherwise noted. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow (including interest rate swaps), Adjusted Income (Loss), Adjusted Diluted Income (Loss) per share (or, Adjusted EPS), Net Debt, and Net Leverage Ratio are non-GAAP measures. Refer to the “Non-GAAP Measures” section for the definitions of the terms and reconciliations to the most comparable GAAP measures included herein. The operating metrics such as Gross Customer Revenue Attrition, Unit Count, RMR, Gross RMR Additions, and Revenue Payback are approximated as there may be variations to reported results in each period due to certain adjustments the Company might make in connection with the integration over several periods of acquired companies that calculated these metrics differently, or otherwise, including periodic reassessments and refinements in the ordinary course of business. These refinements, for example, may include changes due to systems conversion or historical methodology differences in legacy systems. Results of the commercial and solar businesses are presented as discontinued operations. Except for cash flow measures, and unless otherwise noted, amounts herein have been recast to reflect the results of the Company’s continuing operations. | |
| (2) | Amounts may not sum due to rounding. | |
Conference Call
As previously announced, management will host a conference call at 10 a.m. ET today to discuss the Company’s second quarter 2024 results and lead a question-and-answer session. Participants may listen to a live webcast through the investor relations website at investor.adt.com. A replay of the webcast will be available on the website within 24 hours of the live event.
Alternatively, participants may listen to the live call by dialing 1-800-715-9871 (domestic) or 1-646-307-1963 (international), and providing the access code 4948265. An audio replay will be available for two weeks following the call, and can be accessed by dialing 1-800-770-2030 (domestic) or 1-609-800-9909 (international), and providing the access code 4948265.
A slide presentation highlighting the Company’s results will also be available on the Investor Relations section of the Company’s website. From time to time, the Company may use its website as a channel of distribution of material Company information. Financial and other material information regarding the Company is routinely posted on and accessible at investor.adt.com.
About ADT Inc.
ADT provides safe, smart and sustainable solutions for people, homes and small businesses. Through innovative offerings, unrivaled safety and a premium customer experience, all delivered by the largest networks of smart home security professionals in the U.S., we empower people to protect and connect to what matters most. For more information, visit www.adt.com.
| Investor Relations: | Media Relations: |
| investorrelations@adt.com Tel: 888-238-8525 | media@adt.com |
Forward-Looking Statements
ADT has made statements in this press release that are forward-looking and therefore subject to risks and uncertainties, including those described below. All statements, other than statements of historical fact, included in this document are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to, among other things, the divestiture of the commercial business which was completed in October 2023 (the “Commercial Divestiture”); the Company’s exit of the residential solar business and the expected costs and benefits of such exit (the “ADT Solar Exit”); the repurchase of shares of the Company’s common stock under the authorized share repurchase program; the Company’s ability to reduce debt or improve leverage ratios, or to achieve or maintain its long-term leverage goals; the integration of strategic bulk purchases of customer accounts; the Company’s outlook and/or guidance, which includes total revenue, Adjusted EBITDA, Adjusted Diluted Income (Loss) per Share (“Adjusted EPS”) and Adjusted Free Cash Flow (including interest rate swaps); any stated or implied outcomes with regards to the foregoing; and other matters. Without limiting the generality of the preceding sentences, any time we use the words “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and, in each case, their negative or other various or comparable terminology, and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. We caution that these statements are subject to risks and uncertainties, many of which are outside of our control and could cause future events or results to be materially different from those stated or implied in this press release, including, among others, factors relating to uncertainties as to any difficulties with respect to the effect of the Commercial Divestiture and ADT Solar Exit on our ability to retain and hire key personnel and to maintain relationships with customers, suppliers and other business partners; risks related to the Commercial Divestiture and ADT Solar Exit, including ADT’s business becoming less diversified and the possible diversion of management’s attention from ADT’s core CSB business operations; uncertainties as to our ability and the amount of time necessary to realize the expected benefits of the Commercial Divestiture and ADT Solar Exit, including the risk that the ADT Solar Exit may not be completed in a timely manner, or that the costs of the ADT Solar Exit may exceed our best estimates; our ability to maintain and grow our existing customer base and to integrate strategic bulk purchases of customer accounts; activity in repurchasing shares of ADT’s common stock under the authorized share repurchase program; dividend rates or yields for any future quarter; and risks that are described in the Company’s Annual Report and its Quarterly Reports on Form 10-Q, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in those reports, and in our other filings with the SEC. Any forward-looking statement made in this press release speaks only as of the date on which it is made. ADT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
| ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| 2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||
| Monitoring and related services | $ | 1,068 | $ | 1,043 | $ | 25 | $ | 2,131 | $ | 2,072 | $ | 59 | ||||||||||||||||||
| Security installation, product, and other | 136 | 125 | 12 | 264 | 229 | 35 | ||||||||||||||||||||||||
| Total revenue | 1,205 | 1,168 | 36 | 2,394 | 2,301 | 94 | ||||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||||||||||||||||
| Monitoring and related services | 151 | 142 | 9 | 306 | 304 | 2 | ||||||||||||||||||||||||
| Security installation, product, and other | 45 | 45 | — | —% | 85 | 75 | 10 | |||||||||||||||||||||||
| Total cost of revenue | 196 | 188 | 9 | 391 | 379 | 11 | ||||||||||||||||||||||||
| Selling, general, and administrative expenses | 388 | 319 | 69 | 747 | 654 | 93 | ||||||||||||||||||||||||
| Depreciation and intangible asset amortization | 334 | 321 | 13 | 667 | 679 | (12 | ) | (2)% | ||||||||||||||||||||||
| Merger, restructuring, integration, and other | 2 | 8 | (6 | ) | (78)% | 14 | 23 | (9 | ) | (40)% | ||||||||||||||||||||
| Operating income (loss) | 284 | 332 | (48 | ) | (14)% | 576 | 565 | 11 | ||||||||||||||||||||||
| Interest expense, net | (110 | ) | (83 | ) | (26 | ) | (197 | ) | (254 | ) | 57 | (23)% | ||||||||||||||||||
| Other income (expense) | 12 | 1 | 11 | N/M | 27 | (1 | ) | 28 | N/M | |||||||||||||||||||||
| Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of equity method investee | 186 | 249 | (63 | ) | (25)% | 406 | 310 | 96 | ||||||||||||||||||||||
| Income tax benefit (expense) | (60 | ) | (67 | ) | 7 | (11)% | (116 | ) | (86 | ) | (31 | ) | ||||||||||||||||||
| Income (loss) from continuing operations before equity in net earnings (losses) of equity method investee | 126 | 182 | (56 | ) | (31)% | 290 | 224 | 66 | ||||||||||||||||||||||
| Equity in net earnings (losses) of equity method investee | — | (2 | ) | 2 | N/M | — | (4 | ) | 4 | N/M | ||||||||||||||||||||
| Income (loss) from continuing operations | 126 | 180 | (54 | ) | (30)% | 290 | 220 | 70 | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | (34 | ) | (88 | ) | 54 | (62)% | (106 | ) | (247 | ) | 140 | (57)% | ||||||||||||||||||
| Net income (loss) | $ | 92 | $ | 92 | $ | — | —% | $ | 184 | $ | (27 | ) | $ | 211 | N/M | |||||||||||||||
| Common Stock: | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations per share - basic | $ | 0.14 | $ | 0.20 | $ | 0.32 | $ | 0.24 | ||||||||||||||||||||||
| Income (loss) from continuing operations per share - diluted | $ | 0.13 | $ | 0.19 | $ | 0.30 | $ | 0.23 | ||||||||||||||||||||||
| Net income (loss) per share - basic | $ | 0.10 | $ | 0.10 | $ | 0.20 | $ | (0.03 | ) | |||||||||||||||||||||
| Net income (loss) per share - diluted | $ | 0.10 | $ | 0.09 | $ | 0.19 | $ | (0.03 | ) | |||||||||||||||||||||
| Weighted-average shares outstanding - basic | 848 | 858 | 852 | 856 | ||||||||||||||||||||||||||
| Weighted-average shares outstanding - diluted | 909 | 917 | 913 | 919 | ||||||||||||||||||||||||||
| Class B Common Stock: | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations per share - basic | $ | 0.14 | $ | 0.20 | $ | 0.32 | $ | 0.24 | ||||||||||||||||||||||
| Income (loss) from continuing operations per share - diluted | $ | 0.13 | $ | 0.19 | $ | 0.30 | $ | 0.23 | ||||||||||||||||||||||
| Net income (loss) per share - basic | $ | 0.10 | $ | 0.10 | $ | 0.20 | $ | (0.03 | ) | |||||||||||||||||||||
| Net income (loss) per share - diluted | $ | 0.10 | $ | 0.09 | $ | 0.19 | $ | (0.03 | ) | |||||||||||||||||||||
| Weighted-average shares outstanding - basic | 55 | 55 | 55 | 55 | ||||||||||||||||||||||||||
| Weighted-average shares outstanding - diluted | 55 | 55 | 55 | 55 | ||||||||||||||||||||||||||
Note: amounts may not sum due to rounding
| ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) | ||||||
| June 30, 2024 | December 31, 2023 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 38 | $ | 15 | ||
| Restricted cash and restricted cash equivalents | 111 | 115 | ||||
| Accounts receivable, net | 386 | 370 | ||||
| Inventories, net | 203 | 201 | ||||
| Prepaid expenses and other current assets | 241 | 242 | ||||
| Current assets of discontinued operations | 6 | 61 | ||||
| Total current assets | 986 | 1,005 | ||||
| Property and equipment, net | 263 | 254 | ||||
| Subscriber system assets, net | 3,019 | 3,006 | ||||
| Intangible assets, net | 4,836 | 4,877 | ||||
| Goodwill | 4,904 | 4,904 | ||||
| Deferred subscriber acquisition costs, net | 1,249 | 1,176 | ||||
| Other assets | 727 | 699 | ||||
| Noncurrent assets of discontinued operations | 3 | 43 | ||||
| Total assets | $ | 15,986 | $ | 15,964 | ||
| Liabilities and stockholders' equity | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | $ | 192 | $ | 312 | ||
| Accounts payable | 222 | 277 | ||||
| Deferred revenue | 247 | 255 | ||||
| Accrued expenses and other current liabilities | 605 | 556 | ||||
| Current liabilities of discontinued operations | 49 | 80 | ||||
| Total current liabilities | 1,315 | 1,480 | ||||
| Long-term debt | 7,532 | 7,513 | ||||
| Deferred subscriber acquisition revenue | 2,035 | 1,915 | ||||
| Deferred tax liabilities | 1,080 | 1,027 | ||||
| Other liabilities | 200 | 219 | ||||
| Noncurrent liabilities of discontinued operations | 16 | 21 | ||||
| Total liabilities | 12,178 | 12,175 | ||||
| Total stockholders' equity | 3,808 | 3,789 | ||||
| Total liabilities and stockholders' equity | $ | 15,986 | $ | 15,964 | ||
Note: amounts may not sum due to rounding
| ADT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 92 | $ | 92 | $ | 184 | $ | (27 | ) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||
| Depreciation and intangible asset amortization | 334 | 346 | 669 | 729 | ||||||||||||
| Amortization of deferred subscriber acquisition costs | 55 | 48 | 109 | 95 | ||||||||||||
| Amortization of deferred subscriber acquisition revenue | (86 | ) | (76 | ) | (170 | ) | (148 | ) | ||||||||
| Share-based compensation expense | 21 | 12 | 29 | 27 | ||||||||||||
| Deferred income taxes | 38 | (61 | ) | 49 | (131 | ) | ||||||||||
| Provision for losses on receivables and inventory | 46 | 41 | 107 | 67 | ||||||||||||
| Goodwill, intangible, and other asset impairments | 1 | 185 | 21 | 428 | ||||||||||||
| Unrealized (gain) loss on interest rate swap contracts | 8 | (55 | ) | (2 | ) | (22 | ) | |||||||||
| Other non-cash items, net | 22 | 24 | 43 | 53 | ||||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||||||||||
| Deferred subscriber acquisition costs | (94 | ) | (98 | ) | (183 | ) | (185 | ) | ||||||||
| Deferred subscriber acquisition revenue | 69 | 75 | 135 | 148 | ||||||||||||
| Other, net | 57 | (40 | ) | (65 | ) | (235 | ) | |||||||||
| Net cash provided by (used in) operating activities | 563 | 493 | 927 | 799 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Dealer generated customer accounts and bulk account purchases | (142 | ) | (136 | ) | (260 | ) | (252 | ) | ||||||||
| Subscriber system asset expenditures | (143 | ) | (161 | ) | (284 | ) | (320 | ) | ||||||||
| Purchases of property and equipment | (47 | ) | (30 | ) | (87 | ) | (89 | ) | ||||||||
| Proceeds (payments) from interest rate swaps | (2 | ) | — | (4 | ) | — | ||||||||||
| Other investing, net | 2 | 9 | 3 | 7 | ||||||||||||
| Net cash provided by (used in) investing activities | (333 | ) | (319 | ) | (633 | ) | (655 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from long-term borrowings | 811 | 50 | 906 | 650 | ||||||||||||
| Proceeds from receivables facility | 80 | 76 | 146 | 140 | ||||||||||||
| Proceeds (payments) from interest rate swaps | 24 | 20 | 48 | 36 | ||||||||||||
| Repurchases of common stock | — | — | (93 | ) | — | |||||||||||
| Repayment of long-term borrowings, including call premiums | (961 | ) | (266 | ) | (1,018 | ) | (873 | ) | ||||||||
| Repayment of receivables facility | (100 | ) | (48 | ) | (158 | ) | (92 | ) | ||||||||
| Dividends on common stock | (50 | ) | (32 | ) | (82 | ) | (64 | ) | ||||||||
| Payments on finance leases | (8 | ) | (10 | ) | (15 | ) | (21 | ) | ||||||||
| Other financing, net | 4 | (7 | ) | (8 | ) | (33 | ) | |||||||||
| Net cash provided by (used in) financing activities | (200 | ) | (217 | ) | (275 | ) | (258 | ) | ||||||||
| Cash and cash equivalents and restricted cash and restricted cash equivalents: | ||||||||||||||||
| Net increase (decrease) | 30 | (43 | ) | 19 | (113 | ) | ||||||||||
| Beginning balance | 119 | 304 | 130 | 374 | ||||||||||||
| Ending balance | $ | 149 | $ | 261 | $ | 149 | $ | 261 | ||||||||
Note: amounts may not sum due to rounding
ADT sometimes uses information (“non-GAAP financial measures”) that is derived from the consolidated financial statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under SEC rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.
The following information includes definitions of the Company’s non-GAAP financial measures used in this release, reasons management believes these measures are useful to investors regarding the Company’s financial condition and results of operations, additional purposes, if any, for which management uses the non-GAAP financial measures, and limitations to using these non-GAAP financial measures, as well as reconciliations of these non-GAAP financial measures to the most comparable GAAP measures. Each non-GAAP financial measure is presented following the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The limitations of non-GAAP financial measures are best addressed by considering these measures in conjunction with the appropriate GAAP measures. In addition, computations of these non-GAAP measures may not be comparable to other similarly titled measures reported by other companies.
With regard to the Company’s financial guidance for 2024, the Company is not providing a quantitative reconciliation for forward-looking Adjusted EBITDA to GAAP income (loss) from continuing operations, Adjusted EPS to GAAP diluted income (loss) per share from continuing operations, and Adjusted Free Cash Flow (including interest rate swaps) to GAAP net cash provided by operating activities, which are the most directly comparable respective GAAP measures. These GAAP measures cannot be reliably predicted or estimated without unreasonable effort due to their dependence on future uncertainties, such as the adjustment of items used in the following reconciliations. Additionally, information not currently available to the Company about other adjusting items could have a potentially unpredictable and potentially significant impact on future GAAP financial results.
Unless otherwise noted, non-GAAP measures herein reflect the results of only the Company’s continuing operations. Free Cash Flow, Adjusted Free Cash Flow, and Adjusted Free Cash Flow (including interest rate swaps) reflect the results of both continuing and discontinued operations, which is consistent with the presentation of the GAAP measure net cash provided by (used in) operating activities. Adjusted Free Cash Flow and Adjusted Free Cash Flow (including interest rate swaps) exclude amounts related to the exit from the solar business, consistent with the definition of these measures. Beginning in the third quarter of 2024, all remaining cash flows attributable to activities of the solar business will be excluded from these measures as the business is now substantially wound down.
Free Cash Flow, Adjusted Free Cash Flow, and Adjusted Free Cash Flow including interest rate swaps
The Company defines Free Cash Flow as cash flows from operating activities less cash outlays related to capital expenditures. The Company defines capital expenditures to include accounts purchased through the Company’s network of authorized dealers or third parties outside of the Company’s authorized dealer network, subscriber system asset expenditures, and purchases of property and equipment. These items are subtracted from cash flows from operating activities because they represent long-term investments that are required for normal business activities.
The Company defines Adjusted Free Cash Flow as Free Cash Flow adjusted for net cash flows related to (i) net proceeds from the Company’s consumer receivables facility; (ii) restructuring and integration payments; (iii) integration-related capital expenditures; and (iv) transaction costs and other payments or receipts that may mask operating results or business trends. Adjusted Free Cash Flow including interest rate swaps reflects Adjusted Free Cash Flow plus net cash settlements on interest rate swaps presented outside of net cash provided by (used in) operating activities.
The Company believes the presentations of these non-GAAP measures are appropriate to provide investors with useful information about the Company’s ability to repay debt, make other investments, and pay dividends. The Company believes the presentation of Adjusted Free Cash Flow is also a useful measure of the cash flow attributable to normal business activities, inclusive of the net cash flows associated with the acquisition of subscribers, as well as the Company’s ability to repay other debt, make other investments, and pay dividends. Further, Adjusted Free Cash Flow including interest rate swaps is a useful measure of Adjusted Free Cash Flow inclusive of all cash interest.
There are material limitations to using these non-GAAP measures. These non-GAAP measures adjust for cash items that are ultimately within management’s discretion to direct, and therefore, may imply that there is less or more cash available than the most comparable GAAP measure. These non-GAAP measures are not intended to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted.
The non-GAAP measures in the table below include cash flows associated with both continuing and discontinued operations consistent with the applicable GAAP presentation on the Statement of Cash Flows.
| Three Months Ended June 30, | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | 563 | $ | 493 | ||||
| Investing activities | $ | (333 | ) | $ | (319 | ) | ||
| Financing activities | $ | (200 | ) | $ | (217 | ) | ||
| Net cash provided by (used in) operating activities | $ | 563 | $ | 493 | ||||
| Dealer generated customer accounts and bulk account purchases | (142 | ) | (136 | ) | ||||
| Subscriber system asset expenditures | (143 | ) | (161 | ) | ||||
| Purchases of property and equipment | (47 | ) | (30 | ) | ||||
| Free Cash Flow | 231 | 165 | ||||||
| Net proceeds (payments) from receivables facility | (20 | ) | 28 | |||||
| Restructuring and integration payments(1) | 12 | 7 | ||||||
| Integration-related capital expenditures | — | — | ||||||
| Other, net(2) | 7 | (1 | ) | |||||
| Adjusted Free Cash Flow | $ | 229 | $ | 201 | ||||
| Interest rate swaps presented outside operating activities(3) | 22 | 20 | ||||||
| Adjusted Free Cash Flow (including interest rate swaps) | $ | 251 | $ | 221 | ||||
Note: amounts may not sum due to rounding
_______________________
(1) During 2024, primarily includes costs related to the ADT Solar Exit. During 2023, primarily represents ADT Solar integration costs and restructuring activities.
(2) During 2024, primarily includes third party costs associated with implementation of a new ERP system that the Company will not continue to incur once the ERP system is fully implemented, which is expected to complete in the second half of 2025.
(3) Includes net settlements related to interest rate swaps presented outside of net cash provided by (used in) operating activities.
Adjusted EBITDA from Continuing Operations (“Adjusted EBITDA”) and Adjusted EBITDA Margin from Continuing Operations (“Adjusted EBITDA Margin”)
The Company believes Adjusted EBITDA is useful to investors to measure the operational strength and performance of its business. The Company believes the presentation of Adjusted EBITDA is useful as it provides investors additional information about operating profitability adjusted for certain non-cash items, non-routine items the Company does not expect to continue at the same level in the future, as well as other items not core to its operations. Further, the Company believes Adjusted EBITDA provides a meaningful measure of operating profitability because the Company uses it for evaluating business performance, making budgeting decisions, and comparing company performance against other peer companies using similar measures.
The Company defines Adjusted EBITDA as income (loss) from continuing operations adjusted for (i) interest; (ii) taxes; (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets and amortization of dealer and other intangible assets; (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions; (v) share-based compensation expense; (vi) merger, restructuring, integration, and other items; (vii) impairment charges; and (viii) non-cash, non-routine, or other adjustments or charges not necessary to operate our business.
There are material limitations to using Adjusted EBITDA as it does not include certain significant items which directly affect income (loss) from continuing operations (the most comparable GAAP measure).
The discussion above is also applicable to Adjusted EBITDA margin, which is calculated as Adjusted EBITDA as a percentage of total revenue.
| Three Months Ended June 30, | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Income (loss) from continuing operations | $ | 126 | $ | 180 | ||||
| Interest expense, net | 110 | 83 | ||||||
| Income tax expense (benefit) | 60 | 67 | ||||||
| Depreciation and intangible asset amortization | 334 | 321 | ||||||
| Amortization of deferred subscriber acquisition costs | 55 | 46 | ||||||
| Amortization of deferred subscriber acquisition revenue | (86 | ) | (74 | ) | ||||
| Share-based compensation expense | 21 | 8 | ||||||
| Merger, restructuring, integration and other | 2 | 8 | ||||||
| Other, net(1) | 8 | — | ||||||
| Adjusted EBITDA from continuing operations | $ | 629 | $ | 641 | ||||
| Income (loss) from continuing operations to total revenue ratio | 10 | % | 15 | % | ||||
| Adjusted EBITDA Margin (as percentage of Total Revenue) | 52 | % | 55 | % | ||||
Note: amounts may not sum due to rounding
_______________________
(1) During 2024, primarily includes unrealized (gains) / losses related to interest rate swaps presented in other income (expense) and loss on extinguishment of debt.
Adjusted Income (Loss) from Continuing Operations (“Adjusted Income (Loss)”) and Adjusted Diluted Income (Loss) per Share from Continuing Operations (“Adjusted Diluted Income (Loss) per Share” or “Adjusted EPS”)
The Company defines Adjusted Income (Loss) as income (loss) from continuing operations adjusted for (i) merger, restructuring, integration, and other; (ii) share-based compensation expense; (iii) unrealized gains and losses on interest rate swap contracts not designated as hedges; (iv) impairment charges; (v) non-cash, non-routine, or other adjustments or charges not necessary to operate our business; and (vi) the impact these adjusted items have on taxes.
Adjusted Diluted Income (Loss) per share is Adjusted Income (Loss) divided by diluted weighted-average shares outstanding of common stock. When the control number for the GAAP calculation is negative, diluted weighted-average shares outstanding of common stock does not include the assumed conversion of Class B common stock and other potential shares, such as share-based compensation awards, to shares of common stock.
The Company believes Adjusted Income (Loss) and Adjusted Diluted Income (Loss) per share are benchmarks used by analysts and investors who follow the industry for comparison of its performance with other companies in the industry, although these measures may not be directly comparable to similar measures reported by other companies.
There are material limitations to using these measures, as they do not reflect certain significant items which directly affect income (loss) from continuing operations and related per share amounts (the most comparable GAAP measures).
| Three Months Ended June 30, | ||||||||
| (in millions, except per share data) | 2024 | 2023 | ||||||
| Income (loss) from continuing operations | $ | 126 | $ | 180 | ||||
| Merger, restructuring, integration, and other | 2 | 8 | ||||||
| Share-based compensation expense | 21 | 8 | ||||||
| Interest rate swaps, net(1) | 8 | (55 | ) | |||||
| Other, net | 5 | — | ||||||
| Tax impact on adjustments(2) | (6 | ) | 10 | |||||
| Adjusted Income (Loss) from continuing operations | $ | 156 | $ | 153 | ||||
| Weighted-average shares outstanding - diluted(3): | ||||||||
| Common Stock | 909 | 917 | ||||||
| Class B Common Stock | 55 | 55 | ||||||
| Income (loss) per share from continuing operations - diluted: | ||||||||
| Common Stock | $ | 0.13 | $ | 0.19 | ||||
| Class B Common Stock | $ | 0.13 | $ | 0.19 | ||||
| Adjusted Diluted Income (Loss) per share(4) | $ | 0.17 | $ | 0.17 | ||||
Note: amounts may not sum due to rounding.
_______________________
(1) Primarily includes the unrealized (gain) or loss on interest rate swaps not designated as cash flow hedges.
(2) Represents the federal and state blended statutory rate.
(3) Refer to the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K for further discussion regarding the computation of diluted weighted-average shares outstanding of common stock.
(4) Calculated as Adjusted Income (Loss) divided by diluted weighted-average shares outstanding of common stock.
FAQ
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