Continued strong financial results, cash generation, and leverage reduction
Revenue up 5% versus prior year period
GAAP income from continuing operations up 7%; Adjusted EBITDA up 6%
Record-high recurring monthly revenue; solid customer retention
On track to achieve full year 2024 guidance metrics
BOCA RATON, Fla., Oct. 24, 2024 (GLOBE NEWSWIRE) -- ADT Inc. (NYSE: ADT), the most trusted brand in smart home and small business security, today reported results for the third quarter of 2024.
Financial highlights for the third 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.
- Total revenue increased by 5% to $1.2 billion and end-of-period recurring monthly revenue (RMR) increased 2% to $359 million ($4.3 billion on an annualized basis)
- Strong customer retention with gross revenue attrition of 12.8% and revenue payback at 2.2 years
- GAAP income from continuing operations of $132 million, or $0.14 per diluted share, up $9 million
- Adjusted income from continuing operations of $183 million, or $0.20 per diluted share, up $39 million
- Adjusted EBITDA from continuing operations of $659 million, up $35 million
- Year to date net cash provided by operating activities of $1.4 billion up 14%; Adjusted Free Cash Flow (including interest rate swaps) of $520 million up 28%
Business Highlights
- Trusted Neighbor launch - ADT's Trusted Neighbor offering is now available for customers across the US. This new offering allows customers to grant secure, temporary access to their homes through the ADT+ app, enhancing security and convenience. Select customers can use the Auto-Unlock feature to automatically verify a trusted individual, enabled by deep integration of the ADT+ app, Google Nest Doorbell's Familiar Faces technology, and Yale locks.
- ADT Remote Assistance - The ADT Remote Assistance program continues to generate high customer satisfaction at a lower cost while also eliminating thousands of vehicle trips each day. In the third quarter 2024, over 50% of ADT service requests were virtual.
- ADT Home Security Program for State Farm - In October, ADT expanded its Home Security Program for State Farm, introducing a new solution in Maryland and Michigan that detects water leaks in common household areas. Building on learnings and customer feedback from earlier pilot launches, ADT continues to develop tailored packages focused on proactive risk detection and strong customer protection.
- Strategic Bulk Account Purchase - The Company closed on a strategic bulk purchase of approximately 49,000 customer accounts, acquired from the same party as the December 2023 transaction, for $81 million cash with attractive projected returns. This portfolio of customers is concentrated in a few key geographies, all of which align with existing platforms, enabling strong economies of scale upon integration.
- ADT+ app scores high rating - The ADT+ app has received consistently high ratings, averaging 4.7 stars across thousands of reviews in the Apple App Store and Google Play store, making it the highest-rated app in the home security and smart home category.
- ADT's 150th birthday - In August, ADT proudly celebrated its "150th birthday,” a significant milestone marking the Company's 150 years of innovating to keep customers safe. Employees celebrated by ringing the opening bell at the New York Stock Exchange and volunteering with The Birthday Project, a nonprofit organization that hosts birthday celebrations for unhoused youth.
- Hurricane Relief Donations - In October, ADT's Safe Places program donated to local and national organizations such as the American Red Cross, Team Rubicon, and a North Carolina food bank to support relief and recovery efforts in areas affected by recent hurricanes.
- ADT recognized as top workplace for people with disabilities - Newsweek named ADT one of America's Greatest Workplaces for People with Disabilities. This accolade highlights ADT's commitment to inclusivity with robust accommodations, comprehensive benefits, accessible work environments, and meaningful career advancement opportunities for employees with disabilities.
| (in millions, except revenue payback, attrition, and per share data) | Three Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | Change | % Change | ||||||||||||
| GAAP | |||||||||||||||
| Monitoring and related services | $ | 1,078 | $ | 1,053 | $ | 24 | 2 | % | |||||||
| Security installation, product, and other | 166 | 126 | 40 | 32 | % | ||||||||||
| Total revenue | $ | 1,244 | $ | 1,180 | $ | 64 | 5 | % | |||||||
| Income (loss) from continuing operations | $ | 132 | $ | 123 | $ | 9 | 7 | % | |||||||
| Income (loss) from continuing operations per share - diluted | $ | 0.14 | $ | 0.13 | $ | 0.01 | 8 | % | |||||||
| Net cash provided by (used in): | |||||||||||||||
| Operating activities | $ | 498 | $ | 446 | $ | 52 | 12 | % | |||||||
| Investing activities | $ | (402 | ) | $ | (333 | ) | $ | (68 | ) | (20)% | |||||
| Financing activities | $ | (41 | ) | $ | (18 | ) | $ | (23 | ) | (131)% | |||||
| Non-GAAP Measures | |||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 659 | $ | 623 | $ | 35 | 6 | % | |||||||
| Adjusted Income (Loss) from continuing operations | $ | 183 | $ | 144 | $ | 39 | 27 | % | |||||||
| Adjusted Diluted Income (Loss) per share from continuing operations | $ | 0.20 | $ | 0.16 | $ | 0.04 | 25 | % | |||||||
| Adjusted Free Cash Flow (including interest rate swaps) | $ | 158 | $ | 171 | $ | (13 | ) | (7)% | |||||||
| Other Measures | |||||||||||||||
| Trailing twelve-month revenue payback | 2.2 years | 2.0 years | 0.2 years | 10 | % | ||||||||||
| Trailing twelve-month gross customer revenue attrition | 12.8 | % | 12.9 | % | (10) bps | N/A | |||||||||
| RMR | $ | 359 | $ | 350 | $ | 8 | 2 | % | |||||||
Total revenue was $1,244 million for the third quarter, up 5%. Monitoring and related services (M&S) revenue growth was primarily driven by an increase in average prices. Security installation, product, and other revenue increased primarily due to higher volume of outright sales to new customers and higher amortization of deferred subscriber acquisition revenue under the Company-owned sales model.
Income from continuing operations was $132 million, or $0.14 per diluted share, up $9 million. This was primarily attributable to continued growth in revenues and associated margins including cost efficiencies, partially offset by technology investments and higher net interest expense.
Adjusted income from continuing operations was $183 million, or $0.20 per diluted share, up $39 million, driven by the same factors noted above excluding the negative impact of interest rate swaps of $54 million.
Adjusted EBITDA was $659 million, up $35 million primarily attributable to continued growth in M&S revenues and associated margins including cost efficiencies, partially offset by technology investments.
Balance Sheet and Cash Flow
Net cash provided by operating activities during the third quarter was $498 million, up $52 million or 12%, primarily driven by lower cash interest resulting from debt reduction and improved operating performance, partially offset by the net results of the commercial and solar businesses. Adjusted Free Cash Flow (including interest rate swaps) decreased by $13 million, which included a strategic bulk account purchase of $81 million during the quarter, in addition to the drivers above.
The Company returned $50 million to shareholders via dividends in the third quarter.
Total cash and cash equivalents were $95 million and no amounts were outstanding under the Company's First Lien Revolving Credit Facility at the end of the quarter.
In October, the Company amended and restated its First Lien Credit Agreement with respect to the First Lien Revolving Credit Facility, which extended the maturity date to October 2029, subject to certain conditions, and obtained an additional $225 million of commitments. The new facility reduces interest rates on drawn amounts by 85 basis points and commitment fees by 20 basis points.
As of Oct. 24, 2024, approximately $225 million remains available for future share repurchases under the Share Repurchase Plan, net of $32 million of repurchases in October.
2024 Financial Outlook
Based on performance through the end of the third quarter, the Company is tightening its 2024 financial guidance within prior guidance ranges.
| (in millions, except per share data) | Prior Guidance | Updated Guidance | |
| Total Revenue | $4,800 - $5,000 | $4,850 - $4,950 | |
| Adjusted EBITDA | $2,525 - $2,625 | $2,550 - $2,600 | |
| Adjusted EPS | $0.65 - $0.75 | $0.70 - $0.75 | |
| Adjusted Free Cash Flow (including interest rate swaps) | $700 - $800 | $725 - $775 | |
| 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 cash flows attributable to activities of the solar business are excluded from Adjusted Free Cash Flow as the business is substantially wound down. | |||
Dividend Declaration
Effective Oct. 24, 2024, the Company's Board of Directors declared a cash dividend of $0.055 per share to holders of the Company's common stock and Class B common stock of record as of Dec. 12, 2024. This dividend will be paid on Jan. 9, 2025.
_____________________
| (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 third 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: |
| [email protected] | [email protected] |
| Tel: 888-238-8525 |
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”); repurchases 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; the impact from cybersecurity attacks, including the incidents disclosed in the Current Reports on Form 8-K filed with the SEC on August 8, 2024 and October 7, 2024 (together, the "Cybersecurity Incidents”), and the related scope of investigations and expectations regarding impact to the Company's operations or financial condition, and any assumptions related thereto; and other matters. Without limiting the generality of the preceding sentences, any time we use the words "ongoing,” "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; the Company's ongoing assessments of the impacts of the Cybersecurity Incidents; the Company's expectations regarding its ability to contain and remediate the Cybersecurity Incidents and to effectively implement counter measures intended to safeguard the Company's information technology assets and operations; the impact of the Cybersecurity Incidents on the Company's relationships with customers, employees and regulators; the Company's ability to coordinate effectively with its third party business partners to address the Cybersecurity Incidents; legal, reputational and financial risks resulting from the Cybersecurity Incidents; and that any future, or still undetected, cybersecurity related incident, whether an attack, disruption, intrusion, denial of service, theft or other breach could result in unauthorized access to, or disclosure of, data, resulting in claims, costs and reputational harm that could negatively affect our actual results of operations or financial condition; 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||
| Monitoring and related services | $ | 1,078 | $ | 1,053 |
setTimeout(function () {
dataLayer.push({
'event': 'article_complete',
'page_type': 'article',
'headline': 'ADT Reports Third Quarter 2024 Results
',
'article_id': '337698',
'content_category': 'TMT Newswire',
'content_subcategory': 'GlobeNewswire',
'article_type': 'free',
'author_id': '0',
'author_name': '',
'publish_date': '2024-10-24',
'publish_time': '19:06',
'feature_type': '',
'article_tags': ''
});
},6000)
| ||||||||||||||||||||||