Adt Inc. · NYSE:ADT
Adt — Q1 2022 Earnings Presentation
30 slides from Adt's earnings presentation, May 5, 2022
Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 Earnings Presentation May 5, 2022
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures ADT has made statements in this presentation and in other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties, including under the heading — “2022 Financial Outl
Slide 3: We are a Mission-Driven Company
We are a Mission-Driven Company Our mission has expanded beyond the traditional definition of security Safe Smart Sustainable We protect We deliver innovative, We make life better for the what matters most customer-focused products, customers and communities technologies, and services we serve Empow
Slide 4: We Have a Clear Strategy to Drive Customer Preference and Long-term Shareholder Value
We Have a Clear Strategy to Drive Customer Preference and Long-term Shareholder Value Strategic Differentiators Enablers Innovative Unrivaled Premium Trusted Optimized Operational Offerings Safety Experience Brand Go-to-Market Excellence Google Partnership Our Industry-Leading Businesses Consumer &
Slide 5: Our Mission Delivers Superior Results For All Stakeholders
Our Mission Delivers Superior Results For All Stakeholders Our commitment to respect the environment, promote social responsibility and lead with responsible governance is fundamental to who we are and guides our safe, smart, and sustainable business practices Data privacy and cybersecurity Product
Slide 6: We Expect Strong Cash Generation and Profitability
We Expect Strong Cash Generation and Profitability Consumer & Small Commercial Solar Business (CSB) ✓ Home automation market growing ✓ Poised to become a $48B market by ✓ Market leading position with the 22%; Core home security market 2025 with a growing need for full- market positioned for 13% grow
Slide 7: Our Partnership with Google is Building Momentum in 2022
Our Partnership with Google is Building Momentum in 2022 Innovative Unrivaled Premium Trusted Optimized Operational Offerings Safety Experience Brand Go-to-Market Excellence Highlights: • Successful Nest Doorbell launch with more products on the way – Successful national launch of Google Nest Doorbe
Slide 8: Measurable Progress Against Long-Term Financial Goals
Measurable Progress Against Long-Term Financial Goals Financial Goals: 2025 Goals 1Q’22 Update Up 18% in 1Q driven by contribution of ADT Solar, larger Total Revenue $10B+ recurring revenue base, and Commercial revenue growth Up 11% in 1Q driven by CSB M&S revenue, operating efficiency Adjusted EBIT
Slide 9: 1Q 2022 Highlights
1Q 2022 Highlights
Slide 10: 1Q 2022: Highlights
1Q 2022: Highlights Record high customer retention and highest-ever recurring monthly revenue balance 18% revenue growth versus prior year with continued growth in subscribers Adjusted EBITDA of $601 million, up 11% versus prior year on both better revenue and CSB cost performance Driving growth for
Slide 11: 2022 Financial Outlook
2022 Financial Outlook Total Adjusted Adjusted Revenue EBITDA Free Cash Flow $6.2-6.4B $2,335-2,435M $550-625M $5.3B $2,213M $465M 2021 2022 2021 2022 2021 2022 Guidance Guidance Guidance • Total revenue up 18% in 1Q • Adjusted EBITDA up 11% in 1Q • 1Q year-over-year performance reflects prior year
Slide 12: Key Financial and Operating Metrics
TOTA L CO M PA NY Key Financial and Operating Metrics For the three months ended Mar 31, Mar 31, Key Highlights ($ in Millions) Y/Y Change 2022 2021 M&S Revenue $1,121 $1,063 $59 6% • M&S revenue: Larger recurring revenue base from increase in average pricing and subscriber growth initiatives Total
Slide 13: Key Financial and Operating Metrics
TOTA L CO M PA NY Key Financial and Operating Metrics Gross RMR Additions Total Company Statistics $ in Millions Total $16.0 $15.8 Includes initial Ackerman account purchases 1Q’22 Y/Y Change Ending Subscriber Count 6.7M 1% 1Q'21 1Q'22 M&S Revenue $1,121M 6% End of Period RMR Installation Revenue $4
Slide 14: Segment Financials and Key Metrics
CONSUMER AND SMALL BUSINESS Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Consumer and Small Business $1,039 $1,063 $87 $70 $951 $993 1Q’22 Y/Y Change Ending Subscriber Count 6.4M 1% 1Q'21 1Q'22 Interactive Customers ~60% 500bps Monitoring & Service Installation & Other
Slide 15: Segment Financials and Key Metrics
COMMERCIAL Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Commercial $266 $290 $155 $162 1Q’22 Y/Y Change $112 $128 Ending Subscriber Count 260K 2% 1Q'21 1Q'22 End of Period RMR $32M 9% Monitoring & Service Installation & Other 1Q’21 includes initial Ackerman Adjusted EB
Slide 16: Segment Financials and Key Metrics
SOLAR Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Solar $192 $111 1Q’22 Y/Y Change Solar Installations 5.5K 79% 1Q'21 1Q'22 Revenue per installation ~$35K (4%) Installation & Other Financing Fees $38M 39% Adjusted EBITDA (~15% of gross revenue) $ in Millions Battery A
Slide 17: Capital Structure Overview
Capital Structure Overview Recent Highlights Capital Structure $ in Millions 12/31/21 3/31/22 Actual Actual • Paid out 1Q dividend of $0.035 per share in April Revolver 25 170 First Lien Term Loan 2,758 2,751 • Declared 2Q dividend of $0.035 per share payable on First Lien Notes 5,550 5,550 Finance
Slide 18: Appendix
Appendix
Slide 19: Adjusted Free Cash Flow
Adjusted Free Cash Flow For the three months ended ($ in Millions) Mar 31, 2022 Mar 31, 2021 Y/Y Change Adjusted EBITDA $601 $542 $59 Net Expensed SAC (1) 90 106 (15) Net SAC (2) (425) (447) 22 Cash Taxes (0) 4 (4) Cash Interest (156) (167) 11 Capital Expenditures (3) (44) (37) (7) Working Capital &
Slide 20: Net SAC Calculation
Net SAC Calculation For the three months ended March 31, 2022 Cost Components Capitalized Non-capitalized Total Selling, Advertising, & Commissions $93 $130 $223 Installation Cost $139 $139 Capitalized Direct SAC $182 $182 Capitalized Dealer SAC $185 $185 Installation Revenue (1) ($81) ($222) ($303)
Slide 21: Additional Historical Quarterly Data
Additional Historical Quarterly Data (in millions) For the Three Months Ended March 31, December 31, September 30, June 30, March 31, 2022 2021 2021 2021 2021 Operating and Financial Measures Monitoring and Service Revenue $1,121 $1,103 $1,098 $1,084 $1,063 Total Revenue $1,545 $1,381 $1,317 $1,304
Slide 22: Selected Statement of Operations Components
Selected Statement of Operations Components GAAP Line Items GAAP Line Items For the three months ended March 31, 2022 For the three months ended March 31, 2021 ($ in millions) Total Cost of SG&A Total Cost of SG&A Revenue Revenue and Other D&A Total Revenue Revenue and Other D&A Total Monitoring & S
Slide 23: Income Statement
Income Statement (in millions, except per share data) Three Months Ended March 31, 2022 2021 Monitoring and related services $ 1,121 $ 1,063 Installation, product, and other 423 242 Total revenue 1,545 1,305 Cost of revenue (exclusive of depreciation and amortization shown separately below) 510 381
Slide 24: Balance Sheet
Balance Sheet (in millions) March 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 17 $ 24 Accounts receivable, net 454 442 Inventories, net 305 277 Work-in-progress 76 71 Prepaid expenses and other current assets 215 178 Total current assets 1,067 993 Property and equip
Slide 25: Cash Flow Statement
Cash Flow Statement (in millions) Three Months Ended March 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ 52 $ (48) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and intangible asset amortization 476 470 Amort
Slide 26: Segment Information
Segment Information (in millions) Three Months Ended Twelve Months Ended March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 March 31, 2022 December 31, 2021 Total revenue Monitoring and related services $ 1,121 $ 1,103 $ 1,098 $ 1,084 $ 1,063 $ 4,406 $ 4,348 Installatio
Slide 27: Non-GAAP Measures
Non-GAAP Measures We sometimes use information (“non-GAAP financial measures”) that is derived from the condensed 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 measure
Slide 28: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted EBITDA, Adjusted EBITDA prior to subscriber acquisition, and Adjusted EBITDA margin: We believe the presentation of Adjusted EBITDA provides useful information to investors about our operating profitability adjusted for certain non-cash items, non-routine it
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow and Adjusted Free Cash Flow: We believe the presentation of Free Cash Flow and Adjusted Free Cash Flow are appropriate to provide useful information to investors about our ability to repay debt, make other investments, and pay dividends. In addition, w
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Leverage Ratios and Net Debt: Net Leverage Ratio is calculated as the ratio of net debt to Adjusted EBITDA. Net Leverage Ratio prior to subscriber acquisition is calculated as the ratio of net debt to Adjusted EBITDA prior to subscriber acquisition. Net debt is calcu