Adt Inc. · NYSE:ADT
Adt — Q3 2022 Earnings Presentation
35 slides from Adt's earnings presentation, Nov 3, 2022
Slide 1: Third Quarter 2022 Earnings Presentation
Third Quarter 2022 Earnings Presentation November 3, 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 — “Financial Outlook”.
Slide 3: Company Overview
Company Overview
Slide 4: We are a Mission-Driven Company
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations 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 pr
Slide 5: Our Mission Delivers Superior Results For All Stakeholders
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations 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
Slide 6: Well-Positioned For Strong Cash Generation and Profitability
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Well-Positioned For Strong Cash Generation and Profitability Consumer & Small Commercial Solar Business (CSB) ✓ Poised to become a $48B market by ✓ Leading position with the market ✓ Home automation market growing 2025 with a
Slide 7: 3Q 2022
3Q 2022
Slide 8: 3Q 2022: Highlights
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations 3Q 2022: Highlights Strong customersatisfaction, Strong customer satisfaction[record-high with a third customer consecutive quarterand retention of record high recurring customer monthly retention revenue and and balance], re
Slide 9: Key Financial and Operating Metrics
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Key Financial and Operating Metrics For the three months ended Sept. 30, Sept. 30, Key Highlights Y/Y Change ($ in millions) 2022 2021 M&S Revenue $1,160 $1,098 $61 6% • M&S Revenue: Larger recurring revenue base from increas
Slide 10: Gaining Momentum in the Business
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Gaining Momentum in the Business CSB Subscribers Attrition Revenue Payback 7M+ 16%+ 2.7x 2.3x 6.5M 13.1% 2.1x 6.4M 12.6% < 2.0x ~12% 2021 3Q22 2025 Pre-IPO 2021 3Q22 2025 Pre-IPO 2021 3Q22 2025 Goals Goals Goals Jan 2020 Aug
Slide 11: Google Partnership Building Momentum in 2022
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Google Partnership Building Momentum in 2022 • National rollout of Google Nest indoor/outdoor cameras and thermostats in August, following successful launches of doorbell and Wifi earlier in 2022 – Doorbell attachment rate ex
Slide 12: State Farm Strategic Partnership Update
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations State Farm Strategic Partnership Update • Provide State Farm non-tenant homeowners policy holders with new Increase and innovative integrated offering to detect and mitigate losses Subscribers with related to water, fire, int
Slide 13: Partnerships Reinforce Long-Term Strategy
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Partnerships Reinforce Long-Term Strategy Enable customers to better manage Accelerate penetration and unlock the risks of everyday life and 1 2 greater share of wallet in fast protect what matters most growing markets Build
Slide 14: Financial Outlook
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Financial Outlook • On Track to Achieve Full Year 2022 Guidance Metrics Provided at Investor Day – Based on performance through the end of the third quarter, the Company expects to deliver Total Revenue and Adjusted EBITDA to
Slide 15: ADT has a Durable and Resilient Business Model
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations ADT has a Durable and Resilient Business Model • Large existing subscriber base generates $4.4B+ in annual recurring revenue Durable Recurring 1 • Retention at record high, driving ~8-year average subscriber life Revenue Base
Slide 16: Key Financial and Operating Metrics
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations TOTA L CO M PA NY Key Financial and Operating Metrics Gross RMR Additions Total Company Statistics $ in Millions Total (2%) 3Q'22 Y/Y Change $15.5 $15.2 Ending Subscriber Count 6.7M 2% M&S Revenue $1,160M 6% 3Q'21 3Q'22 Insta
Slide 17: Segment Financials and Key Metrics: Consumer and Small Business
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations CONSUMER AND SMALL BUSINESS Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Total +7% $1,036 $1,111 $60 $89 3Q'22 Y/Y Change $976 $1,022 Ending Subscriber Count 6.5M 2% Interactive Customers 63% 50
Slide 18: Segment Financials and Key Metrics: Commercial
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations COMMERCIAL Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Total +12% $281 $314 3Q'22 Y/Y Change $159 $176 Ending Subscriber Count 260K 0% $123 $138 End of Period RMR $32M 5% 3Q'21 3Q'22 Monitoring
Slide 19: Segment Financials and Key Metrics: Solar
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations SOLAR Segment Financials and Key Metrics Revenue Segment Statistics $ in Millions Total (2%) 3Q'22 Y/Y Change $182 $179 Solar Installations 4.6K (7%) 3Q'21 3Q'22 Revenue per Installation ~$39K 6% Installation & Other Battery
Slide 20: Capital Structure Overview
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Capital Structure Overview Highlights Capital Structure $ in Millions 12/31/21 9/30/22 • $600 million First Lien Term Loan A Facility commitment with delayed Actual Actual draw to partially refinance $700 million ADT Notes du
Slide 21: Additional Financial Information
Additional Financial Information
Slide 22: Tender Results and Outcome
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Tender Results and Outcome • ADT self tender for 133.3 million shares expired on October 20, 2022, effectively offsetting dilution from State Farm’s equity investment – Apollo tendered all owned shares as part of the tender,
Slide 23: Adjusted Free Cash Flow
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Adjusted Free Cash Flow For the three months ended For the nine months ended ($ in millions) Sept. 30, 2022 Sept. 30, 2021 Y/Y Change Sept. 30, 2022 Sept. 30, 2021 Y/Y Change Adjusted EBITDA $620 $554 $66 $1,818 $1,638 $180 N
Slide 24: Net SAC Calculation
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Net SAC Calculation For the three months ended For the nine months ended Sept. 30, 2022 Sept. 30, 2022 ($ in millions) Capitalized Non-capitalized Total Capitalized Non-capitalized Total Selling, Advertising & Commissions $10
Slide 25: Additional Historical Quarterly Data
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Additional Historical Quarterly Data ($ in millions) For the Three Months Ended Septem ber 30, June 30, March 31, Decem ber 31, Septem ber 30, 2022 2022 2022 2021 2021 Operating and Financial Measures Monitoring and Service R
Slide 26: Selected Statement of Operations Components
Overview 3Q 2022 Additional Financial Information Non-GAAP Reconciliations Selected Statement of Operations Components For the three months ended September 30, 2022 For the three months ended September 30, 2021 ($ in millions) Total Cost of SG&A Total Cost of SG&A (1) (1) Revenue Revenue and Other D
Slide 27: Income Statement
Income Statement Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per share data) 2022 2021 $ Change % Change 2022 2021 $ Change % Change Monitoring and related services $ 1,160 $ 1,098 $ 61 6% $ 3,427 $ 3,245 $ 182 6% Installation, product, and other 444 219 226
Slide 28: Balance Sheet
Balance Sheet September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 46 $ 24 Accounts receivable, net 540 442 Inventories, net 332 277 Work-in-progress 92 71 Prepaid expenses and other current assets 355 178 Total current assets 1,364 993 Property and equipment, net
Slide 29: Cash Flow Statement
Cash Flow Statement Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cash flows from operating activities: Net income (loss) $ (122) $ (109) $ 21 $ (283) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciatio
Slide 30: Segment Information
Segment Information (in millions) Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 September 30, 2022 September 30, 2021 Total revenue Monitoring and related services $ 1,160 $ 1,146 $ 1,121 $ 1,103 $ 1,098 $ 3,427 $ 3,245 Inst
Slide 31: 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 32: 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 33: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow and Adjusted Free Cash Flow: We believe the presentations of Free Cash Flow and Adjusted Free Cash Flow are appropriate to provide investors with useful information about our ability to repay debt, make other investments, and pay dividends. In addition
Slide 34: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Net Income (Loss) and Adjusted Diluted Net Income (Loss) per share: We define Adjusted Net Income (Loss) as net income (loss) adjusted for (i) merger, restructuring, integration, and other; (ii) losses on extinguishment of debt; (iii) radio conversion costs
Slide 35: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Debt to Net Income (Loss) Leverage Ratio and Reconciliation to Net Leverage Ratio: Net Leverage Ratio is calculated as the ratio of net debt to last twelve months ("LTM") Adjusted EBITDA. Net Leverage Ratio prior to subscriber acquisition is calculated as the ratio o