Adt Inc. · NYSE:ADT
Adt — Q4 2020 Earnings Presentation
34 slides from Adt's earnings presentation, Feb 25, 2021
Slide 1: Q4 2020 Earnings Presentation
Q4 2020 Earnings Presentation February 25, 2021
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures ADT has made statements in this presentation and 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 2021 Financial Outlook. A
Slide 3: Key Takeaways
Key Takeaways Q4 and full-year growth in net subscribers, driven by addition of new interactive customers and improved attrition 15% Q4 increase in U.S. RMR additions; Record low revenue payback of 2.2 years Expansion of distribution channels and new strategic partnerships continuing into 2021 Googl
Slide 4: 2020 In-Review Highlights
2020 In-Review Highlights ▪ Focused on the long-term – navigated through the pandemic while caring for our colleagues, safely continuing to serve our 6+ million customers, and investing in our business ▪ Demonstrated the resilience of ADT and our business model as we delivered results in-line with,
Slide 5: 2020 ADT Subscriber Engagement
2020 ADT Subscriber Engagement 3+ Over 1M Command and Control Million Installations Since Launch 200+ Monthly average Billion app users 85% 85% 86% System events 82% 82% 82% 84% 2+ 73% 74% 74% 75% per year 71% Million In-home technician 50% 51% 300+ visits 43% 44% 47% 48% 49% 39% 40% 41% Million 37%
Slide 6: Accelerating Growth Drivers Entering 2021
Accelerating Growth Drivers Entering 2021 Macro Dynamics ADT Initiatives Increasing de-urbanization, Continued execution of particularly following additive partnerships such as COVID-19 pandemic, is D.R. Horton; healthy pipeline expected to drive new demand of opportunities Improving marketing Incre
Slide 7: Sustained Operational Improvements Enable Transition To Stronger Growth Focus
Sustained Operational Improvements Enable Transition To Stronger Growth Focus Attrition Revenue Payback Attrition and revenue payback improved substantially since 2015… 16%+ 2.7x ~13% 2.2x Legacy ADT(1) 2020 2015 2020 US RMR Adds ($M) Adjusted FCF ($M) …with focus on cash generation and modest RMR g
Slide 8: Preview: ADT's Next Chapter
Preview: ADT’s Next Chapter Accelerated Innovation Consumer Shareholder Growth Leader Centricity Returns Consumer & Ambient Smart Frictionless Capital Commercial Home & Security Journeys Efficiency Smart home driven Google differentiation Omni-channel & Targets for efficiency sustainable growth ADT
Slide 9: 2021 Objectives
2021 Objectives 1 Accelerate new subscriber additions and return to commercial growth 2 Expand partnerships & distribution in rapidly growing smart home market 3 Launch ADT | Google first generation offering 4 Invest in and build the platform of the future 5 Substantially complete our 3G customer co
Slide 10: 2021: Accelerating Efficient Subscriber Growth
2021: Accelerating Efficient Subscriber Growth - Ackerman - Partnerships $52.6M - Internal Initiatives - Macro dynamics $48.0M Gross RMR Additions 2017 2020 2021 $1.43B $1.37B Net Subscriber Acquisition Costs 2017 2020 2021 Revenue Payback 2.5x 2.2x 10 Note: 1. Historical metrics are presented for t
Slide 11: 2021 Financial Outlook
2021 Financial Outlook Non-cash impact from residential customer-owned transactions (1) Total Revenue $5,050M – $5,250M Increase related to return to growth in commercial business ~$150M - $250M incremental Adjusted Free investment in SAC to drive growth $450M – $550M Cash Flow ~$50M investment rela
Slide 12: Financial Review
Financial Review
Slide 13: Strength Across Key Financial and Operating Metrics
Strength Across Key Financial and Operating Metrics For the twelve months ended ($ in millions) Dec 31, 2020 Dec 31, 2019(1) Y/Y Change Y/Y Change % Monitoring and Service Revenue $4,187 $4,308 ($121) (3%) Total Revenue $5,315 $5,126 $189 4% Net Loss ($632) ($424) ($208) (49%) Adjusted EBITDA $2,199
Slide 14: Strong Cash Flow Generation
Strong Cash Flow Generation For the three months ended For the twelve months ended ($ in millions) Dec 31, 2020 Dec 31, 2019 Y/Y Change Dec 31, 2020 Dec 31, 2019 Y/Y Change Adjusted EBITDA $533 $607 ($74) $2,199 $2,483 ($284) Less: Capitalized SAC (273) (251) (22) (863) (1,142) 279 Plus: Net Proceed
Slide 15: Improving Customer Acquisition Efficiency
Improving Customer Acquisition Efficiency Recurring Monthly Revenue (RMR) Additions(1) Net Subscriber Acquisition Costs (SAC)(3) $MM $MM 2.3x $365 2.2x $335 92 84 $13.9 $12.2 251 273 Q4'19 Q4'20 Q4'19 Q4'20 (4) LTM Revenue Payback (in years) (1)(2) Capitalized SAC Non-capitalized SAC US RMR addition
Slide 16: Significant Reduction in Attrition
Significant Reduction in Attrition 2020 impacted by Gross Customer Revenue Attrition(1) Total Revenue $22 million % $MM decrease in Total Revenue due to November 2019 sale of ADT Canada $1,298 $1,315 13.4% 240 261 13.1% 1,058 1,054 LTM 12/31/19 LTM 12/31/20 Q4'19 Q4'20 Monitoring & Service Installat
Slide 17: Strong Cash Flow Generation
Strong Cash Flow Generation Adjusted EBITDA & Margin %(1) Adjusted Free Cash Flow $MM 2020 decline $MM impacted by Defenders acquisition & $607 Canada $675 disposition(2) $590 143 $533 132 57.4% 50.6% Q4'19 Q4'20 FY 2019 FY 2020 Q4 Q3 YTD Adjusted EBITDA decrease of 12% Continued strong, positive ca
Slide 18: Capital Structure Well-Positioned to Support Growth
Capital Structure Well-Positioned to Support Growth Capital $MM Structure(1) Recent Highlights $MM 12/31/19 12/31/20 Actual Actual Revolver - - ▪ Prepaid $300M of First Lien Term Loan in December 2020 First Lien Term Loan 3,102 2,779 ▪ Completed First Lien Term Loan repricing transaction in First Li
Slide 19: Q&A
Q&A 19
Slide 20: Appendix
Appendix
Slide 21: Consistent Track Record of Performance
Consistent Track Record of Performance 2020 decline driven by Canada Total Revenue Adjusted EBITDA disposition & Defenders $MM $MM acquisition (1) $5,126 $5,315 $4,582 $2,483 $4,316 818 1,128 $2,453 472 $2,353 286 $2,199 4,029 4,110 4,308 4,187 2017 2018 2019 2020 2017 2018 2019 2020 Monitoring & Se
Slide 22: Snapshot of Business by Customer Type and Unit Count
Snapshot of Business by Customer Type and Unit Count Market Profile (LTM 12/31/20) Unit Count Small Large / Residential Total Business Multi-Site Units in millions Q4’20 Q4’19 Y/Y % Q3’20 Q/Q % Interactive 3.1 2.9 9% 3.1 2% Unit Count ~5,800K ~500K ~250K ~6,500K Traditional 2.6 2.8 (8%) 2.7 (3%) End
Slide 23: Commercial Platform: Revenue Rebound Continues
Commercial Platform: Revenue Rebound Continues U.S. Commercial Total Revenue Recent Highlights $MM ▪ Completed majority of work on our largest National $27 $27 $27 $27 Account ever, Family Dollar / Dollar Tree $26 $26 $25 $24 ▪ Launched Operation Warp Speed related contracts $289 ▪ Year-end backlogs
Slide 24: 2020 Financial Trend Review
2020 Financial Trend Review Following are selected trend considerations when reviewing ADT’s 2020 results ▪ Strong Residential RMR additions were up on a full year basis, despite challenges from COVID- 19 during the first half ▪ Commercial volumes were adversely impacted by the COVID-19 pandemic thr
Slide 25: Installation Revenue and Adjusted EBITDA
Installation Revenue and Adjusted EBITDA Installation Revenue: Installation & Other Revenue ($M) Small Large / Period Residential Y/Y Change Business Y/Y Change Multi-Site Y/Y Change Total Y/Y Change Q4 2020 $97 $50 $9 $1 $155 ($30) $261 $21 Q3 2020 112 73 8 - 133 (27) 253 46 Q2 2020 158 125 8 - 124
Slide 26: Additional Historical Quarterly Data
Additional Historical Quarterly Data For the Three Months Ended (in millions) December 31, March 31, June 30, September 30, December 31, 2019 2020 2020 2020 2020 Key Performance Indicators Monitoring and Service Revenue $1,058 $1,046 $1,041 $1,046 $1,054 Total Revenue $1,298 $1,370 $1,331 $1,299 $1,
Slide 27: Selected Statement of Operations Components
Selected Statement of Operations Components GAAP Line Items GAAP Line Items For the three months ended December 31, 2020 For the three months ended December 31, 2019 Total Cost of Total Cost of ($ in millions) Revenue Revenue SG&A D&A Total Revenue Revenue SG&A D&A Total Monitoring & Service Revenue
Slide 28: Statements of Operations
Statements of Operations Statements of Operations: 28
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Net Loss Before Special Items and Diluted Net Loss Per Share Before Special Items: Notes: 1. Primarily represents unrealized losses on interest rate swap contracts not designated as hedges. 2. Represents costs, net of any incremental revenue earned, associated with r
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted EBITDA and Adjusted EBITDA Margin: Notes: 1. Represents costs, net of any incremental revenue earned, associated with replacing cellular technology used in many of our security systems pursuant to a replacement program. 2. Represents fees expensed associated
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow and Adjusted Free Cash Flow: Notes: 1. Excludes the payment of $96 million in accumulated dividend obligations in connection with the redemption of mandatorily redeemable preferred securities. 2. The three months ended March 31, 2020 and the twelve mon
Slide 32: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Debt to Net Income Ratio: Net Leverage Ratio: Note: 1. Debt instruments are stated at face value. 32
Slide 33: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations U.S. Commercial Organic Revenue: Notes: 1. ADT Canada was disposed of in November 2019. 2. Represents total revenue associated with commercial and national accounts. 33 3. Represents incremental total revenue associated with U.S. commercial and national accounts from
Slide 34: Non-GAAP Measures
Non-GAAP Measures To provide investors with additional information in connection with our results, as determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we disclose Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, Adjusted Free Cash Flow, Ne