Frontdoor, Inc. · NASDAQ:FTDR
Frontdoor — Q1 2023 Earnings Presentation
23 slides from Frontdoor's earnings presentation, May 4, 2023
Slide 1: First-Quarter 2023 Earnings Webcast
First-Quarter 2023 Earnings Webcast May 4, 2023
Slide 2: Today's Speakers
Today’s Speakers Bill Cobb Jessica Ross Matt Davis Chairman & Senior Vice President & Vice President Chief Executive Officer Chief Financial Officer Investor Relations & Treasurer 2
Slide 3: Forward Looking Statements; Non-GAAP Financial Measures
Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, projected future performance and any statements
Slide 4: Advancing Strategic Initiatives
• Strong first-quarter results on expanding gross margins o Prior pricing actions flowing through Advancing o Cost pressures continue to moderate Improving execution across the platform Strategic o • Increasing use of preferred contractors Initiatives • Higher Frontdoor supply of parts / replacement
Slide 5: Launched Frontdoor Mobile App in April
Launched Frontdoor Mobile App in April • Differentiating our offering through video chat with an expert • Revolutionizing how homeowners maintain and repair their homes • Launched an innovative and “talked about” marketing campaign • Over 165,000 app downloads in three weeks 5
Slide 6: Frontdoor Product Lineup Update
Frontdoor Product Lineup Update Frontdoor Frontdoor Frontdoor Frontdoor Basic Prime Pro Premium Free Membership A-la-carte on Next generation homeowner app program demand services home service plan Additional Launched in Launched in Coming this functionality later in April April June 2023 6
Slide 7: Frontdoor Premium: Reinvention of the Home Service Plan Category
• Annual membership plan o Monthly fee starting at $35 o Service fee of $100 Frontdoor • Covers systems and appliances; will fix covered item or give customer a payout Premium: o Appliances, plumbing and electrical payout is $500 Reinvention of the Home Service o Optional HVAC coverage has a $1,000
Slide 8: Taking Actions to Increase DTC Demand
Taking Actions to Increase DTC Demand • AHS DTC demand has been lower due to: o Higher prices for home service plans o Changing competitive landscape o Impact of inflation on consumer sentiment o Reduced DTC marketing spend in 2023 • Near-term actions: o Testing aggressive pricing / discounting stra
Slide 9: Real Estate Channel Outlook
Real Estate Channel Outlook • Home sales declining; down 22% YoY in March • Inventory remains low; 2.6 months of supply in March • Taking longer than expected to transition to a balanced market o Impacting home service plan sales • Frontdoor focused on improving sales accountability through data usa
Slide 10: Continue to Strengthen the Renewals Channel
Continue to Strengthen the Renewals Channel • Grew number of Renewals customers despite higher pricing • Customer retention rate increased 180 basis points to 75.9% in the first quarter • Driving retention higher over time though improving customer experience and processes 10
Slide 11: First Quarter 2023 Revenue
$367M First Quarter Q1 Revenue 2023 • Increased 4% compared to prior Revenue year period results • ~10% increase from price • ~5% decline from lower volume 11
Slide 12: First Quarter 2023 Revenue Mix
• Renewals revenue increased 13% primarily due to improved price realization First Quarter • Real estate revenue decreased 2023 28% primarily due to lower Revenue Mix volume • Direct-to-Consumer revenue decreased 5% primarily due to lower volume 12
Slide 13: First Quarter 2023 Gross Profit
$170M Gross Profit First Quarter • Gross profit margin increased 540 basis 2023 Gross points to 46% Profit • Higher realized pricing from prior pricing actions • Favorable weather reduced service requests • Cost pressures continue to moderate as cost per service request increased ~7% 13
Slide 14: First Quarter 2023 Net Income & Adjusted EBITDA
First Quarter 2023 Net $22M $54M Income & Net Income(1) Adjusted EBITDA(1) Adjusted • Increased $29M • Increased $20M EBITDA over prior year over prior year period period (1) See the Appendix accompanying this presentation for a reconciliation of Adjusted EBITDA, a non-GAAP measure, to the nearest U
Slide 15: First Quarter Adjusted EBITDA Bridge
Three Months Ended March 31, 2022 $25 Impact of change in revenue(2) 22 First Quarter Contract claims costs(3) 4 2023 Sales and marketing costs (3) Adjusted EBITDA(1) Customer service costs 2 Bridge Interest and net investment income 3 Three Months Ended March 31, 2023 $54 Note: Revenue and expense
Slide 16: Q1 2023 Cash Flow
Three Months Ended March 31, Net cash provided from 2023 2022 (used for): Q1 2023 Operating Activities $60 $47 Cash Flow Investing Activities (8) (8) Financing Activities (7) (47) Cash increase (decrease) $45 $(8) during the period 16
Slide 17: Free Cash Flow and Cash Position
Free Cash $52M $337M Flow and Free Cash Flow Total Cash Cash • Expect to • Restricted cash: Position repurchase $150M approximately $80M in stock in • Unrestricted cash: 2023 $187M 17
Slide 18: Q2 2023 and FY 2023 Outlook
Q2 2023 and FY 2023 Outlook Q2 2023 Outlook Q2 2022 Results Low High Revenue ($ millions) 487 505 520 Adjusted EBITDA ($ millions) (1)(2) 77 80 90 FY 2022 Results FY 2023 Outlook Revenue ($ billions) 1.662 1.70 1.74 Gross Profit Margin (%) 43 43.5% 46.0% SG&A ($ millions) 521 570 595 Adjusted EBITDA
Slide 19: Appendix
Appendix
Slide 20: Q1 2023 Consolidated Results
Three Months Ended Q1 2023 $ millions, except per share amounts 2023 March 31, 2022 Better /(Worse) Consolidated Revenue YOY Growth $ 367 $ 351 $ 15 4% Results Gross Profit % of revenue 170 46.4% 144 41.0% 26 540 pts Note: See elsewhere in this Appendix for a reconciliation of Adjusted Selling and a
Slide 21: Net Income to Adjusted EBITDA Reconciliations
Net Income to Adjusted EBITDA Reconciliations Three Months Ended March 31, ($ millions) 2023 2022 Net Income $ 22 $ 2 Depreciation and amortization expense 9 8 Restructuring charges 1 — Provision for income taxes 7 2 Non-cash stock-based compensation expense 5 6 Interest expense 10 7 Other non-opera
Slide 22: Net Income to Adjusted EBITDA Reconciliations (Cont.)
Net Income to Adjusted EBITDA Reconciliations (Cont.) Three Months Ended Year Ended June 30, December 31, ($ millions) 2022 2021 2022 2021 Net Income $ 33 $ 40 $ 71 $ 128 Depreciation and amortization expense 8 9 34 35 Goodwill and intangibles impairment — — 14 — Restructuring charges 12 1 20 3 Prov
Slide 23: Net Cash Provided from Operating Activities to Free Cash Flow Reconciliations
Net Cash Provided from Operating Activities to Free Cash Flow Reconciliations Three Months Ended March 31, ($ millions) 2023 2022 Net Cash Provided from Operating Activities $ 60 $ 47 Property additions (8) (9) Free Cash Flow $ 52 $ 39 Amounts presented in the above tables may not sum due to roundin