Adt Inc. · NYSE:ADT
Adt — Debt Investor Presentation (September 2019)
41 slides from Adt's debt investor presentation, Sep 5, 2019
Slide 1: Lender Presentation September 5th, 2019
Lender Presentation September 5th, 2019 Exhibit 99.1
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) has been prepared by ADT Inc. (the “Company”) on behalf of Prime Security Services Borrower, LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company, in connection with the Borrower’s amended and extended 1st Lien Senior Secured Term
Slide 3: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures The Company 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. All statements, other than statements of histor
Slide 4: Non-GAAP Measures
Non-GAAP Measures Adjusted EBITDA and Covenant Adjusted EBITDA (Pre-SAC) We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about our operating profitability adjusted for certain non-cash items, non-routine items that we do not expect to
Slide 5: Call Participants
Deepika Yelamanchi Vice President & Treasurer, ADT Jeff Likosar Chief Financial Officer, ADT Bradford Aston Managing Director, Barclays Jim DeVries President and Chief Executive Officer, ADT Call Participants
Slide 6: Transaction Overview
Transaction Overview
Slide 7: Transaction summary and refinancing
ADT Inc. ("ADT" or the "Company”) is a leading security and automation provider serving residential and business customers across the United States and Canada The Company is launching a refinancing transaction (the “Transaction”) to extend the debt maturity profile: $3,150 million 7-year 1st Lien Se
Slide 8: Pro Forma Capitalization, Sources and Uses of Funds
Pro Forma Capitalization Sources and Uses of Funds Notes: Amounts to be adjusted up or down depending on final 1st Lien Senior Secured Notes due 2026 tranche size. Tranche size for 1st Lien Senior Secured Notes due 2026 shown at the midpoint of the range for illustrative purposes. Market data as of
Slide 9: Term Loan Facility Summary of Terms
Borrower Prime Security Services Borrower, LLC (the “Borrower”) Administrative Agent Barclays Facility Offered $3,150 million 1st Lien Term Loan B (the “TL”) (1) Maturity 7 years, with springing maturity to 90 days inside the maturity date of any applicable debt (limited to 2021 Notes, 2022 Notes, a
Slide 10: 1st Lien Notes Summary of Terms
Issuer Prime Security Services Borrower, LLC (the “Issuer”) and Prime Finance Inc. (the “Co-Issuer” and, together with the Issuer, the “Issuers”) Issue $500-750 million add-on to the exiting 1st Lien Senior Secured Notes due 2026 (the “1st Lien Notes due 2026”) Ranking Pro forma for the Transaction,
Slide 11: Pro Forma Corporate Structure
ADT Inc. (formerly Prime Security Services Parent Inc.) Common Equity and Management Interests Prime Security Services Holdings, LLC Credit Facilities Existing Revolver A&R 1st Lien Term Loan Facility Notes 1st Lien Secured Notes due 2024 and 2026 2nd Lien Secured Notes due 2023 Prime Security Servi
Slide 12: Execution Timeline
September 2019 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Date Event September 3rd, 2019 Announce Transaction September 5th, 2019 Lender Call September 13th, 2019 TL Commitments Due at 12:00 PM ET Shortly Thereafter Close and Fund Market Holiday Ke
Slide 13: Business Overview
Business Overview
Slide 14: An American Security Icon Positioned to Outperform
An American Security Icon Positioned to Outperform Over 3 Million Interactive Customers Over 7 Million Customers HAS BEEN TRUSTED LONGER THAN EST. 1892 EST. 1898 EST. 1903 EST. 1894 EST. 1886 EST. 1902 EST. 1892 EST. 1892 200 Billion System Events in 2018 ~2,800 Field & Phone Sales Professionals ~20
Slide 15: Service is Our Business and Key Competitive Advantage
Service is Our Business and Key Competitive Advantage Trusted Security Provider - Service is the Biggest Competitive Advantage and Differentiator Expansive National Footprint Distribution Center National Account Center Boca Raton Disaster Recovery Center Locations Monitoring Centers Corporate Headqu
Slide 16: Market Leader in Growing, Recession-Resilient Market
Market Leader in Growing, Recession-Resilient Market Growing Monitoring Revenue ($Bn)(1) Overall Security Penetration is Expected to Grow(1) Professional Install Monitored Security Systems Self-Install Professionally Monitored Security Systems Household penetration rate CAGR 17% 2% Notes: Parks Asso
Slide 17: The Next Generation of Security and Home Automation
The Next Generation of Security and Home Automation Home Security Home Automation Security Cameras Fire, Home & Safety Monitoring Services Lights Thermostat Garage Door Doorbell Electric Locks Sensors Water Leaks Alerts Video Clips ADT Control Security + Home Automation Accessible Anywhere from One
Slide 18: Continuing Strong Growth in Commercial Market
Notes: U.S. commercial market size based on data from Freedonia, IHS, and company estimates, and includes system installation, integration and monitoring services. Incremental revenue from acquisitions until there is a full 12 months overlap. Presented for the six months ended 6/30/19. ADT Total Rev
Slide 19: Long-Term Cash Flow Focus
Long-Term Cash Flow Focus Retain Our Existing Customers Optimize Adjusted EBITDA Improve Acquisition Cost Efficiency Efficient Core Revenue Growth Invest for Future Growth Efficient Operating Model Balanced Approach to Growth Focuses on Long-Term Cash Flow Generation
Slide 20: Key Investment Highlights
Key Investment Highlights Notes: Based on May 2019 brand tracking research from The Harris Poll. Based on Parks Associates Home Security, 2Q 2018 Report and company estimates. Consistent with our original 2019 guidance, as of January 1, 2019, in conjunction with the acquisition of LifeShield LLC, we
Slide 21: Financial Overview
) gmith Home ¥ Financial Overview
Slide 22: Significantly Strengthened Financial Performance Since 2015
Significantly Strengthened Financial Performance Since 2015 Notes: 2015 and 2016 are presented on a supplemental pro forma basis to include pro forma adjustments necessary to reflect the July 1, 2015 Formation Transactions and the May 2, 2016 ADT Acquisition as if they had occurred on January 1, 201
Slide 23: Q2 Performance Highlights
Q2 Performance Highlights Notes: The operating metrics Gross Revenue Attrition, Unit Count, RMR, RMR additions, and Revenue Payback are approximated as there may be variations to reported results in each period due to certain adjustments we might make in connection with the integration over several
Slide 24: Total Revenue Up 13% Year-over-Year
24 Total Revenue Up 13% Year-over-Year Notes: Recurring revenue lost as a result of customer attrition net of dealer charge-backs and reinstatements; Excludes wholesale customers who outsource their monitoring to ADT and DIY customers; Calculated on a trailing 12 months basis. Trailing twelve-month
Slide 25: Continued to Acquire Customers Efficiently
25 Continued to Acquire Customers Efficiently Notes: Excludes wholesale customers who outsource their monitoring to ADT. Revenue payback period measures the net SAC incurred in the period divided by the recurring monthly revenue added during the period, and represents the approximate time, in years,
Slide 26: Adjusted EBITDA and FCF Generation Remains Robust
26 Adjusted EBITDA and FCF Generation Remains Robust Notes: Adjusted EBITDA margin is calculated as a percentage of monitoring and service revenue. Continued Strong, Positive Free Cash Flow Quarterly timing/phasing of infrastructure capex and working capital offset year-over-year improvements in EBI
Slide 27: Capital Structure Overview
Capital Structure Overview 27 Pro Forma Debt Maturity Profile(1) Transaction Objectives Notes: Amounts to be adjusted up or down depending on final 1st Lien Senior Secured Notes due 2026 tranche size. Tranche size for 1st Lien Senior Secured Notes due 2026 shown at the midpoint of the range for illu
Slide 28: Q&A
Q&A 28
Slide 29: Appendix
SECURED BY ADT 800.ADT.ASAP ADT.COM Appendix
Slide 30: Snapshot of Business by Customer Type and Unit Count
30 Notes: Market profile and unit count exclude wholesale customers who outsource their monitoring to ADT. Net change in total units vs. 6/30/18 includes a loss in US residential of (45K) units, a loss in Canada residential (43K) units, offset by gain in commercial and other of ~40K. Includes amorti
Slide 31: Key Financial and Operating Metrics for 1H 2019
31 Notes: Trailing twelve-month gross customer revenue attrition excludes DIY customers for all periods presented in this presentation. For all presentations covering periods prior to January 1, 2019, trailing twelve-month gross customer revenue attrition included DIY customers and as of June 30, 20
Slide 32: Strong Cash Flow Generation
Strong Cash Flow Generation 32 Notes: Capital expenditures exclude special items primarily related to integration activities; Working capital & other excludes special items related to restructuring, integration, management fees, radio conversions, and financing & consent fees. For the quarters ended
Slide 33: Additional Historical Quarterly Data
Additional Historical Quarterly Data 33 Notes: Excludes wholesale customers who outsource their monitoring to ADT, unless otherwise noted. Trailing twelve-month gross customer revenue attrition excludes DIY customers for all periods presented in this presentation. For all presentations covering peri
Slide 34: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 34 Net Loss Before Special Items Diluted EPS Before Special Items Notes: Represents fees incurred associated with the issuance, restatement, and amendment of debt. Represents the conversion of intercompany loans that are denominated in Canadian dollars to U.S. dollar
Slide 35: Adjusted EBITDA, Adjusted EBITDA Margin, and Covenant Adjusted EBITDA (Pre-SAC)
35 Adjusted EBITDA, Adjusted EBITDA Margin, and Covenant Adjusted EBITDA (Pre-SAC) Notes: Represents costs associated with upgrading cellular technology used in many of our security systems, offset by any incremental revenue earned. Represents fees incurred associated with the issuance, restatement,
Slide 36: Free Cash Flow and Unlevered Free Cash Flow
36 Free Cash Flow, Free Cash Flow before special items, and Unlevered Free Cash Flow before special items Note: Excludes outflows in connection with the redemption of the Koch Preferred Securities including the accumulated dividend obligation of $96 million ($51 million related to Q1 and Q2 of 2018
Slide 37: Supplemental Pro Forma Financial Information 2016
37 Supplemental Pro Forma Financial Information: The ADT Corporation Historical ADT Inc. Historical Year Ended 12/31/2016 Pro Forma Adjustments Supplemental Pro Forma Year Ended 12/31/2016 Three Months Ended 3/31/2016 Period from 4/1/2016 to 5/1/2016 (in millions) Net (loss) income $ (537) $ 62 $ 4
Slide 38: Supplemental Pro Forma Financial Information 2015
38 Supplemental Pro Forma Financial Information: Predecessor Successor ASG The ADT Corporation (in millions) Period from 1/1/2015 through 6/30/2015 From Inception through 12/31/2015 Six Months Historical Ended 6/30/2015 Other Pro Forma Adjustments Subtotal Twelve Months Ended 12/31/2015 ADT Acquisit
Slide 39: Historical Combined Free Cash Flow
39 For the Twelve Months Ended December 31, 2016 December 31, 2015 Successor Free Cash Flow $ (337) $ (32) Predecessor Free Cash Flow N/A 4 The ADT Corporation Free Cash Flow 106 257 ASG Free Cash Flow N/A (7) Historical Combined Free Cash Flow (231) 221 Plus: Cash Interest 511 280 Plus: Special ite
Slide 40: Debt to Net Income Ratio and Net Leverage Ratio
Debt to Net Income Ratio Net Leverage Ratio Notes: Pro Forma financial information represents the preliminary estimated impact associated with the proposed refinancing transaction on debt and cash interest. LTM cash interest of $677 million is comprised of $183 million in Q3'18, $209 million in Q4'1
Slide 41: Commercial Organic Revenue Growth
41 Commercial Organic Revenue Growth Notes: Represents total revenue associated with commercial and national accounts. Represents incremental total revenue associated with commercial and national accounts from acquisitions until there is a full twelve-month overlap from the date of acquisition. GAAP