Slide 1: Q3 2021 Earnings Presentation
Q3 2021 Earnings Presentation November 9, 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 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 — “2021 Financial Outl
Slide 3: Q3 2021: Solid Quarter, Significant Momentum in the Business
Q3 2021: Solid Quarter, Significant Momentum in the Business Announced pending acquisition of Sunpro Solar, expanding addressable market to include fast-growing residential solar Solid Gross RMR additions – Q3 increase of 7% (YTD of 19%), driving end of period RMR up 4% year over year Monitoring and
Slide 4: The Residential Solar Market is Large and Fast Growing
The Residential Solar Market is Large and Fast Growing Key Drivers Solar Total Market Size (1) Growing consumer acceptance of solar and $ in Billions battery storage as a viable technology ~15% $19.4 Consumers attracted to both environmental CAGR $18.0 and energy independence attributes $16.0 Robust
Slide 5: Solar Is a Logical Extension of the ADT Ecosystem…
Solar Is a Logical Extension of the ADT Ecosystem… Remote Solar & Climate Battery Control Storage Smart Monitoring Doorbells Services Smart Smart Lighting Entry Surveillance Smoke / CO Alarms Flood Sensors 5
Slide 6: …and Unlocks ADT's Integrated Home Experience
…and Unlocks ADT’s Integrated Home Experience Security ▪ Best brand ▪ #1 residential security provider ▪ Sunpro Solar adds a ▪ Google partnership rapidly growing third element to the ▪ #1 Smart Home home experience Security Provider (1) Energy Management Automation Protected, Connected, and now Powe
Slide 7: Sunpro Solar Overview – A Fast Growing Solar Player
Sunpro Solar Overview – A Fast Growing Solar Player The Business Key Metrics ▪ One of fastest growing residential solar companies in the U.S., with 90% year-over-year increase in installs in Sales ~$675M 2020 (LTM 9/30/21) ▪ Asset-light business model focused on outright sales, financing provided by
Slide 8: Sunpro is the Premier, Vertically-Integrated Solar Company
Sunpro is the Premier, Vertically-Integrated Solar Company Design, Permitting, Ongoing Support Sales & Marketing Installation & Financing & Monitoring ▪ Dedicated and specialized ▪ Full in-house design and ▪ Complete in-house ▪ Industry-leading in-house Sales & Marketing engineering team installatio
Slide 9: Sunpro is a Great Addition to the ADT Family
Sunpro is a Great Addition to the ADT Family – Increasing Addressable Market and Accelerating Growth Expected to be positive to EBITDA and free cash flow immediately and accretive to EPS within the first 12 months Proven growth strategy in a fast-growing market Asset light, vertically integrated bus
Slide 10: 2022: A Key Year for ADT's Google Partnership
2022: A Key Year for ADT’s Google Partnership Mid- to Late 2022 and beyond: ▪ Further joint marketing and branding rollout ▪ Full integration with ADT’s next generation app and technology platform Early to Mid-2022: Pro-Install and DIY Solutions ▪ Doorbell to launch regionally in January, then follo
Slide 11: Q3 2021 Highlights
Q3 2021 Highlights
Slide 12: Strength Across Key Financial and Operating Metrics
Strength Across Key Financial and Operating Metrics For the three months ended Sep 30, Sep 30, Key Highlights ($ in Millions) Y/Y Change 2021 2020 M&S Revenue $1,098 $1,046 $53 5% ▪ M&S revenue: Increase in average pricing + net unit additions resulting in higher RMR Total Revenue $1,317 $1,299 $18
Slide 13: Consumer & Small Business Segment Growing M&S Revenue
Consumer & Small Business Segment Growing M&S Revenue Revenue Adjusted EBITDA $ in Millions $ in Millions Includes the non- cash impact from ownership model change $1,060 $1,036 $549 $529 $120 $60 $940 $976 Q3'20 Q3'21 Q3'20 Q3'21 Monitoring & Service Installation & Other M&S growth offset by lower
Slide 14: Commercial Segment Growing Rapidly
Commercial Segment Growing Rapidly Revenue Adjusted EBITDA $ in Millions $ in Millions $281 $26 $239 $159 $133 $15 $105 $123 Q3'20 Q3'21 Q3'20 Q3'21 Monitoring & Service Installation & Other Commercial returning to growth with significant runway ahead 14
Slide 15: Continued Subscriber Additions Translating into Higher RMR
Continued Subscriber Additions Translating into Higher RMR Gross RMR Additions End of Period RMR $ in Millions $ in Millions $15.5 $356 $14.5 $341 Q3'20 Q3'21 Q3'20 Q3'21 Highly durable and growing RMR base generating over $4B in annual recurring revenue 15
Slide 16: 2021 Financial Outlook
2021 Financial Outlook The Company remains on track to meet its 2021 guidance and is narrowing the ranges provided earlier in the year. Non-cash impact from residential customer-owned transactions (1) Total Revenue $5.20B – $5.25B (prior range: $5.05B – $5.25B) Increase related to return to growth i
Slide 17: Durable Model & Recurring Revenue Base Generate Significant Cash Flow
Durable Model & Recurring Revenue Base Generate Significant Cash Flow Flexible Capital Deployment Invest In Efficient Selectively Pursue Optimize Capital Return Capital To Organic Growth Accretive Acquisitions Structure/Debt Level Shareholders Reduced annual cash interest expense by $100+ million si
Slide 18: Appendix
Appendix
Slide 19: Capital Structure Well-Positioned to Support Growth
Capital Structure Well-Positioned to Support Growth Capital Structure(1) Recent Highlights $M 12/31/20 9/30/21 Actual Actual Revolver - - ▪ Refinanced $1B of 2022 first lien Notes, extending maturity First Lien Term Loan 2,779 2,765 First Lien Notes 5,550 5,550 to 2029 Receivables Facility 76 165 ▪
Slide 20: Snapshot of Business by Customer Type and Unit Count
Snapshot of Business by Customer Type and Unit Count Market Profile (LTM 9/30/21) Consumer and Small Business Unit Count (2) Consumer and Commercial Total Small Business Units in Millions Q3’21 Q3’20 Y/Y % Q2’21 Q/Q % Unit Count ~6,350K ~250K ~6,600K End of Period RMR $321M $31M $352M Interactive 3.
Slide 21: Adjusted Free Cash Flow
Adjusted Free Cash Flow For the three months ended For the nine months ended ($ in Millions) Sep 30, 2021 Sep 30, 2020 Y/Y Change Sep 30, 2021 Sep 30, 2020 Y/Y Change Adjusted EBITDA $554 $564 ($10) $1,638 $1,666 ($28) Net Expensed SAC 117 90 27 331 258 73 Net SAC (1) (438) (373) (66) (1,295) (1,010
Slide 22: U.S. Gross RMR Additions by Quarter
U.S. Gross RMR Additions by Quarter $ in Millions $16.0 $15.5 $14.5 $14.5 $13.9 $12.9 $12.8 $13.2 $12.1 $12.1 $11.4 Q1’19 Q1’20 Q1’21 Q2’19 Q2’20 Q2’21 Q3’19 Q3’20 Q3’21 Q4’19 Q4’20 YoY % Change: 7% 25% (11%) 28% 10% 7% 15% 22
Slide 23: Installation Revenue and Adjusted EBITDA
Installation Revenue and Adjusted EBITDA Installation & Other Revenue ($M) Consumer and Period Y/Y Change Commercial Y/Y Change Total Y/Y Change Small Business Q3'21 $60 ($60) $159 $25 $219 ($35) Q2'21 57 (109) 163 40 221 (69) Q1'21 87 (86) 155 4 242 (82) Q4'20 105 49 155 (28) 261 21 Q3'20 120 70 13
Slide 24: Additional Historical Quarterly Data
Additional Historical Quarterly Data For the Three Months Ended (in millions) September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Operating and Financial Measures Monitoring and Service Revenue $1,098 $1,084 $1,063 $1,054 $1,046 Total Revenue $1,317 $1,304 $1,305 $1,
Slide 25: Selected Statement of Operations Components
Selected Statement of Operations Components GAAP Line Items GAAP Line Items For the three months ended September 30, 2021 For the three months ended September 30, 2020 Total Cost of Total Cost of ($ in millions) Revenue Revenue SG&A D&A Total Revenue Revenue SG&A D&A Total Monitoring & Service Reven
Slide 26: Statements of Operations
Statements of Operations Three Months Ended Nine Months Ended (in millions, except per share data) September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Monitoring and related services $ 1,098 $ 1,046 $ 3,245 $ 3,133 Installation and other 219 253 681 867 Total revenue 1,317 1,
Slide 27: Segment Information
Segment Information Three Months Ended Nine Months Ended (in millions) September 30, June 30, March 31, December 31, September 30, September 30, September 30, Total revenue 2021 2021 2021 2020 2020 2021 2020 Monitoring and related services $ 1,098 $ 1,084 $ 1,063 $ 1,054 $ 1,046 $ 3,245 $ 3,133 Inst
Slide 28: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted EBITDA and Adjusted EBITDA Margin: Three Months Ended Nine Months Ended Twelve Months Ended (in millions) September 30, June 30, March 31, December 31, September 30, September 30, September 30, September 30, December 31, 2021 2021 2021 2020 2020 2021 2020 20
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow and Adjusted Free Cash Flow: Three Months Ended Nine Months Ended (in millions) September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2021 2021 2021 2020 2020 2021 2020 Net cash provided by operating activities $ 370 $
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Debt to Net Income Ratio: (in millions) September 30, December 31, 2021 2020 Total debt (book value) $ 9,610 $ 9,493 LTM net loss $ (395) $ (632) Debt to net loss ratio (24.3x) (15.0x) Net Leverage Ratio: (in millions) September 30, December 31, 2021 2020 First lien
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