Slide 1: Q1 2021 Earnings Presentation
Q1 2021 Earnings Presentation May 5, 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 Affirming 2021 Financial
Slide 3: Q1 2021: Strong Quarter, Progressing Against 2021 Objectives
Q1 2021: Strong Quarter, Progressing Against 2021 Objectives Driving revenue growth through SAC investment, strategic partnerships, and exceptional customer retention RMR additions of 25% and net residential subscriber growth, aided by Ackerman Continued low attrition of 13.1%; revenue payback of 2.
Slide 4: Strength Across Key Financial and Operating Metrics
Strength Across Key Financial and Operating Metrics For the three months ended Mar 31, Mar 31, Key Highlights ($ in millions) Y/Y Change 2021 2020 M&S Revenue $1,063 $1,046 $17 2% ▪ M&S revenue: Net unit additions + increase in average pricing resulting in higher RMR, partially Total Revenue $1,305
Slide 5: Consumer and Small Business Revenue and Adjusted EBITDA
Consumer and Small Business Revenue and Adjusted EBITDA Revenue Adjusted EBITDA $MM $MM Includes the non- cash impact from residential customer- owned transactions $1,111 $1,039 $537 $519 $173 $87 $938 $951 Q1'20 Q1'21 Q1'20 Q1'21 Monitoring & Service Installation & Other Strong unit and RMR additio
Slide 6: Commercial Revenue and Adjusted EBITDA
Commercial Revenue and Adjusted EBITDA Revenue Adjusted EBITDA $MM $MM $259 $266 $23 $151 $155 $108 $112 $2 Q1'20 Q1'21 Q1'20 Q1'21 Monitoring & Service Installation & Other Improving revenue and margins after challenging 2020 6
Slide 7: Accelerating Subscriber Growth & Total Company RMR
Accelerating Subscriber Growth & Total Company RMR Gross RMR Additions End of Period RMR $MM $MM $16.0 $349 $339 $12.9 $13.6 $12.0 Q1'20 Q1'21 Q1'20 Q1'21 2021: February Ackerman Direct and Dealer 2020: Bulk Purchase Favorable macro dynamics and continued focus on accelerating RMR growth 7
Slide 8: Accelerating Growth Drivers Entering 2021
Accelerating Growth Drivers Entering 2021 Macro Dynamics ADT Initiatives De-urbanization Execution of additive trends partnerships Increased demand Improving marketing for security efficiency using analytics Increasing household construction DIY expansion Smart home adoption Google partnership DISH,
Slide 9: Google Partnership Beginning to Deliver with Product Integration
Google Partnership Beginning to Deliver with Product Integration ADT customers can now enjoy the control and convenience of Google Nest smart home products (Hub, Hub Max, & Mini) integrated with ADT Security Systems National Marketing Video and hardware ADT developed and Upcoming WiFi Launch of Abov
Slide 10: Capital Structure Well-Positioned to Support Growth
Capital Structure Well-Positioned to Support Growth Capital $MM Structure(1) Recent Highlights $MM 12/31/20 3/31/21 Actual Actual Revolver - - ▪ Completed First Lien Term Loan repricing transaction in First Lien Term Loan 2,779 2,779 January 2021 First Lien Notes 5,550 5,550 Receivables Facility 76
Slide 11: Affirming 2021 Financial Outlook
Affirming 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 inves
Slide 12: Preview: ADT's Next Chapter
Preview: ADT’s Next Chapter Strong Innovation Consumer Shareholder Growth Leader Centricity Returns Consumer & Ambient Smart Frictionless Capital Commercial Home & Security Journeys Efficiency Smart home driven Google differentiation Omni-channel & Introduction of long- sustainable growth ADT platfo
Slide 13: Q&A
Q&A 13
Slide 14: Appendix
Appendix
Slide 15: Snapshot of Business by Customer Type and Unit Count
Snapshot of Business by Customer Type and Unit Count Market Profile (LTM 3/31/21) Consumer and Small Business Unit Count (2) Consumer and Commercial Total Small Business Units in millions Q1’21 Q1’20 Y/Y % Q4’20 Q/Q % Unit Count ~6,300K ~250K ~6,600K End of Period RMR $316M $29M $345M Interactive 3.
Slide 16: Adjusted Free Cash Flow
Adjusted Free Cash Flow For the three months ended ($ in millions) Mar 31, 2021 Mar 31, 2020 Y/Y Change Adjusted EBITDA $542 $539 $3 Capitalized SAC (352) (160) (192) Net Proceeds from Consumer Receivables Facility 22 - 22 Cash Taxes 4 (1) 5 Cash Interest (167) (165) (1) Capital Expenditures (1) (37
Slide 17: Installation Revenue and Adjusted EBITDA
Installation Revenue and Adjusted EBITDA Installation Revenue: Installation & Other Revenue ($M) Consumer and Period Y/Y Change Commercial Y/Y Change Total Y/Y Change Small Business Q1 2021 $87 ($86) $155 $4 $242 ($82) Q4 2020 105 49 155 (28) 261 21 Q3 2020 120 70 133 (24) 253 46 Q2 2020 166 122 124
Slide 18: Additional Historical Quarterly Data
Additional Historical Quarterly Data For the Three Months Ended (in millions) March 31, June 30, September 30, December 31, March 31, 2020 2020 2020 2020 2021 Key Performance Indicators Monitoring and Service Revenue $1,046 $1,041 $1,046 $1,054 $1,063 Total Revenue $1,370 $1,331 $1,299 $1,315 $1,305
Slide 19: Selected Statement of Operations Components
Selected Statement of Operations Components GAAP Line Items Total Revenue Cost of Revenue SG&A D&A Monitoring & Service Revenue Monitoring & Service Revenue - - - Field Service and Monitoring & Service Costs and G&A - General and Administrative - Customer Care Expenses Net Expensed SAC Installation
Slide 20: Statements of Operations
Statements of Operations (in millions, except per share data) Monitoring and related services Installation and other Total revenue Cost of revenue (exclusive of depreciation and amortization shown separately below) Selling, general and administrative expenses Depreciation and intangible asset amorti
Slide 21: Segment Information
Segment Information ‘Three Months Ended Twelve Months Ended (in millions) ‘March 31, ‘December 31, September 30, Tune 30, March 31, ‘March 31, December 31, December 31, Total reve 2021 2020 2020 2020 2020 2021 2020 2019 Monitoring and related services $ 1,063 $ 1,054 $ 1,046 $ 1,041 $ 1,046 $ 4,204
Slide 22: 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. Represents fees expensed associated with financing transactions. 2. Represents costs, net of any incremental revenue earned, associated with replacing cellular technology use
Slide 23: 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 24: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow and Adjusted Free Cash Flow: Notes: 1. The three months ended March 31, 2020 and the twelve months ended December 31, 2020 included $81 million related to the settlement of a pre-existing relationship in connection with the Defenders acquisition. This
Slide 25: 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. 25
Slide 26: 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