ADT Inc. (NYSE: ADT), the most trusted brand in smart home and
small business security, today reported results for the fourth
quarter and full year of 2023.
Financial highlights for the fourth quarter and
full year are listed below. Except for cash flow measures, prior
period amounts have been recast to exclude the commercial business,
consistent with continuing operations GAAP presentation following
the sale of the commercial business. Variances are on a
year-over-year (or quarter-over-prior year quarter) basis unless
otherwise noted.
Fourth Quarter 2023
- Total revenue of
$1.2 billion with end-of-period recurring monthly revenue
(RMR) up 4% to $353 million ($4.2 billion on an annualized
basis)
- Consumer and Small Business (CSB)
revenue of $1.2 billion, up 5% and segment Adjusted EBITDA of
$627 million, up 8%
- High customer retention with gross
revenue attrition maintaining 12.9%
- GAAP income from
continuing operations of $85 million, or $0.09 per diluted share,
down $57 million or 40%
- Adjusted income
from continuing operations of $226 million, or $0.25 per
diluted share, up $148 million
- Adjusted EBITDA
from continuing operations of $599 million, up 1%
Full Year 2023
- GAAP loss from
continuing operations of $65 million, or $(0.07) per diluted share,
which includes $511 million in Solar segment goodwill
impairment charges
- Adjusted income
from continuing operations of $439 million, or $0.51 per diluted
share
- Adjusted EBITDA
from continuing operations of $2,365 million, with CSB segment
Adjusted EBITDA of $2,481 million, up 8%
“2023 was a pivotal year for ADT. Following the
divestiture of our commercial business and decision to exit solar,
our model is simplified and focused on our core consumer security
and smart home business. Entering 2024, we are focused on driving
significant cash flow, while continuing to invest in both growing
and serving our customer base,” said ADT Chairman, President, and
CEO, Jim DeVries. “The substantial progress we’ve made in debt
reduction, coupled with our confidence in continued cash flow
generation, enables us to also return capital to shareholders
through the 57% dividend increase and a $350 million share
repurchase program authorization we announced earlier this year. We
remain focused on generating value for our shareholders, customers
and employees.”
BUSINESS HIGHLIGHTS
Foundation for Growth
- Continued
growth of RMR – The end-of-period RMR balance was a record $353
million ($4.2 billion on annualized basis), representing a 4%
increase. More than 85% of CSB revenue was generated from this
durable recurring revenue.
- Maintained
near-record customer retention and improved revenue payback – With
strong customer satisfaction, trailing 12-month gross customer
revenue attrition was 12.9%, and revenue payback ended 2023 at 2.1
years, a 0.1 year improvement.
Unlocking Shareholder Value
- Balance sheet
fortification – During 2023, the Company reduced debt by $2.1
billion, improved borrowing costs by approximately 35 basis points,
and extended debt maturities. Additionally, both Moody’s and
S&P recognized these and other improvements with corporate
rating upgrades.
- Completed sale
of commercial business – On Oct. 2, 2023, the Company completed the
divestiture of its commercial business for a purchase price of
approximately $1.6 billion.
- Solar business
exit – On Jan. 24, 2024, the Company announced it will be exiting
its residential solar business following the previously announced
footprint restructuring and detailed strategic review.
Innovative Offerings, Unrivaled Safety
and Premium Experience
- ADT Home
Security Program for State Farm – In 2023, ADT and State Farm
advanced their partnership with ADT’s program for State Farm
customers expanding to 13 states. Participating State Farm
customers receive exclusive discounts on ADT home security products
and professional monitoring.
- ADT named most
trusted brand – For the fifth consecutive year, ADT earned the
title of most trusted home security system brand in a study based
on consumer ratings conducted by Lifestory Research. ADT is among
only 10 brands to have achieved this feat for five consecutive
years.
- Expanded Alarm
Scoring pilot – ADT expanded its Alarm Scoring pilot program into
six U.S. cities, with plans to continue expansion in 2024. This
innovative method of classifying alarms provides a uniform and
reliable categorization of severity levels, giving first responders
the most precise and crucial alarm data.
Progress on our ESG
Journey
- ADT Safe Places
Program in 2023 – ADT’s corporate social responsibility program,
ADT Safe Places, is positively impacting communities throughout the
country with purposeful non-profit partnerships, volunteerism, and
charitable giving. In 2023, ADT donated a total of $683,000 to 39
non-profit organizations.
- ADT’s CDP
Climate Change Disclosure – ADT achieved a CDP score at the
“Awareness” level, in line with the North American regional
average, including the commercial and consumer services
sector.
2024 FINANCIAL OUTLOOK
The Company is providing the following financial
guidance for 2024, with all metrics representing an improvement
over 2023 performance.
(in millions, except per share data) |
2024 Guidance |
|
CSB
Segment |
|
|
Total Revenue |
$4,800 - $5,000 |
|
Adjusted EBITDA |
$2,525 - $2,625 |
|
Total
Company |
|
|
Adjusted EPS |
$0.60 - $0.70 |
|
Adjusted Free Cash
Flow(including interest rate swaps) |
$700 - $800 |
|
|
|
|
The Company is not providing forward-looking guidance for U.S. GAAP
financial measures other than CSB Total Revenue or a quantitative
reconciliation to the most directly comparable GAAP measures for
its non-GAAP financial guidance shown above because the GAAP
measures cannot be reliably estimated and the reconciliations
cannot be performed without unreasonable effort due to their
dependence on future uncertainties and adjusting items that the
Company cannot reasonably predict at this time but which may be
material. Please see "Non-GAAP Measures" for additional
information. |
|
The above measurements do not include restructuring or similar
expenditures associated with winding down and exiting the solar
business, for which the Company expects to incur aggregate charges
of $70 million to $110 million, and aggregated cash expenditures of
$50 million to $70 million. |
TOTAL COMPANY RESULTS(1)(2) |
|
(in millions,
except revenue payback, attrition, and per share data) |
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
GAAP |
Total revenue |
|
$ |
1,222 |
|
|
$ |
1,317 |
|
|
$ |
4,983 |
|
|
$ |
5,168 |
|
Income (loss) from continuing
operations |
|
$ |
85 |
|
|
$ |
142 |
|
|
$ |
(65 |
) |
|
$ |
107 |
|
Net income (loss) |
|
$ |
576 |
|
|
$ |
151 |
|
|
$ |
463 |
|
|
$ |
133 |
|
Net cash provided by (used
in): |
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
412 |
|
|
$ |
567 |
|
|
$ |
1,658 |
|
|
$ |
1,888 |
|
Investing activities |
|
$ |
1,231 |
|
|
$ |
(324 |
) |
|
$ |
242 |
|
|
$ |
(1,533 |
) |
Financing activities |
|
$ |
(1,869 |
) |
|
$ |
71 |
|
|
$ |
(2,144 |
) |
|
$ |
(15 |
) |
Income (loss) from continuing
operations per share - basic |
|
$ |
0.09 |
|
|
$ |
0.16 |
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
Income (loss) from continuing
operations per share - diluted |
|
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
Non-GAAP Measures |
Adjusted EBITDA from
Continuing Operations |
|
$ |
599 |
|
|
$ |
591 |
|
|
$ |
2,365 |
|
|
$ |
2,310 |
|
Adjusted Free Cash Flow |
|
$ |
94 |
|
|
$ |
269 |
|
|
$ |
442 |
|
|
$ |
558 |
|
Adjusted Free Cash Flow
(including interest rate swaps) |
|
$ |
117 |
|
|
$ |
277 |
|
|
$ |
525 |
|
|
$ |
539 |
|
Adjusted Income (Loss) from
Continuing Operations |
|
$ |
226 |
|
|
$ |
77 |
|
|
$ |
439 |
|
|
$ |
176 |
|
Adjusted Diluted Income (Loss)
per share |
|
$ |
0.25 |
|
|
$ |
0.08 |
|
|
$ |
0.51 |
|
|
$ |
0.21 |
|
|
|
Other Measures |
Trailing twelve-month revenue
payback |
|
|
|
|
|
|
2.1 years |
|
|
|
2.2 years |
|
Trailing twelve-month gross
customer revenue attrition |
|
|
|
|
|
|
12.9 |
% |
|
|
12.8 |
% |
End of period RMR |
|
|
|
|
|
$ |
353 |
|
|
$ |
341 |
|
SEGMENT RESULTS(2) |
|
CSB |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions, except Adjusted
EBITDA Margin) |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
Monitoring and related services |
|
$ |
1,054 |
|
|
$ |
1,024 |
|
|
$ |
30 |
|
3 |
% |
|
$ |
4,179 |
|
|
$ |
4,053 |
|
|
$ |
126 |
|
3 |
% |
Security installation,
product, and other |
|
|
119 |
|
|
|
93 |
|
|
|
25 |
|
27 |
% |
|
|
474 |
|
|
|
329 |
|
|
|
145 |
|
44 |
% |
Total CSB revenue |
|
$ |
1,172 |
|
|
$ |
1,117 |
|
|
$ |
55 |
|
5 |
% |
|
$ |
4,653 |
|
|
$ |
4,382 |
|
|
$ |
271 |
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
627 |
|
|
$ |
581 |
|
|
$ |
46 |
|
8 |
% |
|
$ |
2,481 |
|
|
$ |
2,305 |
|
|
$ |
176 |
|
8 |
% |
Adjusted EBITDA Margin (as a %
of Total CSB Revenue) |
|
|
53 |
% |
|
|
52 |
% |
|
|
|
|
|
|
53 |
% |
|
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CSB revenue was $1,172 million for the
fourth quarter and $4,653 million for the full year, up 5% and 6%,
respectively. Monitoring and related services (M&S) revenue
increased primarily from higher average pricing. Security
installation, product, and other revenue increased primarily from a
greater volume of transactions and higher installation revenue per
unit under the customer-owned equipment ownership model as well as
higher amortization of deferred subscriber acquisition revenue.
CSB Adjusted EBITDA increased 8% to $627 million
in the fourth quarter and increased 8% to $2,481 million for the
full year. These improvements were driven by revenue growth, net of
associated costs, and enhanced cost discipline.
Solar
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions, except Adjusted
EBITDA Margin) |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
Solar installation, product, and other |
|
$ |
50 |
|
|
$ |
200 |
|
|
$ |
(150 |
) |
|
(75)% |
|
$ |
330 |
|
|
$ |
786 |
|
|
$ |
(457 |
) |
|
(58)% |
Total Solar revenue |
|
$ |
50 |
|
|
$ |
200 |
|
|
$ |
(150 |
) |
|
(75)% |
|
$ |
330 |
|
|
$ |
786 |
|
|
$ |
(457 |
) |
|
(58)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
(28 |
) |
|
$ |
10 |
|
|
$ |
(37 |
) |
|
N/M |
|
$ |
(117 |
) |
|
$ |
5 |
|
|
$ |
(122 |
) |
|
N/M |
Adjusted EBITDA Margin (as a %
of Total Solar Revenue) |
|
|
(56 |
)% |
|
|
5 |
% |
|
|
|
|
|
|
(35 |
)% |
|
|
1 |
% |
|
|
|
|
Note: M&S
revenue is not applicable to the Solar segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Solar revenue for the fourth quarter was
$50 million and $330 million for the full year, down 75% and 58%,
respectively. This performance was driven by lower installations
and weaker sales performance.
Solar Adjusted EBITDA was a $28 million loss for
the fourth quarter and a $117 million loss for the full year.
Adjusted EBITDA was negatively impacted by the lower revenue
discussed above.
BALANCE SHEET, CASH, AND LIQUIDITY |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
|
|
2023 |
|
|
2022 |
|
$ Change |
|
% Change |
|
|
2023 |
|
|
2022 |
|
$ Change |
|
% Change |
Net cash provided by (used in) operating activities |
|
$ |
412 |
|
$ |
567 |
|
$ |
(155 |
) |
|
(27)% |
|
$ |
1,658 |
|
$ |
1,888 |
|
$ |
(230 |
) |
|
(12)% |
Adjusted Free Cash Flow |
|
$ |
94 |
|
$ |
269 |
|
$ |
(175 |
) |
|
(65)% |
|
$ |
442 |
|
$ |
558 |
|
$ |
(115 |
) |
|
(21)% |
Adjusted Free Cash Flow
(including interest rate swaps) |
|
$ |
117 |
|
$ |
277 |
|
$ |
(160 |
) |
|
(58)% |
|
$ |
525 |
|
$ |
539 |
|
$ |
(14 |
) |
|
(3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities during
the fourth quarter was $412 million, down $155 million or 27%, and
Adjusted Free Cash Flow (including the benefit of interest rate
swaps) decreased by $160 million versus the prior year period.
During the fourth quarter, cash losses in solar and expenditures on
an attractive strategic bulk account purchase were partially offset
by improved CSB operating profitability.
The Company returned $32 million to shareholders
in dividends during the fourth quarter of 2023 and $129 million for
the full year 2023.
On Dec. 29, 2023, the Company redeemed $500
million of First Lien Senior Secured Notes due 2024 using the $200
million remaining net proceeds from the commercial divestiture and
cash on hand. The Company expects to redeem the remaining $100
million of these notes on hand on or before maturity in April 2024.
There are no other significant debt maturities until 2026.
During 2023, the Company reduced debt by $2.1
billion and ended the year with no outstanding revolver
borrowings.
On Jan. 24, 2024, the Company announced updates
to its capital allocation strategy including a 57% dividend
increase and authorization of a $350 million share repurchase
program. The quarterly cash dividend of $0.055 per share will be
payable on April 4, 2024, to shareholders of record at the close of
business on March 14, 2024.
_____________________
(1 |
) |
All variances are year-over-year unless otherwise noted. Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted
Free Cash Flow (including interest rate swaps), Adjusted Income
(Loss), Adjusted Diluted Income (Loss) per share (or, Adjusted
EPS), Net Debt and Net Leverage Ratio are non-GAAP measures. Refer
to the “Non-GAAP Measures” section for the definitions of these
terms and reconciliations to the most comparable GAAP measures. The
operating metrics such as Gross Customer Revenue Attrition, Unit
Count, RMR, Gross RMR Additions, and Revenue Payback are
approximated as there may be variations to reported results in each
period due to certain adjustments the Company might make in
connection with the integration over several periods of acquired
companies that calculated these metrics differently, or otherwise,
including periodic reassessments and refinements in the ordinary
course of business. These refinements, for example, may include
changes due to systems conversion or historical methodology
differences in legacy systems. Results of the commercial business
are presented as discontinued operations. Except for cash flow
measures, and unless otherwise noted, amounts herein have been
recast to reflect the results of the Company’s continuing
operations. |
|
|
|
(2 |
) |
Amounts may not sum due to rounding. |
|
|
|
Conference Call As
previously announced, management will host a conference call at 10
a.m. ET today to discuss the Company’s fourth quarter and full year
2023 results and lead a question-and-answer session. Participants
may listen to a live webcast through the investor relations website
at investor.adt.com. A replay of the webcast will be available on
the website within 24 hours of the live event.
Alternatively, participants may listen to the
live call by dialing 1-833-470-1428 (domestic) or 1-404-975-4839
(international), and providing the access code 533961. An audio
replay will be available for two weeks following the call, and can
be accessed by dialing 1-866-813-9403 (domestic) or 1-929-458-6194
(international), and providing the access code 375946.
A slide presentation highlighting the Company’s
results will also be available on the Investor Relations section of
the Company’s website. From time to time, the Company may use its
website as a channel of distribution of material Company
information. Financial and other material information regarding the
Company is routinely posted on and accessible at
investor.adt.com.
About ADT Inc.
ADT provides safe, smart and sustainable
solutions for people, homes and small businesses. Through
innovative offerings, unrivaled safety and a premium customer
experience, all delivered by the largest networks of smart home
security professionals in the U.S., we empower people to protect
and connect to what matters most. For more information, visit
www.adt.com.
Investor Relations: |
Media Relations: |
investorrelations@adt.com Tel: 888-238-8525 |
media@adt.com |
|
|
Forward-Looking Statements
ADT has made statements in this press release
that are forward-looking and therefore subject to risks and
uncertainties, including those described below. All statements,
other than statements of historical fact, included in this document
are, or could be, “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995 and the
applicable rules and regulations of the Securities and Exchange
Commission (the “SEC”) and are made in reliance on the safe harbor
protections provided thereunder. These forward-looking statements
relate to, among other things, the Company’s planned exit of the
residential solar business and the expected costs and benefits of
such exit (the “ADT Solar Exit”); the repurchase of shares of the
Company’s common stock under the authorized share repurchase
program; the Company’s ability to reduce debt or improve leverage
ratios, or to achieve or maintain its long-term leverage goals; the
integration of the December 2023 strategic bulk purchase of
customer accounts; the Company’s outlook and/or guidance, which
includes total revenue and Adjusted EBITDA for the Consumer and
Small Business (“CSB”) segment and Adjusted Diluted Income (Loss)
per Share (“Adjusted EPS”) and Adjusted Free Cash Flow (including
interest rate swaps) for total company; any stated or implied
outcomes with regards to the foregoing; and other matters. Without
limiting the generality of the preceding sentences, any time we use
the words “expects,” “intends,” “will,” “anticipates,” “believes,”
“confident,” “continue,” “propose,” “seeks,” “could,” “may,”
“should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,”
“targets,” “planned,” “projects,” and, in each case, their negative
or other various or comparable terminology, and similar
expressions, we intend to clearly express that the information
deals with possible future events and is forward-looking in nature.
However, the absence of these words or similar expressions does not
mean that a statement is not forward-looking. These forward-looking
statements are based on management’s current beliefs and
assumptions and on information currently available to management.
We caution that these statements are subject to risks and
uncertainties, many of which are outside of our control and could
cause future events or results to be materially different from
those stated or implied in this press release, including, among
others, factors relating to uncertainties as to any difficulties
with respect to the effect of the Commercial Divestiture and ADT
Solar Exit on our ability to retain and hire key personnel and to
maintain relationships with customers, suppliers and other business
partners; risks related to the Commercial Divestiture and ADT Solar
Exit, including ADT’s business becoming less diversified and the
possible diversion of management’s attention from ADT’s core CSB
business operations; uncertainties as to our ability and the amount
of time necessary to realize the expected benefits of the
Commercial Divestiture and ADT Solar Exit, including the risk that
the ADT Solar Exit may not be completed in a timely manner or at
all; our ability to maintain and grow our existing customer base
and to integrate the December 2023 strategic bulk purchase of
customer accounts; activity in repurchasing shares of ADT’s common
stock under the authorized share repurchase program; dividend rates
or yields for any future quarter; and risks that are described in
the Company’s Annual Report and its Quarterly Reports on Form 10-Q,
including the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” contained in those reports, and in our other filings
with the SEC. Any forward-looking statement made in this press
release speaks only as of the date on which it is made. ADT
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments, or otherwise.
ADT INC. AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF OPERATIONS(in millions, except per
share data) (Unaudited) |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monitoring and related services |
|
$ |
1,054 |
|
|
$ |
1,024 |
|
|
$ |
30 |
|
|
3 |
% |
|
$ |
4,179 |
|
|
$ |
4,053 |
|
|
$ |
126 |
|
|
3 |
% |
Security installation, product, and other |
|
|
119 |
|
|
|
93 |
|
|
|
25 |
|
|
27 |
% |
|
|
474 |
|
|
|
329 |
|
|
|
145 |
|
|
44 |
% |
Solar installation, product, and other |
|
|
50 |
|
|
|
200 |
|
|
|
(150 |
) |
|
(75 |
)% |
|
|
330 |
|
|
|
786 |
|
|
|
(457 |
) |
|
(58 |
)% |
Total revenue |
|
|
1,222 |
|
|
|
1,317 |
|
|
|
(95 |
) |
|
(7 |
)% |
|
|
4,983 |
|
|
|
5,168 |
|
|
|
(186 |
) |
|
(4 |
)% |
Cost of
revenue(exclusive of depreciation and amortization shown
separately below): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monitoring and related services |
|
|
152 |
|
|
|
151 |
|
|
|
1 |
|
|
— |
% |
|
|
604 |
|
|
|
597 |
|
|
|
8 |
|
|
1 |
% |
Security installation, product, and other |
|
|
33 |
|
|
|
35 |
|
|
|
(2 |
) |
|
(5 |
)% |
|
|
147 |
|
|
|
102 |
|
|
|
45 |
|
|
44 |
% |
Solar installation, product, and other |
|
|
44 |
|
|
|
119 |
|
|
|
(75 |
) |
|
(63 |
)% |
|
|
257 |
|
|
|
502 |
|
|
|
(245 |
) |
|
(49 |
)% |
Total cost of revenue |
|
|
229 |
|
|
|
305 |
|
|
|
(76 |
) |
|
(25 |
)% |
|
|
1,008 |
|
|
|
1,200 |
|
|
|
(192 |
) |
|
(16 |
)% |
Selling, general, and
administrative expenses |
|
|
380 |
|
|
|
408 |
|
|
|
(28 |
) |
|
(7 |
)% |
|
|
1,540 |
|
|
|
1,663 |
|
|
|
(123 |
) |
|
(7 |
)% |
Depreciation and intangible asset
amortization |
|
|
330 |
|
|
|
392 |
|
|
|
(62 |
) |
|
(16 |
)% |
|
|
1,351 |
|
|
|
1,616 |
|
|
|
(265 |
) |
|
(16 |
)% |
Merger, restructuring,
integration, and other |
|
|
20 |
|
|
|
16 |
|
|
|
4 |
|
|
23 |
% |
|
|
62 |
|
|
|
17 |
|
|
|
45 |
|
|
N/M |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/M |
|
|
|
511 |
|
|
|
201 |
|
|
|
310 |
|
|
N/M |
|
Operating income (loss) |
|
|
263 |
|
|
|
195 |
|
|
|
68 |
|
|
35 |
% |
|
|
510 |
|
|
|
471 |
|
|
|
39 |
|
|
8 |
% |
Interest expense, net |
|
|
(170 |
) |
|
|
(147 |
) |
|
|
(23 |
) |
|
16 |
% |
|
|
(572 |
) |
|
|
(264 |
) |
|
|
(308 |
) |
|
N/M |
|
Loss on extinguishment of
debt |
|
|
(14 |
) |
|
|
— |
|
|
|
(14 |
) |
|
N/M |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
|
N/M |
|
Other income (expense) |
|
|
10 |
|
|
|
96 |
|
|
|
(86 |
) |
|
(90 |
)% |
|
|
12 |
|
|
|
(58 |
) |
|
|
70 |
|
|
N/M |
|
Income (loss) from continuing operations before income
taxes and equity in net earnings (losses) of equity method
investee |
|
|
89 |
|
|
|
144 |
|
|
|
(56 |
) |
|
(39 |
)% |
|
|
(67 |
) |
|
|
149 |
|
|
|
(216 |
) |
|
N/M |
|
Income tax benefit (expense) |
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
|
N/M |
|
|
|
(5 |
) |
|
|
(38 |
) |
|
|
33 |
|
|
(88 |
)% |
Income (loss) from continuing operations before equity in
net earnings (losses) of equity method investee |
|
|
72 |
|
|
|
144 |
|
|
|
(73 |
) |
|
(50 |
)% |
|
|
(71 |
) |
|
|
111 |
|
|
|
(183 |
) |
|
N/M |
|
Equity in net earnings (losses)
of equity method investee |
|
|
14 |
|
|
|
(2 |
) |
|
|
16 |
|
|
N/M |
|
|
|
7 |
|
|
|
(5 |
) |
|
|
11 |
|
|
N/M |
|
Income (loss) from continuing operations |
|
|
85 |
|
|
|
142 |
|
|
|
(57 |
) |
|
(40 |
)% |
|
|
(65 |
) |
|
|
107 |
|
|
|
(171 |
) |
|
N/M |
|
Income (loss) from discontinued
operations, net of tax |
|
|
491 |
|
|
|
9 |
|
|
|
482 |
|
|
N/M |
|
|
|
528 |
|
|
|
26 |
|
|
|
502 |
|
|
N/M |
|
Net income (loss) |
|
$ |
576 |
|
|
$ |
151 |
|
|
$ |
425 |
|
|
N/M |
|
|
$ |
463 |
|
|
$ |
133 |
|
|
$ |
330 |
|
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations per share - basic |
|
$ |
0.09 |
|
|
$ |
0.16 |
|
|
|
|
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
|
|
Income (loss) from continuing operations per share - diluted |
|
$ |
0.09 |
|
|
$ |
0.15 |
|
|
|
|
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic |
|
$ |
0.62 |
|
|
$ |
0.17 |
|
|
|
|
|
|
$ |
0.51 |
|
|
$ |
0.15 |
|
|
|
|
|
Net income (loss) per share - diluted |
|
$ |
0.59 |
|
|
$ |
0.16 |
|
|
|
|
|
|
$ |
0.51 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - basic |
|
|
858 |
|
|
|
851 |
|
|
|
|
|
|
|
857 |
|
|
|
848 |
|
|
|
|
|
Weighted-average shares outstanding - diluted |
|
|
919 |
|
|
|
922 |
|
|
|
|
|
|
|
857 |
|
|
|
848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common
Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations per share - basic |
|
$ |
0.09 |
|
|
$ |
0.16 |
|
|
|
|
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
|
|
Income (loss) from continuing operations per share - diluted |
|
$ |
0.09 |
|
|
$ |
0.15 |
|
|
|
|
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic |
|
$ |
0.62 |
|
|
$ |
0.17 |
|
|
|
|
|
|
$ |
0.51 |
|
|
$ |
0.15 |
|
|
|
|
|
Net income (loss) per share - diluted |
|
$ |
0.59 |
|
|
$ |
0.16 |
|
|
|
|
|
|
$ |
0.51 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - basic |
|
|
55 |
|
|
|
55 |
|
|
|
|
|
|
|
55 |
|
|
|
55 |
|
|
|
|
|
Weighted-average shares outstanding - diluted |
|
|
55 |
|
|
|
55 |
|
|
|
|
|
|
|
55 |
|
|
|
55 |
|
|
|
|
|
Note: amounts may not sum due to rounding
|
ADT INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(in millions)
(Unaudited) |
|
|
December 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
15 |
|
$ |
257 |
Restricted cash and restricted cash equivalents |
|
115 |
|
|
116 |
Accounts receivable, net |
|
390 |
|
|
335 |
Inventories, net |
|
224 |
|
|
225 |
Work-in-progress |
|
6 |
|
|
12 |
Prepaid expenses and other current assets |
|
254 |
|
|
307 |
Current assets held for sale |
|
— |
|
|
470 |
Total current assets |
|
1,005 |
|
|
1,722 |
Property and equipment, net |
|
283 |
|
|
306 |
Subscriber system assets,
net |
|
3,006 |
|
|
2,919 |
Intangible assets, net |
|
4,877 |
|
|
4,927 |
Goodwill |
|
4,904 |
|
|
5,430 |
Deferred subscriber acquisition
costs, net |
|
1,176 |
|
|
991 |
Other assets |
|
713 |
|
|
641 |
Noncurrent assets held for
sale |
|
— |
|
|
886 |
Total assets |
$ |
15,964 |
|
$ |
17,821 |
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
Current liabilities: |
|
|
|
Current maturities of long-term debt |
$ |
321 |
|
$ |
858 |
Accounts payable |
|
294 |
|
|
418 |
Deferred revenue |
|
264 |
|
|
310 |
Accrued expenses and other current liabilities |
|
601 |
|
|
777 |
Current liabilities held for sale |
|
— |
|
|
299 |
Total current liabilities |
|
1,480 |
|
|
2,661 |
Long-term debt |
|
7,523 |
|
|
8,947 |
Deferred subscriber acquisition
revenue |
|
1,915 |
|
|
1,581 |
Deferred tax liabilities |
|
1,027 |
|
|
893 |
Other liabilities |
|
230 |
|
|
240 |
Noncurrent liabilities held for
sale |
|
— |
|
|
106 |
Total liabilities |
|
12,175 |
|
|
14,428 |
|
|
|
|
Total stockholders' equity |
|
3,789 |
|
|
3,393 |
Total liabilities and stockholders' equity |
$ |
15,964 |
|
$ |
17,821 |
Note: amounts may not sum due to rounding
|
ADT INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
millions) (Unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
576 |
|
|
$ |
151 |
|
|
$ |
463 |
|
|
$ |
133 |
|
Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Depreciation and intangible asset amortization |
|
330 |
|
|
|
412 |
|
|
|
1,389 |
|
|
|
1,694 |
|
Amortization of deferred subscriber acquisition costs |
|
50 |
|
|
|
45 |
|
|
|
196 |
|
|
|
163 |
|
Amortization of deferred subscriber acquisition revenue |
|
(81 |
) |
|
|
(68 |
) |
|
|
(309 |
) |
|
|
(244 |
) |
Share-based compensation expense |
|
8 |
|
|
|
17 |
|
|
|
51 |
|
|
|
67 |
|
Deferred income taxes |
|
118 |
|
|
|
(16 |
) |
|
|
125 |
|
|
|
20 |
|
Provision for losses on receivables and inventory |
|
47 |
|
|
|
45 |
|
|
|
151 |
|
|
|
114 |
|
Loss on extinguishment of debt |
|
14 |
|
|
|
— |
|
|
|
17 |
|
|
|
— |
|
Goodwill, intangible, and other asset impairments |
|
7 |
|
|
|
5 |
|
|
|
529 |
|
|
|
206 |
|
(Gain) loss on sales of businesses |
|
(649 |
) |
|
|
— |
|
|
|
(649 |
) |
|
|
(10 |
) |
Unrealized (gain) loss on interest rate swap contracts |
|
77 |
|
|
|
11 |
|
|
|
38 |
|
|
|
(302 |
) |
Change in fair value of other financial instruments |
|
— |
|
|
|
(94 |
) |
|
|
— |
|
|
|
63 |
|
Other non-cash items, net |
|
(1 |
) |
|
|
20 |
|
|
|
100 |
|
|
|
135 |
|
Changes in operating assets and
liabilities, net of effects of acquisitions and dispositions: |
|
|
|
|
|
|
|
Deferred subscriber acquisition costs |
|
(91 |
) |
|
|
(89 |
) |
|
|
(387 |
) |
|
|
(394 |
) |
Deferred subscriber acquisition revenue |
|
68 |
|
|
|
73 |
|
|
|
290 |
|
|
|
329 |
|
Other, net |
|
(61 |
) |
|
|
56 |
|
|
|
(346 |
) |
|
|
(85 |
) |
Net cash provided by (used in) operating activities |
|
412 |
|
|
|
567 |
|
|
|
1,658 |
|
|
|
1,888 |
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Dealer generated customer
accounts and bulk account purchases |
|
(203 |
) |
|
|
(121 |
) |
|
|
(589 |
) |
|
|
(622 |
) |
Subscriber system asset
expenditures |
|
(150 |
) |
|
|
(162 |
) |
|
|
(631 |
) |
|
|
(735 |
) |
Purchases of property and
equipment |
|
(46 |
) |
|
|
(41 |
) |
|
|
(176 |
) |
|
|
(177 |
) |
Acquisition of businesses, net of
cash acquired |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
Sales of businesses, net of cash
sold |
|
1,609 |
|
|
|
— |
|
|
|
1,609 |
|
|
|
27 |
|
Other investing, net |
|
20 |
|
|
|
— |
|
|
|
29 |
|
|
|
(13 |
) |
Net cash provided by (used in) investing activities |
|
1,231 |
|
|
|
(324 |
) |
|
|
242 |
|
|
|
(1,533 |
) |
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common
stock, net of expenses |
|
— |
|
|
|
1,180 |
|
|
|
— |
|
|
|
1,180 |
|
Proceeds from long-term
borrowings |
|
217 |
|
|
|
70 |
|
|
|
867 |
|
|
|
550 |
|
Proceeds from receivables
facility |
|
69 |
|
|
|
65 |
|
|
|
282 |
|
|
|
277 |
|
Repurchases of common stock |
|
— |
|
|
|
(1,200 |
) |
|
|
— |
|
|
|
(1,200 |
) |
Repayment of long-term
borrowings, including call premiums |
|
(2,073 |
) |
|
|
(77 |
) |
|
|
(2,962 |
) |
|
|
(605 |
) |
Repayment of receivables
facility |
|
(56 |
) |
|
|
(40 |
) |
|
|
(200 |
) |
|
|
(121 |
) |
Dividends on common stock |
|
(32 |
) |
|
|
(32 |
) |
|
|
(129 |
) |
|
|
(127 |
) |
Payments on finance leases |
|
(11 |
) |
|
|
(11 |
) |
|
|
(44 |
) |
|
|
(45 |
) |
Proceeds (payments) from
opportunity fund |
|
(9 |
) |
|
|
101 |
|
|
|
(9 |
) |
|
|
101 |
|
Proceeds (payments) from interest
rate swaps |
|
24 |
|
|
|
8 |
|
|
|
83 |
|
|
|
(19 |
) |
Other financing, net |
|
2 |
|
|
|
8 |
|
|
|
(32 |
) |
|
|
(5 |
) |
Net cash provided by (used in) financing activities |
|
(1,869 |
) |
|
|
71 |
|
|
|
(2,144 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
Cash and cash equivalents
and restricted cash and restricted cash equivalents: |
|
|
|
|
|
|
|
Net increase (decrease) |
|
(226 |
) |
|
|
314 |
|
|
|
(244 |
) |
|
|
340 |
|
Beginning balance |
|
356 |
|
|
|
60 |
|
|
|
374 |
|
|
|
33 |
|
Ending balance |
$ |
130 |
|
|
$ |
374 |
|
|
$ |
130 |
|
|
$ |
374 |
|
Note: amounts may not sum due to rounding
|
ADT INC. AND SUBSIDIARIESSEGMENT
INFORMATION(in millions) (Unaudited) |
|
Revenue
by Segment |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
CSB: |
|
|
|
|
|
|
|
|
Monitoring and related services |
|
$ |
1,054 |
|
$ |
1,024 |
|
$ |
4,179 |
|
$ |
4,053 |
Security installation, product, and other |
|
|
119 |
|
|
93 |
|
|
474 |
|
|
329 |
Total CSB |
|
$ |
1,172 |
|
$ |
1,117 |
|
$ |
4,653 |
|
$ |
4,382 |
|
|
|
|
|
|
|
|
|
Solar: |
|
|
|
|
|
|
|
|
Solar installation, product, and other |
|
$ |
50 |
|
$ |
200 |
|
$ |
330 |
|
$ |
786 |
Total Solar |
|
$ |
50 |
|
$ |
200 |
|
$ |
330 |
|
$ |
786 |
|
|
|
|
|
|
|
|
|
Total Revenue |
|
$ |
1,222 |
|
$ |
1,317 |
|
$ |
4,983 |
|
$ |
5,168 |
|
Adjusted EBITDA by Segment
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
CSB |
|
$ |
627 |
|
|
$ |
581 |
|
$ |
2,481 |
|
|
$ |
2,305 |
Solar |
|
|
(28 |
) |
|
|
10 |
|
|
(117 |
) |
|
|
5 |
Total |
|
$ |
599 |
|
|
$ |
591 |
|
$ |
2,365 |
|
|
$ |
2,310 |
|
Adjusted EBITDA Margin by
Segment
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
CSB (as a % of Total CSB
Revenue) |
|
53 |
% |
|
52 |
% |
|
53 |
% |
|
53 |
% |
Solar (as a % of Total Solar
Revenue) |
|
(56 |
)% |
|
5 |
% |
|
(35 |
)% |
|
1 |
% |
Note: amounts may not sum due to rounding
ADT INC. AND
SUBSIDIARIESNON-GAAP MEASURES
ADT sometimes uses information (“non-GAAP
financial measures”) that is derived from the 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 measures may be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for or superior to GAAP results.
The following information includes definitions
of the Company’s non-GAAP financial measures used in this release,
reasons management believes these measures are useful to investors
regarding the Company’s financial condition and results of
operations, additional purposes, if any, for which management uses
the non-GAAP financial measures, and limitations to using these
non-GAAP financial measures, as well as reconciliations of these
non-GAAP financial measures to the most comparable GAAP measures.
Each non-GAAP financial measure is presented following the
corresponding GAAP measure so as not to imply that more emphasis
should be placed on the non-GAAP measure. The limitations of
non-GAAP financial measures are best addressed by considering these
measures in conjunction with the appropriate GAAP measures. In
addition, computations of these non-GAAP measures may not be
comparable to other similarly titled measures reported by other
companies.
With regard to the Company’s financial guidance
for 2024, the Company is not providing a quantitative
reconciliation for forward-looking CSB Adjusted EBITDA and Adjusted
EPS to income (loss) from continuing operations, and Adjusted Free
Cash Flow (including interest rate swaps) to net cash provided by
operating activities, which are the most directly comparable
respective GAAP measures. These GAAP measures cannot be reliably
predicted or estimated without unreasonable effort due to their
dependence on future uncertainties, such as the adjustment of items
used in the following reconciliations. Additionally, information
about other adjusting items that is currently not available to the
Company could have a potentially unpredictable and potentially
significant impact on its future GAAP financial results.
The results of the commercial business are
presented as a discontinued operation (with the exception of
certain costs previously reflected in the Commercial segment that
do not qualify to be presented as discontinued operations and are
now reflected in the CSB segment). Except for Free Cash Flow,
Adjusted Free Cash Flow, and Adjusted Free Cash Flow (including
interest rate swaps) which, consistent with the presentation of the
GAAP measure net cash provided by (used in) operating activities,
continue to reflect the results of both continuing and discontinued
operations (through the date of sale), and unless otherwise noted,
non-GAAP measures herein have been recast for prior periods to
reflect the results of only the Company’s continuing operations and
to exclude the results of discontinued operations related to the
commercial business to conform with the current period
presentation.
ADT INC. AND
SUBSIDIARIESU.S. GAAP to Non-GAAP
RECONCILIATIONS(Unaudited)
Adjusted EBITDA from Continuing
Operations (“Adjusted EBITDA”) and Adjusted EBITDA Margin from
Continuing Operations (“Adjusted EBITDA Margin”)
The Company believes the presentation of the
non-GAAP measure, Adjusted EBITDA, provides useful information to
investors about the Company’s operating profitability adjusted for
certain non-cash items, non-routine items that the Company does not
expect to continue at the same level in the future, as well as
other items that are not core to the Company’s operations. Further,
the Company believes this provides a meaningful measure of
operating profitability because it is used for evaluating business
performance, making budgeting decisions, and comparing company
performance against that of other peer companies using similar
measures.
The Company defines Adjusted EBITDA as income or
loss from continuing operations adjusted for (i) interest; (ii)
taxes; (iii) depreciation and amortization, including depreciation
of subscriber system assets and other fixed assets and amortization
of dealer and other intangible assets; (iv) amortization of
deferred costs and deferred revenue associated with subscriber
acquisitions; (v) share-based compensation expense; (vi) merger,
restructuring, integration, and other items such as separation
costs; (vii) losses on extinguishment of debt; (viii) radio
conversion costs net of any related incremental revenue earned;
(ix) adjustments related to acquisitions, such as contingent
consideration and purchase accounting adjustments, or dispositions;
(x) impairment charges; and (xi) other income/gain or expense/loss
items such as changes in fair value of certain financial
instruments or financing and consent fees.
There are material limitations to using Adjusted
EBITDA as it does not reflect certain significant items which
directly affect income or loss from continuing operations (the most
comparable GAAP measure).
The discussion above is also applicable to
Adjusted EBITDA margin, which is calculated as Adjusted EBITDA as a
percentage of total revenue.
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Income (loss) from
continuing operations |
$ |
85 |
|
|
$ |
142 |
|
|
$ |
(65 |
) |
|
$ |
107 |
|
Interest expense, net |
|
170 |
|
|
|
147 |
|
|
|
572 |
|
|
|
264 |
|
Income tax expense
(benefit) |
|
17 |
|
|
|
— |
|
|
|
5 |
|
|
|
38 |
|
Depreciation and intangible
asset amortization |
|
330 |
|
|
|
392 |
|
|
|
1,351 |
|
|
|
1,616 |
|
Amortization of deferred
subscriber acquisition costs |
|
50 |
|
|
|
42 |
|
|
|
188 |
|
|
|
154 |
|
Amortization of deferred
subscriber acquisition revenue |
|
(81 |
) |
|
|
(66 |
) |
|
|
(302 |
) |
|
|
(235 |
) |
Share-based compensation
expense |
|
8 |
|
|
|
14 |
|
|
|
39 |
|
|
|
53 |
|
Merger, restructuring,
integration and other(1) |
|
20 |
|
|
|
16 |
|
|
|
62 |
|
|
|
17 |
|
Goodwill impairment(2) |
|
— |
|
|
|
— |
|
|
|
511 |
|
|
|
201 |
|
Loss on extinguishment of
debt |
|
14 |
|
|
|
— |
|
|
|
17 |
|
|
|
— |
|
Change in fair value of other
financial instruments(3) |
|
— |
|
|
|
(94 |
) |
|
|
— |
|
|
|
63 |
|
Non-cash acquisition-related
adjustments and other, net(4) |
|
(14 |
) |
|
|
(2 |
) |
|
|
(14 |
) |
|
|
31 |
|
Adjusted EBITDA from continuing operations |
$ |
599 |
|
|
$ |
591 |
|
|
$ |
2,365 |
|
|
$ |
2,310 |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations to total revenue ratio |
|
7 |
% |
|
|
11 |
% |
|
(1)% |
|
|
2 |
% |
Adjusted EBITDA Margin(as percentage of Total Revenue) |
|
49 |
% |
|
|
45 |
% |
|
|
47 |
% |
|
|
45 |
% |
Note: amounts may not sum due to
rounding_______________________
(1) During 2023, includes
integration and third-party costs related to the strategic
optimization of the Solar business operations following the ADT
Solar acquisition as well as restructuring
costs.(2) Represents impairment charges associated
with the Solar reporting unit.(3) During 2022,
represents the change in fair value of a contingent forward
purchase contract related to the State Farm transaction during
2022.(4) During 2023, primarily represents the
gain on sale of a business and other investment partially offset by
financing fees and interest rate swaps included in other income
(expense). During 2022, also includes the gain on sale of a
business. During 2022 and 2021, primarily represents the
amortization of the customer backlog intangible asset acquired in
the ADT Solar Acquisition, which was fully amortized as of March
2022.
Free Cash Flow, Adjusted Free Cash Flow,
and Adjusted Free Cash Flow including interest rate
swaps
The Company defines Free Cash Flow as cash flows
from operating activities less cash outlays related to capital
expenditures. The Company defines capital expenditures to include
accounts purchased through the Company’s network of authorized
dealers or third parties outside of the Company’s authorized dealer
network, subscriber system asset expenditures, and purchases of
property and equipment. These items are subtracted from cash flows
from operating activities because they represent long-term
investments that are required for normal business activities.
The Company defines Adjusted Free Cash Flow as
Free Cash Flow adjusted for net cash flows related to (i) net
proceeds from the Company’s consumer receivables facility; (ii)
financing and consent fees; (iii) restructuring and integration;
(iv) integration-related capital expenditures; (v) radio conversion
costs net of any related incremental revenue collected; and (vi)
other payments or receipts that may mask operating results or
business trends. Adjusted Free Cash Flow including interest rate
swaps reflects Adjusted Free Cash Flow plus net cash settlements on
interest rate swaps presented outside of net cash provided by (used
in) operating activities.
The Company believes the presentations of these
non-GAAP measures are appropriate to provide investors with useful
information about the Company’s ability to repay debt, make other
investments, and pay dividends. The Company believes the
presentation of Adjusted Free Cash Flow is also a useful measure of
the cash flow attributable to normal business activities, inclusive
of the net cash flows associated with the acquisition of
subscribers, as well as the Company’s ability to repay other debt,
make other investments, and pay dividends. Further, Adjusted Free
Cash Flow including interest rate swaps is a useful measure of
Adjusted Free Cash Flow inclusive of all cash interest.
There are material limitations to using these
non-GAAP measures. These non-GAAP measures adjust for cash items
that are ultimately within management’s discretion to direct, and
therefore, may imply that there is less or more cash available than
the most comparable GAAP measure. These non-GAAP measures are not
intended to represent residual cash flow for discretionary
expenditures since debt repayment requirements and other
non-discretionary expenditures are not deducted.
The non-GAAP measures in the table below include
cash flows associated with both continuing and discontinued
operations consistent with the applicable GAAP presentation on the
Statement of Cash Flows.
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by
(used in): |
|
|
|
|
|
|
|
Operating activities |
$ |
412 |
|
|
$ |
567 |
|
|
$ |
1,658 |
|
|
$ |
1,888 |
|
Investing activities |
$ |
1,231 |
|
|
$ |
(324 |
) |
|
$ |
242 |
|
|
$ |
(1,533 |
) |
Financing activities |
$ |
(1,869 |
) |
|
$ |
71 |
|
|
$ |
(2,144 |
) |
|
$ |
(15 |
) |
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities |
$ |
412 |
|
|
$ |
567 |
|
|
$ |
1,658 |
|
|
$ |
1,888 |
|
Dealer generated customer
accounts and bulk account purchases |
|
(203 |
) |
|
|
(121 |
) |
|
|
(589 |
) |
|
|
(622 |
) |
Subscriber system asset
expenditures |
|
(150 |
) |
|
|
(162 |
) |
|
|
(631 |
) |
|
|
(735 |
) |
Purchases of property and
equipment |
|
(46 |
) |
|
|
(41 |
) |
|
|
(176 |
) |
|
|
(177 |
) |
Free Cash Flow |
|
13 |
|
|
|
243 |
|
|
|
262 |
|
|
|
355 |
|
Net proceeds from receivables
facility |
|
14 |
|
|
|
25 |
|
|
|
81 |
|
|
|
156 |
|
Restructuring and integration
payments(1) |
|
16 |
|
|
|
4 |
|
|
|
43 |
|
|
|
17 |
|
Integration-related capital
expenditures |
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
Radio conversion costs,
net |
|
— |
|
|
|
(6 |
) |
|
|
(5 |
) |
|
|
4 |
|
Tax payments associated with
gain on divestitures |
|
25 |
|
|
|
— |
|
|
|
25 |
|
|
|
— |
|
Transaction costs and other,
net(2) |
|
25 |
|
|
|
3 |
|
|
|
33 |
|
|
|
24 |
|
Adjusted Free Cash Flow |
$ |
94 |
|
|
$ |
269 |
|
|
$ |
442 |
|
|
$ |
558 |
|
Interest rate swaps presented
outside operating activities(3) |
|
24 |
|
|
|
8 |
|
|
|
83 |
|
|
|
(19 |
) |
Adjusted Free Cash Flow (including interest rate
swaps) |
$ |
117 |
|
|
$ |
277 |
|
|
$ |
525 |
|
|
$ |
539 |
|
Note: amounts may not sum due to rounding
_______________________(1) During 2023, primarily
includes ADT Solar integration costs and restructuring
activities.(2) During the three months ended
December 2023, primarily represents transaction costs related to
the Commercial Divestiture. During 2022, primarily includes
acquisition costs related to the ADT Solar
Acquisition.(3) Includes net settlements related
to interest rate swaps presented outside of net cash provided by
(used in) operating activities.
Adjusted Income (Loss) from Continuing
Operations (“Adjusted Income (Loss)”) and Adjusted Diluted Income
(Loss) per Share from Continuing Operations (“Adjusted Diluted
Income (Loss) per Share”) (or Adjusted EPS)
The Company defines Adjusted Income (Loss) as
income (loss) from continuing operations adjusted for (i) merger,
restructuring, integration, and other items such as separation
costs; (ii) losses on extinguishment of debt; (iii) radio
conversion costs net of any related incremental revenue earned;
(iv) share-based compensation expense; (v) unrealized gains and
losses on interest rate swap contracts not designated as hedges;
(vi) other income/gain or expense/loss items such as changes in
fair value of certain financial instruments, impairment charges,
financing and consent fees, or acquisition-related adjustments; and
(vii) the impact these adjusted items have on taxes.
Adjusted Diluted Income (Loss) per share is
Adjusted Income (Loss) divided by diluted weighted-average shares
outstanding of common stock. When the control number for the GAAP
calculation is negative, diluted weighted-average shares
outstanding of common stock does not include the assumed conversion
of Class B Common Stock and other potential shares, such as
share-based compensation awards, to shares of Common Stock.
The Company believes Adjusted Income (Loss) and
Adjusted Diluted Income (Loss) per share are benchmarks used by
analysts and investors who follow the industry for comparison of
its performance with other companies in the industry, although
these measures may not be directly comparable to similar measures
reported by other companies.
There are material limitations to using these
measures, as they do not reflect certain significant items which
directly affect income (loss) from continuing operations and
related per share amounts (the most comparable GAAP measures).
Prior to the third quarter of 2023, the Company
presented Adjusted Net Income along with a reconciliation to GAAP
net income and Adjusted Diluted Net Income (Loss) per share along
with a reconciliation to GAAP Diluted Net Income (Loss) per share.
As the Company did not report discontinued operations prior to the
third quarter of 2023, net income (loss) reflected all of the
Company’s operations, including the commercial business. Since the
beginning of the third quarter of 2023, results of the commercial
business are presented in accordance with GAAP as discontinued
operations. Therefore, the Company now presents Adjusted Income
(Loss) and Adjusted Diluted Income (Loss) per share along with
reconciliations to GAAP income (loss) from continuing operations
and GAAP Diluted income (loss) from continuing operations per
share, respectively, as the most directly comparable GAAP
measures.
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(in millions, except per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Income (loss) from
continuing operations |
$ |
85 |
|
|
$ |
142 |
|
|
$ |
(65 |
) |
|
$ |
107 |
|
Merger, restructuring,
integration, and other(1) |
|
20 |
|
|
|
16 |
|
|
|
62 |
|
|
|
17 |
|
Goodwill impairment(1) |
|
— |
|
|
|
— |
|
|
|
511 |
|
|
|
201 |
|
Loss on extinguishment of
debt |
|
14 |
|
|
|
— |
|
|
|
17 |
|
|
|
— |
|
Change in fair value of other
financial instruments(1) |
|
— |
|
|
|
(94 |
) |
|
|
— |
|
|
|
63 |
|
Share-based compensation
expense |
|
8 |
|
|
|
14 |
|
|
|
39 |
|
|
|
53 |
|
Interest rate swaps,
net(2) |
|
70 |
|
|
|
11 |
|
|
|
57 |
|
|
|
(302 |
) |
Non-cash acquisition-related
adjustments and other, net(1) |
|
(24 |
) |
|
|
(2 |
) |
|
|
(24 |
) |
|
|
32 |
|
Tax impact on
adjustments(3) |
|
51 |
|
|
|
(9 |
) |
|
|
(159 |
) |
|
|
5 |
|
Adjusted Income (Loss) from continuing
operations |
$ |
226 |
|
|
$ |
77 |
|
|
$ |
439 |
|
|
$ |
176 |
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding -
diluted(4): |
|
|
|
|
|
|
|
Common Stock |
|
919 |
|
|
|
922 |
|
|
|
857 |
|
|
|
848 |
|
Class B Common Stock |
|
55 |
|
|
|
55 |
|
|
|
55 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
Income (loss) per
share from continuing operations - diluted: |
|
|
|
|
|
|
|
Common Stock |
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
Class B Common Stock |
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
(0.07 |
) |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted
Income (Loss) per share(5) |
$ |
0.25 |
|
|
$ |
0.08 |
|
|
$ |
0.51 |
|
|
$ |
0.21 |
|
Note: amounts may not sum due to
rounding._______________________(1) Refer to the
footnotes to the reconciliation of Adjusted EBITDA to income (loss)
from continuing operations.(2) Primarily includes
the unrealized (gain) or loss on interest rate swaps not designated
as cash flow hedges. During Q3 2023, includes $25 million
associated with the reclassification to interest expense, net from
accumulated other comprehensive income (“AOCI”) of historical
losses related to certain interest rate swaps for which the Company
previously applied hedge accounting but for which the cash flows
are probable of not occurring as a result of the partial redemption
of the Company’s First Lien Term Loan due
2026.(3) Represents the statutory rate, inclusive
of the federal statutory rate, which reflects the tax impact of the
Company’s filing posture in combined, unitary, and separate
reporting states. The Company’s state tax profile varies by
state.(4) Refer to the Company’s Quarterly Reports
on Form 10-Q and Annual Reports on Form 10-K (or Form 10-K/A) for
further discussion regarding the computation of diluted
weighted-average shares outstanding of common
stock.(5) Calculated as Adjusted Income (Loss)
divided by diluted weighted-average shares outstanding of Common
Stock.
ADT (NYSE:ADT)
過去 株価チャート
から 5 2024 まで 6 2024
ADT (NYSE:ADT)
過去 株価チャート
から 6 2023 まで 6 2024