ADT Reports Second Quarter 2021 Results

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BOCA RATON, Florida –ADT Inc., the most trusted brand in smart home and small business security, has released its results for the second quarter of 2021.

Some of the operational highlights announced for the second quarter of 2021 include:

• Additions of gross monthly recurring income (RMR) increased by 28%

• End-of-period CMA of $ 352 million increased by 4%

• Strong customer loyalty with an attrition rate of 13.3%

• The commercial recovery continues with better results year on year

• Proactive improvement of capital structure to improve liquidity and address short-term debt maturities

“We continue to make substantial progress against our key priorities for 2021, including increasing our DPR additions and our monthly recurring revenue base, improving the performance of our business activity and driving innovation both through to our internal expertise and through our strategic partnerships, ”said Jim DeVries, President and CEO of ADT. “I would like to thank our entire ADT team for serving our clients and delivering solid results to our shareholders. From mobile to residential to commercial, the breadth and reach of the services ADT provides is unmatched in the market. We are well positioned to lead the way in the fast growing smart home and business protection markets, leveraging our trusted brand to drive profitable growth through premium services, innovative technology and world-class partnerships. ”

Q2 2021 results

Total revenue decreased 2% year-over-year to $ 1,304 million, primarily due to a $ 69 million decrease in installation and other revenue. Installation revenue for individuals and small businesses decreased $ 109 million from a year ago, reflecting the reduction in non-cash reported revenue due to changes in equipment ownership model, which was partially offset by higher commercial installation revenues. Surveillance and related services revenue increased $ 42 million or 4%, driven by higher recurring monthly revenue.

Reflecting strong customer loyalty, the attrition of gross customer revenue over the last 12 months of 13.3% increased slightly from a year ago mainly due to headwinds from the acquisition of Defenders in 2020 and an increase in client outsourcing. The 12-month customer return on investment remained at 2.2 years.

The company reported a net loss of $ 126 million, compared to the prior year’s net loss of $ 107 million, as strong M&S revenues and improved business performance were offset by higher expenses. year-over-year high related to radio conversion, service and net subscriber acquisition. costs. The diluted net loss per share of the common shares was ($ 0.15) compared to ($ 0.14) a year ago, and the diluted net loss per share of the Class B common shares was (0, $ 15). As detailed below, the diluted net loss per share before special items was $ (0.07) for both periods.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to $ 542 million, compared to $ 563 million the previous year, reflecting the non-monetary impact of changes in ownership model, an increase service costs and investments in next-generation IT infrastructure and technology. These items were partially offset by strong performance in revenue from surveillance and related services, as well as improved business results.

Year-to-date, free cash flow from operating activities was $ 786 million and free cash flow used in investing activities was $ 777 million. These amounts compare to $ 629 million and $ 536 million, respectively, for the first six months of 2020. The increase in cash flow from operating activities reflects the impact of lower firm sales to customers. residential in 2021 and the one-time payment in 2020 related to the acquisition of Defenders, partially offset by higher net payments for radio conversion costs. The increase in net cash used in investing activities reflects spending on subscriber system assets and additional spending on dealer and wholesale account purchases, partially offset by the one-time acquisition by Defenders. Net cash used in financing activities was $ 60 million compared to $ 96 million a year ago.

Year-to-date adjusted free cash flow was $ 227 million, down from $ 405 million last year. This decrease is due to higher subscriber acquisition costs to fund significant customer growth and RMR additions.

Company highlights

ADT is a trusted consumer brand, driving profitable growth through innovative technology, strategic partnerships and premium products and services. The main highlights of the Company’s performance include:

• Continued DPR Growth – During the quarter, additions to the gross DPR increased to $ 14.5 million, an increase of 28% from the previous year. This growth included a better year-over-year performance from ADT’s dealer network. Total additions to the gross CMA in the United States have increased by double digits in each of the past four quarters. At the end of the quarter, the DPR totaled $ 352 million, an increase of 4% year-over-year. Approximately 80 percent of the Company’s total revenues come from these sustainable recurring revenues.

• Progress in radio conversions – The Company continued to make significant progress in replacing 3G cellular and code division multiple access (“CDMA”) equipment used in many of its security systems. In the first half of 2021, the number of client systems to be converted was reduced by one million. As of June 30, 2021, there were approximately 800,000 client systems to convert.

• Proactive improvement of capital structure – After the end of the quarter, the Company entered into a number of transactions in order to proactively improve its balance sheet. In July, the Company issued $ 1 billion of new notes due 2029 and plans to use the proceeds to repay its $ 1 billion of notes due 2022. The Company also extended the term of its credit facility renewable until 2026 and increased its capacity by $ 400. million to $ 575 million. The Company amended its consumer finance agreement on more favorable terms while aligning the facility more closely with customer needs, including a wider range of smart home products. Combined with other refinancing transactions in 2019 and 2020, the Company smoothed short-term maturities, improved liquidity and reduced annual cash interest by more than $ 100 million.

• Declared Cash Dividend – Effective August 4, 2021, the Board of Directors of the Company declared a cash dividend of $ 0.035 per share to holders of the Company’s common shares and registered Class B common shares. on September 16, 2021. This dividend will be paid on October 5, 2021.


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