Significant long-term shareholder value creation opportunities delivered through strategy of innovative offerings, unrivaled safety and premium customer experience
Goal of $10 billion in total revenue, approximately $3 billion in adjusted EBITDA and $1 billion debt reduction by 2025
March 02, 2022 — ADT Inc. (NYSE: ADT), the most trusted brand in smart home and small business security, yesterday held an investor day event and outlined its long-term strategy to grow the business and drive long-term shareholder value.
ADT’s President and Chief Executive Officer Jim DeVries said, “It’s a great time for ADT. After several years of progress reshaping our company, we are well-positioned to accelerate our growth. Our customer-focused strategy creates even more reasons for customers to choose ADT, stay with ADT and spend more with ADT, driving double-digit revenue growth and significant long-term shareholder value.”
DeVries continued, “With the right mission and a clear strategy and plan in place, ADT is the only scaled player positioned to capture the next wave of growth in the security, smart home and residential solar markets. Our pledge is to be safe, smart and sustainable, both for our customers and for our investors.”
Mission
ADT revealed its evolved mission — Safe, Smart, Sustainable — which reflects how the company meets consumers’ expanding safety needs.
- Safe: protecting what matters most
- Smart: delivering innovative, customer-focused products, technology and services
- Sustainable: making life better for our customers and communities we serve
Long-term strategy
ADT presented its long-term strategy to grow across its consumer and small business, commercial and solar segments. The strategy builds on the growth momentum provided by the company’s Google partnership and its commercial and solar businesses.
- Innovative offerings: ADT is building ADT+, a next-generation smart home security platform. In addition, ADT expects to offer bundled services that provide greater customer choice and flexibility, bringing together smart home security and energy management as well as mobile and vehicle security and smart aging products.
- Unrivaled safety: ADT is investing in its core monitoring capabilities, designed to improve alarm handling times and reduce false alarms while helping to protect customer data and privacy with encrypted and patented methods.
- Premium experience: ADT is modernizing its customer experience with the planned introduction of flexible installation options, like “do-it-with-me,” no-contract options, e-commerce and retail sales, as well as virtual service, which reduces the need to send a technician into the home.
Long-term financial goals
ADT believes this strategy will create sustainable, long-term revenue and earnings growth and significant free cash flow. As part of today’s investor day event, management provided 2025 financial goals including:
- Total revenue: $10 billion total revenue, representing approximately 15 percent compounded annual growth
- Earnings: Approximately $3 billion adjusted EBITDA and more than $0.50 earnings per share
- Cash flow: $3 billion cumulative adjusted free cash flow from 2022-2025
- Debt reduction: $1 billion debt reduction versus year-end 2021
ESG pillars and report
ADT introduced eight environmental, social and governance (ESG) pillars that will guide its commitment to respect the environment, promote social responsibility and lead with responsible governance. These pillars are fundamental to who ADT is and guide the company’s safe, smart and sustainable business practices. The company plans to publish its first ESG narrative report this spring. ADT’s ESG pillars are: data privacy and cyber security, inclusive diversity and belonging, employee well-being and development, customer and community health and safety, environmental management, climate change and risk management, responsible governance, and product safety and quality.
ADT’s 2022 Investor Day
Presentation materials and a replay of the event, which provide additional context to ADT’s 2025 goals and long-term growth strategy, can be found on the ADT investor relations website at https://investor.adt.com.
Note regarding 2025 goals
These financial goals are aspirational and do not reflect company guidance or projections of future results. ADT does not provide guidance except with respect to its current fiscal year.
ADT is not providing forward-looking goals for any GAAP financial measures other than total revenue, earnings per share, or a quantitative reconciliation to GAAP for the non-GAAP goals for adjusted EBITDA, cumulative adjusted free cash flow or net debt. Please see “Non-GAAP Financial Measures” for additional information.
FORWARD-LOOKING STATEMENTS
ADT has made statements in this press release that are forward-looking and therefore subject to risks and uncertainties. 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 are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to our long-term growth strategy, our evolved corporate mission, our long-term financial goals, our ESG program and intentions, and other matters. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. ADT cautions that these statements are subject to risks and uncertainties, many of which are outside of ADT’s control, and could cause future events or results to be materially different from those stated or implied in this press release, including among others, risks and uncertainties related to the Company’s ability to successfully implement its long-term strategy, develop and commercialize innovative products and services, provide an exceptional customer experience, implement and adhere to a successful corporate mission, implement and adhere to successful ESG strategies and initiatives, and risk factors that are described in the Company’s Annual Report on Form 10-K including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. 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.
Non-GAAP Financial Measures
With regard to our long-term financial goals, the Company is not providing a quantitative reconciliation for forward looking Adjusted EBITDA and cumulative Adjusted Free Cash Flow to net income (loss) and net cash provided by operating activities, which are the most directly comparable GAAP measures respectively. These GAAP measures cannot be reliably predicted or estimated without unreasonable effort due to their dependence on future uncertainties, such as the adjustment for items as listed below. 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.
We define Adjusted EBITDA as net income or loss 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; (vii) losses on extinguishment of debt; (viii) radio conversion costs net of any related incremental revenue earned; and (ix) other income/gain or expense/loss items such as impairment charges, financing and consent fees, or acquisition-related adjustments.
There are material limitations to using Adjusted EBITDA as it does not reflect certain significant items which directly affect our net income or loss (the most comparable GAAP measure). We define Free Cash Flow as cash flows from operating activities less cash outlays related to capital expenditures. We define capital expenditures to include accounts purchased through our network of authorized dealers or third parties outside of our 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.
We then define Adjusted Free Cash Flow as Free Cash Flow adjusted for net cash flows related to (i) net proceeds from our 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 our operating results or business trends.
Free Cash Flow and Adjusted Free Cash Flow 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. Free Cash Flow and Adjusted Free Cash Flow are not intended to represent residual cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary expenditures are not deducted.
About ADT Inc.
ADT provides safe, smart and sustainable solutions for people, homes and businesses. Through innovative products, partnerships and the largest network of smart home security professionals in the United States, we empower people to protect and connect what matters most. For more information, visit www.adt.com.
