Announces pending acquisition of Sunpro Solar, entering into the rapidly growing residential solar market
Continued momentum in the business with total revenue, subscribers, and end of period RMR all increasing year over year
Commercial rebound continues with double-digit revenue growth
BOCA RATON, Fla., Nov. 09, 2021 (GLOBE NEWSWIRE) -- ADT Inc. (NYSE: ADT), the most trusted brand in smart home and small business security, today reported results for the third quarter of 2021.
THIRD QUARTER 2021 OPERATIONAL HIGHLIGHTS VERSUS PRIOR YEAR
- Monitoring and related services revenue increased 5%
- Gross recurring monthly revenue (RMR) additions grew 7% in the third quarter, 19% year-to-date
- End of period RMR of $356 million increased by 4%, the 5th quarter of sequential improvement
- Solid customer retention with attrition at 13.4%
- Commercial performance improves with revenue growing 18%
“Our third quarter results show that we are successfully delivering solid results for our shareholders while positioning the Company for long-term growth. Our people are at the heart of ADT’s brand and I want to thank our entire team for their great work and steadfast focus on our customers,” stated Jim DeVries, ADT’s President and CEO. “Our pending acquisition of Sunpro Solar represents an exciting new chapter for ADT, giving us a top-tier position in the fast-growing residential solar business. With our broad spectrum of integrated security, smart home, and energy management solutions – customers will now be protected, connected, and powered by ADT.”
THIRD QUARTER 2021 FINANCIAL RESULTS
ACQUISITION OF SUNPRO SOLAR
The Company has entered into a definitive agreement to acquire Sunpro Solar, a leading provider of residential solar installation, for approximately $825 million,(2) comprised of $160 million cash and approximately 77.8 million shares of ADT common stock, subject to certain adjustments. The completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close by year-end 2021.
Sunpro Solar will be branded ADT Solar, giving ADT an industry-leading position and instant brand recognition in the rapidly growing residential solar market. The transaction brings numerous strategic and financial benefits, including:
- Immediate brand and market leadership position: The highly fragmented solar industry does not have a clear brand leader, much less one with ADT’s trusted reputation.
- Grow market share quickly: ADT’s trusted brand, national footprint, and reach to 6 million customers should enable strong, efficient solar customer lead generation and acquisition relative to competitors.
- Expands ADT’s presence in the home: Creates opportunity to offer consumers a single provider for the protected, connected, and powered home.
- Earnings and cash flow positive: Transaction expected to be positive to EBITDA and free cash flow immediately and accretive to EPS within the first twelve months, prior to any synergy realization.
- Improves cash flow profile: Minimal capital expenditures, stable customer acquisition costs, and significant upfront cash generation.
- Limited balance sheet impact: ADT will assume approximately $20 million in vehicle loans and leases; all other existing Sunpro Solar debt will be retired using the cash proceeds from the acquisition.
BUSINESS HIGHLIGHTS
ADT is a trusted consumer brand, driving profitable growth through innovative technology, strategic partnerships, and premium products and service. Key highlights of the Company’s performance include:
- Continued Growth of RMR – During the quarter, Gross RMR additions increased to $15.5 million, an increase of 7% from the prior year. As of the end of the quarter, RMR totaled $356 million, representing a 4% year over year increase. Approximately 80% of the Company’s total revenues come from this durable recurring revenue.
- Radio Conversions Progress – The Company continued to make significant progress in replacing the 3G and Code-Division Multiple Access (“CDMA”) cellular equipment used in many of its security systems. During 2021, the number of customer systems to be converted was reduced by 1.4 million with approximately 480 thousand customer systems remaining to be converted as of September 30, 2021.
- Proactively improving capital structure – The Company completed transactions during the quarter to proactively improve its balance sheet. In July, the Company issued $1 billion in new notes due in 2029 and in August used the proceeds to retire its $1 billion of notes due in 2022. Combined with other refinancing transactions in 2019 and 2020, the Company has flattened near-term maturities, improved liquidity, and reduced annual cash interest by more than $100 million.
- Cash dividend declared – Effective November 9, 2021, the Company’s board of directors declared a cash dividend of $0.035 per share to holders of the Company’s common stock and Class B common stock of record as of December 16, 2021. This dividend will be paid on January 4, 2022.
2021 FINANCIAL OUTLOOK (3)(4)
The Company remains on track to meet its 2021 guidance and is narrowing the ranges provided earlier in the year.
(in millions; 2021 Updated Guidance)
Total Revenue: $5,200 - $5,250
Adjusted EBITDA: $2,150 - $2,200
Adjusted Free Cash Flow: $450 - $500
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Conference Call
Management will discuss the Company’s third quarter of 2021 results and our announced agreement to acquire Sunpro Solar during a conference call and webcast today beginning at 10:00 a.m. ET. The conference call can be accessed as follows:
- By dialing 1-877-407-3982 (domestic) or 1-201-493-6780 (international) and requesting the ADT Third Quarter 2021 Earnings Conference Call
- Live webcast accessed through ADT’s website at investor.adt.com.
An audio replay of the conference call will be available from approximately 1:00 p.m. ET on November 9, 2021, until 11:59 p.m. ET on November 23, 2021, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode, 13724615 or by accessing ADT's website at investor.adt.com. 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 is the most trusted brand in smart home and small business security. Through innovative products, partnerships and the largest network of smart home security professionals in the United States, we connect and protect what matters most to our customers at home, work and on the go. For more information, visit www.adt.com.
FORWARD-LOOKING STATEMENTS
ADT has made statements in this press release and other reports, filings, and other public written and verbal announcements 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 anticipated financial performance, management’s plans and objectives for future operations, our proposed acquisition of Sunpro Solar and its anticipated impact on our business and financial condition, our anticipated timing for the Sunpro acquisition, business prospects, outcome of regulatory proceedings, market conditions, our ability to successfully respond to the challenges posed by the COVID-19 pandemic, our strategic partnership and ongoing relationship with Google, the expected timing of product commercialization with Google or any changes thereto, the successful internal development, commercialization and timing of our next generation platform and other matters. 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. 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 document, including among others, risks and uncertainties related to the parties’ ability to successfully close the Sunpro Solar acquisition, which is subject to various closing conditions, our ability to integrate the acquired business successfully and to achieve synergies and other benefits, the possibility that the acquisition may cause disruption to the Sunpro Solar business and to its customers, any distraction of our management team from our business, the possibility that the acquisition may adversely impact our financial results, other risks associated with our ability to execute on the transaction, and risk factors that are described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.
Impact on Non-GAAP Measures
The Company is not providing a quantitative reconciliation of the impact that the acquisition of Sunpro Solar will have on the Company's EBITDA and free cash flow to net income (loss) and net cash provided by operating activities, which are their respective corresponding GAAP measures, because the impact of the acquisition of Sunpro Solar on these GAAP measures is difficult to reliably predict or estimate without unreasonable effort due to their dependence on future uncertainties, such as special items. Additionally, information that is currently not available to the Company could have a potentially unpredictable and potentially significant impact on its future GAAP financial results.
