[January 28, 2015] |
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ADT Reports First Quarter 2015 Results
The ADT Corporation (NYSE:ADT):
FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS
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GAAP: revenue of $887 million, net income of $72 million, diluted EPS
of $0.41, operating cash flow of $369 million
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Diluted EPS before special items of $0.51(1), up 18.6% from
prior year
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Recurring revenue of $825 million, up 6.5% or 7.1% in constant currency(1)(2)
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EBITDA before special items of $453 million(1), up $27
million or 6.3%
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EBITDA margin before special items of 51.1%(1), up 30 basis
points from prior year
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Operating cash flow before special items $390 million(1),
up $48 million or 14.0% from prior year
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Steady-state free cash flow of $893 million(1), up $106
million or 13.5% from prior year
FIRST QUARTER 2015 BUSINESS HIGHLIGHTS
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Increased gross additions to 262,000, up 13.4% from prior year
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Lowered revenue attrition to 13.0%, year-over-year improvement
of 120 basis points, lowest level since spin off
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Lowered unit attrition to 12.9%, a year-over-year improvement
of 70 basis points
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Increased new and resale revenue per unit to $47.28, an
increase of $2.37 or 5.3% over prior year
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Reduced Direct Channel net SAC creation multiple to 31.9x, an
improvement of 2.1x over prior year
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Drove ADT Pulse® take rates to 53.4%; Pulse customers comprise
18% of the total ADT base
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Repurchased 2.9 million shares during the quarter at an average price
of $32.35 per share
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Increased the quarterly dividend by 5% subsequent to the quarter
The ADT Corporation (NYSE:ADT) today reported its financial results for
the first quarter of 2015. The Company reported diluted earnings per
share of $0.41. Excluding special items for merger and restructuring
costs and 2G radio conversion costs, diluted earnings per share was $0.51(1),
an 18.6% increase as compared to diluted earnings per share excluding
special items of $0.43(1) in the first quarter of 2014. Using
the Company's cash tax rate, diluted earnings per share before special
items was $0.73(1).
The Company reported total revenue of $887 million, an increase of 5.7%,
or 6.4% in constant currency(1), compared to the first
quarter of 2014. Recurring revenue, which made up 93% of total revenue
in the quarter, was $825 million, up 6.5% compared to the same period
last year and up 7.1% in constant currency(1). Recurring
revenue growth in the quarter was primarily driven by an increase in
ADT's new revenue per customer, which rose 5.3% over last year to
$47.28. Revenue attrition for the quarter improved to 13.0%, an
improvement of 50 basis points sequentially and 120 basis points
year-over-year. Unit attrition for residential and small business
improved 30 basis points sequentially, and 70 basis points from last
year, ending at 12.9% for the quarter. ADT closed the quarter with 6.7
million customer accounts, a 4.3% increase over last year. EBITDA before
special items increased by $27 million to $453 million(1),
6.3% higher than the prior year, while EBITDA margin before special
items was 51.1%(1), a 30 basis point improvement over the
comparable period last year. Excluding Reliance Protectron, EBITDA
margin before special items was up nearly 100 basis points over prior
year. The year-over-year margin improvement was attributable to
recurring revenue growth, the success of Pulse, productivity
improvements and cost efficiencies.
Operating cash flow increased $34 million, or 10.1% over the same period
last year, to $369 million driven largely by previous growth investments
generating higher ARPU customers. Excluding special items for merger and
restructuring costs and 2G radio conversion costs, operating cash flow
was $390 million(1), an increase of $48 million or
14.0% from prior year. Steady-state free cash flow before special items,
calculated on a pre-tax and unlevered basis, of $893 million(1),
was up 13.5% from last year. Free cash flow before special items was $46
million(1) in the quarter, down from $68 million(1)
in the same period last year due to a 13.4% increase in gross subscriber
additions, higher Pulse take rates, nearly a two fold increase in Pulse
upgrades, and timing of cash interest paid on incremental debt, a
significant portion of which was used to repurchase shares.
"The trends from the second half of last year continue and we are off to
a strong start to the year, highlighted by double digit gross subscriber
growth and attrition reaching its lowest levels since we became a public
company over two years ago," said Naren Gursahaney, ADT's chief
executive officer. "Solid execution by our team is driving better
operational performance overall, leading to improved customer metrics,
increases in EBITDA before special items, and strong bottom line
results. Improved lead generation, higher self generated sales, and
strong close rates all fueled gross add growth in both channels. We
continued to invest in our business, positioning the Company to deliver
profitable growth as well as enhancing our free cash flow profile for
the future. Our investment in Pulse has led to Pulse take rates now
climbing over 53% overall, driving higher revenue per user and
delivering what we believe is a better customer experience. We further
enhanced our senior team, appointing a new leader for our combined
businesses in Canada and adding a new member to our board of directors
from the technology sector. After three solid quarters of improving
performance, I feel that we are demonstrating the power of the ADT brand
and the unique assets we have, including a talented and energized team.
I am excited about what our team can accomplish throughout the year
ahead."
"We are also very encouraged about what we see in the monitored security
and home automation landscape. At the Consumer Electronics Show this
year, the connected home arena gained significant traction and ADT Pulse
was well-represented being named by Time Magazine as one of the 'top 6
coolest smart home innovations' at the event. The conference
showcased many firms offering new point solutions targeting
opportunities in the other 80% of the market that hasn't been reached by
either monitored security or automation. As a partner of choice, we
believe that ADT is in the right place - at the right time - with the
right platform, services and products to make homes both smart and
safe," Gursahaney added.
PROGRESS ON 2015 PRIORITIES: DELIVERING ON GROWTH INITIATIVES
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Growth investments in ADT Pulse fuel New RPU growth - The
Company continued to extend its position as a leading provider of
monitored interactive home automation and security solutions,
achieving strong growth in its ADT Pulse platform. In our residential
direct channel, approximately 71% of new customers purchased a Pulse
security system and upgrade units nearly doubled from a year ago. ADT
added over 130,000 Pulse customers in the quarter and upgraded over
31,000 existing customers to Pulse, capturing many current 2G
customers in-line for conversion to 3G. Pulse customers drive higher
ARPU and a better customer experience which the Company believes will
result in stronger retention characteristics. Overall, ADT Pulse
customers comprise approximately 18% of ADT's customer base.
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Attrition reduction initiatives drive lowest level of attrition
since spin off - The Company continued to take action to reduce
customer attrition by improving customer experience and completing its
roll out of tighter credit screening policies. In the last year, the
Company has focused on lowering attrition by implementing non-pay
initiatives, strengthening resale efforts and developing customer
loyalty programs, while driving increased penetration of ADT Pulse
automation services, which currently exhibit better retention
characteristics. These actions, along with a more stable housing
market, drove improvements resulting in revenue attrition in the
quarter of 13.0% - a 50 basis point improvement sequentially and 120
basis points below prior year, and unit attrition in our residential
and small business channels of 12.9% - a 30 basis point improvement
sequentially and 70 basis points below the same period last year.
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Increases in sales leads and solid demand for ADT Pulse drives
strong increase in gross additions over prior year - In-line with
our efforts to drive stronger gross adds in both the direct and dealer
channels, the Company delivered a 13.4% increase in gross customer
additions over the prior year despite implementing tenure screening in
its direct channel.
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Strong lead generation helped fuel a 10% increase in gross adds in
the direct channel, resulting in the first quarter of year over
year growth since 2013. Sales leads increased by 9.5% for direct
new sales and self generated sales improved by over 12% over the
prior year. ADT Pulse demand continued to improve resulting in a
56.8% take rate when considering both new and resale Pulse
customers in the residential direct channel.
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Dealer channel production grew 19% year-over-year, surpassing last
year's levels, driven by higher production from existing dealers
as well as from new dealers joining ADT. Pulse demand in the
dealer channel continued to rise, as evidenced by a 50% Pulse take
rate, up from 29% in the comparable period last year.
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Business channel gains traction in small business and making
progress in commercial activities - The Company is executing on
growth initiatives in the small business and mid-size commercial space.
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The small business channel is driving strong year-over-year growth
with gross additions up over 6%, new & resale revenue per unit
increased by nearly 10%, and recurring revenue grew 6% organically
year-over-year. Strong sales of hosted video and a year-over-year
increase in Pulse sales, resulting in a 49% take rate, contributed
to this success.
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The Company continues to build its commercial presence, adding to
its sales force, expanding its product line and contributing new
unit sales. The Company expects to continue to add to its sales
force and drive increasing momentum in the mid-size commercial
market throughout the year.
"We've come out of the gate with another quarter of strong performance
and improved operating metrics, while continuing to accelerate our
investments in growth," said Michael Geltzeiler, ADT's chief financial
officer. "In the first quarter, we drove strong growth in gross adds,
reduced gross and net attrition, increased ARPU to its highest level and
made improvements to our cost structure, resulting in a 19% increase in
diluted EPS before special items(1). Operationally, we
lowered gross revenue attrition by 80 basis points and drove higher
resales. We also lowered our cost to create new customers by launching
our new Total Security (TS) panel for Pulse automation and began to
deploy our new electronic contract system. Despite a significant
increase in Pulse take rates, direct channel SAC creation multiples
excluding upgrades were lower by 6% when compared to last year, leading
to a 2.1x improvement. We also invested in growth by adding new Pulse
customers, implementing customer experience initiatives, building our
commercial presence, and making other growth investments. With mid-teens
returns, investing in new subscribers remains the best use of capital
for ADT. In the quarter, we also increased steady-state free cash flow(1)
by 13.5%, grew operating cash flow before special items by 14%(1),
improved EBITDA before special items by more than 6%(1), and
enhanced our capital structure with the repurchase of 2.9 million shares
and announced a 5% increase in our quarterly dividend."
PROGRESS ON 2015 PRIORITIES: DRIVING COST EFFICIENCIES
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The Company made progress on its cost efficiency initiatives,
improving its EBITDA margin before special items(1) as well
as lowering our direct creation multiple. Total operating expenses
before special items(3) were up 6.5% over last year despite
the increase in ADT Pulse customers, investments in ADT Business and
the acquisition of Reliance Protectron. Depreciation and amortization
("D&A") expenses rose 10% as we transition a portion of our customer
base to Pulse and home automation. Excluding D&A, total operating
expenses before special items(3) rose only 4%.
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Cost to serve / G&A - Cost to serve before special items(3)
was up 6.1% compared to last year, largely related to the
consolidation of Reliance Protectron. Without the consolidating
effects of Reliance Protectron, cost to serve expenses were flat with
the same period last year despite the Company making additional
investments in improving customer experience, launching its commercial
business, and generating a higher mix of ADT Pulse accounts over last
year.
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Subscriber acquisition cost (SAC) / Creation multiple - Total
net SAC creation multiple, excluding the impact of Pulse upgrades, was
31.7x, a year-over-year improvement of 0.7x. Direct net SAC creation
multiple, excluding the impact of upgrades was 31.9x, an improvement
of 2.1x over the same period last year. The Company reduced net
creation multiples by lowering installation costs and realizing higher
ARPU generated from new customers additions. We expect to benefit more
from these and other initiatives, including the launch of electronic
contracts and the deployment our TS Panel for ADT Pulse, over the
course of 2015.
PROGRESS ON 2015 PRIORITIES: CAPITAL STRUCTURE OPTIMIZATION
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Share repurchase - The Company repurchased 2.9 million shares
for $94 million, at an average price of $32.35.
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Debt/Capital Structure - Long-term debt totaled $5.3 billion at
the end of the quarter, bringing the Company's leverage ratio, based
off of a trailing twelve month EBITDA before special items, to 2.9(1)
on a pro-forma basis. The Company also replaced a portion of its
revolver borrowings with proceeds from a $300 million debt issuance
during the quarter. The Company's average cost of borrowing was below
4% in the quarter.
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Quarterly dividend - The Company paid a quarterly dividend of
$0.20 per share on November 19th, an increase of 60% versus last year.
Subsequent to the quarter, the Company announced a 5% increase in the
quarterly dividend.
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FIRST QUARTER 2015 RESULTS HIGHLIGHTS
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($ in millions, except per share amounts)
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Q1 2015
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Q1 2014
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Change
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Recurring revenue
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$
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825
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$
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775
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6.5
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%
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Other revenue
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$
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62
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$
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64
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(3.1
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)%
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Total revenue
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$
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887
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$
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839
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5.7
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%
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EBITDA before special items(1)
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$
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453
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$
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426
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6.3
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%
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EBITDA margin before special items(1)
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51.1
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%
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50.8
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%
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30
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bps
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Net income
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$
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72
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$
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77
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(6.5
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)%
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Diluted earnings per share
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$
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0.41
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$
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0.39
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5.1
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%
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Diluted earnings per share before special items(1)
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$
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0.51
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$
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0.43
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18.6
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%
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Diluted weighted-average shares outstanding
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175
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198
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(11.6
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)%
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(1) Reconciliations from GAAP to non-GAAP financial
measures can be found in the attached tables.
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(2) All variances are year-over-year unless otherwise
noted.
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(3) Operating expenses in Q1 2015 include special items
totaling $26 million in cost to serve; Q4 2014 include special
items totaling $30 million, which is comprised of $23 million in
cost to serve and $7 million in separation costs; Q1 2014
operating expenses include special items totaling $14 million,
which is comprised of $9 million in cost to serve and $5 million
in separation costs.
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CONFERENCE CALL AND WEBCAST
Management will discuss the Company's first quarter 2015 results during
a conference call and webcast today beginning at 8:30 a.m. (ET). During
the conference call and webcast management will refer to a slide
presentation hosted on and accessible at http://investors.adt.com.
Today's conference call for investors can be accessed in the following
ways:
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At ADT's website: http://investors.adt.com
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By telephone: For both "listen-only" participants and those
participants who wish to take part in the question-and-answer portion
of the call, the telephone dial-in number in the United States is
(877) 280-4962, pass code 99417107 when prompted. The telephone
dial-in number for participants outside the United States is (857)
244-7319, pass code 99417107 when prompted.
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An audio replay of the conference call will be available at 10:30 a.m.
(ET) on January 28, 2015, and ending at 11:59 p.m. (ET) on February 5,
2015. The dial-in number for participants in the United States is
(888) 286-8010, pass code 57934550 when prompted. For participants
outside the United States, the replay dial-in number is (617)
801-6888, pass code 57934550 when prompted.
ABOUT ADT
The ADT Corporation (NYSE:ADT) is a leading provider of electronic
security, interactive home and business automation and monitoring
services for residences and small businesses in the United
States and Canada. ADT's broad and pioneering set of products and
services, including ADT Pulse® interactive home and business
solutions and health services, meet a range of customer needs for
today's active and increasingly mobile lifestyles. Headquartered in Boca
Raton, Florida, ADT helps provide peace of mind to nearly seven million
customers, and it employs approximately 17,500 people at more than 200
locations. More information is available at www.adt.com
or by downloading the ADT IR app for iPhone, iPad and Android Devices.
From time to time, ADT 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 http://investors.adt.com.
In addition, you may automatically receive email alerts and other
information about ADT by enrolling your email by visiting the "Investor
Relations" section at http://investors.adt.com.
NON-GAAP MEASURES
Revenue in constant currency, recurring revenue in constant currency,
leverage ratio, earnings before interest, taxes, depreciation and
amortization (EBITDA), EBITDA margin, EBITDA (pre-SAC), EBITDA margin
(pre-SAC), free cash flow (FCF), steady-state free cash flow (SSFCF),
diluted earnings per share (EPS) and diluted EPS at cash tax rates, in
each case "before special items," are non-GAAP measures that may be used
from time to time and should not be considered replacements for GAAP
results.
Revenue and recurring revenue, each in constant currency, are useful
measures because they provide transparency to the underlying performance
in markets outside the United States by excluding the effect that
foreign currency exchange rate fluctuations have on comparability. Revenue
and recurring revenue in constant currency as presented herein may not
be comparable to similarly titled measures reported by other companies.
The difference between revenue (the most comparable GAAP measure),
revenue in constant currency (non-GAAP measure) and recurring revenue in
constant currency (the non-GAAP measure) is the exclusion of the impact
of foreign currency exchange fluctuations. This is also the
primary limitation of this measure, which is best addressed by using
revenue and recurring revenue in constant currency in combination with
GAAP revenue.
The leverage ratio is defined as the ratio of EBITDA before special
items to total debt. The leverage ratio is a useful measure of
the Company's credit position and progress towards leverage targets. Refer
to the discussion on EBITDA before special items for a description of
the differences between the most comparable GAAP measure. The
calculation is limited in that the Company may not always be able to use
cash to repay debt on a dollar-for-dollar basis.
EBITDA is a useful measure of the Company's success in acquiring,
retaining and servicing our customer base and ability to generate and
grow recurring revenue while providing a high level of customer service
in a cost-effective manner. The difference between Net Income
(the most comparable GAAP measure) and EBITDA (the non-GAAP measure) is
the exclusion of interest expense, the provision for income taxes,
depreciation and amortization expense. Excluding these items
eliminates the impact of expenses associated with our capitalization and
tax structure as well as the impact of non-cash charges related to
capital investments.
EBITDA (pre-SAC) is a useful measure of the Company's success in
retaining and servicing our customer base while providing a high level
of customer service in a cost-effective manner. The difference
between Net Income (the most comparable GAAP measure) and EBITDA
(pre-SAC) (the non-GAAP measure) is the exclusion of interest expense,
the provision for income taxes, depreciation expense, amortization
expense, and subscriber acquisition related revenue and expenses. Excluding
these items eliminates the impact of expenses associated with our
capitalization and tax structure, the impact of non-cash charges related
to capital investments and the impact of growing our subscriber base.
In addition, from time to time, the Company may present EBITDA and
EBITDA (pre-SAC) before special items, which are the respective
measures, adjusted to exclude the impact of the special items
highlighted below. These numbers provide information to investors
regarding the impact of certain items management believes are useful to
identify, as described below.
There are material limitations to using EBITDA and EBITDA (pre-SAC).
EBITDA and EBITDA (pre-SAC) may not be comparable to similarly titled
measures reported by other companies. Furthermore, EBITDA and
EBITDA (pre-SAC) do not take into account certain significant items,
including depreciation and amortization, interest expense and tax
expense, which directly affect our net income. Additionally,
EBITDA (pre-SAC) does not take into account expenses related to
acquiring new customers. These limitations are best addressed by
considering the economic effects of the excluded items independently,
and by considering EBITDA and EBITDA (pre-SAC) in conjunction with net
income as calculated in accordance with GAAP. The EBITDA and
EBITDA (pre-SAC) discussion above is also applicable to the respective
margin measures.
FCF is a useful measure of our ability to repay debt, make other
investments and return capital to shareholders through dividends and
share repurchases. The difference between Cash Flows from
Operating Activities (the most comparable GAAP measure) and FCF (the
non-GAAP measure) consists of the impact of capital expenditures,
subscriber system assets, dealer generated customer accounts and bulk
account purchases. Dealer generated accounts are accounts that
are generated through the network of authorized dealers. Bulk
account purchases represent accounts acquired from third parties outside
of the authorized dealer network, such as other security service
providers, on a selective basis. These items are subtracted from
cash flows from operating activities because they represent long-term
investments that are required for normal business activities.
SSFCF is a useful measure of pre-levered cash that is generated by
the Company after the cost of replacing recurring revenue lost to
attrition, but before the cost of new subscribers that drive recurring
revenue growth. The difference between Net Income (the most
comparable GAAP measure) and SSFCF (the non-GAAP measure) consists of
the factors discussed above regarding EBITDA (pre-SAC), on a
quarter-to-date basis. EBITDA (pre-SAC) is then annualized and
adjusted for additional factors, described in the reconciliation below,
required to maintain the steady-state. Certain components of
these inputs are determined using trailing twelve month information or
information from the most recent quarter.
In addition, from time to time the Company may present FCF and SSFCF
before special items, which is FCF or SSFCF, adjusted to exclude the
impact of the special items highlighted below. These numbers
provide information to investors regarding the impact of certain items
management believes are useful to identify, as described below.
The limitation associated with using FCF and SSFCF is that they
adjust for certain items that are ultimately within management's and the
Board of Directors' discretion to direct, and therefore, may imply that
there is less or more cash that is available than the most comparable
GAAP measure. FCF is not intended to represent residual cash flow
for discretionary expenditures since debt repayment requirements and
other non-discretionary expenditures are not reduced. This
limitation is best addressed by using FCF and SSFCF in combination with
other GAAP financial measures.
FCF and SSFCF as presented herein may not be comparable to similarly
titled measures reported by other companies. These measures
should be used in conjunction with other GAAP financial measures. Investors
are urged to read the Company's financial statements as filed with the
Securities and Exchange Commission, as well as the accompanying tables
to this press release that show all the elements of the GAAP measure.
Diluted EPS at cash tax rates is a useful measure of the Company's
diluted earnings per share after considering the difference between the
effective tax rate and cash tax rate. The difference between
diluted EPS (the most comparable GAAP measure) and diluted EPS at cash
tax rates (the non-GAAP measure) is the exclusion of the impact of
income tax expense and the inclusion of the impact of income taxes paid,
net of refunds. Adjusting for these items provides information on
the impact of our net operating loss carryforwards on our diluted EPS.
The Company has presented its diluted EPS, diluted EPS at cash tax
rates, EBITDA, EBITDA margin, EBITDA (pre-SAC), EBITDA margin (pre-SAC),
FCF, SSFCF and other measures before special items. Special items
include charges and gains related to acquisitions, restructurings,
impairments, and other income or charges that may mask the underlying
operating results and/or business trends of the Company. The
Company utilizes these measures to assess overall operating performance,
as well as to provide insight to management in evaluating overall
operating plan execution and underlying market conditions. The
Company may also present its effective tax rate as adjusted for special
items for consistency. One or more of these measures may be used
as components in the Company's incentive compensation plans. These
measures are useful for investors because they may permit more
meaningful comparisons of the Company's underlying operating results and
business trends between periods. The difference between net
income and diluted EPS before special items and net income and diluted
EPS (the most comparable GAAP measures) consists of the impact of the
special items noted above on the applicable GAAP measure. EBITDA,
EBITDA margin, EBITDA (pre-SAC) and EBITDA margin (pre-SAC) before
special items do not reflect any additional adjustments, other than
taxes, that are not reflected in net income before special items. The
limitation of these measures is that they exclude the impact (which may
be material) of items that increase or decrease the Company's reported
operating income, operating margin, net income and EPS. This
limitation is best addressed by using the non-GAAP measures in
combination with the most comparable GAAP measures in order to better
understand the amounts, character and impact of any increase or decrease
on reported results.
FORWARD-LOOKING STATEMENTS
Our reports, filings, and other public announcements may include
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking
statements relate to anticipated financial performance, management's
plans and objectives for future operations, business prospects, outcome
of regulatory proceedings, market conditions and other matters. We
make these forward-looking statements in reliance on the safe harbor
protections provided under the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical
facts, included in this press release or report that address activities,
events or developments that we expect, believe or anticipate will exist
or may occur in the future, are forward-looking statements. 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 that 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 or report. Specific factors that
could cause actual results to differ from results contemplated by
forward-looking statements include, among others, the following:
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competition in the markets we serve, including new entrants in
these markets, and our ability to continue to execute a competitive,
profitable pricing structure;
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our ability to compete with new and existing competitors by
developing or acquiring new technologies that achieve market
acceptance and acceptable margins;
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entry of potential competitors upon the expiration of
non-competition agreements;
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an increase in the rate of customer attrition;
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changes in the housing market and consumer discretionary income;
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shifts in consumers' choice of, or telecommunication providers'
support for, telecommunication services and equipment;
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failure to maintain the security of our information and technology
networks, including personally identifiable information;
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interruption to our monitoring facilities;
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volatility in the market price of our stock;
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current and potential securities litigation;
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failure to realize expected benefits from acquisitions and
investments;
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risks associated with pursuing business opportunities that diverge
from our current business model;
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potential loss of authorized dealers and affinity marketing
relationships;
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risks associated with acquiring and integrating customer accounts;
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failure of our authorized dealers to mitigate certain risks;
-
increase in government regulation of telemarketing, e-mail
marketing and other marketing upon cost and growth of our business;
-
unauthorized use of our brand name;
-
risks associated with ownership of the ADT® brand name outside of
the United States and Canada by Tyco International Ltd., our former
parent company ("Tyco") and other third parties;
-
failure to enforce our intellectual property rights;
-
allegations that we have infringed the intellectual property rights
of third parties;
-
changes in U.S. and non-U.S. governmental laws and regulations;
-
our dependence on certain software technology that we license from
third parties, and failure or interruption in products or services of
third-party providers;
-
our greater exposure to liability for employee acts or omissions or
system failures;
-
interference with our customers' access to some of our products and
services through the Internet by broadband service providers;
-
potential impairment of our deferred tax assets;
-
inability to hire and retain key personnel, including an effective
sales force;
-
adverse developments in our relationship with our employees;
-
capital market conditions, including availability of funding
sources;
-
changes in our credit ratings;
-
risks related to our increased indebtedness;
-
exposure to counterparty risk in our hedging agreements;
-
potential liabilities for legacy obligations relating to the
separation from Tyco; and
-
failure to fully realize expected benefits from the separation from
Tyco.
Given the risk factors and uncertainties that could cause our actual
results to differ materially from those contained in any forward-looking
statement, we caution investors not to unduly rely on our
forward-looking statements. These risk factors should not be
construed as exhaustive. We disclaim any obligations to and do
not intend to update the above list or to announce publicly the result
of any revisions to any of the forward-looking statements to reflect
future events or developments. If one or more of these risks or
uncertainties materialize or if our underlying assumptions prove to be
incorrect, actual results may vary materially from what we projected.
Consequently, actual events and results may vary significantly from
those included in or contemplated or implied by our forward-looking
statements. More detailed information about these and other
factors is set forth in ADT's most recent annual report on Form 10-K,
our quarterly reports on Form 10-Q and in other subsequent filings with
the U.S. Securities and Exchange Commission.
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
|
|
|
December 26,
|
|
December 27,
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
Revenue
|
|
$
|
887
|
|
|
$
|
839
|
|
|
5.7
|
%
|
Cost of revenue
|
|
|
388
|
|
|
|
362
|
|
|
7.2
|
%
|
Selling, general and administrative expenses
|
|
|
318
|
|
|
|
304
|
|
|
4.6
|
%
|
Radio conversion costs
|
|
|
23
|
|
|
|
3
|
|
|
N/M
|
|
Separation costs
|
|
|
-
|
|
|
|
5
|
|
|
(100.0
|
)%
|
Operating income
|
|
|
158
|
|
|
|
165
|
|
|
(4.2
|
)%
|
Interest expense, net
|
|
|
(50
|
)
|
|
|
(47
|
)
|
|
6.4
|
%
|
Other income
|
|
|
-
|
|
|
|
2
|
|
|
(100.0
|
)%
|
Income before income taxes
|
|
|
108
|
|
|
|
120
|
|
|
(10.0
|
)%
|
Income tax expense
|
|
|
(36
|
)
|
|
|
(43
|
)
|
|
(16.3
|
)%
|
Net income
|
|
$
|
72
|
|
|
$
|
77
|
|
|
(6.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
|
5.1
|
%
|
Diluted
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
|
5.1
|
%
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
174
|
|
|
|
196
|
|
|
(11.2
|
)%
|
Diluted
|
|
|
175
|
|
|
|
198
|
|
|
(11.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
33.3
|
%
|
|
|
35.8
|
%
|
|
(250)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M - not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
CONDENSED AND CONSOLIDATED BALANCE SHEETS
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
December 26,
|
|
September 26,
|
|
|
2014
|
|
2014
|
Assets
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
70
|
|
|
$
|
66
|
Accounts receivable trade, net
|
|
|
111
|
|
|
|
101
|
Inventories
|
|
|
86
|
|
|
|
76
|
Prepaid expenses and other current assets
|
|
|
53
|
|
|
|
55
|
Deferred income taxes
|
|
|
116
|
|
|
|
111
|
Total current assets
|
|
|
436
|
|
|
|
409
|
Property and equipment, net
|
|
|
272
|
|
|
|
265
|
Subscriber system assets, net
|
|
|
2,328
|
|
|
|
2,260
|
Goodwill
|
|
|
3,724
|
|
|
|
3,738
|
Intangible assets, net
|
|
|
3,094
|
|
|
|
3,120
|
Deferred subscriber acquisition costs, net
|
|
|
589
|
|
|
|
571
|
Other assets
|
|
|
217
|
|
|
|
186
|
Total Assets
|
|
$
|
10,660
|
|
|
$
|
10,549
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
4
|
|
|
$
|
4
|
Accounts payable
|
|
|
210
|
|
|
|
208
|
Accrued and other current liabilities
|
|
|
208
|
|
|
|
253
|
Income taxes payable
|
|
|
5
|
|
|
|
7
|
Deferred revenue
|
|
|
229
|
|
|
|
236
|
Total current liabilities
|
|
|
656
|
|
|
|
708
|
Long-term debt
|
|
|
5,254
|
|
|
|
5,096
|
Deferred subscriber acquisition revenue
|
|
|
856
|
|
|
|
838
|
Deferred tax liabilities
|
|
|
682
|
|
|
|
651
|
Other liabilities
|
|
|
125
|
|
|
|
128
|
Total Liabilities
|
|
|
7,573
|
|
|
|
7,421
|
Total Equity
|
|
|
3,087
|
|
|
|
3,128
|
Total Liabilities and Equity
|
|
$
|
10,660
|
|
|
$
|
10,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
December 26,
|
|
December 27,
|
|
|
2014
|
|
2013
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
72
|
|
|
$
|
77
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and intangible asset amortization
|
|
|
275
|
|
|
|
249
|
|
Amortization of deferred subscriber acquisition costs
|
|
|
34
|
|
|
|
32
|
|
Amortization of deferred subscriber acquisition revenue
|
|
|
(40
|
)
|
|
|
(37
|
)
|
Stock-based compensation expense
|
|
|
5
|
|
|
|
5
|
|
Deferred income taxes
|
|
|
31
|
|
|
|
34
|
|
Provision for losses on accounts receivable and inventory
|
|
|
14
|
|
|
|
13
|
|
Changes in operating assets and liabilities and other
|
|
|
(22
|
)
|
|
|
(38
|
)
|
Net cash provided by operating activities
|
|
|
369
|
|
|
|
335
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Dealer generated customer accounts and bulk account purchases
|
|
|
(146
|
)
|
|
|
(110
|
)
|
Subscriber system assets
|
|
|
(177
|
)
|
|
|
(157
|
)
|
Capital expenditures
|
|
|
(32
|
)
|
|
|
(12
|
)
|
Other investing
|
|
|
(30
|
)
|
|
|
28
|
|
Net cash used in investing activities
|
|
|
(385
|
)
|
|
|
(251
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
7
|
|
|
|
8
|
|
Repurchases of common stock under approved program
|
|
|
(94
|
)
|
|
|
(1,184
|
)
|
Dividends paid
|
|
|
(35
|
)
|
|
|
(25
|
)
|
Proceeds from long-term borrowings
|
|
|
450
|
|
|
|
1,225
|
|
Repayment of long-term debt
|
|
|
(301
|
)
|
|
|
(151
|
)
|
Other financing
|
|
|
(6
|
)
|
|
|
(14
|
)
|
Net cash provided by (used in) financing activities
|
|
|
21
|
|
|
|
(141
|
)
|
Effect of currency translation on cash
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
4
|
|
|
|
(58
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
66
|
|
|
|
138
|
|
Cash and cash equivalents at end of period
|
|
$
|
70
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
GAAP to Non-GAAP Reconciliations
|
(Unaudited)
|
|
Net Income Before Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Net Income (GAAP)
|
|
$
|
72
|
|
$
|
82
|
|
|
$
|
77
|
Restructuring and other, net(1)
|
|
|
2
|
|
|
1
|
|
|
|
3
|
Acquisition and integration costs(1)
|
|
|
-
|
|
|
2
|
|
|
|
-
|
Radio conversion costs(1)
|
|
|
15
|
|
|
12
|
|
|
|
2
|
Non-recurring separation costs(1)
|
|
|
-
|
|
|
4
|
|
|
|
3
|
Separation related other expense (income)(2)
|
|
|
-
|
|
|
3
|
|
|
|
1
|
Pre-separation and other discrete tax items
|
|
|
-
|
|
|
(7
|
)
|
|
|
-
|
Net Income before special items
|
|
$
|
89
|
|
$
|
97
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
|
|
(1) Items have been presented net of tax of $9M for the
quarter ended December 26, 2014, $11M for the quarter ended
September 26, 2014, and $6M for the quarter ended December 27,
2013.
|
(2) Relates to the 2012 Tax Sharing Agreement between
Tyco, ADT and Pentair.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Before Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
|
|
2014
|
|
2014
|
|
2013
|
Diluted EPS (GAAP)
|
|
$
|
0.41
|
|
$
|
0.47
|
|
$
|
0.39
|
Impact of special items(1)
|
|
|
0.10
|
|
|
0.08
|
|
|
0.04
|
Diluted EPS before special items
|
|
$
|
0.51
|
|
$
|
0.55
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
(1) Items have been presented net of tax where
applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Before Special Items at Cash Tax Rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
|
|
2014
|
|
2014
|
|
2013
|
Diluted EPS (GAAP)
|
|
$
|
0.41
|
|
|
$
|
0.47
|
|
|
$
|
0.39
|
|
Plus: Impact of income tax expense on diluted EPS
|
|
|
0.21
|
|
|
|
0.15
|
|
|
|
0.22
|
|
Less: Impact of income taxes paid, net of refunds
|
|
|
(0.03
|
)
|
|
|
(0.01
|
)
|
|
|
(0.02
|
)
|
Diluted EPS at cash tax rates
|
|
$
|
0.59
|
|
|
$
|
0.61
|
|
|
$
|
0.59
|
|
Impact of special items(1)
|
|
|
0.14
|
|
|
|
0.18
|
|
|
|
0.07
|
|
Diluted EPS before special items at cash tax rates
|
|
$
|
0.73
|
|
|
$
|
0.79
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Items presented at cash tax rates where applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
GAAP to Non-GAAP Reconciliations (continued)
|
(Unaudited)
|
|
EBITDA Before Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Net Income (GAAP)
|
|
$
|
72
|
|
|
$
|
82
|
|
|
$
|
77
|
|
Interest expense, net
|
|
|
50
|
|
|
|
50
|
|
|
|
47
|
|
Income tax expense
|
|
|
36
|
|
|
|
27
|
|
|
|
43
|
|
Depreciation and intangible asset amortization
|
|
|
275
|
|
|
|
273
|
|
|
|
249
|
|
Amortization of deferred subscriber acquisition costs
|
|
|
34
|
|
|
|
33
|
|
|
|
32
|
|
Amortization of deferred subscriber acquisition revenue
|
|
|
(40
|
)
|
|
|
(40
|
)
|
|
|
(37
|
)
|
EBITDA
|
|
$
|
427
|
|
|
$
|
425
|
|
|
$
|
411
|
|
EBITDA Margin
|
|
|
48.1
|
%
|
|
|
48.1
|
%
|
|
|
49.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other, net
|
|
|
2
|
|
|
|
2
|
|
|
|
5
|
|
Acquisition and integration costs
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
Radio conversion costs
|
|
|
23
|
|
|
|
17
|
|
|
|
3
|
|
Non-recurring separation costs
|
|
|
-
|
|
|
|
7
|
|
|
|
5
|
|
Separation related other expense (income)(1)
|
|
|
-
|
|
|
|
3
|
|
|
|
1
|
|
EBITDA before special items
|
|
$
|
453
|
|
|
$
|
458
|
|
|
$
|
426
|
|
EBITDA Margin before special items
|
|
|
51.1
|
%
|
|
|
51.9
|
%
|
|
|
50.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition cost expenses, net of related revenue
|
|
|
105
|
|
|
|
108
|
|
|
|
98
|
|
EBITDA before special items (pre-SAC)
|
|
$
|
558
|
|
|
$
|
566
|
|
|
$
|
524
|
|
EBITDA Margin before special items (pre-SAC)
|
|
|
66.4
|
%
|
|
|
67.8
|
%
|
|
|
66.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (GAAP)
|
|
$
|
887
|
|
|
$
|
883
|
|
|
$
|
839
|
|
Subscriber acquisition cost related revenue
|
|
|
(47
|
)
|
|
|
(48
|
)
|
|
|
(52
|
)
|
Revenue (pre-SAC)
|
|
$
|
840
|
|
|
$
|
835
|
|
|
$
|
787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA before special items
|
|
$
|
453
|
|
|
$
|
458
|
|
|
$
|
426
|
|
Effect of Protectron on EBITDA before special items
|
|
|
(13
|
)
|
|
|
(11
|
)
|
|
|
-
|
|
EBITDA before special items excluding Protectron
|
|
$
|
440
|
|
|
$
|
447
|
|
|
$
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (GAAP)
|
|
$
|
887
|
|
|
$
|
883
|
|
|
$
|
839
|
|
Effect of Protectron on revenue
|
|
|
(36
|
)
|
|
|
(33
|
)
|
|
|
-
|
|
Revenue excluding Protectron
|
|
$
|
851
|
|
|
$
|
850
|
|
|
$
|
839
|
|
EBITDA Margin before special items excluding Protectron
|
|
|
51.7
|
%
|
|
|
52.6
|
%
|
|
|
50.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Relates to the 2012 Tax Sharing Agreement between
Tyco, ADT and Pentair.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
GAAP to Non-GAAP Reconciliations (continued)
|
(Unaudited)
|
|
SSFCF Before Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Last quarter, annualized EBITDA before special items (pre-SAC)
|
|
$
|
2,232
|
|
|
$
|
2,264
|
|
|
$
|
2,096
|
|
SAC required to maintain recurring revenue(1)
|
|
|
(1,329
|
)
|
|
|
(1,288
|
)
|
|
|
(1,299
|
)
|
Maintenance capital expenditures
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
|
(10
|
)
|
SSFCF before special items
|
|
$
|
893
|
|
|
$
|
966
|
|
|
$
|
787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) SAC required to maintain recurring revenue is
calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
September 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Last quarter average recurring revenue under contract for the period
|
|
$
|
275
|
|
|
$
|
273
|
|
|
$
|
258
|
|
Trailing twelve month disconnects net of price escalation(2)
|
|
|
14.6
|
%
|
|
|
14.7
|
%
|
|
|
14.9
|
%
|
Last quarter gross recurring revenue creation multiple(3)
|
|
|
33.1
|
|
|
|
32.1
|
|
|
|
33.8
|
|
SAC required to maintain recurring revenue
|
|
$
|
1,329
|
|
|
$
|
1,288
|
|
|
$
|
1,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Average trailing twelve month recurring revenue
disconnected net of price escalations. Disconnects account for
dealer chargebacks.
|
(3) Gross creation cost includes amount held back from
dealers for chargebacks.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow and FCF Before Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2013
|
Operating cash flow (GAAP)
|
|
$
|
369
|
|
|
$
|
335
|
|
Restructuring and other, net
|
|
|
2
|
|
|
|
-
|
|
Acquisition and integration costs
|
|
|
2
|
|
|
|
-
|
|
Radio conversion costs
|
|
|
17
|
|
|
|
1
|
|
Non-recurring separation costs within cash from operating activities
|
|
|
-
|
|
|
|
6
|
|
Operating cash flow before special items
|
|
$
|
390
|
|
|
$
|
342
|
|
Dealer generated customer accounts and bulk account purchases
|
|
|
(146
|
)
|
|
|
(110
|
)
|
Subscriber system assets
|
|
|
(177
|
)
|
|
|
(157
|
)
|
Capital expenditures
|
|
|
(32
|
)
|
|
|
(12
|
)
|
Non-recurring separation capital expenditures
|
|
|
11
|
|
|
|
5
|
|
FCF before special items
|
|
$
|
46
|
|
|
$
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
GAAP to Non-GAAP Reconciliations (continued)
|
(Unaudited)
|
|
Leverage Ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended
|
|
|
December 26,
|
|
September 26,
|
|
September 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Net Income (GAAP)
|
|
$
|
299
|
|
|
$
|
304
|
|
|
$
|
421
|
|
Interest expense, net
|
|
|
195
|
|
|
|
192
|
|
|
|
117
|
|
Income tax expense
|
|
|
121
|
|
|
|
128
|
|
|
|
221
|
|
Depreciation and intangible asset amortization
|
|
|
1,066
|
|
|
|
1,040
|
|
|
|
942
|
|
Amortization of deferred subscriber acquisition costs
|
|
|
133
|
|
|
|
131
|
|
|
|
123
|
|
Amortization of deferred subscriber acquisition revenue
|
|
|
(154
|
)
|
|
|
(151
|
)
|
|
|
(135
|
)
|
EBITDA
|
|
$
|
1,660
|
|
|
$
|
1,644
|
|
|
$
|
1,689
|
|
Restructuring and other, net
|
|
|
14
|
|
|
|
17
|
|
|
|
(1
|
)
|
Acquisition and integration costs
|
|
|
7
|
|
|
|
7
|
|
|
|
2
|
|
Radio conversion costs
|
|
|
64
|
|
|
|
44
|
|
|
|
-
|
|
Non-recurring separation costs
|
|
|
12
|
|
|
|
17
|
|
|
|
23
|
|
Separation related other income(1)
|
|
|
37
|
|
|
|
38
|
|
|
|
(23
|
)
|
EBITDA before special items
|
|
$
|
1,794
|
|
|
$
|
1,767
|
|
|
$
|
1,690
|
|
EBITDA Margin before special items
|
|
|
51.9
|
%
|
|
|
51.8
|
%
|
|
|
51.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Protectron adjustment to EBITDA before special items
|
|
|
35
|
|
|
|
54
|
|
|
|
|
|
Pro-forma EBITDA before special items
|
|
$
|
1,829
|
|
|
$
|
1,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Relates to the 2012 Tax Sharing Agreement between
Tyco, ADT and Pentair.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 26,
|
|
September 26,
|
|
September 27,
|
($ in millions)
|
|
2014
|
|
2014
|
|
2013
|
Current maturities of long-term debt
|
|
$
|
4
|
|
$
|
4
|
|
$
|
3
|
Long-term debt
|
|
|
5,254
|
|
|
5,096
|
|
|
3,373
|
Total Debt
|
|
$
|
5,258
|
|
$
|
5,100
|
|
$
|
3,376
|
|
|
|
|
|
|
|
|
|
|
Leverage Ratio(2)
|
|
|
2.9
|
|
|
2.9
|
|
|
2.0
|
Leverage Ratio including pro-forma Protectron(2)
|
|
|
2.9
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Leverage ratio is defined as the ratio of debt to
trailing twelve month EBITDA before special items or trailing
twelve month EBITDA before special items including pro-forma
Protectron.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue at Constant Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
December 26,
|
|
December 27,
|
($ in millions)
|
|
2014
|
|
2013
|
Recurring revenue as reported
|
|
$
|
825
|
|
$
|
775
|
Recurring revenue at constant currency (1)
|
|
$
|
830
|
|
$
|
775
|
|
|
|
|
|
|
|
Total revenue as reported
|
|
$
|
887
|
|
$
|
839
|
Total revenue at constant currency (1)
|
|
$
|
893
|
|
$
|
839
|
|
|
|
|
|
|
|
(1) Constant currency revenue results are calculated by
translating current period revenue in local currency using the
prior comparable period's currency conversion rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ADT CORPORATION
|
SELECTED FINANCIAL AND OPERATING DATA
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended
|
|
|
|
|
|
December 26,
|
|
December 27,
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
Recurring customer revenue (in millions)
|
|
$
|
825
|
|
|
$
|
775
|
|
|
6.5
|
%
|
Other revenue (in millions)
|
|
|
62
|
|
|
|
64
|
|
|
(3.1
|
)%
|
Total revenue (in millions)
|
|
$
|
887
|
|
|
$
|
839
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of customers (in thousands)
|
|
|
6,655
|
|
|
|
6,382
|
|
|
4.3
|
%
|
Gross customer additions (in thousands)
|
|
|
262
|
|
|
|
231
|
|
|
13.4
|
%
|
Customer revenue attrition rate(1)
|
|
|
13.0
|
%
|
|
|
14.2
|
%
|
|
-120
|
bps
|
Customer unit attrition rate(2)
|
|
|
12.9
|
%
|
|
|
13.6
|
%
|
|
-70
|
bps
|
Average revenue per customer (dollars)(3)
|
|
$
|
41.76
|
|
|
$
|
40.98
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The customer revenue attrition rate is a 52-week
trailing ratio, the numerator of which is the annualized recurring
revenue lost during the period due to attrition, excluding
contracts monitored but not owned and net of dealer charge- backs
and re-sales, and the denominator of which is total annualized
recurring revenue based on an average of recurring revenue under
contract at the beginning of each month during the period.
|
(2) The customer unit attrition rate is a 52-week
trailing ratio, the numerator of which is the trailing twelve
month residential and business customer sites canceled during the
period due to attrition, excluding health services and contracts
monitored but not owned and net of charge-backs and re-sales, and
the denominator of which is the average of the customer base at
the beginning of each month during the trailing twelve month
period.
|
(3) Average revenue per customer measures the average
amount of recurring revenue per customer per month, excluding
contracts monitored but not owned, and is calculated based on the
recurring revenue under contract at the end of the period, divided
by the total number of customers under contract at the end of the
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
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|