Summary (from the latest annual and quarterly report)
- Total equity: 3.03 billion USD
- Market Cap is 5.98 billion USD ( the last price of the stock is 7.24 USD)
- ADT Inc. provides security, automation, and smart home solutions to consumer and business customers in the United States. It provides a range of fire detection, fire suppression, video surveillance, and access control systems to residential, commercial, and multi-site customers
- Total stockholders' equity has decreased from 3.18 billion USD in 2019 to 3.03 billion in 2021
- The company has 205 million USD in cash on account
- Total equity – cash on account = 3.03 billion USD – 205 million USD = 2.798 billion USD
- In Dec 2020, long-term debt was 9.6 billion USD, short – term debt was 300 million USD. (In 2019, total debt was 9.85 billion USD)
- The company's revenue increased in 2020 to 5.31 billion USD from 5.12 billion in 2019
- Net loss in 2020 was 632 million USD, Net loss in 2019 was 424 million USD
- In 2020 the company paid 109 million USD dividend to its shareholders
Opinion about the company
Fundamentally it is not a bad company, and in the future, we can expect its growth (Total debt is 9.9 billion USD, the company has 205 million USD in cash on account, ROE is around -20%).
ADT Inc is a provider of monitored security, interactive home and business automation and related monitoring services in the United States and Canada. ADT offers residential, commercial, and multi-site customers a comprehensive set of burglary, video, access control, fire and smoke alarm, and medical alert solutions. It provides interactive home and business automation solutions designed to control access, react to movement, and sense carbon monoxide, flooding, changes in temperature, or other environmental conditions, as well as address personal emergencies, such as injuries and medical emergencies. In addition, it offers professional monitoring of third-party devices through ADT Canopy platform. The product brands of the company are ADT and ADT Pulse, and Protection One brand.
In February 2016, Apollo Global Management acquired ADT for nearly $7 billion and merged it with another home security firm, Protection 1. The purchase price represented a premium of approximately 56 percent over ADT's closing share price on February 12, 2016, and, when combined with Protection 1, representing an aggregate transaction value of approximately $15 billion. In October 2019 Telus Corporation purchased all of ADT's Canadian assets for $700 million. By September 2020, Telus had renamed ADT's Canadian assets to Telus SmartHome Security.
ADT stock performed well through 2020, and many analysts believe that the stock is fundamentally strong and see some upside when looking at its valuation based on the next 12 months’ trading multiples. As of 2020, the company served 6.5 million recurring customers through 200 locations, nine monitoring, and the largest network of security professionals in the US. Most of their revenues come from the security division, especially home monitoring and maintenance of security systems. These revenues are typically recurring, stemming from multi-year (on average, three years for residential and five years for commercial) contracts with automatic renewal. Most of the company’s revenues come from its residential segment, where it has 5.8 million units installed and generates $281 million in recurring monthly revenues. All commercial operations generate $57 million, for comparison.
ADT reported Q4 results in February; total revenue has increased by 2.3% Y/Y while Q4 GAAP EPS was -$0.14 (misses by $0.03). In recent years, ADT has seen explosive top-line growth. From FY 2016 to FY 2020, total sales increased at a 20% compounded annual rate from $2.95 billion to $5.31 billion.
It is important to mention that this company has not been profitable on a net income basis since its IPO in January 2018; this is mostly a result of “non-core” and non-cash expenses. For example, in 2019, it recorded a $62 million loss on the sale of ADT Canada, $45 million in goodwill impairment for the same transaction, and $104 million in debt extinguishment. Excluding these costs, it is easy to see that ADT’s core business is actually quite profitable, with average gross margins of 76% and EBITDA margins of 48% between FY 2016 and FY 2019. Further, it is an excellent cash generator, with an average levered free cash flow margin of 12% in the same period.
Despite negative accounting earnings in recent years, ADT is a solidly profitable company on an EBITDA and cash flow basis. ADT is well-positioned to benefit from technological advancement as well as handle the competition, and according to estimates, it will soon become profitable on a net income basis.
Standalone subsidiaries and acquisitions :
- In 2020, ADT acquired Defenders, a company built on the principle that a company is only as good as its people for 381 million USD
- In 2019, ADT acquired LifeShield, a monitored wireless security system that provides superior protection and the best value in-home security for 25 million USD
- In 2018, ADT acquired Red Hawk Fire & Security for 317 million USD
- In the last 10 years, ADT had also lots of smaller acquisitions worth around 200 million USD
Total = 923 million USD