ADT Beats Q2 Earnings Estimates, Sells Commercial Business For $1.6B To Curb Debts

ADT Inc. ADT reported a second-quarter (Q2) 2023 sales decline of 0.5% year-on-year to $1.59 billion, missing the consensus of $1.65 billion.

Adjusted EPS of $0.16 beat the consensus of $0.06.

The end-of-period recurring monthly revenue (RMR) of $382 million rose 4% Y/Y.

Trailing 12-month gross customer revenue attrition was 12.5%, a 20-basis-point improvement versus the prior year period.

Total Consumer and Small Business revenue was $1.168 billion for the second quarter, up 7% versus the prior year.

Total Commercial revenue was $348 million for the second quarter, up 17% versus the prior year. 

Total Solar revenue for the second quarter was $78 million, down 64% versus the second quarter of last year.

Adjusted EBITDA in the quarter under review rose 9% Y/Y to $651 million. 

The Boca Raton, Florida-based company exited the quarter with cash and equivalents worth $303 million. 

Net debt at the end of the second quarter was $9.32 billion.

Sale of Commercial Business For $1.6B

ADT plans to sell its commercial security, fire, and life safety business unit to GTCR, a private equity firm, for a purchase price of $1.6 billion.

Proceeds from the sale, which is expected to close in Q4 of 2023, will be used to reduce debt by $1.5 billion.

ADT chief executive Jim DeVries says the company will be "better positioned to grow through our strategic differentiators and innovative offerings, including our partnerships with Google and State Farm."

Outlook

ADT lowered FY23 sales guidance to $$6.30 billion-$6.50 billion, against the consensus of $6.66 billion (prior view: $6.60 billion - $6.85 billion).

It expects adjusted EPS of $0.30 - $0.40, against consensus of $0.34.

Price Action: ADT shares traded lower by 1.46% at $6.07 premarket on the last check Tuesday.