The ADT Corporation
) first quarter fiscal 2014 GAAP net income declined to $77
million or 39 cents per share from $105 million or 44 cents per
share in the year-ago quarter. The year-over-year decrease in
earnings is primarily due to high operating costs and interest
expense during the reported quarter associated with being a
standalone public company.
Excluding non-recurring items, adjusted net income stood at $86
million or 43 cents per share, versus $103 million or 44 cents
per share in the year-ago quarter. The quarterly adjusted
earnings poorly missed the Zacks Consensus Estimate of 49 cents.
Revenues for the quarter increased 3.7% year over year to $839
million. However, it failed to meet the Zacks Consensus Estimate
of $850 million. Recurring revenues of $775 million, which
accounted for 92% of total revenue in the reported quarter, was
up 4.2% compared with the year-earlier period. Recurring revenue
growth was largely driven by an increase in average revenue per
customer, which was up 3.1% year over year to $40.63. ADT closed
the quarter with 6.5 million customer accounts, up 0.7% from last
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA) were $411 million in the reported quarter compared with
$417 million in the prior-year period. EBITDA before special
items improved to $426 million in the reported quarter from $417
million in the year-ago quarter.
In its earnings release, ADT provided key insights in some of the
initiatives it has taken to accelerate growth, improve cost
efficiencies, and optimize capital structure. In order to capture
a greater pie in the market, the company invested heavily in its
ADT Pulse platform and launched several new products.
During the quarter, ADT aimed to reduce customer attrition by
initiating tighter credit screening policies, implementing resale
efforts and customer loyalty programs. The company also expanded
its dealer network and forged partnership with companies like
Ford Motor Co.
) to extend its footprint in security and home automation.
In order to reduce subscriber acquisition costs, ADT implemented
new technology and installation procedures and optimized lead
management, sales conversion and marketing activities across all
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter end were $80 million, while
long-term debt aggregated $4,434 million. Cash from operating
activities totaled $335 million for the reported quarter compared
with $409 million in the prior-year period.
The company authorized a 60% increase in the company's quarterly
dividend to 20 cents per share, up from 12.5 cents per share. ADT
repurchased 26 million of its shares for $1.2 billion during the
reported quarter under its $3 billion share repurchase program.
Since its inception, the company has repurchased 54 million
shares for $2.4 billion, which has resulted in a 20% reduction to
ADT shares fell in pre-market trading as investors probably
expected it to comfortably beat the revenue and earnings
estimates. The earnings release also lacked an update on the
fiscal outlook of the company.
ADT currently has a Zacks Rank #3 (Hold). Stocks that look
promising and are worth a look now in the industry include
Nielsen Holdings N.V.
McGraw Hill Financial, Inc.
), both carrying a Zacks Rank #2 (Buy).
ADT CORP (ADT): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
MCGRAW HILL FIN (MHFI): Free Stock Analysis
NIELSEN HOLDNGS (NLSN): Free Stock Analysis
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