ADT Q3 Loss Drops, But Misses View, Revises FY21 Outlook; Buys Sunpro For $825 Mln

(RTTNews) - ADT Inc. (ADT), a smart home and business security provider, on Tuesday reported a decreased loss for the third quarter, with a rise in revenue, driven by a strong M&S revenue and lower interest expense, offset by higher radio conversion costs.

Excluding items, the company's earning missed the Street view. Despite positive market cues, the company has narrowed its revenue and earnings guidance ranges for the current fiscal.

Separately, the Florida-headquartered firm announced it has inked a deal to acquire Sunpro Solar, an American residential rooftop solar contractor, for $825 million. This includes $160 million in cash and approximately 77.8 million shares of ADT common stock. In the post acquisition, ADT will rebrand Sunpro as 'ADT SolarTM' and enter the rooftop solar business as part of its expansion strategy.

The latest transaction is expected to be positive to earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow immediately, and accretive to earnings per share within the first four quarters, prior to any synergy realization.

The cash portion of the proceeds the agreed acquisition of Sunpro Solar is expected to be used for debt reduction and sellers' taxes. Nearly all of the sellers' consideration is in ADT stock, reflecting their conviction in ADT's future growth.

The smart security service provider posted a loss of $109 million or $0.13 per share for the third quarter ended in September, compared to a loss of $113 million or $0.15 per share reported for the same quarter last year.

Excluding items, for the thirteen-week period ended in September, the company recorded a loss of $54 million or $0.07 per share as against a loss of $58 million or $0.08 per share recorded for the same quarter of last fiscal.

Six analysts, on average, polled by Thomson-Reuters were estimating the firm to report earnings per share at $0.09. Analysts' estimates typically exclude one-time items.

Despite a rise in sales, the operating income of the firm also fell to $23 million for the 90-day period, from $63 million, recorded during the same quarter of 2020. Adjusted EBITDA of the company also declined to $554 million, from $564 million.

Amidst a firm demand, ADT generated total revenue of $1.31 billion for the quarter ended on September 30, versus total revenue $1.29 billion, reported for the three-month period ended in September last fiscal.

The revenue from monitoring and related services (M&S) also moved up to $1.09 billion for the three-month period to September, from $1.04 billion, reported for the same quarter of last year. In addition, the firm's net interest expense fell to $133 million for the thirteen-week period ended on September 30, from $157 million recorded for the same three-month period of 2020.

Analysts, on average, had expected the firm to report its total revenue at $1.29 billion for the September quarter.

For the fiscal 2021, the company has also narrowed its revenue and earning guidance. Now, it expects total revenue to be in the range of $5.20 billion - $5.25 billion as against its previous projection range of $5.05 billion - $5.25 billion.

Also, its projects adjusted EBITDA to be in the range of $2.15 billion - $2.20 billion, versus its previous expected range of $2.10 billion - $2.20 billion.

Analysts, on average, now expect the firm to report its total revenue at $5.22 billion for the current fiscal.

Founded in 2008, Sunpro markets, designs, sells, installs, and maintains solar power systems on residential and commercial properties through their 3,600-person, full-time workforce of solar energy professionals with 56 locations in 22 states.