ADT CEO Admits Investors Were "Screaming" For Them To Cut Debt
ADT's sudden reversal last month, divesting its commercial business for $1.6 billion, after years of touting it as a "unique growth opportunity", surprised many. Now, the company's CEO admits this being driven by investors, in his words, "screaming" about having too much debt.
ADT is feeling the pressure on its stock price, despite the 2020 Google investment, the 2022 State Farm one, and the recent Commercial sell-off.
In this note, we examine ADT's remarks and the challenges that ADT faces.
Stock ********
*** ****** *** *** ***** ***** up, **** ****** ** ** ****** major *****. ***** ******, **** **** 5 ***** ***, *** ***** ** down **** **** **%, *** **** since *** ****** **** * ***** ago, *** ***** ** **** **%, as *** ***** ***** ************:
*** ********** **** ************, *** * month ***, *** *** ******** *********, with *** ***** **** ~*% *****.
*********
*** ******** * ******** **** ***** Finance***** *** ********** ***** *****, **** ADT's *** *********:
*** ** *** ****** **** ** continually ***** *** *** ********. **** we **** ***** ** * *.* on ** * ******** *****, ** weregetting ******** *** ****** ************. Now that we're at 3.3, with line of sight to 3.0, I think it opens the aperture for us. We're excited about our future. [emphasis added]
Leverage ******
*** **** ********* *** *** ***** cut *** ******** *** ** ****** debt. *************, **** ***** **** ***** revenue ** ********* ********* ******* (*** net ******** ***** ** * ******** of ***** **** ******* ** ******) but **** ** * *********** ********* for ***. ******* ******* ** *** conventional *******-***** **** ******** ****** *** been ********* ********* ***, ************, *** ADT, ***** *** ******* ***** **** and ****** *********** **** *** ***********.
Interest **** **********
*** ****** **** ** ******** ***** is ******* * ************ ****** ** ADT's ********. *** **** *****, *** benefited **** **** *** ******** *****, making ***** **** ******** *** ** risky ** ******. *** ****** **** of *** ***** ***** **** **** zero ** **** *% *** ********** changed ***'* *********. *** ****, ****** ****** ******** ***** *** ********* Alarm *********, **** ****** **********.
Better *********** *** ***?
** ***** ** *********, *** ** not ** * ****** ******** ***** divesting *** ********** ********, ** *** stock ***** *** ***** ***** *** deal *********.
***, ** *** *** *****, **** year, ********* ********** ******** *** * "****** growth ***********", **** *** ** ** * worse ********.
***********, ** ***'* *** ************ ****** that **** *********, *** ********** ***********, enables **** ** ***** ** *** residential ******. ***, *** ******** *******, how **** **** **** ** **** to ******* ** *********** ***** *** fundamental ********** **** **** ** * market ***** *********** ** ***?
*** ********** ******* **** ** *** Commercial *** * ******. ***** *********** was ~**% ** ***** ********, ***** to *** ***********, ** ***** **** been **** *********** ** **** *** residential *** **** **********, **** ** they ****** **.
** ***** **** **** **** *********** to **** *** *********** *** **** Commercial
********* *** ** *** ** ** speculate, *** * ****** *** **** ADT ***** **** ****** *** ***** resi ******** ** **** **** ** out, ************ **** *** ****** *** the ***** ** *** *** *** brand *** * *****. * ***** wager **** ***** **** ****** ****** to ****** *********** ***** ********** **** and **** **** *** ******* ** go **** ****** ** **** ******. The ****-**** *********** ****** **** ***** bleak *** *** ****** ****** **** ADT, ***.
* **** ** ******* **** ****** being ******** *** ** ***** ******** on *** *** **** ***** ***** that *** * ****** ****** ** selling ******* **** ********- ** ******* for ****** ** *** ********** **** so **** ******** **** *** ********** group ***** * ***** **** ***** it *** ******** *** ******** ***** to **** *** **** ****'* **** Google's ******** *** *** ***** ***** enough ** **** * ********** ******** wise
*** **** ** ******* **** * thought. **** ****** ***** ********** *** be ******* **** ***** *********** * wonder *** ********** ** ** ** renewals *** **** **** ************* ** residential *********.
****’* ***** ** **** ***** **** sold ** *** *.* ******* ****’* they ***** ****** $*-$** ******* ** debt? * ****, ** *** ***** their **** *** *** ** * significant ****** ***** * **** **** would ** ******* ***** **** ******. It *** **** **** *** **** little *** *’* ****** **** **** lost * ****** **** ** ***** ship.
***** *** ***, *** ******* ***** trends, ** *** *********** ******, *'* surprised **** **** ** ****** *** commercial ******** *** **** ** *** resi ****. ********** ***** **** ** would **** *** **** *********** *** long **** *******. **** ** *** trends ** **********, *** ***** ********** integrator ***********/************* ******.