ADT Meets Expectations, Growth Forecast Slims

Services

Published: November 27, 2012 7:42 am

The ADT Corp. (NYSE: ADT) reported fourth-quarter and full fiscal year 2012 results before markets opened this morning. Quarterly adjusted diluted earnings per share (EPS) totaled $0.43 and revenues came in at $812 million. In the same period a year ago, the security and monitoring firm reported EPS of $0.41 on revenue of $794 million. Fourth-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.43 and $818.2 million in revenue.

For the full year, ADT reported EPS of $1.67 on revenues of $3.23 billion, compared with consensus estimates of $1.73 and $3.23 billion.

The company’s CEO said:

We delivered solid recurring revenue growth fueled by the continued success of Pulse in the residential and small business security markets. Our focus for 2013 is to deliver meaningful shareholder value by leveraging our competitive strengths to accelerate growth and through the efficient deployment of capital.

ADT guided fiscal year 2013 revenues to grow at a pace of 4.9% to 5.2%, or $3.39 billion to $3.4 billion. EBITDA margin is forecast at 49.5% to 50.5% before special items, and free cash flow is estimated at $375 million to $425 million.

The company has also adopted a three-year, $2 billion stock repurchase plan and initiated a $0.125 quarterly dividend for the fourth quarter.

ADT was spun out of Tyco International Ltd. (NYSE: TYC) in September, and the share price has climbed from around 18% since the initial public offering. The company’s revenue projections are not very aggressive, reflecting a drop from the 7% annual growth prediction for each of the next five years that the company’s executives touted just prior to the IPO. Without the 2010 acquisition of Brinks Home Security, ADT’s revenue prospects would be even weaker.

Shares are inactive in premarket trading this morning, having closed at $43.10 last night in a post-IPO range of $34.68 to $44.97. Thomson Reuters had a consensus analyst price target of around $44.20 before today’s results were announced.

Paul Ausick

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