Fourth Quarter 2020 Highlights
- Total revenues increased by $24.7 million year over year to
$332.5 million
- Net loss of $151.2 million vs. a net loss of $88.5 million in
the prior year period
- Adjusted EBITDAa increased by $21.6 million year over year to
$146.7 million
- Net cash provided by operating activities of $6.6 million, up
$105.5 million from prior year period
Full Year 2020 Highlights
- Total revenues increased by $104.7 million year over year to
$1,260.7 million
- Net loss of $484.2 million vs. a net loss of $395.9 million in
the prior year
- Adjusted EBITDAa increased by $167.4 million year over year to
$588.8 million
- 1,695,498 Total Subscribers as of December 31, 2020, up over 9%
year over year
- Attrition rate improved by 150 basis points year over year to
12.4%
- Net cash provided by operating activities of $226.7 million, up
$448.3 million from prior year
Vivint Smart Home, Inc. (NYSE: VVNT), a leading smart
home company, today reported financial and operating results for
the fourth quarter and full year ended December 31, 2020.
“We met or exceeded all of our financial goals in a year marked
by profound and unprecedented challenges, a testament to the
favorable positioning of our end-to-end smart home platform and
robust service offering heading into the pandemic,” said Todd
Pedersen, CEO of Vivint. “As we turn our attention forward, we will
continue the process of driving better consumer awareness of the
Vivint brand on a national scale. Beyond this, now is also the
right time to continue pushing new boundaries in delivering a
transformative smart home experience to every home. Our vision is
to extend our reach well beyond where it is today, by delivering
additional services to the home—bridging even further to a truly
autonomous home experience.”
Revenue and Subscriber Data
Recurring and other revenue increased by $24.7 million, or 8%
for the quarter ended December 31, 2020 as compared to the quarter
ended December 31, 2019. The increase was primarily a result
of:
- $29.0 million from an increase of approximately 9% in Total
Subscribers; and
- $1.5 million in sales from certain pilot initiatives.
These were partially offset by a decrease of $6.1 million from a
change in AMRU.
The Company added 58,554 New Subscribers for the quarter ended
December 31, 2020, an increase of approximately 28% compared to
45,861 New Subscribers during the same period in 2019. Results by
sales channel were as follows:
- Direct to Home added 14,590 New Subscribers for the quarter, an
increase of approximately 49% compared to the same period in 2019,
driven by an extension of the Summer sales season; and
- National Inside Sales added 43,964 New Subscribers for the
quarter, an increase of 22% compared to the same period in
2019.
Recurring and other revenue increased $104.7 million, or 9% for
the year ended December 31, 2020 as compared to the year ended
December 31, 2019. The increase was primarily a result of:
- $92.1 million from an increase of approximately 9% in Total
Subscribers;
- $9.1 million adjustment to reduce recurring and other revenue
during the year ended December 31, 2019 related to a change in
accounting estimate for RIC receivables associated primarily with
subscribers originated in 2017 and 2018;
- $4.7 million in sales from certain pilot initiatives; and
- $2.4 million from a change in AMRU.
These were partially offset by decreases of:
- $2.8 million resulting from the spin-off of our wireless
internet business in July 2019; and
- $0.7 million negative effect from currency translation when
computed on a constant foreign currency basis.
The Company added 343,434 New Subscribers for the year ended
December 31, 2020, an increase of approximately 9% compared to
316,403 New Subscribers during the same period in 2019. Results by
sales channel were as follows:
- Direct to Home added 176,790 New Subscribers for the year, a
decrease of 1.8% compared to 2019, driven by sales restrictions
related to COVID-19, the reduction of retail installment contracts
and the elimination of direct sales in Canada; and
- National Inside Sales added 166,644 New Subscribers for the
year, an increase of approximately 22% compared to 2019.
a) This earnings release includes Adjusted
EBITDA and Covenant Adjusted EBITDA, metrics that are not
calculated in accordance with Generally Accepted Accounting
Principles in the U.S. (GAAP). Covenant Adjusted EBITDA provides
additional information to investors about the calculation of, and
compliance with, certain financial covenants contained in the
agreements governing the Company’s notes, and the credit agreements
governing the Company’s revolving credit facility and term loan.
See the Statement Regarding Non-GAAP Financial Measures section at
the end of this earnings release for the definitions of Adjusted
EBITDA and Covenant Adjusted EBITDA and reconciliations to their
most directly comparable financial measure calculated in accordance
with GAAP.
Summary of Quarterly Key Financial and
Portfolio Metrics
($ in millions, except for subscriber
data)
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
2019
2020
2020
2020
2020
Total Revenues
$
307.8
$
303.2
$
306.0
$
319.0
$
332.5
Net Loss
$
(88.5
)
$
(138.1
)
$
(87.0
)
$
(107.9
)
$
(151.2
)
Adjusted EBITDA(a)
$
125.1
$
134.9
$
152.7
$
154.5
$
146.7
Adjusted EBITDA Margin
40.6
%
44.5
%
49.9
%
48.4
%
44.1
%
LTM Covenant Adjusted EBITDA(a)
$
643.2
$
683.5
$
728.7
$
771.6
$
805.3
LTM Covenant Adjusted EBITDA Margin
55.6
%
57.8
%
60.3
%
62.4
%
63.9
%
New Subscribers(1)
45,861
50,053
107,980
126,847
58,554
Total Subscribers(1)
1,552,541
1,548,201
1,610,642
1,687,892
1,695,498
Total Monthly Service
Revenue(1)
$
79.9
$
78.6
$
80.3
$
82.8
$
83.0
Avg Monthly Service Revenue per
User(1)
$
51.44
$
50.75
$
49.83
$
49.06
$
48.95
Total Monthly Revenue(1)
$
102.6
$
101.1
$
102.0
$
106.3
$
110.8
Avg Monthly Revenue per User(1)
$
65.98
$
65.27
$
64.66
$
63.79
$
65.35
Attrition Rate(2)
13.9
%
14.1
%
13.7
%
12.8
%
12.4
%
(1) Excludes subscribers from sales pilot initiatives
(2) Attrition Rate is reported on LTM basis for each period end
& excludes subscribers from internet business & sales pilot
initiatives
Costs and Expenses
Operating expenses for the quarter ended December 31, 2020
decreased by $0.8 million, or 1%, as compared to the quarter ended
December 31, 2019. This decrease included an $8.7 million increase
in stock-based compensation primarily associated with grants of
equity awards in 2020 and the vesting of rollover equity awards.
Excluding stock-based compensation, operating expenses decreased by
$7.9 million, or 8%, primarily due to decreases of:
- $6.9 million in equipment costs from lower excess and obsolete
inventory, along with lower equipment pricing and usage; and
- $2.8 million in personnel and related support costs, due
primarily to lower staffing levels and related travel as a result
of COVID-19.
These were partially offset by an increase of $2.4 million in
third-party contracted services.
Operating expenses for the year ended December 31, 2020
decreased by $16.7 million, or 5%, as compared to the year ended
December 31, 2019. This decrease included a $20.1 million increase
in stock-based compensation primarily associated with grants of
equity awards in 2020 and the vesting of rollover equity awards.
Excluding stock-based compensation, operating expenses decreased by
$36.8 million, or 10%, primarily due to decreases of:
- $29.6 million in personnel and related support costs, due
primarily to lower staffing levels and related travel as a result
of COVID-19;
- $10.1 million in equipment costs from lower excess and obsolete
inventory, along with lower equipment pricing and usage;
- $5.5 million in costs associated with our former wireless
internet business which was spun out in July 2019; and
- $2.8 million in costs associated with our sales pilot
initiatives.
These were partially offset by increases of:
- $6.3 million in third-party contracted servicing;
- $2.4 million in subcontractor monitoring costs; and
- $0.8 million in facility and housing costs.
Net Service Cost per Subscriber was $10.50 for the year ended
December 31, 2020, which contributed to a net service margin of
79%, as compared to $13.73 and a net service margin of 74% for the
same period in 2019.
Selling expenses, excluding capitalized contract costs,
increased by $60.4 million, or 139%, for the quarter ended December
31, 2020 as compared to the quarter ended December 31, 2019. This
increase included a $43.8 million increase in stock-based
compensation primarily associated with grants of equity awards in
2020 and the vesting of rollover equity awards. Excluding
stock-based compensation, selling expenses increased by $16.6
million, or 38%, primarily due to increases of:
- $12.8 million in marketing costs associated with branding and
lead generation costs; and
- $4.0 million in personnel and related support costs.
These were partially offset by a decrease of $1.6 million in
costs associated with our sale pilot initiatives.
Selling expenses, excluding capitalized contract costs,
increased $109.2 million, or 56%, for the year ended December 31,
2020 as compared to the year ended December 31, 2019. This increase
included a $101.4 million increase in stock-based compensation
primarily associated with grants of equity awards in 2020 and the
vesting of rollover equity awards. Excluding stock-based
compensation, selling expenses increased by $7.8 million, or 4%,
primarily due to increases of:
- $12.5 million in marketing costs associated with branding and
lead generation costs;
- $3.6 million in information technology costs; and
- $2.2 million in personnel and related support costs.
These were partially offset by decreases of:
- $8.6 million in costs associated with sales pilot initiatives;
and
- $1.8 million in facility and housing costs.
The Company’s Net Subscriber Acquisition Costs per New
Subscriber were $139 for the last twelve months ended December 31,
2020, as compared to $1,018 for the same period in 2019. The
average proceeds collected at point of sale during the last twelve
months ended December 31, 2020 increased to $1,998 per New
Subscriber as compared to $1,115 for the same period in 2019.
General and administrative expenses increased by $35.9 million,
or 71%, for the quarter ended December 31, 2020 as compared to the
quarter ended December 31, 2019. This increase included a $24.4
million increase in stock-based compensation expense primarily
associated with grants of equity awards in 2020 and the vesting of
rollover equity awards. Excluding stock-based compensation, general
and administrative expenses increased by $11.5 million, or 23%,
primarily due to increases of:
- $14.2 million in the loss contingency accrual; and
- $1.0 million in marketing costs.
These were offset by decreases of:
- $2.9 million in bad debt expenses; and
- $2.1 million in personnel and related support costs, due
primarily to the organizational restructuring in March 2020 and
lower benefits and travel costs related to COVID-19.
General and administrative expenses increased by $74.9 million,
or 39%, for the year ended December 31, 2020 as compared to the
year ended December 31, 2019. This increase included a $73.8
million increase in stock-based compensation expense primarily
associated with grants of equity awards in 2020 and vesting of
rollover equity awards. Excluding stock-based compensation, general
and administrative expenses increased by $1.1 million, or 1%,
primarily due to increases of:
- $24.4 million in the loss contingency accrual; and
- $2.4 million in legal and finance contracted service
costs.
These were offset by decreases of:
- $14.8 million in personnel and related support costs, due
primarily to the organizational restructuring in March 2020 and
lower benefits and travel costs related to COVID-19;
- $5.3 million in costs associated with our former wireless
internet business which was spun out in July 2019;
- $3.8 million in bad debt expenses; and
- $1.6 million in research and development costs.
Net Loss, Adjusted EBITDA and Covenant Adjusted
EBITDA
Net loss increased by $62.7 million to $151.2 million for the
quarter ended December 31, 2020, as compared to a net loss of $88.5
million for the same period in 2019. Adjusted EBITDA was up by
$21.6 million to $146.7 million for the quarter ended December 31,
2020, as compared to Adjusted EBITDA of $125.1 million for the same
period in 2019.
Net loss increased by $88.3 million to $484.2 million for the
year ended December 31, 2020, as compared to a net loss of $395.9
million for the same period in 2019. Adjusted EBITDA was up by
$167.4 million to $588.8 million for the year ended December 31,
2020, as compared to Adjusted EBITDA of $421.4 million for the same
period in 2019.
Covenant Adjusted EBITDA was $805.3 million for the year ended
December 31, 2020, as compared to Covenant Adjusted EBITDA of
$643.2 million for the same period in 2019.
Liquidity
As of December 31, 2020, the Company’s liquidity position on a
consolidated basis, defined as cash on hand, short-term marketable
securities and available borrowing capacity under the Company’s
revolving credit facility, was approximately $648.5 million.
The Company received $120.8 million of proceeds from the
exercise of approximately 10.5 million warrants during the year
ended December 31, 2020.
Certain Credit Statistics
The Company’s net leverage ratio, defined as the ratio of net
debt to LTM Covenant Adjusted EBITDA, was 3.1x at December 31,
2020.
Financial Outlook
“The fundamental characteristics of our financial model remain
highly attractive, particularly the contractual, recurring revenue
that provides long-term visibility and predictability to our
business,” said Dale R. Gerard, CFO of Vivint. “We have several
initiatives in 2021 that we believe will continue to fuel our
leadership position in smart home and beyond. In terms of guidance,
we expect to end 2021 with:
- Approximately 1.80 to 1.85 million total subscribers,
- Full year revenue between $1.38 and $1.42 billion dollars,
and
- Full year adjusted EBITDA between $640 and $655 million
dollars.”
A reconciliation of Adjusted EBITDA to Net Loss is not available
on a forward-looking basis without unreasonable efforts due to the
high variability, complexity and uncertainty with respect to
forecasting and quantifying certain amounts that are necessary for
such reconciliation, including Net Loss and adjustments that could
be made for impairment charges, restructuring charges and the
timing and magnitude of other amounts included in the
reconciliation. For the same reasons, we are unable to address the
probable significance of the unavailable information, which could
have a potentially unpredictable, and potentially significant,
impact on our future GAAP financial results.
Conference Call
Vivint will host a conference call and webcast to discuss the
quarterly results at 5:00 p.m. ET / 3:00 p.m. MT today, February
24, 2021. To join the live webcast and conference call, please
visit the Investor Relations section of the Vivint website,
https://investors.vivint.com/events-and-presentations/events/default.aspx.
Investors and participants can register for the telephonic
version of the call in advance by visiting
http://www.directeventreg.com/registration/event/3352346. After
registering, instructions will be shared on how to join the call
including dial-in information, as well as a unique passcode and
registrant ID. At the time of the call, registered participants
will dial in using the numbers from the confirmation email, and
upon entering their unique passcode and ID, will be entered
directly into the conference.
A financial results presentation and online access to join the
webcast will be available immediately before the call on the
Investor Relations section of the Company’s website at
https://investors.vivint.com/events-and-presentations/events/default.aspx.
A replay of the webcast will be available for 30 days on the
Investor Relations section of the Company’s website at
https://investors.vivint.com/home/default.aspx following the
completion of the webcast and conference call.
About the Company
Vivint is a leading smart home company in North America. Vivint
delivers an integrated smart home system with in-home consultation,
professional installation and support delivered by its Smart Home
Pros, as well as 24-7 customer care and monitoring. Dedicated to
redefining the home experience with intelligent products and
services, Vivint serves approximately 1.7 million customers. For
more information, visit https://www.vivint.com.
Forward-Looking Statements
This earnings release and accompanying conference call include
certain forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995, including statements
regarding, among other things, the Company’s plans, strategies and
prospects, both business and financial, including without
limitation statements regarding the potential impact of the
COVID-19 pandemic on the Company’s business and results of
operations and the information under the heading “Financial
Outlook” in this press release. These statements are based on the
beliefs and assumptions of the Company’s management. Although the
Company believes that its plans, intentions and expectations
reflected in or suggested by these forward-looking statements are
reasonable, the Company cannot assure you that it will achieve or
realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and
assumptions. Generally, statements that are not historical facts,
including statements concerning our possible or assumed future
actions, business strategies, events or results of operations, are
forward-looking statements. These statements may be preceded by,
followed by or include the words “believes,” “estimates,”
“expects,” “projects,” “forecasts,” “may,” “will,” “should,”
“seeks,” “plans,” “scheduled,” “anticipates” or “intends” or
similar expressions.
Forward-looking statements are not guarantees of performance.
You should not put undue reliance on these statements which speak
only as of the date hereof. You should understand that the
following important factors, in addition to those discussed in our
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2020, as filed on May 11, 2020 and our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2020, as filed on
August 6, 2020, as such factors may be updated from time to time in
the Company’s periodic filings with the SEC, could affect our
future results and could cause those results or other outcomes to
differ materially from those expressed or implied in our
forward-looking statements:
- the duration and scope of the COVID-19 pandemic;
- actions governments, the company’s counterparties, and the
company’s customers or potential customers take in response to the
COVID-19 pandemic;
- the impact of the pandemic and actions taken in response to the
pandemic on the global economies and economic activity;
- the pace of recovery when the COVID-19 pandemic subsides;
- the impact of the COVID-19 pandemic on our liquidity and
capital resources, including the impact of the pandemic on our
customers and timing of payments, the sufficiency of credit
facilities, and the company’s compliance with lender
covenants;
- the ineffectiveness of steps we take to reduce operating
costs;
- risks of the smart home and security industry, including risks
of and publicity surrounding the sales, subscriber origination and
retention process;
- the highly competitive nature of the smart home and security
industry and product introductions and promotional activity by our
competitors;
- litigation, complaints, product liability claims and/or adverse
publicity;
- the impact of changes in consumer spending patterns, consumer
preferences, local, regional, and national economic conditions,
crime, weather, demographic trends and employee availability;
- adverse publicity and product liability claims;
- increases and/or decreases in utility and other energy costs,
increased costs related to utility or governmental
requirements;
- cost increases or shortages in smart home and security
technology products or components;
- the introduction of unsuccessful new Smart Home Services;
- privacy and data protection laws, privacy or data breaches, or
the loss of data;
- the impact to our business, results of operations, financial
condition, regulatory compliance and customer experience of the
Vivint Flex Pay plan; and
- risks related to our exposure to variable rates of interest
with respect to its revolving credit facility and term loan
facility.
In addition, the origination and retention of new subscribers
will depend on various factors, including, but not limited to,
market availability, subscriber interest, the availability of
suitable components, the negotiation of acceptable contract terms
with subscribers, local permitting, licensing and regulatory
compliance, and our ability to manage anticipated expansion and to
hire, train and retain personnel, the financial viability of
subscribers and general economic conditions.
The Company undertakes no obligations to update or revise
publicly any forward-looking statements, whether a result of new
information, future events, or otherwise, except as required by
law.
Certain Definitions
Total Subscribers - is the aggregate number of active
smart home and security subscribers at the end of a given
period.
Total Monthly Revenue - or Total MR, is the average
monthly total revenue recognized during the period.
Average Monthly Revenue per User - or AMRU, is Total MR
divided by average monthly Total Subscribers during a given
period.
Total Monthly Service Revenue - or MSR, is the contracted
recurring monthly service billings to our smart home and security
subscribers, based on the Total Subscribers number as of the end of
a given period.
Average Monthly Service Revenue per User - or AMSRU, is
Total MSR divided by Total Subscribers at the end of a given
period.
Adjusted EBITDA Margin - is Adjusted EBITDA as a percent
of revenue.
Covenant Adjusted EBITDA Margin - is Covenant Adjusted
EBITDA as a percent of revenue.
Attrition Rate - is the aggregate number of canceled
smart home and security subscribers during the prior 12 month
period divided by the monthly weighted average number of Total
Subscribers based on the Total Subscribers at the beginning and end
of each month of a given period. Subscribers are considered
canceled when they terminate in accordance with the terms of their
contract, are terminated by us or if payment from such subscribers
is deemed uncollectible (when at least four monthly billings become
past due). If a sale of a service contract to third parties occurs,
or a subscriber relocates but continues their service, we do not
consider this as a cancellation. If a subscriber transfers their
service contract to a new subscriber, we do not consider this a
cancellation.
Average Subscriber Lifetime - in number of months, is
100% divided by our expected long-term annualized attrition rate
(which is currently estimated at 13%) multiplied by 12 months.
Net Service Cost per Subscriber - is the average monthly
service costs incurred during the period (both period and
capitalized service costs), including monitoring, customer service,
field service and other service support costs, less total
non-recurring smart home services billings and cellular network
maintenance fees for the period, divided by average monthly Total
Subscribers for the same period.
Net Service Margin - is the monthly average MSR for the
period, less total average net service costs for the period divided
by the monthly average MSR for the period.
New Subscribers - is the aggregate number of net new
smart home and security subscribers originated during a given
period. This metric excludes new subscribers acquired by the
transfer of a service contract from one subscriber to another.
Net Subscriber Acquisition Costs per New Subscriber - is
the net cash cost to create new smart home and security subscribers
during a given 12 month period divided by New Subscribers for that
period. These costs include commissions, Products, installation,
marketing, sales support and other allocations (general and
administrative and overhead); less upfront payments received from
the sale of Products associated with the initial installation, and
installation fees. Upfront payments reflect gross proceeds prior to
deducting fees related to consumer financing of Products. These
costs exclude capitalized contract costs and upfront proceeds
associated with contract modifications.
Total Monthly Service Revenue for New Subscribers - is
the contracted recurring monthly service billings to our New
Subscribers during the prior 12-month period.
Total bookings - is Total Monthly Service Revenue for New
Subscribers multiplied by Average Subscriber Lifetime, plus total
Product revenue to be recognized over the contract term from New
Subscribers during the prior 12 month period.
Total backlog - is total unrecognized Product revenue
plus total Service revenue expected to be recognized over the
remaining subscriber lifetime for Total Subscribers.
Average Monthly Service Revenue per New Subscriber - is
the Total Monthly Service Revenue for New Subscribers divided by
New Subscribers during the prior 12-month period.
VIVINT SMART HOME, INC. and
SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands)
(Unaudited)
Three Months Ended Dec
31,
Years Ended Dec 31,
2020
2019
2020
2019
Revenues:
Recurring and other revenue
$
332,536
$
307,835
$
1,260,730
$
1,155,981
Costs and expenses:
Operating expenses
95,218
94,437
352,585
369,285
Selling expenses
103,871
43,494
302,547
193,359
General and administrative expenses
86,432
50,597
267,130
192,182
Depreciation and amortization
147,442
140,179
570,831
543,440
Restructuring expenses
—
—
20,941
—
Total costs and expenses
432,963
328,707
1,514,034
1,298,266
Loss from operations
$
(100,427
)
$
(20,872
)
$
(253,304
)
$
(142,285
)
Other expenses (income):
Interest expense
50,380
65,216
221,175
260,014
Interest income
(421
)
—
(708
)
(23
)
Other (income) loss, net
(277
)
461
9,104
(7,665
)
Total other expenses
49,682
65,677
229,571
252,326
Loss before income taxes
(150,109
)
(86,549
)
(482,875
)
(394,611
)
Income tax expense
1,041
1,917
1,365
1,313
Net loss
$
(151,150
)
$
(88,466
)
$
(484,240
)
$
(395,924
)
VIVINT SMART HOME, INC. and
SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31,
2020
2019
ASSETS
Current Assets:
Cash and cash equivalents
$
313,799
$
4,549
Accounts and notes receivable, net
65,572
64,216
Inventories
47,299
64,622
Prepaid expenses and other current
assets
14,338
18,063
Total current assets
441,008
151,450
Property, plant and equipment, net
52,379
61,088
Capitalized contract costs, net
1,318,498
1,215,249
Deferred financing costs, net
1,667
1,123
Intangible assets, net
111,474
177,811
Goodwill
837,077
836,540
Operating lease right-of-use assets
52,880
65,320
Long-term notes receivables and other
assets, net
62,510
95,827
Total assets
$
2,877,493
$
2,604,408
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current Liabilities:
Accounts payable
$
81,364
$
86,554
Accrued payroll and commissions
87,943
72,642
Accrued expenses and other current
liabilities
239,755
139,389
Deferred revenue
323,494
234,612
Current portion of notes payable, net
9,500
461,420
Current portion of operating lease
liabilities
12,135
11,640
Current portion of finance lease
liabilities
3,356
7,708
Total current liabilities
757,547
1,013,965
Notes payable, net
2,372,235
2,471,659
Notes payable, net - related party
443,865
103,634
Revolving line of credit
—
245,000
Finance lease liabilities, net of current
portion
2,460
5,474
Deferred revenue, net of current
portion
618,401
405,786
Operating lease liabilities
49,692
63,477
Other long-term obligations
119,374
80,540
Deferred income tax liabilities
1,265
2,231
Total liabilities
4,364,839
4,391,766
Total stockholders’ deficit
(1,487,346
)
(1,787,358
)
Total liabilities and stockholders’
deficit
$
2,877,493
$
2,604,408
VIVINT SMART HOME, INC. and
SUBSIDIARIES
Summary Cash Flow Data
(In thousands)
(Unaudited)
Three Months Ended Dec
31,
Years Ended Dec 31,
2020
2019
2020
2019
Net cash provided by (used in) operating
activities
$
6,624
$
(98,842
)
$
226,664
$
(221,592
)
Net cash used in investing activities
(2,959
)
(3,147
)
(11,663
)
(5,612
)
Net cash provided by financing
activities
14,382
103,616
94,112
218,914
Effect of exchange rate changes on
cash
70
44
137
66
Net increase (decrease) in cash and cash
equivalents
18,117
1,671
309,250
(8,224
)
Cash and cash equivalents:
Beginning of period
295,682
2,878
4,549
12,773
End of period
$
313,799
$
4,549
$
313,799
$
4,549
Statement Regarding Non-GAAP Financial
Measures
Adjusted EBITDA
Adjusted EBITDA is defined as net income (loss) before interest,
taxes, depreciation, amortization, stock-based compensation (or
non-cash compensation), certain financing fees, and certain other
non-recurring expenses or gains.
Adjusted EBITDA is not defined under GAAP and is subject to
important limitations. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP, and non-GAAP
financial measures as used by the Company may not be comparable to
similarly titled amounts used by other companies.
Management believes that the presentation of Adjusted EBITDA is
useful to investors because it is frequently used by securities
analysts, investors, and other interested parties in their
evaluation of the operating performance of companies in industries
similar to ours. In addition, targets based on Adjusted EBITDA are
among the measures we use to evaluate our management’s performance
for purposes of determining their compensation under our incentive
plans.
Adjusted EBITDA and other non-GAAP financial measures have
important limitations as analytical tools and you should not
consider them in isolation or as substitutes for analysis of our
results as reported under GAAP.
Covenant Adjusted EBITDA
“Covenant Adjusted EBITDA” is defined as net income (loss)
before interest expense (net of interest income), income and
franchise taxes and depreciation and amortization (including
amortization of capitalized subscriber acquisition costs), further
adjusted to exclude the effects of certain contract sales to third
parties, non-capitalized subscriber acquisition costs, stock-based
compensation and certain unusual, non-cash, non-recurring and other
items permitted in certain covenant calculations under the
agreements governing our Notes, the credit agreement governing the
2025 Term Loan B and the credit agreement governing our revolving
credit facility.
We believe that the presentation of Covenant Adjusted EBITDA is
appropriate to provide additional information to investors about
the calculation of, and compliance with, certain financial
covenants contained in the agreements governing the Notes, the
credit agreements governing the revolving credit facility and the
2025 Term Loan B. We caution investors that amounts presented in
accordance with our definition of Covenant Adjusted EBITDA may not
be comparable to similar measures disclosed by other issuers,
because not all issuers and analysts calculate Covenant Adjusted
EBITDA in the same manner.
Covenant Adjusted EBITDA is not a measurement of our financial
performance under GAAP and should not be considered as an
alternative to net loss or any other performance measures derived
in accordance with GAAP or as an alternative to cash flows from
operating activities as a measure of our liquidity.
See the following tables for quantitative reconciliations of
Adjusted EBITDA and Covenant Adjusted EBITDA for historical periods
to Net Loss, which we believe is the most comparable financial
measure calculated in accordance with GAAP.
VIVINT SMART HOME, INC. and
SUBSIDIARIES
Reconciliation of Non-GAAP
Financial Measures
(In millions)
(Unaudited)
Three Months Ended
Years Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
2020
2020
2020
2020
2019
2020
2019
2018
Net loss
$
(151.2
)
$
(107.9
)
$
(87.0
)
$
(138.1
)
$
(88.5
)
$
(484.2
)
$
(395.9
)
$
(472.6
)
Interest expense, net
49.9
51.0
54.5
65.1
65.2
220.5
260.0
245.2
Income tax expense (benefit), net
1.1
0.2
0.9
(0.8
)
1.9
1.4
1.3
(1.6
)
Depreciation
4.4
4.9
5.2
5.7
6.2
20.2
25.7
25.0
Amortization (i)
142.9
139.1
135.0
133.6
134.0
550.6
517.7
489.0
Stock-based compensation (ii)
77.9
57.8
46.8
17.0
0.8
199.5
3.8
2.2
MDR fee (iii)
8.7
7.7
6.0
5.2
5.0
27.6
16.5
8.7
Loss contingency (iv)
13.2
10.0
—
—
—
23.2
—
—
Restructuring expenses (v)
—
—
—
20.9
—
20.9
—
—
Other (income) expense, net (vi)
(0.2
)
(8.3
)
(8.7
)
26.3
0.5
9.1
(7.7
)
(17.7
)
Adjusted EBITDA
$
146.7
$
154.5
$
152.7
$
134.9
$
125.1
$
588.8
$
421.4
$
278.2
(i)
Excludes loan amortization costs that are
included in interest expense.
(ii)
Reflects non-cash compensation costs
related to employee and director stock incentive plans.
(iii)
Costs related to financing fees incurred
under the Vivint Flex Pay program.
(iv)
Reflects an increase to the loss
contingency accrual relating to regulatory matters.
(v)
Employee severance and termination
benefits expenses associated with restructuring plans.
(vi)
Amounts for the three months ended March
31, 2020 include adjustment to eliminate $16.9 million from
expenses included in debt modification and extinguishment.
VIVINT SMART HOME, INC. and
SUBSIDIARIES
Reconciliation of Non-GAAP
Financial Measures
(In millions)
(Unaudited)
LTM Period Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
2020
2020
2020
2020
2019
2018
Net loss
$
(484.2
)
$
(421.6
)
$
(416.0
)
$
(444.9
)
$
(395.9
)
$
(472.6
)
Interest expense, net
220.5
235.7
250.0
261.3
259.9
244.8
Other expense (income), net
9.1
9.8
12.4
20.9
(7.6
)
33.0
Gain on sale of spectrum (i)
—
—
—
—
—
(50.4
)
Income tax expense (benefit), net
1.4
2.2
2.3
0.8
1.3
(1.6
)
Restructuring expenses (ii)
20.9
20.9
20.9
20.9
—
4.6
Depreciation and amortization (iii)
89.6
94.3
98.3
103.1
106.2
115.9
Amortization of capitalized contract
costs
481.2
469.3
458.8
448.4
437.2
398.2
Non-capitalized contract costs (iv)
268.5
256.8
259.3
277.6
273.9
276.4
Non-cash compensation (v)
199.5
122.5
65.9
20.0
3.8
2.3
Other Adjustments (vi)
86.5
72.2
62.9
65.0
53.2
64.3
Adjustment for change in accounting
principle (Topic 606) (vii)
(87.7
)
(90.5
)
(86.1
)
(89.6
)
(88.8
)
(77.2
)
Covenant Adjusted EBITDA
$
805.3
$
771.6
$
728.7
$
683.5
$
643.2
$
537.7
(i)
Gain on sale of spectrum intangible assets
during the year ended December 31, 2018.
(ii)
Employee severance and termination
benefits expenses associated with restructuring plans.
(iii)
Excludes loan amortization costs that are
included in interest expense.
(iv)
Reflects subscriber acquisition costs that
are expensed as incurred because they are not directly related to
the acquisition of specific subscribers. Certain other industry
participants purchase subscribers through subscriber contract
purchases, and as a result, may capitalize the full cost to
purchase these subscriber contracts, as compared to our organic
generation of new subscribers, which requires us to expense a
portion of our subscriber acquisition costs under GAAP.
(v)
Reflects non-cash compensation costs
related to employee and director stock option plans.
(vi)
Other Adjustments includes certain items
such as product development costs, Blackstone monitoring fee, loss
contingencies, certain legal and professional fees, expenses
associated with retention bonuses, relocation and severance
payments, and certain other adjustments.
(vii)
Adjustments to eliminate the impact of the
Company's adoption of Accounting Standards Codification Topic 606,
Revenue from Contracts with Customers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210224006007/en/
Nate Stubbs VP, Investor Relations 801-221-6724
ir@vivint.com
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