The ADT Corporation (ADT) reported fourth quarter fiscal 2013 GAAP net income of $96 million or 45 cents per share versus $94 million or 40 cents per share earned in the year-ago quarter.
Excluding non-recurring items, net income stood at $99 million or 46 cents per share, versus $101 million or 43 cents per share in the year-ago quarter. The quarterly adjusted earnings were in line with the Zacks Consensus Estimate.
In fiscal 2013, ADT reported net income of $421 million or $1.88 per share versus $394 million or $1.67 per share in the year-ago quarter.
Excluding non-recurring items, net income stood at $413 million or $1.84 per share in fiscal 2013 versus $411 million or $1.74 per share in the year-ago quarter. Fiscal adjusted earnings beat the Zacks Consensus Estimate of $1.83.
Revenues for the quarter increased 4.2% year over year to $846 million, ahead of the Zacks Consensus Estimate of $844 million. The revenue growth was driven by gross additions and Devcon Security acquisition, partially offset by customer attrition. Average revenue per customer increased 3.7% to $40.31 in the reported quarter. ADT closed the quarter with 6.5 million customer accounts, up 1.5% from last year.
Revenues for fiscal 2013 increased 2.5% year over year to $3,309 million. The fiscal revenues surpassed the Zacks Consensus Estimate of 3,306 million.
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) stood at $425 million in the reported quarter, up 9.0% year over year. EBITDA before special items was $431 million in the reported quarter, up 7.5% year over year, and EBITDA margin before special items was 50.9%, a 150 basis point improvement. The year-over-year growth in margins was driven by favorable impact from charges related to legal matters.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Sep 2013 were $138 million, while long-term debt aggregated $3,373 million. Cash from operating activities totaled $1,666 million with free cash flow of $460 million.
The company authorized a 60% increase in the company’s quarterly dividend to 20 cents per share, up from 12.5 cents per share, beginning with the next dividend declaration.
The company repurchased 5 million of its shares for $206 million during the reported quarter. Additionally, since quarter end, the company has repurchased 7 million shares for $300 million.
Also, the company entered into an accelerated share repurchase agreement, under which it will repurchase approximately $400 million of its common stock. Between the shares already repurchased and the accelerated share repurchase program, the company expects to complete the $2 billion share repurchase program in the first half of fiscal 2014. As a result, the company has increased the current share repurchase authorization by an additional $1.0 billion.
Outlook
Moving ahead, ADT expects recurring revenues and total revenue growth to be in the range of 4%-5% in fiscal 2014. EBITDA margin before special items is expected to improve 150 basis points over a three-year period with a 50 basis point improvement in fiscal 2014.
Free cash flow before special items is expected to be in the range of 5%-10%. The strategic move by the company is to grow ADT’s core business both organically and through acquisitions, increase operating efficiency and return capital to its shareholders.
ADT currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now are Nielsen Holdings N.V. (NLSN) and CoreLogic, Inc. (CLGX ), both having a Zacks Rank #1 (Strong Buy) and McGraw Hill Financial, Inc (MHFI) carrying a Zacks Rank #2 (Buy).
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