Exhibit 99.1
Vivint Announces First Quarter 2022 Results
Revenue grew ~15% as company reported record 66,734 new subscribers and 15-quarter-low attrition of 11.2%
Provo, UT – May 3, 2022 – Vivint Smart Home, Inc. (NYSE: VVNT), a leading smart home company, today announced results for the first quarter ended March 31, 2022.
“Our strong track record of execution as a public company continued through the first quarter of 2022,” said David Bywater, CEO of Vivint Smart Home. “We remain committed to profitable growth as evidenced by our revenue increase of nearly 15%, improvement in net loss of more than 69%, and adjusted EBITDA growth of almost 26%. We are particularly pleased with our attrition rate of 11.2% which was a 15-quarter low and a 60-basis point improvement versus the prior year. We believe our attrition rate is the lowest among national smart home companies by a significant margin, and it is the result of years of work to improve the overall credit quality of our customers as well as performance enhancements across our portfolio of products and services. We continue to make progress on our Smart Energy and Smart Insurance initiatives as we pursue our mission to make our customers’ homes smarter, greener, and safer while saving them money.”
“We are proud of our consistent execution across all of our key financial metrics,” said Dale R. Gerard, CFO of Vivint Smart Home. “The fundamentals of the business remain strong, and we are bullish about the opportunities ahead of us. We remain on track to meet the full year guidance we laid out in February related to total subscribers, revenue, and adjusted EBITDA. Given the uncertainties related to a challenging economic environment, rising interest rates, and continuing global supply chain constraints, we are lowering the bottom end of our guidance range for free cash flow by $17 million to $50 million and leaving the top end of the range unchanged at $77 million.”
First Quarter Financial Highlights (vs. prior year period)
•Revenue increased by $50.4 million to $392.7 million, representing an increase of 14.7%
•Net loss improved by $61.4 million to a loss of $27.4 million
•Adjusted EBITDA(a) increased by $41.6 million to $202.3 million
•Originated 66,734 new subscribers, a record for the first-quarter period
•Attrition rate improved by 60 basis points to 11.2%, the lowest rate in 15 quarters
•Total subscribers grew by 9.6% to 1,870,440
•Net service margin increased to 78.2% from 77.7% in the prior year period
Business Highlights
Awards & Recognition:
◦Named “Best Home Security Company of 2022” by Forbes Home
◦Made Forbes’ list of “Best Employers for Diversity 2022”
◦Recognized in Green Builder Media’s “2022 Sustainable Products of the Year” issue
Smart Energy:
◦Continue to see higher sales realization rates when bundling smart home with smart energy
◦Remain on track to double the number of megawatts sold in 2022 vs. 2021
a) This earnings release includes Adjusted EBITDA, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow 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, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow and reconciliations to their most directly comparable financial measure calculated in accordance with GAAP. | ||
◦Progressing towards our long-term vision to combine energy production and consumption into a single integrated platform that uses data-infused AI to manage power consumption more intelligently
Smart Insurance:
◦Appointed Ron Davies as our first chief insurance officer, a proven leader who has built and transformed insurance companies over a career spanning more than two decades
◦Continuing process of becoming a Managing General Agent, which will allow Vivint to develop specific homeowner coverages and enable us to accelerate growth
Full Year 2022 Guidance
•Reaffirming total subscribers between 1.95 million and 2.00 million
•Reaffirming total revenue between $1.60 billion and $1.63 billion
•Reaffirming adjusted EBITDA(a) between $725 million and $745 million
•Updating free cash flow(a) to between $50 million and $77 million ($67 million and $77 million previously)
Reconciliations of net loss to Adjusted EBITDA and net cash used in operating activities to Free Cash Flow are 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 reconciliations, 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 reconciliations. 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 Information
Vivint will host a conference call and webcast to discuss its first quarter 2022 results at 4:30 p.m. ET / 2:30 p.m. MT today, May 3, 2022. To join the live webcast and conference call, please visit the Investor Relations section of the Company’s website at https://investors.vivint.com/events-and-presentations/events/default.aspx, or dial 1-844-200-6205 for domestic participants or +1-929-526-1599 for international participants with the access code of 344732. A financial results presentation will be available immediately before the call in the Investor Relations section of Vivint’s website at https://investors.vivint.com/events-and-presentations/events/default.aspx, and a replay of the webcast will be available following the completion of the webcast and conference call.
a) This earnings release includes Adjusted EBITDA, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow 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, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow 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)
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | |||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2022 | |||||||||||||
| Total Revenues | $ | 342.3 | $ | 354.1 | $ | 386.7 | $ | 396.2 | $ | 392.7 | |||||||
| Net Loss | $ | (88.8) | $ | (70.5) | $ | (92.7) | $ | (53.5) | $ | (27.4) | |||||||
| Net Loss Margin | (25.9) | % | (19.9) | % | (24.0) | % | (13.5) | % | (7.0) | % | |||||||
Adjusted EBITDA(a) | $ | 160.7 | $ | 159.6 | $ | 170.4 | $ | 178.4 | $ | 202.3 | |||||||
Adjusted EBITDA Margin(a) | 46.9 | % | 45.1 | % | 44.1 | % | 45.0 | % | 51.5 | % | |||||||
LTM Covenant Adjusted EBITDA(a) | $ | 913.2 | $ | 957.3 | $ | 1,004.1 | $ | 1,050.7 | $ | 1,106.7 | |||||||
New Subscribers(1) | 60,127 | 121,599 | 114,380 | 64,403 | 66,734 | ||||||||||||
Total Subscribers(1) | 1,706,069 | 1,781,469 | 1,843,744 | 1,855,141 | 1,870,440 | ||||||||||||
| Total Monthly Service Revenue | $ | 82.1 | $ | 84.5 | $ | 86.4 | $ | 86.7 | $ | 87.4 | |||||||
| Avg Monthly Svc Revenue per User | $ | 48.12 | $ | 47.45 | $ | 46.88 | $ | 46.71 | $ | 46.71 | |||||||
| Total Monthly Recurring Revenue | $ | 112.1 | $ | 114.4 | $ | 121.5 | $ | 125.2 | $ | 126.5 | |||||||
| Avg Monthly Recurring Rev per User | $ | 65.84 | $ | 65.39 | $ | 66.39 | $ | 67.58 | $ | 67.87 | |||||||
Attrition Rate(2) | 11.8 | % | 11.6 | % | 11.4 | % | 11.3 | % | 11.2 | % | |||||||
(1) Excludes subscribers from sales pilot initiatives
(2) Attrition Rate is reported on LTM basis for each period end & excludes subscribers from sales pilot initiatives
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. | ||
About the Company
Vivint Smart Home 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 nearly 1.9 million customers across the U.S. and Canada. 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 the information under the heading “Full Year 2022 Guidance” 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 "Risk Factors" and elsewhere in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2021, which was filed on March 1, 2022, 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 evolving COVID-19 pandemic;
•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, geopolitical tensions, weather, and demographic trends;
•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 including disruptions in our supply chains;
•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;
•risks related to our exposure to variable rates of interest with respect to our revolving credit facility and term loan facility;
•our inability to maintain effective internal control over financial reporting; and
•our inability to attract and retain employees due to labor shortages.
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 Recurring Revenue - or Total MRR, is the average total monthly recurring revenue recognized during a given period.
Average Monthly Recurring Revenue per User - or AMRRU, is Total MRR 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.
Net Loss Margin - is net loss as a percent of revenue.
Adjusted EBITDA Margin - is 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 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 subscribers during a given 12-month period divided by New Subscribers for that period. These costs include commissions, equipment and associated financing fees (estimated), installation, marketing, sales support, and other allocations (general and administrative); less upfront payments received from the sale of equipment associated with the initial installation, and installation fees. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.
VIVINT SMART HOME, INC. and SUBSIDIARIES
Consolidated Statements of Operations
(In thousands; unaudited)
| Three Months Ended Mar 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Revenues: | |||||||||||
| Recurring and other revenue | $ | 392,748 | $ | 342,327 | |||||||
| Costs and expenses: | |||||||||||
| Operating expenses | 95,460 | 96,531 | |||||||||
| Selling expenses | 78,037 | 114,541 | |||||||||
| General and administrative expenses | 55,515 | 66,801 | |||||||||
| Depreciation and amortization | 154,394 | 146,912 | |||||||||
| Total costs and expenses | 383,406 | 424,785 | |||||||||
| Income (Loss) from operations | 9,342 | (82,458) | |||||||||
| Other expenses (income): | |||||||||||
| Interest expense | 37,511 | 49,803 | |||||||||
| Interest income | (133) | (44) | |||||||||
| Change in fair value of warrant liabilities | (9,293) | (29,103) | |||||||||
| Other expense (income), net | 8,256 | (14,559) | |||||||||
| Total other expenses | 36,341 | 6,097 | |||||||||
| Loss before income taxes | (26,999) | (88,555) | |||||||||
| Income tax expense | 432 | 244 | |||||||||
| Net loss | $ | (27,431) | $ | (88,799) | |||||||
VIVINT SMART HOME, INC. and SUBSIDIARIES
Consolidated Balance Sheets
(In thousands; unaudited)
| Mar 31, 2022 | Dec 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 153,217 | $ | 208,509 | |||||||
| Accounts and notes receivable, net | 58,919 | 63,671 | |||||||||
| Inventories | 64,221 | 51,251 | |||||||||
| Prepaid expenses and other current assets | 36,416 | 19,385 | |||||||||
| Total current assets | 312,773 | 342,816 | |||||||||
| Property, plant and equipment, net | 56,170 | 55,448 | |||||||||
| Capitalized contract costs, net | 1,376,068 | 1,405,442 | |||||||||
| Deferred financing costs, net | 1,974 | 2,088 | |||||||||
| Intangible assets, net | 38,439 | 51,928 | |||||||||
| Goodwill | 837,577 | 837,153 | |||||||||
| Operating lease right-of-use assets | 44,779 | 46,000 | |||||||||
| Long-term notes receivables and other non-current assets, net | 45,373 | 44,753 | |||||||||
| Total assets | 2,713,153 | 2,785,628 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | 112,970 | 96,317 | |||||||||
| Accrued payroll and commissions | 55,947 | 83,347 | |||||||||
| Accrued expenses and other current liabilities | 213,875 | 236,250 | |||||||||
| Current portion of notes payable, net | 13,500 | 13,500 | |||||||||
| Deferred revenue | 441,874 | 429,900 | |||||||||
| Current portion of operating lease liabilities | 12,396 | 12,033 | |||||||||
| Current portion of finance lease liabilities | 2,240 | 2,854 | |||||||||
| Total current liabilities | 852,802 | 874,201 | |||||||||
| Notes payable, net | 2,696,766 | 2,698,845 | |||||||||
| Finance lease liabilities, net of current portion | 1,404 | 1,416 | |||||||||
| Operating lease liabilities, net of current portion | 39,848 | 41,713 | |||||||||
| Warrant derivative liabilities | 15,271 | 24,564 | |||||||||
| Deferred revenue, net of current portion | 760,934 | 778,214 | |||||||||
| Other long-term obligations | 99,121 | 106,135 | |||||||||
| Deferred income tax liabilities | 893 | 640 | |||||||||
| Total liabilities | 4,467,039 | 4,525,728 | |||||||||
| Total stockholders’ deficit | (1,753,886) | (1,740,100) | |||||||||
| Total liabilities and stockholders’ deficit | 2,713,153 | 2,785,628 | |||||||||
VIVINT SMART HOME, INC. and SUBSIDIARIES
Summary Cash Flow Data
(In thousands; unaudited)
| Three Months Ended Mar 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net cash used in operating activities | $ | (36,094) | $ | (14,156) | |||||||
| Net cash used in investing activities | (3,282) | (4,548) | |||||||||
| Net cash used in financing activities | (15,987) | (20,757) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 71 | 6 | |||||||||
| Net decrease in cash & cash equivalents | (55,292) | (39,455) | |||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning of period | 208,509 | 313,799 | |||||||||
| End of period | $ | 153,217 | $ | 274,344 | |||||||
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, changes in the fair value of the derivative liability associated with our public and private warrants and certain other non-recurring expenses or gains.
Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of revenue.
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.
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, changes in the fair value of the derivative liability associated with our public and private warrants and certain unusual, non-cash, non-recurring and other items permitted in certain covenant calculations under the agreements governing our Notes and the Credit Agreement.
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 Company’s Notes and the Credit Agreement governing the Revolving Credit Facility and the Term Loan Facility. 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.
Free Cash Flow
Free Cash Flow is defined as net cash (used in) provided by operating activities less capital expenditures.
See the following tables for quantitative reconciliations of Adjusted EBITDA and Covenant Adjusted EBITDA, for historical periods, to Net Loss and Free Cash Flow, for historical periods, to net cash provided by operating activities, which we believe are the most comparable financial measures calculated in accordance with GAAP.
VIVINT SMART HOME, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures: Adjusted EBITDA
(In millions; unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2022 | |||||||||||||||||||||||||
| Net loss | $ | (88.8) | $ | (70.5) | $ | (92.7) | $ | (53.5) | $ | (27.4) | |||||||||||||||||||
| Interest expense, net | 49.8 | 49.9 | 47.0 | 37.8 | 37.4 | ||||||||||||||||||||||||
| Income tax expense (benefit), net | 0.2 | 1.3 | (1.0) | 2.0 | 0.4 | ||||||||||||||||||||||||
| Depreciation | 4.1 | 4.3 | 3.9 | 4.2 | 4.2 | ||||||||||||||||||||||||
| Amortization (i) | 142.8 | 145.3 | 147.4 | 149.5 | 150.2 | ||||||||||||||||||||||||
| Stock-based compensation (ii) | 87.0 | 27.6 | 29.0 | 22.8 | 25.6 | ||||||||||||||||||||||||
| Consumer financing fees (iii) | 9.3 | 10.2 | 11.8 | 12.2 | 12.9 | ||||||||||||||||||||||||
| CEO transition (iv) | — | 5.8 | 3.0 | 3.0 | — | ||||||||||||||||||||||||
| Change in fair value of warrant derivative liabilities (v) | (29.1) | (6.2) | (15.3) | 0.5 | (9.3) | ||||||||||||||||||||||||
| Other (income) expense, net (vi) | (14.6) | (8.1) | 37.3 | (0.1) | 8.3 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 160.7 | $ | 159.6 | $ | 170.4 | $ | 178.4 | $ | 202.3 | |||||||||||||||||||
| Net loss margin | (26) | % | (20) | % | (24) | % | (14) | % | (7) | % | |||||||||||||||||||
| Adjusted EBITDA margin | 47 | % | 45 | % | 44 | % | 45 | % | 52 | % | |||||||||||||||||||
(i)Excludes loan amortization costs that are included in interest expense
(ii)Reflects stock-based compensation costs related to employee and director stock incentive plans
(iii)Reflects the reduction to revenue related to the amortization of certain financing fees incurred under the Vivint Flex Pay program
(iv)Hiring and severance expenses associated with CEO transition
(v)Reflects the change in fair value of the derivative liability associated with our public and private warrants
(vi)Primarily consists of changes in our consumer finance program derivative instrument, foreign currency exchange, and other gains/losses associated with financings and other transactions
VIVINT SMART HOME, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures: Covenant Adjusted EBITDA
(In millions; unaudited)
| LTM Period Ended | |||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2022 | |||||||||||||||||||||||||
| Net loss | $ | (545.1) | $ | (455.6) | $ | (436.9) | $ | (305.6) | $ | (244.2) | |||||||||||||||||||
| Interest expense, net | 205.2 | 200.6 | 196.7 | 184.5 | 172.1 | ||||||||||||||||||||||||
| Other (income) expense, net | (26.9) | (30.6) | 13.9 | 14.5 | 37.3 | ||||||||||||||||||||||||
| Income tax expense, net | 2.1 | 2.5 | 1.3 | 2.5 | 2.7 | ||||||||||||||||||||||||
| Depreciation and amortization (i) | 85.7 | 82.4 | 79.0 | 76.5 | 75.1 | ||||||||||||||||||||||||
| Amortization of capitalized contract costs | 492.8 | 505.5 | 516.3 | 525.0 | 533.8 | ||||||||||||||||||||||||
| Non-capitalized contract costs (ii) | 273.4 | 303.8 | 333.7 | 343.1 | 358.3 | ||||||||||||||||||||||||
| Stock-based compensation (iii) | 274.5 | 254.1 | 224.5 | 166.4 | 105.0 | ||||||||||||||||||||||||
| Change in fair value of warrant derivative liabilities (iv) | 63.4 | (5.0) | (21.3) | (50.1) | (30.3) | ||||||||||||||||||||||||
| Other adjustments (v) | 88.1 | 99.6 | 96.9 | 93.9 | 96.9 | ||||||||||||||||||||||||
| Covenant Adjusted EBITDA | $ | 913.2 | $ | 957.3 | $ | 1,004.1 | $ | 1,050.7 | $ | 1,106.7 | |||||||||||||||||||
(i)Excludes loan amortization costs that are included in interest expense
(ii)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.
(iii)Reflects stock-based compensation costs related to employee and director stock incentive plans
(iv)Reflects the change in fair value of the derivative liability associated with our public and private warrants
(v)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, expenses associated with CEO transition, and certain other adjustments
VIVINT SMART HOME, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures: Free Cash Flow
(In millions; unaudited)
| Three Months Ended | |||||||||||
| Mar 31, | Mar 31, | ||||||||||
| 2022 | 2021 | ||||||||||
| Net cash used in operating activities | $ | (36.1) | $ | (14.2) | |||||||
| Capital expenditures | (5.2) | (4.6) | |||||||||
| Free Cash Flow | $ | (41.3) | $ | (18.8) | |||||||
Contact:
Nate Stubbs
VP, Investor Relations
801-221-6724
ir@vivint.com