[August 10, 2016] |
|
APX Group Holdings, Inc. Reports Second Quarter 2016 Results
APX Group Holdings, Inc. ("APX Group", "Vivint" or the "Company")
today reported results for the quarter ended June 30, 2016.
"As we have reached the midpoint of the year, I believe we are
effectively executing to our financial and operational plans," said Todd
Pedersen, CEO of APX Group. "We generated a record 101,334 New
Subscribers in the second quarter, while increasing the take rate for
Smart Home services by 779 basis points year-over-year to 87.4%. Our new
products are meeting quality and volume expectations and we're
continuing to add intelligence and functionality to the VivintSky
Platform. Brand awareness has also been a focus area, and we are
beginning to see progress in this area as evidenced by the performance
of our Inside Sales channel, which generated 65.8% year-over-year growth
in the quarter." Mr. Pedersen continued, "Results like these, continue
to validate our strategy and differentiate us in the Smart Home market."
APX Group reported total revenues of $180.8 million for the quarter
ended June 30, 2016, an increase of 14.5% from $157.9 million in the
second quarter of the prior year. The $22.9 million increase in total
revenues was driven primarily by a 14.0% increase in the Company's smart
home subscriber base and a 2.4% increase in Average RMR per Subscriber
to $56.20, partially offset by a 17.3% decrease in upgrade revenue at
the time of a new installation as the company has shifted to recurring
revenue upgrades for new installation. Vivint's new customers continue
to drive higher adoption rates of additional Smart Home services. The
Smart Home adoption rate was 87.4% for the quarter ended June 30, 2016,
up from 79.6% in the quarter ending June 30, 2015. Total revenues for
the second quarter also included a $0.7 million year-over-year increase
in revenues from its wireless internet business.
"Financial performance for the quarter was strong across a number of our
key metrics, including 14.5% Revenue Growth, a $5.03 increase in Average
RMR for New Subscribers to $67.08, and our twelve month Creation Cost
Multiple declined 0.6x," said Mark Davies, CFO of APX Group. "As we've
previously discussed, the company has made targeted investments in
customer experience, while driving Service Margins at 72.7%. In terms of
Attrition, our twelve-month rate increased to 12.9%, from 12.6% in the
first quarter of 2016. We believe this increase is in-line with the
expected cohort attrition curves that have gone through their
end-of-term renewal periods." Mr. Davies continued, "We still have work
to do in the areas of productivity and operational efficiencies, and
while we will continue to make select investments in products, service
and channels, we remain focused on our unit-of-one economics and
enterprise scaling."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Key Financial and Portfolio Metrics
|
($ in millions, except for subscriber data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
|
September 30, 2015
|
|
|
December 31, 2015
|
|
|
March 31, 2016
|
|
|
June 30,
2016
|
Total Revenues
|
|
|
$
|
157.9
|
|
|
|
|
$
|
168.6
|
|
|
|
|
$
|
175.0
|
|
|
|
|
$
|
174.3
|
|
|
|
$
|
180.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
$
|
(43.6
|
)
|
|
|
|
$
|
(125.1
|
)
|
|
|
|
$
|
(62.4
|
)
|
|
|
|
$
|
(45.1
|
)
|
|
|
$
|
(89.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
93.4
|
|
|
|
|
$
|
102.7
|
|
|
|
|
$
|
101.5
|
|
|
|
|
$
|
102.8
|
|
|
|
$
|
105.0
|
|
Adj EBITDA Margin
|
|
|
|
59.2
|
%
|
|
|
|
|
60.9
|
%
|
|
|
|
|
58.0
|
%
|
|
|
|
|
59.0
|
%
|
|
|
|
58.1
|
%
|
Total RMR(1)
|
|
|
$
|
52.4
|
|
|
|
|
$
|
55.8
|
|
|
|
|
$
|
55.7
|
|
|
|
|
$
|
56.3
|
|
|
|
$
|
61.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net New Smart Home Subscribers
|
|
|
|
89,185
|
|
|
|
|
|
88,406
|
|
|
|
|
|
33,162
|
|
|
|
|
|
41,830
|
|
|
|
|
101,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average RMR per New Subscriber(1)
|
|
|
$
|
62.05
|
|
|
|
|
$
|
61.30
|
|
|
|
|
$
|
60.08
|
|
|
|
|
$
|
62.01
|
|
|
|
$
|
67.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Subscribers(1)
|
|
|
|
955,162
|
|
|
|
|
|
1,015,267
|
|
|
|
|
|
1,013,917
|
|
|
|
|
|
1,018,397
|
|
|
|
|
1,088,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average RMR per Subscriber(1)
|
|
|
$
|
54.86
|
|
|
|
|
$
|
55.00
|
|
|
|
|
$
|
54.92
|
|
|
|
|
$
|
55.27
|
|
|
|
$
|
56.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber Account Attrition(2)
|
|
|
|
12.0
|
%
|
|
|
|
|
12.0
|
%
|
|
|
|
|
12.2
|
%
|
|
|
|
|
12.6
|
%
|
|
|
|
12.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Total Subscribers and RMR data excludes wireless Internet
business and are provided as of each period end
|
(2)
|
|
Subscriber attrition is reported on an LTM basis for each
period end and excludes wireless Internet business
|
Costs and Expenses
Operating expenses were $68.9 million for the quarter ended June 30,
2016, up from $58.6 million in the same period of 2015. The 17.6%
increase in expense was primarily due to a 14.0% growth in our
subscriber base and a management decision to invest in customer
experience, which drove an increase of $0.29 in Net Service Cost per
Subscriber from $14.73 for the period ended June 30, 2015 to $15.02 for
the period ended June 30, 2016. Vivint's Net Service Margin was 72.7%
for the quarter, excluding operating expenses associated with the
Company's wireless internet service.
Selling expenses, net of capitalized subscriber acquisition costs, were
$37.3 million for the quarter ended June 30, 2016, compared to $31.2
million for the quarter ended June 30, 2015. The 19.6% increase was
primarily attributable to higher lead generation costs associated with
the 65.8% year-over-year growth in Inside Sales and higher Direct to
Home personnel and housing costs during the quarter. Vivint's
twelve-month Net Creation Cost Multiple as of June 30, 2016, improved
0.6x from the same period in 2015 to 30.5x, excluding its wireless
Internet service.
General and administrative ("G&A") expenses were $36.1 million for the
quarter ended June 30, 2016, compared to $12.9 million for the same
period of 2015, noting that the Company recorded a one-time non-cash
gain of $12.2 million related to settlement of the Merger-related escrow
in the second quarter of 2015, resulting in a normalized year-over-year
increase of $11.0 million. The $11.0 million increase was primarily
associated with higher personnel costs of $5.5 million, which included a
one-time non-cash stock compensation expense of $2.2 million, along with
$2.1 million of legal and $0.9 million of IT costs.
The Company's net loss for the quarter ended June 30, 2016, was $89.7
million compared to a net loss of $43.6 million for the same period in
2015. Adjusted EBITDA1 for the second quarter was
$105.0 million, up 12.4% as compared to $93.4 million for the same
period in 2015.
Liquidity
As of June 30, 2016, the Company's liquidity position on a consolidated
basis, defined as cash on hand, marketable securities and available
borrowing capacity under the Company's revolving credit facility, was
approximately $405 million.
Subsequent to the quarter, in July 2016, the Company's parent completed
the final issuance and sale to certain investors , co-led by Peter Thiel
and strategic investment firm Solamere Capital, of a series of preferred
stock in a private placement exempt from registration under the
Securities Act. On August 1, 2016, the Company's parent contributed the
net proceeds of $30.6 million from such issuance and sale to the Company
as an equity contribution.
Giving effect to the $30.6 million equity contribution, the Company's
liquidity would have been approximately $436 million.
Certain Credit Statistics
Our net leverage ratio, defined as the ratio of net debt to LTM Adjusted
EBITDA, was 5.6x at June 30, 2016, a year-over-year improvement of 0.2x.
The Company's pro-forma net leverage ratio would have been 5.5x,
including the $30.6 million equity contribution.
Conference Call
Vivint will host a conference call and webcast to discuss the quarterly
results at 5:00 p.m. EDT today, August 10, 2016. To access the
conference call, please dial (877) 201-0168 from the United States and
Canada or (647) 788-4901 from outside the United States and Canada and
use the conference ID 51494181. A financial results presentation and
online access to join the webcast will be made available immediately
prior to the call on the Investor Relations section of the Company's
website at http://investors.vivint.com/events-presentations/events.
A replay of the webcast will be made available on the Investor Relations
section of the Company's website at www.investors.vivint.com
following the call for a period of 30 days.
About Vivint
Vivint Smart Home is the largest smart home services provider in North
America. The company combines innovative products and services to offer
homeowners the best smart home experience. As the only vertically
integrated smart home company, Vivint delivers its integrated platform
and products 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 more than one million
customers throughout the U.S. and Canada. For more information, visit www.vivint.com.
Forward-Looking Statements
This earnings release includes certain forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995,
including statements regarding, among other things, our plans,
strategies and prospects, both business and financial. Forward-looking
statements convey the Company's current expectations or forecasts of
future events. All statements contained in this earnings release other
than statements of historical fact are forward-looking statements. These
statements are based on the beliefs and assumptions of our management.
Although we believe that our plans, intentions and expectations
reflected in or suggested by these forward-looking statements are
reasonable, we cannot assure you that we will achieve or realize these
plans, intentions or expectations. Forward-looking statements are
inherently subject to risks, uncertainties and assumptions. 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 this
date hereof. You should understand that the following important factors,
in addition to those discussed in "Risk Factors" in our most recent
annual report on Form 10-K, and other reports filed with the Securities
Exchange Commission ("SEC"), as such factors may be updated from time to
time in our periodic filings with the SEC, which are available on the
SEC's website at www.sec.gov, 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:
-
risks of the security and smart home industry, including risks of and
publicity surrounding the sales, subscriber origination and retention
process;
-
the highly competitive nature of the security and smart home industry
and product introductions and promotional activity by our competitors;
-
litigation, complaints 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; and
-
cost increases or shortages in security and smart home technology
products or components.
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.
These and other factors that could cause actual results to differ from
those implied by the forward-looking statements in this press release
are more fully described in the "Risk Factors" section in our most
recent annual report on Form 10-K, and other reports as such factors may
be updated from time to time in our periodic filings with the SEC. These
risk factors should not be construed as exhaustive. We undertake 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
The following definitions are used in this press release for purposes of
describing the results in our home security and automation business and
except where noted, exclude our wireless internet business.
"Total Subscribers" means the aggregate number of active smart home and
security subscribers at the end of a given period.
"RMR" means the recurring monthly revenue billed to a smart home and
security subscriber.
"Total RMR" means the aggregate RMR billed to all smart home and
security subscribers.
"Average RMR per Subscriber" means the Total RMR divided by Total
Subscribers. This is also commonly referred to as Average Revenue per
User, or "ARPU."
"Average RMR per New Subscriber" means the aggregate RMR for new
subscribers originated during a period divided by the number of new
subscribers originated during such period.
"Attrition" means the aggregate number of canceled smart home and
security subscribers during a period divided by the monthly weighted
average number of total smart home and security subscribers for such
period. Subscribers are considered canceled when they terminate in
accordance with the terms of their contract, are terminated by the
Company, or if payment from such subscribers is deemed uncollectible
(when at least four monthly billings become past due). Sales of
contracts to third parties and certain moves are excluded from the
attrition calculation.
"Net Subscriber Acquisition Costs" means direct and indirect costs to
create a new smart home and security subscriber. These include
commissions, equipment, installation, marketing and other allocations
(G&A and overhead), less activation fees and up sell revenue. These
costs also exclude residuals and long-term equity expenses associated
with the direct-to-home sales channel.
"Net Creation Cost Multiple" means total Net Subscriber Acquisition
Costs, divided by the number of new subscribers originated, and then
divided by the Average RMR per New Subscriber.
"Net Service Cost per Subscriber" means total service costs for the
period, including monitoring, customer service, field service and other
allocations (G&A and overhead) costs, less total service revenue for the
period divided by total service subscribers.
"Net Service Margin" means the average RMR per subscriber for the period
less Net Service Costs divided by the average RMR per subscriber for the
period.
1 This earning release includes Adjusted EBITDA, a metric
that is not calculated in accordance with Generally Accepted Accounting
Principles in the U.S. ("GAAP"). See the "Statement Regarding Non-GAAP
Financial Measures" section at the end of this earnings release for the
definition of Adjusted EBITDA and a reconciliation to its most directly
comparable financial measure calculated in accordance with GAAP.
|
|
|
|
|
|
|
APX GROUP HOLDINGS, INC. and SUBSIDIARIES
|
Consolidated Statements of Operations (unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Recurring revenue
|
|
$
|
172,472
|
|
|
|
$
|
149,543
|
|
|
|
$
|
339,918
|
|
|
|
$
|
295,207
|
|
Service and other sales revenue
|
|
|
5,826
|
|
|
|
|
6,992
|
|
|
|
|
10,837
|
|
|
|
|
12,216
|
|
Activation fees
|
|
|
2,509
|
|
|
|
|
1,378
|
|
|
|
|
4,305
|
|
|
|
|
2,685
|
|
Total revenues
|
|
|
180,807
|
|
|
|
|
157,913
|
|
|
|
|
355,060
|
|
|
|
|
310,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
68,943
|
|
|
|
|
58,623
|
|
|
|
|
126,934
|
|
|
|
|
109,952
|
|
Selling expenses
|
|
|
37,343
|
|
|
|
|
31,244
|
|
|
|
|
66,223
|
|
|
|
|
56,520
|
|
General and administrative expenses
|
|
|
36,109
|
|
|
|
|
12,864
|
|
|
|
|
66,550
|
|
|
|
|
41,098
|
|
Depreciation and amortization
|
|
|
72,010
|
|
|
|
|
60,070
|
|
|
|
|
132,581
|
|
|
|
|
117,127
|
|
Restructuring and asset impairment charges
|
|
|
(725
|
)
|
|
|
|
-
|
|
|
|
|
(680
|
)
|
|
|
|
-
|
|
Total costs and expenses
|
|
|
213,680
|
|
|
|
|
162,801
|
|
|
|
|
391,608
|
|
|
|
|
324,697
|
|
Loss from operations
|
|
|
(32,873
|
)
|
|
|
|
(4,888
|
)
|
|
|
|
(36,548
|
)
|
|
|
|
(14,589
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
47,447
|
|
|
|
|
38,841
|
|
|
|
|
92,865
|
|
|
|
|
77,101
|
|
Interest income
|
|
|
(11
|
)
|
|
|
|
-
|
|
|
|
|
(23
|
)
|
|
|
|
(2
|
)
|
Other loss (income), net
|
|
|
9,861
|
|
|
|
|
(294
|
)
|
|
|
|
4,753
|
|
|
|
|
(335
|
)
|
Total other expenses
|
|
|
57,297
|
|
|
|
|
38,547
|
|
|
|
|
97,595
|
|
|
|
|
76,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(90,170
|
)
|
|
|
|
(43,435
|
)
|
|
|
|
(134,143
|
)
|
|
|
|
(91,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
|
|
(448
|
)
|
|
|
|
179
|
|
|
|
|
672
|
|
|
|
|
308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(89,722
|
)
|
|
|
$
|
(43,614
|
)
|
|
|
$
|
(134,815
|
)
|
|
|
$
|
(91,661
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APX GROUP HOLDINGS, INC. and SUBSIDIARIES
|
Condensed Consolidated Balance Sheets (unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
121,406
|
|
|
|
$
|
2,559
|
|
Accounts receivable, net
|
|
|
8,545
|
|
|
|
|
8,060
|
|
Inventories
|
|
|
89,496
|
|
|
|
|
26,321
|
|
Prepaid expenses and other current assets
|
|
|
16,860
|
|
|
|
|
10,626
|
|
Total current assets
|
|
|
236,307
|
|
|
|
|
47,566
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
54,062
|
|
|
|
|
55,274
|
|
Subscriber acquisition costs, net
|
|
|
945,851
|
|
|
|
|
790,644
|
|
Deferred financing costs, net
|
|
|
5,434
|
|
|
|
|
6,456
|
|
Intangible assets, net
|
|
|
503,146
|
|
|
|
|
558,395
|
|
Goodwill
|
|
|
836,129
|
|
|
|
|
834,416
|
|
Long-term investments and other assets, net
|
|
|
10,629
|
|
|
|
|
10,893
|
|
Total assets
|
|
$
|
2,591,558
|
|
|
|
$
|
2,303,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
108,121
|
|
|
|
$
|
52,207
|
|
Accrued payroll and commissions
|
|
|
70,541
|
|
|
|
|
38,247
|
|
Accrued expenses and other current liabilities
|
|
|
36,616
|
|
|
|
|
35,573
|
|
Deferred revenue
|
|
|
42,621
|
|
|
|
|
34,875
|
|
Current portion of capital lease obligations
|
|
|
8,055
|
|
|
|
|
7,616
|
|
Total current liabilities
|
|
|
265,954
|
|
|
|
|
168,518
|
|
|
|
|
|
|
|
Notes payable, net
|
|
|
2,381,320
|
|
|
|
|
2,118,112
|
|
Revolving Credit Facility
|
|
|
-
|
|
|
|
|
20,000
|
|
Capital lease obligations, net of current portion
|
|
|
8,534
|
|
|
|
|
11,171
|
|
Deferred revenue, net of current portion
|
|
|
52,231
|
|
|
|
|
44,782
|
|
Other long-term obligations
|
|
|
11,849
|
|
|
|
|
10,530
|
|
Deferred income tax liabilities
|
|
|
8,046
|
|
|
|
|
7,524
|
|
Total liabilities
|
|
|
2,727,934
|
|
|
|
|
2,380,637
|
|
|
|
|
|
|
|
Total stockholders' deficit
|
|
|
(136,376
|
)
|
|
|
|
(76,993
|
)
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
2,591,558
|
|
|
|
$
|
2,303,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APX GROUP HOLDINGS, INC. and SUBSIDIARIES
|
Summary Cash Flow Data (unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(159,068
|
)
|
|
|
$
|
(106,022
|
)
|
|
|
$
|
(171,573
|
)
|
|
|
$
|
(89,690
|
)
|
Net cash used in investing activities
|
|
|
(2,455
|
)
|
|
|
|
(16,828
|
)
|
|
|
|
(4,897
|
)
|
|
|
|
(31,307
|
)
|
Net cash provided by financing activities
|
|
|
281,732
|
|
|
|
|
124,733
|
|
|
|
|
295,758
|
|
|
|
|
130,720
|
|
Effect of exchange rate changes on cash
|
|
|
685
|
|
|
|
|
24
|
|
|
|
|
(441
|
)
|
|
|
|
(577
|
)
|
Net Increase in cash
|
|
$
|
120,894
|
|
|
|
$
|
1,907
|
|
|
|
$
|
118,847
|
|
|
|
$
|
9,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash:
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period
|
|
|
512
|
|
|
|
|
18,046
|
|
|
|
|
2,559
|
|
|
|
|
10,807
|
|
End of period
|
|
$
|
121,406
|
|
|
|
$
|
19,953
|
|
|
|
$
|
121,406
|
|
|
|
$
|
19,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement Regarding Non-GAAP Financial Measures
Non-GAAP Financial Measures
This earnings release includes Adjusted EBITDA, which is a supplemental
measure that is not required by, or presented in accordance with,
accounting principles generally accepted in the United States ("GAAP").
"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, the historical results of
Solar and certain unusual, non-cash, non-recurring and other items
permitted in certain covenant calculations under the indentures
governing our notes and the credit agreement governing our revolving
credit facility.
We believe that the presentation of Adjusted EBITDA is appropriate to
provide additional information to investors about the calculation of,
and compliance with, certain financial covenants in the indentures
governing our notes and the credit agreement governing our revolving
credit facility. We caution investors that amounts presented in
accordance with our definition of Adjusted EBITDA may not be comparable
to similar measures disclosed by other issuers, because not all issuers
and analysts calculate Adjusted EBITDA in the same manner.
Adjusted EBITDA is not a measurement of our financial performance under
GAAP and should not be considered as an alternative to net income (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 table for a quantitative reconciliation of Adjusted
EBITDA to Net Loss, which we believe is the most comparable financial
measure calculated in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
APX GROUP HOLDINGS, INC. and SUBSIDIARIES
|
Reconciliation of Non-GAAP Financial Measures
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Net loss
|
|
$
|
(89.7
|
)
|
|
|
$
|
(43.6
|
)
|
|
|
$
|
(66.3
|
)
|
|
|
$
|
(134.8
|
)
|
|
|
$
|
(91.7
|
)
|
|
|
$
|
(113.6
|
)
|
Interest expense, net
|
|
|
47.4
|
|
|
|
|
38.8
|
|
|
|
|
35.1
|
|
|
|
|
92.8
|
|
|
|
|
77.1
|
|
|
|
|
70.2
|
|
Other expense (income), net
|
|
|
9.9
|
|
|
|
|
(0.3
|
)
|
|
|
|
-
|
|
|
|
|
4.8
|
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
Income tax (benefit) expense
|
|
|
(0.4
|
)
|
|
|
|
0.2
|
|
|
|
|
0.7
|
|
|
|
|
0.7
|
|
|
|
|
0.3
|
|
|
|
|
0.9
|
|
Restructuring and asset impairment
|
|
|
(0.7
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.7
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
33.4
|
|
|
|
|
38.3
|
|
|
|
|
40.4
|
|
|
|
|
66.6
|
|
|
|
|
75.9
|
|
|
|
|
80.5
|
|
Amortization of capitalized creation costs
|
|
|
38.6
|
|
|
|
|
21.8
|
|
|
|
|
12.9
|
|
|
|
|
66.0
|
|
|
|
|
41.2
|
|
|
|
|
23.2
|
|
Non-capitalized subscriber acquisition costs
|
|
|
51.4
|
|
|
|
|
43.7
|
|
|
|
|
33.9
|
|
|
|
|
87.5
|
|
|
|
|
78.6
|
|
|
|
|
60.7
|
|
Non-cash compensation
|
|
|
2.7
|
|
|
|
|
0.6
|
|
|
|
|
0.5
|
|
|
|
|
3.0
|
|
|
|
|
1.4
|
|
|
|
|
0.9
|
|
Other adjustments
|
|
|
12.4
|
|
|
|
|
(6.1
|
)
|
|
|
|
11.4
|
|
|
|
|
21.9
|
|
|
|
|
0.5
|
|
|
|
|
24.0
|
|
Adjusted EBITDA
|
|
$
|
105.0
|
|
|
|
$
|
93.4
|
|
|
|
$
|
68.6
|
|
|
|
$
|
207.8
|
|
|
|
$
|
183.0
|
|
|
|
$
|
146.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
Reflects the restructuring and asset impairment charges related to
the transition of the wireless internet business to a 60 GHz-based
technology
|
(ii)
|
|
Excludes loan amortization costs that are included in interest
expense.
|
(iii)
|
|
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.
|
(iv)
|
|
Reflects non-cash compensation costs related to employee and
director stock option plans. Excludes non-cash compensation costs
included in non-capitalized subscriber acquisition costs.
|
(v)
|
|
Other Adjustments includes certain items such as product development
costs, non-operating legal and professional fees, deferred revenue
fair value adjustment, non-cash gain on settlement of merger-related
escrow, and other similar adjustments.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160810006131/en/
[ Back To Homepage ]
|