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ADT Prices $1B Notes Offering, To Use Proceeds to Repay Debt

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ADT Inc. (ADT - Free Report) yesterday announced the offering and pricing of $1 billion worth of first-priority senior secured notes. It is worth noting here that The ADT Security Corporation — an indirect wholly-owned subsidiary of ADT — is the issuer of these senior notes.

It is worth mentioning here that ADT’s share price decreased 0.9% yesterday, ending the trading session at $10.35.

Inside the Headlines

As mentioned, the offering is made only to qualified institutional buyers, as defined under Rule 144A of the Securities Act, and to non-U.S. investors (per Regulation S). Compliance with registration requirements under the Securities Act is exempted for the offering.

The first-priority senior secured notes offered carry a coupon rate of 4.125% and are due to expire in 2029. Subject to the fulfillment of certain conditions, the completion of the offering is expected on Jul 29, 2021.

ADT intends on using the gross proceeds from the notes offering as well as available cash to redeem $1,000 million worth of 3.500% senior notes due to mature in 2022, and pay for related fees and other expenses.

We believe that the offerings of senior notes will increase the company’s debts and, in turn, might inflate its financial obligations and hurt profitability. However, measures relating to redeeming notes will be a relief.

Exiting first-quarter 2021, ADT’s long-term debt stood at $9,446 million. Notably, its proceeds from long-term borrowings totaled $11 million in the first quarter, while long-term borrowing repayments (includes call premiums) amounted to $18 million.

Zacks Rank, Earnings Estimates and Price Performance

With a market capitalization of $8.6 billion, ADT currently carries a Zacks Rank #4 (Sell).

In the past three months, the company’s shares have gained 12.5% as compared with the industry’s growth of 8.8%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

In the past 60 days, the Zacks Consensus Estimate for its earnings decreased 7.1% to 26 cents for second-quarter 2021 and 10.8% to 74 cents for 2021. The consensus estimate of $1.08 suggests an improvement from the 60-day ago figure of 28 cents.

ADT Inc. Price and Consensus

 

ADT Inc. Price and Consensus

ADT Inc. price-consensus-chart | ADT Inc. Quote

Stocks to Consider

Three better-ranked stocks in the Zacks Industrial Products sector are Ituran Location and Control Ltd. (ITRN - Free Report) , Verra Mobility Corporation (VRRM - Free Report) , and Chart Industries, Inc. (GTLS - Free Report) . All companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, earnings estimates for these stocks have improved for the current year. Further, positive earnings surprise for the last reported quarter was 14.29% for Ituran Location, 9.09% for Verra Mobility and 8.82% for Chart Industries.

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