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One-time tax gain can’t paper over cracks as ADT succumbs to surprise fourth quarter loss

In the security group’s first earnings release since going public earlier this year, ADT recorded an adjusted loss of US$37mln, or 10 US cents a share

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Shares have now lost almost a quarter of their value since ADT’s January IPO

A huge one-time boost from the recent raft of US tax changes helped ADT Inc (NYSE:ADT) swing back to a profit in the final quarter of 2017, but the home security giant’s underlying performance left investors uneasy.  

Including the US$690mln gain from the tax reforms brought in by President Trump and his administration at the end of last year, ADT earned US$638mln, or 99 US cents a share, in the quarter ended December 31.

Reduced customer attrition

Stripping out that hefty one-off gain though, ADT posted a surprise adjusted loss of US$37mln, or 10 US cents a share, in its first earnings report since going public in January (Q4 2016: US$47mln, 7 US cents). Analysts had been expecting earnings of 14 US cents a share.

At US$1.11bn (Q4 2016: US$1.05bn), revenue was slightly better than the US$1.09bn Wall Street number crunchers had initially penciled in.

“Our fourth quarter results reflect a very strong finish to 2017,” said chief executive Tim Whall.

“We grew revenue, EBITDA, and cash flow year-over-year, and we also meaningfully reduced customer attrition while improving customer acquisition efficiency.

He added: “Following our initial public offering, we are excited about the future of ADT and our ability to drive significant cash flow growth as we continue to execute against our strategic objectives.”

For the year ahead, ADT is guiding for revenue of between US$4.45bn to US$4.55bn, in line with analysts' forecasts of US$4.47bn.

Shares popped 5% higher at the opening bell, but quickly reversed and are down 8.8% to US$9.31 in late-morning trade.

Quick facts: ADT Inc

Price: 7.94 USD

NYSE:ADT
Market: NYSE
Market Cap: $6.11 billion
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