Q1 2022 ADT Inc Earnings Call
Greetings and welcome to the ADT first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation if.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Elizabeth Landers Senior director of Investor Relations you may begin.
Yes.
Thanks, operator, and good morning, everyone. We appreciate you joining adt's first quarter 2022 earnings call speaking on today's call will be Adt's, President and CEO, Jim Devries, and our CFO and president of corporate development, Jeff buckets are.
Jim will provide an overview of our recent performance and how that links to the mission and long term strategy, we laid out at our Investor Day in March Jeff will then cover our financial performance.
Joining us for Q&A are Don Young Chief operating Officer, Kent Forest, EVP of finance and Calgary, Our SVP of Finance Investor Relations and communications.
Earlier. This morning, we issued a press release and slide presentation of our financial results. These materials are available on our website at Investor ADT Dot com.
And before we start I do need to tell you that today's remarks include forward looking statements. These forward looking statements are subject to risks and uncertainties that could cause actual results to materially differ from those forward looking statements.
Some of the factors that may cause differences are described in our SEC filings will also include non-GAAP financial measures on the call for a complete reconciliation of our non-GAAP financial measures. Please refer to our earnings press release and with that I'll turn the call over to Jim.
Thanks, and welcome everyone to our call ADT released our earnings results. This morning, beginning of the year with solid first quarter momentum delivering strong year over year improvements in total revenue and adjusted EBITDA and a $52 million net profit we continue to see.
Demand for ADT products and services.
Drive our subscriber growth and producing the highest RMR balance in our history.
We're also seeing good traction with Sac efficiency in our consumer and small business segment with record high installation revenue per unit that was up more than 30%.
As prior year aided by a higher attachment rate for our Google Tour adult sales and increased pull through of additional products.
Extraordinary service provided by our employees is reflected in improved customer satisfaction rates and enhanced brand loyalty close customer attrition over the last 12 months was 12.9% a record low down 20 basis points versus <unk>.
Prior year and sequentially from the fourth quarter. This trend is consistent with expected retention characteristics of our interactive customers with more advanced and larger systems.
I wanted to express my gratitude to our employees and dealer partners for a tremendous start to the year. Our people are adt's greatest asset and our results are evidence of what can be achieved when 25000 of the best professionals in the industry focus on <unk>.
Great care of our customers.
At our Investor Day in March we presented our mission and laid out our long term strategy.
ADT is a trusted brand and synonymous with safety and peace of mind, we are positioned to drive growth across all our business segments by leveraging our unique strategic advantages, our innovative offerings unrivaled safety and premium customer experience.
The strategy, we outlined at Investor day focused strongly on our customers.
Our subscriber base expanding the share of wallet from each customer and strengthening our brand loyalty and customer retention simply stated we are giving customers even more reasons to choose ADT stay with ADT and spend more with ADT.
We are already demonstrating progress against our plan with several achievements in the first quarter that I'd like to highlight.
Our Google partnership remains positioned to help accelerate the transformation of our business we.
We launched the Google nest doorbell in early January and have seen great success with over 60000 net store bulk sales as of the end of the first quarter. Additionally, offering the branded Google product is driving higher attachment rates higher pull through of other devices and.
Higher installation revenue that we were seeing with our previous white label doorbell.
Moving quickly to maintain our momentum we rolled out mesh Wi Fi a few weeks ago, and we're targeting to launch the Google indoor and outdoor cameras by the end of Q3.
And our dealer channel, we're expanding distribution and also beginning to introduce Google products throughout the network. So while we're still in the early innings of our full Google product rollout, we're very encouraged by early successes.
Based on favorable customer feedback we are also expanding our ATT virtual service platform today almost half of our service visits are now being successfully conducted virtually virtual visits are delivering high customer satisfaction and in the first.
Corridor alone, we eliminated over 165000, truffles, reducing not only our expenses, but also our carbon footprint.
We are continuing to evaluate and expand this program with additional ADP services.
We are also continuing the rollout of our next generation monitoring technology, our patented technology delivers unrivaled safety by helping them prioritize response advance and sending data directly to emergency response centers.
So this is a critically important in situations, where every second matters. We are also expanding this capability for our commercial customers.
Today, our technology is in approximately 70 emergency response centers and our goal is to be in 1000 centers by the end of the year.
ADT commercial showcased several innovations at the recent ISC West conference, we specifically showcase the capabilities and uses of robots and indoor drones.
Innovations, we believe provide opportunities for disrupting the traditional manned guards industry.
She will also receive three Sami awards, recognizing our best in class marketing and advertising efforts.
I'd like to take a moment to comment on ADT solar our newest business segment.
Following 80 Ts acquisition of Sun Pro in December we have now completed our first corner with ADT solar reporting as part of our business and we are very pleased with our performance there.
The card over to the ADT Solar brand is now complete and you will begin seeing branded vehicles and uniforms out in the market soon.
ADT solar installed 5500 systems in the quarter, an increase of approximately 80% plus was legacy Sun pro in the first quarter of last year.
We have begun to launch our solar dealer program to existing ADP viewers and we're seeing the early benefits between our dealer launch and other cross sell initiatives already seen about 20% of solar sales generating from the ADT equal system.
It stopped at Investor Day, we are integrating ESG into our business operations Chuck.
Just this week, we published our first corporate ESG report, which outlines all with ADT is doing to embed ESG into our business, we truly believe that our ESG principles underpin our core mission and empowering people to protect and connect.
What matters most.
In closing I am encouraged by our performance. This quarter, we are delivering on the plan we laid out at our Investor day, a few months ago and I'm increasingly excited about the opportunities ahead, and now I'll turn the call over to Jeff to cover our financial performance and the quarter in more detail.
Thank you Jim and thank you everyone for joining our call today.
As Jim described we have started the year with solid momentum across the business and are pleased with our first quarter results.
Total company revenue in the first quarter was $1.55 billion up 18%, which includes the benefit of our solar acquisition.
Excluding solar our revenue grew approximately 4%.
Importantly, our recurring monthly revenue or RMR base grew to $365 million the record level, Jim mentioned and was $16 million higher than last year.
This is the result of the cumulative effect of our recent growth and customer retention progress.
Our gross new additions to RMR were down slightly in the first quarter as planned due to last year's initial ackerman account acquisitions.
Our revenue growth combined with efficiency improvements, especially within our CSB segment generated an 11% increase in adjusted EBITDA at $601 million.
On a segment basis consumer and small business or CSB delivered total revenue of one point O six $3 billion, an increase of 2% or $24 million versus last year.
This performance was largely driven by the increase in monitoring and services revenue from the higher RMR bounds I mentioned earlier.
We continue to see an increasing number of customers choose interact is integrated and more comprehensive systems in.
In addition to the retention benefits Jim describes the resulting mix shift has also helped improve our average revenue per subscriber.
We expect this space of interactive customers to grow as we add more Google products to our portfolio.
Yeah.
CSP adjusted EBITDA increased by more than $40 million, representing the largest contribution to our overall improvement.
This was driven by the higher revenue combined with strong cost performance.
A key driver of this cost performance was the virtual service initiative, Jim mentioned, which allowed us to service, our growing and increasingly interactive customer base, while keeping our service costs relatively flat.
We are also seeing continued improving performance in our commercial segment.
First quarter commercial revenue grew by 9% to $290 million with increases in both installation in monitoring and services revenue.
We have continued to recover from COVID-19 challenges and capture market share as conditions have improved.
Commercial adjusted EBITDA was up slightly as these higher revenues were offset by some inflation driven challenges on parts labor and fuel.
The commercial team has moved quickly to take actions to offset much of this inflation.
Our new solar business also delivered strong results in the first full quarter since our December acquisition of some growth with revenue of $192 million and adjusted EBITDA of $17 million.
Solar installation revenue included a 30 million dollar headwind from the amortization of the pre acquisition backlog, which will not affect the subsequent quarters.
Light commercial solar has moved quickly to recover cost inflation pressures.
As Jim described we are pleased with some early indicators of cross selling opportunities and we remain very excited about our new solar business as we continue to integrate within our ADT ecosystem.
Turning to cash flow and the balance sheet.
Adjusted free cash flow was negative $42 million, which was slightly better than our internal plan for the quarter.
We remain on track for our full year guidance for adjusted free cash flow. In addition to our guidance for adjusted EBITDA and revenue.
Our quarterly cash flows are uneven for a variety of reasons, including especially the timing of interest payments, which are much higher in the first and third quarters.
Additionally, this year's first quarter included the effects of a variety of working capital and timing items, including our annual incentive compensation payments.
We expect second quarter, adjusted free cash flow to be around $200 million higher than the first quarter about half of which is due to lower interest payments.
We remain very comfortable with our capital structure and our liquidity overall.
Our next significant maturity is our 700 million dollar first lien notes due next year.
We plan to access the capital markets later, this year to refinance that debt with the exact timing amount and structure dependent upon market conditions.
As a reminder, we plan to reduce our net debt by $1 billion by 2025.
Before concluding I wanted to touch on a couple of noncash items.
Our depreciation and amortization expense was up slightly in the quarter as we have grown our business.
However, we expect year over year reductions of $50 million to $75 million for each of the next four quarters.
This is the result of the roll off of intangible assets acquired in 2015, and 2016 transactions associated with Apollo's acquisitions of protection, one and ADT.
Additionally, our GAAP interest expense was down year over year with the decline driven by mark to market adjustments on our interest rate swaps, which have increased in value with rising rates.
The resulting $145 million reduction to interest expense net of the associated tax effects drove our first quarterly GAAP profit since 2017.
To conclude I want to reiterate that we are executing on this strategy and committed to delivering the financial targets, we laid out during our investor day in March.
Well the only a couple of months have passed we were very pleased with the progress we made in the first quarter of this year as we continue to balance near term results with building for the longer term.
I want to add my thanks to all the ADT employees dealers suppliers customers communities and investors who have enabled our progress.
Thank you for joining our call.
And thank you for your support of our company.
Operator, please open the call for questions.
And at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue you.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
And our first question comes from the line of George Tong with Goldman Sachs. Please proceed with your question.
Hi, Thanks, good morning.
Can you discuss how you're seeing inflation impact the business and then steps that you're taking to mitigate the impact I know your.
Rolling out virtual services, which should help drive some savings and then pricing as well.
Maybe if you can elaborate on those factors that'd be great.
Yeah.
Hey, George this is Jeff so it's like like all companies, we're working our way through the macro environment and navigating inflation, especially part parts labor fuel managing it quite well in our residential business, where we're we have a smaller number of.
Hughes and very strong relationships with a more concentrated number of suppliers, it's more more complicated and challenging in our commercial business, where we have much much longer tail of lower volume parts with a much greater number of suppliers, so more more challenging there and ER and then.
Our solar business of course of course is new and subject to the same pressures we were navigating it with a host of actions, including qualifying alternate suppliers in number of cases, and including having a strategically built some inventory and then including some actions that we've taken to to attempt to pass along some of them.
Those challenges on the pricing and other actions. So it's a it's a challenge for sure are spending a lot more time on it than we were a year and certainly compared to two years ago, but we think we're navigating it well.
What kind of George when I come in so it's Jim here My comments, there, Jeff, but I'll just share a couple of other things quickly.
We have already taken price actions and solar.
And taken price actions in in commercial to Jeff's point the markets are that the markets are absorbing those increases and we've not had any impact from a growth or retention perspective.
Very helpful context, and then secondly, with respect to the Google partnership you talked about rolling out the doorbell earlier in January you have the mesh Wifi launched several weeks ago, and then indoor outdoor cameras. They come in through Q can you discuss what you have planned.
Beyond <unk> what are the next major milestones for the Google partnership and how would you expect that to impact your operating and financial performance.
Yeah, So I'll share some perspective on on Google Overall, and then and then get specifically to your question George.
We feel great about our relationship with Google We had earlier expanded our home automation product set with the hub and hub Max and voice assistant.
The Google video Doorbell was launched in January we have an attachment rate that is approaching 50% are we just launched the mesh Wi Fi product.
Specific to your question indoor and outdoor cameras will be next will launch those in Q3, and then I'll mentioned as a reminder, we're going to be going to market co branded with Google Our marketing teams are already working together on some odd creative.
And then on the engineering front, both organizations are working toward a full integration with our next generation App and technology platform that will have in 2023, but the next milestone for us will be some work we're looking for.
Florida co branding and Ah the cameras in Q3.
Got it very helpful. Thank you.
Thank you.
Yeah.
Our next question comes from the line of Pete Christiansen with Citi. Please proceed with your question.
Good morning, Thanks for the question really nice trends here guys.
Tim I was just wondering is it on the on the attrition number coming down and any recent attribution you know deeper in the numbers. There that gives you confidence that the value proposition transformation is really occurring.
That would be helpful and then.
A follow up the virtual service ticket number looked really really good.
And certainly great traction towards your goal of of of targeting a 40% increase in virtual service tickets overall, how do you think about that feature of changing the labor intensity of the business.
Going forward or maybe longer term. Thank you.
Pete I'll take the first question.
Person and then Don young.
Who's leading the efforts around virtual service will take your question on on the service front I'm attrition yeah, we can.
We feel great about it and ended the quarter at $12 nine a decrease of 20 Bips. That's an all time record for ADT, we see continued momentum.
We know that the more customers use the system the higher the retention we know the more customers invest in our system are the higher the retention well, we know that our interactive customers retain at a higher rate and all of those trends bode well for us we're getting more sophisticated in our save efforts reactor.
Lee and proactively.
And then Theres. Some lead indicators that are that are positive are the mix of credit scores. Our service backlog is at a historical low.
So I you know retention is going to move around from quarter to quarter, but we're long term bullish about the metrics and we think that there's just a whole host of positive trends that should serve as a tailwind for us.
Yeah.
So Pete this is Don on the virtual side hard not to get excited about this it was really born out of necessity last year, one when our cost we're exceeding our plan.
We leaned into it slightly with basically a thousand virtual appointments per day were up to 4000 virtual appointments per day now are the reality is that the customers have a large appetite draw anything get immediate satisfaction, which is obvious but also education on how they can grow and enhance the value of their solutions.
Whether it's a safety or convenience.
Reality is that most of the problems that customers call us for are either door window sensors or broadband initiatives will both of those can be found easily get them trend in wireless equipment that we've been delivering to our customers over the years and all we need is access to their customers is in hand to resolve a problem remotely they don't.
Really want us in their home to resolve their problem. If it can be done satisfactorily a lot quickly without them.
And entering their home.
And literally this is just the launching pad at 4000, so a lot of other areas of the business that we could see ourselves doing virtually Ah and then really just kind of kick starting our our whole plan all along to digitize their experience.
He didn't dawn spreads.
It's beautiful equation there.
Did you say that the CSP segments up about almost 300 bps year over year in margin peripheral surfaces, the star and Edison.
Oh really.
Yeah.
That's great. Thank you guys nice execution.
Our next question comes from the line of.
Now she's so battery with RBC capital markets. Please proceed with your question.
Hi, This is Joe mazzoli filling in for Sheesh, maybe quickly on solar other installers are indicating strong demand for residential solar across the U S are largely driven by an increase in utility rates and homeowners desire for energy independence could you talk about the demand environment and any trends you're seeing there. Thanks.
Yeah. This is Jim that the so we're we're feeling really good about solar the team's fantastic. We're out of the gates nicely. We think that the demand is going to continue to be a catalyst for growth in this space, there's only 3.5% penetration.
And we think that we can get more than our fair share of the growth we.
We mentioned earlier that our first quarter was up 80% year over year versus legacy Sun Pro.
And we're just really just getting started we're beginning to rebrand for ADT solar we're at a point where about 20% of the sales volume is coming from ADT sources and are where we're going to be disciplined about our growth keep our eye on the customer, but we think that this.
There's going to be a very meaningful business for us and the and and the growth catalyst is real.
Yeah.
Great. Thank you and may be quickly on labor is there any other comments you could share on the hiring environment and perhaps what you're doing these days it seems like the virtual servicing will help but on the technician side and other hiring from it would be great to get an update there. Thanks.
But so we're seeing some inflationary pressure.
From Labor I would say, it's not material at this time labor and staffing overall are absolutely a focus area for US yeah, we're seeing in the marketplace record turnover job vacancies across the country. It's obviously a tight labor market like like many employers.
We're working through talent acquisition strategies across a broad range of our positions.
Where we're focused also on training because that's part of the equation. It's not just a lack of candidates, but its a lack of candidates with the skill set that we need were helped by the fact that our employee turnover is actually down this year versus last year about 400 basis points.
And are we are just beginning to look at some off shoring off for some of our more transactional.
<unk> rules that.
That will provide us some savings, but the real driver for that decision is access to talent. So net net net we're.
Talent labor shortages are on our radar screen talent acquisition, and ensuring we have an attractive <unk>.
<unk> value proposition has never been more important and the inflationary pressure is is real but we've been able to offset it at this point and it's not material at this time.
Great. Thanks for the color congratulations again on the strong results.
Yeah.
Our next question comes from the line of Philip Shen with Roth Capital Partners. Please proceed with your question.
Hey, guys. Thanks for taking my questions.
Yeah as a follow up in terms of solar.
There's this anti circumvention case out there.
With the threat of a potential retroactive tariffs.
And.
With that as well as LG pulling out of the module market I was wondering if you could talk through how your module supply looks for the rest of the year.
Yeah, Phil Thanks for the question. It's Jim. So we are now working with three different module manufacturing partners. We don't anticipate disruption in the supply chain are we've seen an increase in panels of about.
$20 per panel give or take 10% increase in costs.
On a at the end of Q1, we increased our prices in solar.
To to help absorb all the costs on the labor front and on the panel front are we think that its not had an impact on from a demand perspective. Our April was a record a record all time record sales month for us and in solar.
So we feel pretty good about about managing the supply chain and are absorbing absorbing the cost.
We are increasing prices to maintain our margins.
Great. Thanks, Jan and then you had a really nice.
And strong year over year growth in Q1, what kind of volume would you expect either revenue or megawatts or customers are to see in Q2, three and four.
What should we expect that.
Yeah. So we we had sort of intimated fill that we would be right around 800 million and in revenues.
For further business that in that that's about a 20% increase from 2021 for Sun, Paul obviously on the heels of a fantastic first quarter, we're feeling feeling really good about that our internal plans are obvious.
So the above 20%, we'll take it a quarter at a time, but couldn't couldn't be more bullish about the growth in solar.
And one thing I'd add to that.
Yeah that does.
In the prepared remarks is that we had some headwind from the one time purchase accounting, where we were not able to recognize some revenue that was for the backlog at time of them of the acquisition.
Our run rate supports.
You're getting getting too.
As Jim described and we're holding our guidance for now, but I'm very optimistic about about the trends we see in solar and then for that matter the rest of the business.
Great. Thanks, Yeah, one more if I may in terms of.
You had a nice improvement there year over year was wondering if you expect to see.
That 9% ish maintained for solar as we get through the rest of 'twenty two.
If you can get a strong first quarter, especially against some of those things.
In Q1.
So we're not giving yet.
Quarterly guidance.
For the full year I don't really like when we came out of the first part and that virtual service.
Some of the other initiatives that we have our increase in the margin.
And then ultimately topline stuff.
Remember that in Q1 as well so we like that combination.
And one thing I'd add to or really.
Really emphasize or reiterate is that you know, we're navigating a year to deliver.
The guidance that we shared but we're always making tradeoffs between between optimizing near term results and making the investments for the longer term. So that you know of course through its older navigated supply chain and some of the things we've talked about earlier through any true commercial through June .
He also.
Okay. Thanks, everyone I'll pass it on.
I think so.
Yeah.
Our next question comes from the line of Brian Rottenberg.
Capital. Please proceed with your question.
Great. Thank you very much first of all easy question attrition are at all time lows I believe unless I haven't been tracking more than 20 years is there have you ever had anything lower than 12, 9% in terms of attrition.
Yeah, I think that's a it's a record for us it's a I'll I'll also mention that as a gross attrition number. So our net attrition are you know give or take 200 5300 basis points better than that so you know we feel really good about it.
Okay.
So on Friday.
Three years in June for some reason, we looked at me and I felt like the old Guy in the room.
[laughter] I E is it that maintainable and improvable from those levels.
Yeah, we think so.
I mentioned earlier, it's not you know, it's not going to be linear, but they're the retention improvement was really across the board relocation a was a contributor our voluntary.
Losses are improved our loss to competition is better it's in all regions of the country, we've got a little bit of headwind on non paid but you know what.
Long term, we feel great about it Brian as you know the more a customer invest in a system the higher the retention rate and we're also at record levels for a customer investment upfront installation revenue per unit has never been higher so I think there's.
There's there's cause for optimism on on customer attention and you want one thing I'd add to that there's a different flavor on the point I was making earlier about balancing long term and shorter term as we talked about this often but you are IRR equation and that's really what we're focused on it's a combination of the margin rates in that way.
We're able to generate is how long we keep our customers are interested in flash retention and its how much it costs us to take on customers that sac efficiency. So if we were seeking to optimize any one of those measures we for sure to do so.
It's eating optimize overall ecosystems of weeks, we've made progress.
And we will continue to make progress in each of them, but I just want to emphasize that we're really focused on is generating strong returns on invested capital, including especially subscriber acquisition costs.
Great and then just switching subjects real quick can you give us some kind of update on the new initiatives like insurance and maybe talk about potential structures that may be too early for you to address that too much that you have.
Given evidence going down the road of the insurance a route and I believe that you're open to the idea maybe you can give us an update on what your thoughts are on that front.
Yeah, I you know it is solved.
Our very early for us on the insurance front I'd say, we're open to it it's not a priority.
Not not today anyway, the and and most likely the way that we would enter would be via partnerships.
As the selling as an exclusive agent or an independent agent or a N G E R.
Selling insurance on our own.
So if if we enter it would be you know would be be a partnership.
It wouldn't be a solo act and for now it's not a high priority for us.
Great. Thank you very much.
Thank you.
Yeah.
And our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.
Okay.
Hi, Good morning. This is actually running Kennedy on for Madonna. Thank you for taking the call on the question on the back of that question with regards to insurance just wondering if you could please give an update on some of the other partnerships more specifically canopy with Ford with D. H Horton et cetera, I'm, just an update on those.
Partnerships like we expected benefits ought to be.
Yeah. So.
You don't generally going well our relationship with Lyft continues to deepen a V. A partnership with D. R. Horton is going well that will be you know give or take about 100000 home builds over the next 12 months will convert something in the zone of 60%.
Of those we feel great about canopy, that's new for us.
For those of you are aware ADC and Ford are partnered to invest $150 million in a in a joint venture called canopy ER.
The intention is to service our support vehicle security and and that will involve both an aftermarket product and an integrated product both of which will be available in the first half of 2023.
So no I'm no material impact no impact at all in 'twenty, two but it will start to cut in in 'twenty, three and 'twenty four and thereafter.
It opens up a pretty significant new Tam for us and are the largest customer of canopy out of the gate will be Ford. So it's it's it's going to pay dividends long term.
Exciting new opportunity for us.
Thank you and then if I may as a follow up can you just comment on so secure the rollout of that potential benefits and any other noteworthy our innovation.
So I'll comment on some secure an offer Mike to anybody else that wants to comment on innovation. So secure his are a product that essentially provides virtual or virtual companion via G. P. S. In the phone.
We will be eventually integrating so secure into the application that customers use to control their homes the interactive.
We're calling ADT plus so I can control my life blocks doors, I can arm and disarm a system and I'll also have so secure embedded in that application. So.
So we think it's a really useful or add on feature for us helps differentiate our our application from everybody else.
Okay. Thank you and sorry, if I may please just sneak in one more could you comment on Adt's recession resiliency and your assessment of how you think ADT would perform.
If there were to be in a recession.
Yeah, we don't feel like we have a lot of characteristics that give us some recession resistance. One of course is just the recurring.
The recurring revenue base.
During times of recession, there's a variety of macro factors then that tend to move in our favor people tend to move less frequently which means that they they don't tend to cancel their accounts because they're moving often in recessions people tend to be more concerned about things like safety and security and then it's generally the case that if people.
Take peace of mind from having a security system, that's not in the first thing that they would cut in times of financial challenges. We've talked about this a lot and the whole time I've been with the company you talked about this a lot never having been through it but I would also offer that to the way in which we were able to navigate the challenges associated.
With with Covid and in 2020 and into 'twenty, one is almost a.
A proof point as it shows we were able to navigate through a challenging set of conditions favorably. So oh, what we're hoping to best for the overall macroeconomic conditions of course, but we think we're very well situated.
Maybe one other point I'd make too is that is that you are we have a lot of discretion in our capital allocation model. So even even if even if some of what I said earlier, we're not to play out the way I describe it not fully where you believe it will you know we we have levers at our disposal to manage our liquidity and nor are our financing and debt.
I mean, even if things were to take a turn and a more negative direction, but we feel really good overall.
Great. Thank you very much appreciate it.
Okay.
And we have reached the end of the question and answer session I'll now turn the call back over to Jim <unk> for closing remarks.
Okay I'd like to extend my appreciation to our ADT employees and dealers are we had a very strong quarter I'm proud of our collective efforts.
Thanks, as well to everyone joining our earnings call. This morning is as you've heard we're optimistic about continuing the year strong and are looking forward to the growth ahead have a great day everybody.
Yeah.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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