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Investing.com -- Moody’s Ratings has changed ADT Inc.’s outlook to positive from stable while affirming its Ba3 corporate family rating, the credit rating agency announced Thursday.
The rating action reflects ADT’s solid operating performance, with good revenue growth prospects and strong free cash flow generation. Moody’s projects ADT will maintain organic recurring monthly revenue growth in the low-to-mid single digit percentage range and free cash flow to debt above 5% over the next 12-18 months.
Despite carrying a large debt burden, ADT effectively manages its maturities by staggering them annually and maintaining good access to capital markets. Moody’s expects ADT to use operating cash to repay the remaining $300 million of its 2026 notes by April 2026, which could lower debt to recurring monthly revenue to about 20x in 2026.
Apollo Global Management’s influence over ADT has diminished substantially, with its ownership declining to approximately 12% as of Thursday, down from nearly 40% at the end of 2024. The addition of new independent directors has strengthened board oversight.
Moody’s also upgraded ADT’s speculative grade liquidity rating to SGL-2 from SGL-3, citing approximately $45 million of unrestricted cash on hand as of June 30, expected annual free cash flow exceeding $550 million, and full access to an $800 million revolving credit facility due October 2029.
ADT, headquartered in Boca Raton, Florida, is the largest provider of residential alarm monitoring services in the United States. The company derives a substantial portion of its revenue from multi-year monitoring services contracts that provide a predictable and recurring revenue base.
Ongoing partnerships with Google Inc. and State Farm Life Insurance Company, which have become minority shareholders, continue to foster product development and innovation, supporting revenue growth and helping reduce subscriber acquisition costs and attrition.
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