Gross Profit Margin Rebounded 700 bps to 50%
in 2023; Record Net Income of $171 Million and Adjusted
EBITDA(1) of $346 Million; $120 Million Utilized to
Repurchase 3.6 Million Shares; Targeting Higher Revenue and
Adjusted EBITDA(1) in 2024
Frontdoor, Inc. (NASDAQ: FTDR), the nation’s leading provider of
home warranties, today announced fourth-quarter and full-year 2023
results.
Financial Results
Three Months Ended
Year Ended
December 31,
December 31,
$ millions (except as noted)
2023
2022
Change
2023
2022
Change
Revenue
$
366
$
339
8
%
$
1,780
$
1,662
7
%
Gross Profit
177
145
22
%
885
710
25
%
Net Income
9
8
4
%
171
71
141
%
Diluted Earnings per Share
0.11
0.10
6
%
2.12
0.87
144
%
Adjusted Net Income(1)
16
11
50
%
186
104
79
%
Adjusted Diluted Earnings per Share(1)
0.20
0.13
53
%
2.30
1.27
82
%
Adjusted EBITDA(1)
45
33
35
%
346
214
62
%
Home Warranties (number in millions)
2.00
2.13
(6)
%
Fourth-Quarter 2023 Summary
- Revenue increased 8% to $366 million
- Gross profit margin increased 570 basis points to
48%
- Net income of $9 million; Adjusted EBITDA(1)
increased $12 million to $45 million
Full-Year 2023 Summary
- Revenue increased 7% to $1.78 billion in a challenging
macroeconomic environment and was comprised of an 11% increase from
price that was partly offset by a 4% decline from lower
volume
- Gross profit margin expanded 700 basis points to 50% as a
result of higher realized price, milder weather, favorable cost
development, a transition to higher service fees, a lower number of
service requests per customer and continued process improvement
initiatives that was partly offset by inflationary cost
pressures
- Net income and Diluted Earnings per Share more than doubled
to $171 million and $2.12, respectively
- Adjusted EBITDA(1) increased 62% to a record $346
million
- Net cash provided from operating activities of $202 million;
Repurchased record $120 million of shares
Full-Year 2024 Outlook
- Revenue range of $1.81 billion to $1.84 billion
- Gross profit margin range of 48.5% to 49.5%
- Adjusted EBITDA(2) range of $350 million to $360
million
“Frontdoor delivered record financial performance in 2023,” said
Chairman and Chief Executive Officer Bill Cobb. “This is an
exceptional turnaround from when I started 21 months ago, and I
would like to thank our associates and contractors for their hard
work in achieving these results. In 2024, our top priority is to
grow revenue and reignite customer growth as we relaunch the
American Home Shield brand and expand our on-demand service
offerings. Looking beyond 2024, I am extremely optimistic about
Frontdoor’s future as we have several initiatives to drive growth,
our margins have stabilized, and we are building a strong
foundation that will benefit all of our stakeholders for years to
come.”
“We took decisive actions to improve execution and combat a
challenging macroeconomic environment, which resulted in gross
margins rebounding to the highest levels in nearly 10 years,” said
Chief Financial Officer Jessica Ross. “We have a strong and
resilient core business, and our 2024 outlook reflects modest
revenue growth, normalized margins and continued investments to
drive unit growth. We are confident in the fundamentals of our home
warranty business, and we are in the process of executing our
growth strategy from a position of strength.”
Fourth-Quarter 2023
Results
Revenue by Customer
Channel
Three Months Ended
December 31,
$ millions
2023
2022
Change
Renewals
$
285
$
254
12
%
Real estate (First-Year)
26
31
(15)
%
Direct-to-consumer (First-Year)
37
43
(14)
%
Other
18
12
55
%
Total
$
366
$
339
8
%
Fourth-quarter 2023 revenue increased 8% to $366 million, which
was comprised of a 15% increase from price that was partially
offset by a 7% decline from lower volume.
- Renewal revenue increased 12% due to improved price realization
that was partially offset by lower volume;
- Real estate revenue decreased 15% due to lower sales as a
result of the challenging real estate market that was partially
offset by improved price realization;
- Direct-to-consumer revenue decreased 14% due to lower sales,
which we believe was driven by a decline in overall category demand
for home warranties; and
- Other revenue increased $6 million due to higher on-demand home
services.
Fourth-quarter 2023 net income was $9 million, or diluted
earnings per share of $0.11.
Period-over-Period Adjusted
EBITDA(1) Bridge
$ millions
Three Months Ended December 31,
2022
$
33
Impact of change in revenue(3)
29
Contract claims costs(4)
4
Sales and marketing costs
(17
)
General and administrative costs
(6
)
Interest and net investment income
2
Other
(1
)
Three Months Ended December 31,
2023
$
45
Fourth-quarter 2023 Adjusted EBITDA(1) of $45 million increased
35% versus the prior year period, and includes:
- $29 million from higher revenue conversion(3), as price
increases were partly offset by lower volume;
- $4 million of lower contract claims costs(4), excluding the
impact of claims costs related to the change in revenue. The
decrease in contract claims costs reflects:
- A lower number of service requests per customer, including a
$10 million favorable impact from weather;
- A transition to higher service fees and continued process
improvement initiatives, specifically better cost management
efforts across our contractor network; partially offset by
- Ongoing inflationary cost pressures from our contractor
network, replacement parts and equipment; and
- Favorable claims cost development of $6 million, compared to a
$25 million favorable cost development in the fourth quarter of
2022; and
- $17 million of higher sales and marketing costs, primarily
investments to drive direct-to-consumer sales; and
- $6 million of higher G&A costs primarily due to increased
personnel costs.
Full-Year 2023 Results
Revenue by Customer
Channel
Year Ended
December 31,
$ millions
2023
2022
Change
Renewals
$
1,367
$
1,203
14
%
Real estate (First-Year)
141
184
(23)
%
Direct-to-consumer (First-Year)
194
219
(12)
%
Other
77
56
40
%
Total
$
1,780
$
1,662
7
%
Full-year 2023 revenue increased 7% to $1.78 billion, which was
comprised of an 11% increase from price that was partially offset
by a 4% decline from lower volume.
- Renewal revenue increased 14% due to improved price
realization;
- Real estate revenue decreased 23% due to lower sales as a
result of the challenging real estate market that was partially
offset by improved price realization;
- Direct-to-consumer revenue decreased 12% due to lower sales,
which we believe was driven by a decline in overall category demand
for home warranties; and
- Other revenue increased $22 million due to higher on-demand
home services.
Full-year 2023 net income increased 141% to $171 million;
diluted earnings per share increased 144% to $2.12.
Period-over-Period Adjusted
EBITDA(1) Bridge
$ millions
Year Ended December 31, 2022
$
214
Impact of change in revenue(3)
126
Contract claims costs(4)
52
Sales and marketing costs
(46
)
Customer service costs
6
General and administrative costs
(15
)
Interest and net investment income
13
Other
(4
)
Year Ended December 31, 2023
$
346
Full-year 2023 Adjusted EBITDA(1) of $346 million was $132
million higher than the prior year, and includes:
- $126 million from higher revenue conversion(3), as price
increases were partly offset by lower volume;
- $52 million of lower contract claims costs(4), excluding the
impact of claims costs related to the change in revenue. The
decrease in contract claims costs reflects:
- A lower number of service requests per customer, including a
$30 million impact from favorable weather;
- Favorable cost development of $11 million, compared to $12
million of unfavorable cost development in 2022; and
- A transition to higher service fees and continued process
improvement initiatives, specifically better cost management
efforts across our contractor network; partially offset by
- Ongoing inflationary cost pressures from our contractor
network, replacement parts and equipment.
- $46 million of higher sales and marketing costs primarily
related to the Frontdoor brand and investments in the
direct-to-consumer channel to drive sales;
- $15 million of higher G&A costs primarily due to increased
personnel costs; and
- $13 million of higher interest income as a result of higher
interest rates on cash deposits.
Cash Flow
Year Ended December
31,
$ millions
2023
2022
Net cash provided from (used
for):
Operating Activities
$
202
$
142
Investing Activities
(32
)
(35
)
Financing Activities
(137
)
(77
)
Cash increase during the period
$
34
$
29
Net cash provided from operating activities was $202 million for
the 12 months ended December 31, 2023 and was comprised of $242
million in earnings adjusted for non-cash charges, partially offset
by $7 million in payments for restructuring charges and $33 million
in cash used for working capital.
Net cash used for investing activities was $32 million for the
12 months ended December 31, 2023 and was primarily comprised of
capital expenditures related to technology projects.
Net cash used for financing activities was $137 million for the
12 months ended December 31, 2023 and was primarily comprised of
$121 million (including taxes and fees) to repurchase 3.6 million
shares, or 4% of outstanding shares, and scheduled debt
payments.
Free Cash Flow(1) was $170 million for the 12 months ended
December 31, 2023.
Cash as of December 31, 2023 was $325 million and was comprised
of $157 million of restricted net assets and $168 million of
Unrestricted Cash.
First-Quarter 2024 Outlook
- Revenue of $370 million to $380 million, reflecting
upper-single digit growth in the renewals channel, partially offset
by a 20% to 25% decline in the first-year real estate channel and
an approximately 20% decline in the first-year direct-to-consumer
channel. Additionally, other revenue is projected to increase
approximately $5 million.
- Adjusted EBITDA(2) of $40 million to $50 million, a decline
from the prior-year period as a result of increased marketing
investments to drive first-year direct-to-consumer customer
count.
Full-Year 2024 Outlook
- Revenue to grow approximately 2% to 3% to $1.81 billion to
$1.84 billion. Key assumptions include:
- A mid-single digit increase in renewals channel revenue;
- Approximately 10% decline in direct-to-consumer channel
revenue;
- A 15% to 20% decline in real estate channel revenue;
- Approximately 30% increase in other revenue, which is primarily
driven by the new HVAC program;
- The number of home warranties is expected to decline 1% to
3%.
- Gross profit margin of 48.5% to 49.5%, which reflects the
impact of reverting back to normal weather conditions, as well as a
slightly higher mix of on-demand services.
- SG&A of $580 million to $595 million, which is slightly
higher than the prior year due to normal cost inflation in general
and administrative expenses. Additionally, there is a shift in
marketing investments from the Frontdoor brand to American Home
Shield to support the brand relaunch.
- Adjusted EBITDA(2) of $350 million to $360 million.
- Capital expenditures of approximately $35 million to $45
million.
- Annual effective tax rate of approximately 25%.
2024 Share Repurchase Outlook
- The company is targeting full year share repurchases of
approximately $100 million.
Fourth-Quarter and Full-Year 2023 Earnings Conference
Call
Frontdoor has scheduled a conference call today, February 28,
2023, at 7:30 a.m. Central time (8:30 a.m. Eastern time). During
the call, Bill Cobb, Chairman and Chief Executive Officer, and
Jessica Ross, Chief Financial Officer, will discuss the company’s
operational performance and financial results for fourth-quarter
and full-year 2023 and respond to questions from the investment
community. To participate on the conference call, interested
parties should call 1-833-470-1428 (or international participants,
1-929-526-1599) and enter conference ID 840618. Additionally, the
conference call will be available via webcast which will include a
slide presentation highlighting the company’s results. To
participate via webcast and view the slide presentation, visit
Frontdoor’s investor relations home page. The call will be
available for replay for approximately 60 days. To access the
replay of this call, please call 1-866-813-9403 and enter
conference ID 708921 (international participants: +44-204-525-0658,
conference ID 708921).
About Frontdoor, Inc.
Frontdoor is reimagining how homeowners maintain and repair
their most valuable asset – their home. We bring over 50 years of
experience in providing our members with comprehensive options to
protect their homes from costly and unexpected breakdowns through
our extensive network of pre-qualified professional contractors.
American Home Shield, the category leader in home service plans
with approximately two million members, gives homeowners budget
protection and convenience, covering up to 23 essential home
systems and appliances. Frontdoor is a cutting edge, one-stop app
for home repair and maintenance. Enabled by our Streem technology,
the app empowers homeowners by connecting them in real time through
video chat with pre-qualified experts to diagnose and solve their
problems. The Frontdoor app also offers homeowners a range of other
benefits including DIY tips, discounts and more. For more
information about American Home Shield and Frontdoor, please visit
frontdoorhome.com.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
including, in particular, projected future performance and any
statements about Frontdoor’s plans, strategies and prospects.
Forward-looking statements can be identified by the use of
forward-looking terms such as “believe,” “expect,” “estimate,”
“could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,”
“project,” “will,” “shall,” “would,” “aim,” or other comparable
terms. These forward-looking statements are subject to known and
unknown risks and uncertainties, many of which may be beyond our
control. Such risks and uncertainties include, but are not limited
to: changes in macroeconomic conditions, including inflation and
global supply chain and political challenges, especially as they
may affect existing home sales, interest rates, consumer confidence
or labor availability; the success of our business strategies; the
ability of our marketing efforts to be successful or
cost-effective; our dependence on our real estate and
direct-to-consumer customer acquisition channels and our renewals
channel; changes in the source and intensity of competition in our
market; our ability to attract, retain and maintain positive
relations with third-party contractors and vendors; increases in
parts, appliance and home system prices, and other operating costs;
our ability to attract and retain qualified key employees and labor
availability in our customer service operations; our dependence on
third-party vendors, including business process outsourcers, and
third-party component suppliers; cybersecurity breaches,
disruptions or failures in our technology systems; our ability to
protect the security of personal information about our customers;
evolving corporate governance and disclosure regulations and
expectations related to environmental, social and governance
matters; lawsuits, enforcement actions and other claims by third
parties or governmental authorities; increases in tariffs or
changes to import/export regulations; physical effects of climate
change, adverse weather conditions and Acts of God, along with the
increased focus on sustainability; our ability to protect our
intellectual property and other material proprietary rights;
negative reputational and financial impacts resulting from
acquisitions or strategic transactions; requirement to recognize
impairment charges; third-party use of our trademarks as search
engine keywords to direct our potential customers to their own
websites; inappropriate use of social media by us or other parties
to harm our reputation; special risks applicable to operations
outside the United States by us or our business process outsource
providers; dependence on appreciation in our stock price for a
return on investment in our common stock; restrictions in our
certificate of incorporation related to an acquisition of us or to
our lawsuits against us or our directors or officers; the effects
of our significant indebtedness; increases in interest rates
increasing the cost of servicing our indebtedness; increased
borrowing costs due to lowering or withdrawal of the credit
ratings, outlook or watch assigned to us, our debt securities or
our credit facilities; and our ability to generate significant cash
needed to fund our operations and service our debt. We caution you
that forward-looking statements are not guarantees of future
performance or outcomes and that actual performance and outcomes,
including, without limitation, our actual results of operations,
financial condition and liquidity, and the development of new
markets or market segments in which we operate, may differ
materially from those made in or suggested by the forward-looking
statements contained in this news release. For a discussion of
other important factors that could cause Frontdoor’s results to
differ materially from those expressed in, or implied by, the
forward-looking statements included in this document, refer to the
risks and uncertainties detailed from time to time in Frontdoor’s
periodic reports filed with the SEC, including the disclosure
contained in Item 1A. Risk Factors in our 2022 Annual Report on
Form 10-K filed with the SEC, as such factors may be updated from
time to time in Frontdoor’s periodic filings with the SEC. Except
as required by law, Frontdoor does not undertake any obligation to
update or revise the forward-looking statements to reflect new
information or events or circumstances that occur after the date of
this news release or to reflect the occurrence of unanticipated
events or otherwise. Readers are advised to review Frontdoor’s
filings with the SEC, which are available from the SEC’s EDGAR
database at sec.gov, and via
Frontdoor’s website at frontdoorhome.com.
Non-GAAP Financial Measures
To supplement Frontdoor’s results presented in accordance with
accounting principles generally accepted in the United States
(“U.S. GAAP”), Frontdoor has disclosed the non-GAAP financial
measures of Adjusted EBITDA, Free Cash Flow, Adjusted Net Income,
Adjusted Diluted Earnings Per Share, and Unrestricted Cash.
We define "Adjusted EBITDA" as net income before depreciation
and amortization expense; goodwill and intangibles impairment;
restructuring charges; provision for income taxes; non-cash
stock-based compensation expense; interest expense; loss on
extinguishment of debt; and other non-operating expenses. We
believe Adjusted EBITDA is useful for investors, analysts and other
interested parties as it facilitates company-to-company operating
performance comparisons by excluding potential differences caused
by variations in capital structures, taxation, the age and book
depreciation of facilities and equipment, restructuring
initiatives, and equity-based, long-term incentive plans, and it is
a component of our incentive compensation program.
We define “Free Cash Flow” as net cash provided from operating
activities less property additions. Free Cash Flow is not a
measurement of our financial performance or liquidity under U.S.
GAAP and does not purport to be an alternative to net cash provided
from operating activities or any other performance or liquidity
measures derived in accordance with U.S. GAAP. Free Cash Flow is
useful as a supplemental measure of our liquidity. Management uses
Free Cash Flow to facilitate company-to-company cash flow
comparisons, which may vary from company-to-company for reasons
unrelated to operating performance.
We define “Adjusted Net Income” as net income before:
amortization expense; restructuring charges; loss on extinguishment
of debt; other non-operating expenses; and the tax impact of the
aforementioned adjustments. We believe Adjusted Net Income is
useful for investors, analysts and other interested parties as it
facilitates company-to-company operating performance comparisons by
excluding potential differences caused by items listed in this
definition.
We define “Adjusted Diluted Earnings per Share” as Adjusted Net
Income divided by the weighted-average diluted common shares
outstanding.
We define “Unrestricted Cash” as cash not subject to third-party
restrictions. For additional information related to our third-party
restrictions, see “Liquidity and Capital Resources — Liquidity”
under the heading “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our 2022 Annual
Report on Form 10-K filed with the SEC.
See the schedules attached hereto for additional information and
reconciliations of such non-GAAP financial measures. Management
believes these non-GAAP financial measures provide useful
supplemental information for its and investors’ evaluation of
Frontdoor’s business performance and are useful for
period-over-period comparisons of the performance of Frontdoor’s
business. While we believe that these non-GAAP financial measures
are useful in evaluating our business, this information should be
considered as supplemental in nature and is not meant to be
considered in isolation or as a substitute for the related
financial information prepared in accordance with U.S. GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly entitled measures reported by other companies.
© 2024 Frontdoor, Inc. All rights reserved. The following terms,
which may be used in this press release, are trademarks of
Frontdoor, Inc. and its subsidiaries: Frontdoor®, American Home
Shield®, HSA™, OneGuard®, Landmark Home Warranty®, Streem®, the
Streem logo and the Frontdoor logo. All other trademarks used
herein are the property of their respective owners.
(1)
See “Reconciliations of Non-GAAP Financial
Measures” accompanying this release for a reconciliation of
Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted
Diluted Earnings per Share, each a non-GAAP measure, to the nearest
GAAP measure. See “Non-GAAP Financial Measures” included in this
release for descriptions of calculations of these measures. Amounts
presented in the reconciliations and other tables presented herein
may not sum due to rounding.
(2)
A reconciliation of the forward-looking
first-quarter and full-year 2024 Adjusted EBITDA outlook to net
income cannot be provided without unreasonable effort because of
the inherent difficulty of accurately forecasting the occurrence
and financial impact of the various adjusting items necessary for
such reconciliation that have not yet occurred, are out of our
control, or cannot be reasonably predicted. For the same reasons,
the company is unable to assess the probable significance of the
unavailable information, which could have a material impact on its
future GAAP financial results.
(3)
Revenue conversion includes the impact of
the change in the number of home warranties as well as the impact
of year-over-year price changes. The impact of the change in the
number of home warranties considers the associated revenue on those
plans less an estimate of contract claims costs based on margin
experience in the prior year period.
(4)
Contract claims costs includes the impact
of changes in service request incidence, inflation and other
drivers associated with the number of home warranties in the prior
year period. The impact on contract claims costs resulting from
year-over-year changes in the number of home warranties is included
in revenue conversion above.
Frontdoor, Inc.
Consolidated Statements of
Operations and Comprehensive Income (Unaudited)
(In millions, except per share
data)
Year Ended
December 31,
2023
2022
2021
Revenue
$
1,780
$
1,662
$
1,602
Cost of services rendered
895
952
818
Gross Profit
885
710
784
Selling and administrative expenses
581
521
511
Depreciation and amortization expense
37
34
35
Goodwill and intangibles impairment
—
14
—
Restructuring charges
16
20
3
Interest expense
40
31
39
Interest and net investment income
(16
)
(4
)
(1
)
Loss on extinguishment of debt
—
—
31
Income before Income Taxes
229
93
168
Provision for income taxes
57
22
39
Net Income
$
171
$
71
$
128
Other Comprehensive (Loss) Income, Net
of Income Taxes:
Unrealized (loss) gain on derivative
instruments, net of income taxes
(3
)
27
15
Total Other Comprehensive (Loss)
Income, Net of Income Taxes:
(3
)
27
15
Comprehensive Income
$
169
$
98
$
143
Earnings per Share:
Basic
$
2.13
$
0.87
$
1.51
Diluted
$
2.12
$
0.87
$
1.50
Weighted-average Common Shares
Outstanding:
Basic
80.5
81.8
85.1
Diluted
80.9
82.0
85.5
Frontdoor, Inc.
Consolidated Statements of
Financial Position (Unaudited)
(In millions, except share
data)
As of
December 31,
2023
2022
Assets:
Current Assets:
Cash and cash equivalents
$
325
$
292
Receivables, less allowance of $5 and $4,
respectively
6
5
Prepaid expenses and other current
assets
32
33
Total Current Assets
363
330
Other Assets:
Property and equipment, net
60
66
Goodwill
503
503
Intangible assets, net
143
148
Operating lease right-of-use assets
3
11
Deferred customer acquisition costs
12
16
Other assets
5
8
Total Assets
$
1,089
$
1,082
Liabilities and Shareholders'
Equity:
Current Liabilities:
Accounts payable
$
76
$
80
Accrued liabilities:
Payroll and related expenses
38
22
Home warranty claims
76
103
Other
22
21
Deferred revenue
102
121
Current portion of long-term debt
17
17
Total Current Liabilities
331
364
Long-Term Debt
577
592
Other Long-Term Liabilities:
Deferred tax liabilities, net
25
39
Operating lease liabilities
16
18
Other long-term liabilities
5
8
Total Other Long-Term Liabilities
46
65
Shareholders' Equity:
Common stock, $0.01 par value;
2,000,000,000 shares authorized; 86,553,387 shares issued and
78,378,511 shares outstanding as of December 31, 2023 and
86,079,773 shares issued and 81,517,243 shares outstanding as of
December 31, 2022
1
1
Additional paid-in capital
117
90
Retained earnings
296
124
Accumulated other comprehensive income
6
8
Less treasury stock, at cost; 8,174,876
shares as of December 31, 2023 and 4,562,530 shares as of December
31, 2022
(283
)
(162
)
Total Shareholders' Equity
136
61
Total Liabilities and Shareholders'
Equity
$
1,089
$
1,082
Frontdoor, Inc.
Consolidated Statements of
Cash Flows (Unaudited)
(In millions)
Year Ended
December 31,
2023
2022
2021
Cash and Cash Equivalents at Beginning
of Period
$
292
$
262
$
597
Cash Flows from Operating
Activities:
Net Income
171
71
128
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization expense
37
34
35
Deferred income tax benefit
(13
)
(10
)
(2
)
Stock-based compensation expense
26
22
25
Goodwill and intangibles impairment
—
14
—
Restructuring charges
16
20
3
Payments for restructuring charges
(7
)
(5
)
(2
)
Loss on extinguishment of debt
—
—
31
Other
6
1
5
Changes in working capital:
Receivables
—
2
(2
)
Prepaid expenses and other current
assets
(1
)
(3
)
—
Accounts payable
(4
)
15
10
Deferred revenue
(19
)
(35
)
(32
)
Accrued liabilities
(7
)
10
(6
)
Accrued interest payable
—
—
(9
)
Current income taxes
(1
)
6
1
Net Cash Provided from Operating
Activities
202
142
185
Cash Flows from Investing
Activities:
Purchases of property and equipment
(32
)
(40
)
(31
)
Other investing activities
—
4
—
Net Cash Used for Investing
Activities
(32
)
(35
)
(31
)
Cash Flows from Financing
Activities:
Borrowings of debt, net of discount
—
—
638
Repayments of debt
(17
)
(17
)
(994
)
Debt issuance cost paid
—
—
(8
)
Call premium paid on retired debt
—
—
(21
)
Repurchase of common stock
(121
)
(59
)
(103
)
Other financing activities
1
(2
)
(1
)
Net Cash Used for Financing
Activities
(137
)
(77
)
(489
)
Cash Increase (Decrease) During the
Period
34
29
(335
)
Cash and Cash Equivalents at End of
Period
$
325
$
292
$
262
Reconciliations of Non-GAAP
Financial Measures
The following table presents
reconciliations of net income to Adjusted Net Income.
Three Months Ended
Year Ended
December 31,
December 31,
($ millions, except per share
amounts)
2023
2022
2023
2022
Net Income
$
9
$
8
$
171
$
71
Amortization expense
1
1
4
7
Goodwill and intangibles impairment
—
—
—
14
Restructuring charges
9
2
16
20
Tax impact of adjustments
(2
)
(1
)
(5
)
(8
)
Adjusted Net Income
$
16
$
11
$
186
$
104
Adjusted Earnings per Share:
Basic
$
0.21
$
0.13
$
2.31
$
1.27
Diluted
$
0.20
$
0.13
$
2.30
$
1.27
Weighted-average common shares
outstanding:
Basic
79.1
81.5
80.5
81.8
Diluted
79.7
81.7
80.9
82.0
The following table presents
reconciliations of net cash provided from operating activities to
Free Cash Flow.
Three Months Ended
Year Ended
December 31,
December 31,
($ millions)
2023
2022
2023
2022
Net Cash Provided from Operating
Activities
$
63
$
62
$
202
$
142
Property Additions
(9
)
(10
)
(32
)
(40
)
Free Cash Flow
$
54
$
52
$
170
$
102
The following table presents
reconciliations of net income to Adjusted EBITDA.
Three Months Ended
Year Ended
December 31,
December 31,
(In millions)
2023
2022
2023
2022
Net Income
$
9
$
8
$
171
$
71
Depreciation and amortization expense
9
9
37
34
Goodwill and intangible impairment
—
—
—
14
Restructuring charges
9
2
16
20
Provision for income taxes
3
—
57
22
Non-cash stock-based compensation
expense
5
5
26
22
Interest expense
10
9
40
31
Adjusted EBITDA
$
45
$
33
$
346
$
214
Key Business Metrics
As of December 31,
2023
2022
Number of home warranties (in
millions)
2.00
2.13
Renewals
1.53
1.56
First-Year Direct-To-Consumer
0.27
0.32
First-Year Real Estate
0.19
0.25
Reduction in number of home warranties
(6)
%
(4)
%
Customer retention rate(1)
76.2
%
75.7
%
(1) Customer retention rate is presented
on a rolling 12-month basis in order to avoid seasonal
anomalies.
Source: Frontdoor, Inc. FTDR-Financial
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228455977/en/
Investor Relations: Matt Davis 901.701.5199
ir@frontdoorhome.com
Media: Tom Collins 901.701.5198
mediacenter@frontdoorhome.com
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