Financial Performance - Q2 2022 - Revenue reached $487 million[11], while net income was $33 million[11] - Adjusted EBITDA stood at $77 million[11], a decrease from $114 million in Q2 2021[12] - Free Cash Flow was $75 million for the first six months of 2022[17] - Available liquidity amounted to $357 million, including $109 million of Unrestricted Cash and a $248 million undrawn revolving credit facility[15] Financial Performance - H1 2022 - Revenue increased to $838 million, a 6% year-over-year growth compared to $791 million in the first half of 2021[25] - Adjusted EBITDA was $102 million, down from $150 million in the same period of the previous year[26] Outlook - Q3 2022 revenue is projected to be between $470 million and $480 million, with an adjusted EBITDA between $65 million and $75 million[18] - Full-year 2022 revenue is expected to be between $163 billion and $165 billion, with an adjusted EBITDA between $170 million and $190 million[18] - Capital expenditures for the full year are estimated to be between $35 million and $45 million[18] Challenges and Opportunities - The company faces short-term challenges due to a historically challenging macroeconomic environment, including rapid increases in contractor-related costs and record low home inventory impacting the real estate channel[8] - Long-term opportunities exist in the growing demand for home services and the early stages of digital transformation in the industry[8]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to Commission file number 001-38617 ________________________________________________ Frontdoor, Inc. (Exact name of registrant as specified in its charter) Delaware 82-3871179 WASHINGTON, D.C. 20549 ________________________________________________ FORM 10-Q ________________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June ...

frontdoor. First-Quarter 2022 Earnings Webcast May 5, 2022 Today's Speakers Rex Tibbens President & Chief Executive Officer Brian Turcotte Senior Vice President & Chief Financial Officer Matt Davis Vice President Investor Relations & Treasurer 2 Forward Looking Statements This presentation 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 futu ...

Financial Performance - For the three months ended March 31, 2022, the company generated revenue of $351 million, net income of $2 million, and Adjusted EBITDA of $25 million, compared to $329 million, $5 million, and $36 million for the same period in 2021[86]. - Revenue for the three months ended March 31, 2022, was $351 million, a 7% increase from $329 million in the same period of 2021[111]. - Net income decreased by 69% to $2 million compared to $5 million in the prior year[122]. - Adjusted EBITDA was $25 million, down from $36 million, reflecting increased contract claims costs and higher operating expenses[123]. - Free cash flow for the three months ended March 31, 2022, was $39 million, down from $45 million in the same period of 2021, indicating a decline of approximately 13.3%[144]. Revenue Sources - 70% of the total operating revenue for Q1 2022 was derived from existing customer renewals, while 13% came from new home service plan sales related to real estate transactions and 13% from direct-to-consumer sales[87]. - Renewal revenue increased by $23 million (10%) to $247 million, while real estate revenue decreased by $11 million (20%) to $45 million[111]. Customer Metrics - The company had 2.2 million active home service plans across all 50 states and the District of Columbia as of March 31, 2022[85]. - The number of home service plans decreased by 3% to 2.19 million, and the customer retention rate declined to 74.1% from 75.1%[114]. - The company reported a customer retention rate calculated as the ratio of ending home service plans to the sum of beginning plans, new sales, and acquired accounts[106]. Cost and Expenses - Cost of services rendered rose to $207 million, an increase of 14% from $181 million, primarily due to inflationary pressures and contract claims costs[116]. - Selling and administrative expenses increased to $125 million, up 6% from $118 million, driven by higher sales and marketing costs[117]. Cash Flow and Liquidity - Cash and cash equivalents totaled $255 million as of March 31, 2022, down from $262 million at the end of 2021[127]. - Available liquidity was $340 million, consisting of $92 million in unrestricted cash and $248 million in borrowing capacity[127]. - Net cash provided from operating activities was $47 million for the three months ended March 31, 2022, compared to $52 million for the same period in 2021, reflecting a decrease of approximately 9.6%[137]. - Net cash used for investing activities was $8 million in Q1 2022, slightly higher than $7 million in Q1 2021[139]. - Net cash used for financing activities decreased significantly to $47 million in Q1 2022 from $105 million in Q1 2021, primarily due to reduced debt repayments[141]. Shareholder Actions - The company has repurchased 3,643,468 shares at an aggregate cost of $143 million under a three-year repurchase authorization of up to $400 million[130]. - Total shareholders' equity showed a deficit of $20 million as of March 31, 2022, compared to a surplus of $2 million as of December 31, 2021, primarily due to stock repurchases[146]. - The company repurchased a total of 3,643,468 outstanding shares at an aggregate cost of $143 million under its share repurchase program as of March 31, 2022[156]. Market Conditions - The ongoing COVID-19 pandemic has created uncertainty regarding its impact on the company's financial performance, with increased service-related costs expected due to higher home system usage[91]. - The company continues to monitor macroeconomic conditions, including inflation and labor availability, which may adversely affect demand for its services[89]. - The company is exposed to macroeconomic risks including inflation and global supply chain challenges, which could adversely impact future operations[147]. Operational Challenges - The company experienced challenges in customer retention due to industry-wide supply chain issues and inflation affecting contractor costs[95]. - Seasonal fluctuations significantly impact the company's revenue, with approximately 21% of revenue recognized in Q1 2021, driven by increased service requests during the pandemic[92]. - Deferred revenue increased during Q1 2022, reflecting a net contract liability related to customer revenue recognition[146]. Performance Metrics - Adjusted EBITDA margin is a key performance metric, defined as Adjusted EBITDA divided by revenue, which helps in comparing operating performance across periods[104]. - There were no material changes in internal control over financial reporting during the most recently completed fiscal quarter[150].

Financial Data and Key Metrics Changes - In 2021, the company achieved a revenue increase of 9%, marking the highest annual growth rate since going public, despite a 4% decline in real estate channel revenue [16][77] - Adjusted EBITDA rose by 11% to $300 million, with free cash flow exceeding $150 million [16][81] - The fourth quarter of 2021 saw a revenue increase of 5% to $340 million, driven by higher pricing and a shift to higher-priced products [50][92] Business Line Data and Key Metrics Changes - Revenue from the home service plan channels increased by 9% due to improved price realization and growth in renewed plans [78] - ProConnect revenue reached $23 million, while Streem generated $10 million in revenue for the year [80] - The real estate channel experienced a 4% decline in revenue, attributed to a lower number of home service plans sold [78] Market Data and Key Metrics Changes - The existing home sales market hit a 15-year high of 6.1 million units sold, but the company struggled to place products in real estate transactions due to low inventory levels [27][28] - The National Association of Realtors reported an all-time low of 850,000 unsold existing homes, equating to only 1.6 months of supply [28] - Forecasts for 2022 predict a 3% decline in existing home sales, continuing pressure on the real estate channel [29] Company Strategy and Development Direction - The company aims to enhance its digital-first service experience, focusing on remote diagnostics and troubleshooting [10][13] - Plans include expanding ProConnect and Streem to deepen market penetration and improve customer experience [11][12] - The company is committed to sustainability and has launched its first sustainability report, highlighting efforts to reduce environmental impact [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged inflationary pressures impacting financial performance, particularly in the second half of 2021 [18][54] - The company remains optimistic about long-term growth opportunities in the $500 billion home services industry [47] - Expectations for 2022 include revenue growth of approximately 6% to 8%, with a focus on dynamic pricing to mitigate inflationary costs [93][97] Other Important Information - The company repurchased over $100 million in shares as part of its strategy to return value to shareholders [17] - Full-year 2021 gross profit increased by 10% to $784 million, with a gross profit margin of 49% [81] - The company is targeting a mid-single-digit price increase in 2022 to address rising costs [68] Q&A Session Summary Question: Strategic priorities for capital allocation - Management emphasized the focus on growing demand in the core home service plan business and advancing technology platforms to enhance customer experience [105][106] Question: Impact of inflation on costs - Management discussed the significant rise in contractor costs and the impact of the Omicron variant on service requests, indicating a need for ongoing adjustments [109][110] Question: Scaling ProConnect and marketing learnings - The company plans to deepen service offerings in existing markets for ProConnect while leveraging marketing efficiencies across its channels [122][123]

Frontdoor, Inc. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) WASHINGTON, D.C. 20549 ________________________________________________ FORM 10-K ________________________________________________ For the transition period from to Commission file number 001-38617 ________________________________________________ Delaware 82-3871179 150 Peabody Place, Memphis, ...

Financial Performance - Q3 2021 - Revenue for Q3 2021 was $471 million[12], compared to $440 million in Q3 2020[23], representing a 7% year-over-year growth[23] - Net income for Q3 2021 was $76 million[12], compared to $49 million in Q3 2020[23] - Adjusted EBITDA for Q3 2021 was $122 million[12, 13], compared to $91 million in Q3 2020[13], a $31 million increase[25] - Free Cash Flow for the nine months ended September 30, 2021, was $119 million[18], compared to $127 million for the same period in 2020[37] Financial Performance - YTD 2021 - Revenue for the nine months ended September 30, 2021, was $1.263 billion[29], a 10% increase compared to $1.151 billion for the same period in 2020[29] - Net income for the nine months ended September 30, 2021, was $122 million[29], compared to $111 million for the same period in 2020[29] - Adjusted EBITDA for the nine months ended September 30, 2021, was $272 million[30], compared to $238 million for the same period in 2020[30] Outlook - Q4 2021 revenue is projected to be between $330 million and $340 million[20] - Q4 2021 Adjusted EBITDA is projected to be between $40 million and $45 million[20] - FY 2021 revenue is projected to be between $1.59 billion and $1.60 billion[21] - FY 2021 Adjusted EBITDA is projected to be between $310 million and $315 million[21]

Financial Data and Key Metrics Changes - Revenue increased by 7% year-over-year to $471 million, driven by higher pricing in home service plans and growth in ProConnect and Streem [26][30] - Gross profit rose by 18% to $254 million, with a gross profit margin of 54%, the highest in 15 years [31][32] - Adjusted net income increased by 55% to $78 million, and adjusted EBITDA was $122 million, exceeding guidance by over $20 million [32][46] Business Line Data and Key Metrics Changes - Revenue from customer renewals increased by 8% due to improved price realization and growth in renewed plans [27] - First-year real estate revenue decreased by 5% due to a decline in home service plans sold in a tight housing market [27] - Direct-to-consumer (D2C) channel revenue grew by 7%, attributed to improved pricing and the introduction of a new product mix [28][29] Market Data and Key Metrics Changes - The real estate market remains tight, with homes selling quickly and low inventory levels, impacting the sale of home service plans [14][15] - The D2C channel faced challenges due to lower customer demand and increased advertising costs, with a nearly 20% decline in internet search demand for home service plans [18][20] Company Strategy and Development Direction - The company aims to enhance customer experience through digital self-service options and a mobile-first strategy, including the launch of a new app [10][24] - Plans to expand into home maintenance and improvement services to attract a broader customer base [9] - The focus remains on balancing growth and profitability, particularly in the ProConnect business, while addressing challenges in the real estate channel [13][60] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about service request trends returning to pre-pandemic levels, with expectations for continued growth in the D2C channel [61] - The company anticipates ongoing challenges from inflation and supply chain disruptions, particularly affecting appliance trades [22][47] - A high single-digit revenue growth rate is projected for 2022, with expectations of continued pressure in the real estate channel [70][71] Other Important Information - The company has a solid liquidity position with $309 million in total cash and plans for a $400 million share repurchase program [41][42] - Adjusted EBITDA for the full year 2021 is expected to be between $310 million and $315 million, reflecting strong cost management [46] Q&A Session Summary Question: ProConnect revenue tracking and cost assumptions - Management confirmed ProConnect is on track to meet the $20 million revenue target, with expectations to double revenue in 2022 based on service mix [52][53] Question: Claims trends and expectations - Claims requests are trending close to pre-pandemic levels, with cautious optimism for Q4 and 2022 [60][61] Question: Labor shortages and inflation impact - Labor shortages are affecting contractors, but strong relationships with preferred providers are helping mitigate issues [66] Question: Revenue growth assumptions for 2022 - Revenue growth is expected to be similar to 2021, with challenges in the real estate channel anticipated [70][71] Question: Dynamic pricing impact on margins - Dynamic pricing contributed to improved margins, but process improvements and lower service requests were the main drivers [78][79] Question: Competitive environment and market share - The company believes its scale provides a competitive advantage, with opportunities for market share gains despite challenging conditions [87]

Financial Performance - For the three months ended September 30, 2021, the company generated revenue of $471 million, net income of $76 million, and Adjusted EBITDA of $122 million, compared to $440 million, $49 million, and $91 million for the same period in 2020[100]. - For the nine months ended September 30, 2021, total operating revenue was $1,263 million, with 69% derived from existing customer renewals, 16% from new home service plan sales related to real estate transactions, and 12% from direct-to-consumer sales[101]. - Adjusted EBITDA for the nine months ended September 30, 2021, was $272 million, up from $238 million in the same period of 2020[100]. - Revenue for the three months ended September 30, 2021, was $471 million, a 7% increase from $440 million in the same period of 2020[125]. - Revenue for the nine months ended September 30, 2021, reached $1,263 million, reflecting a 10% increase compared to $1,151 million in 2020[127]. - Renewal revenue for the three months ended September 30, 2021, was $328 million, an 8% increase from $303 million in 2020[126]. - Net income for the three months ended September 30, 2021, was $76 million, an increase of 55.1% compared to $49 million for the same period in 2020[146]. - Adjusted EBITDA for the three months ended September 30, 2021, was $122 million, up 34.1% from $91 million in 2020, driven by a $24 million increase in revenue[148]. Customer Metrics - The company had over two million active home service plans across all 50 states and the District of Columbia as of September 30, 2021[99]. - The number of home service plans as of September 30, 2021, was 2.23 million, with a customer retention rate of 74%, down from 76% in 2020[130]. - The company reported a customer retention rate calculated as the ratio of ending home service plans to the sum of beginning home service plans, new sales, and acquired accounts[120]. Market Conditions - Macroeconomic conditions, including home sales and consumer confidence, continue to affect customer spending patterns and overall financial performance[106]. - The company experienced increased appliance claims due to higher usage driven by customers spending more time at home during the COVID-19 pandemic, impacting costs and customer retention[109]. Operating Expenses - The company faces inflationary pressures on operating expenses, including contractor costs and employee wages, which may impact profitability[116]. - Cost of services rendered for the three months ended September 30, 2021, decreased to $217 million from $225 million in 2020[131]. - Selling and administrative expenses for the three months ended September 30, 2021, were $138 million, up from $129 million in 2020[134]. - Interest expense for the three months ended September 30, 2021, was $7 million, a 50% decrease from $14 million in 2020[142]. Debt and Financing - Loss on extinguishment of debt for the nine months ended September 30, 2021, was $31 million, primarily related to the redemption of debt[144]. - The company recorded a loss on extinguishment of debt of $30 million in the second quarter of 2021 due to the redemption of $634 million of the Prior Term Loan Facility[161]. - Net cash used for financing activities was $407 million for the nine months ended September 30, 2021, compared to $6 million in 2020[175]. - The company had $248 million of available borrowing capacity under the Amended Revolving Credit Facility as of September 30, 2021[156]. - As of September 30, 2021, future scheduled long-term debt payments total $636 million, with estimated payments for 2022 through 2026 being $4 million, $17 million, $17 million, $17 million, $17 million, and $205 million respectively[179]. - Estimated future interest payments total $118 million as of September 30, 2021, with annual estimates for 2022 through 2026 being $6 million, $24 million, $24 million, $23 million, $19 million, and $10 million respectively[179]. - The estimated debt balance at the end of each fiscal year from 2021 through 2026 is projected to decrease from $632 million to $359 million[179]. - The weighted-average interest rate on estimated debt balances is expected to range from 2.2% to 4.0% from 2021 to 2026[179]. - The company is exposed to market risks including interest rate changes, which are managed through a combination of variable-rate and fixed-rate debt[183]. Cash Flow and Equity - Cash and cash equivalents totaled $309 million as of September 30, 2021, down from $597 million as of December 31, 2020[156]. - Net cash provided from operating activities was $142 million for the nine months ended September 30, 2021, compared to $154 million for the same period in 2020[168]. - Capital expenditures for the nine months ended September 30, 2021, were $23 million, with expectations for full-year expenditures to be approximately $30 million to $35 million[172]. - The company announced a three-year repurchase authorization of up to $400 million of outstanding shares, with $25 million spent on repurchases as of September 30, 2021[162]. - Total shareholders' equity increased to a surplus of $62 million as of September 30, 2021, compared to a deficit of $61 million as of December 31, 2020, primarily driven by $122 million of net income generated during the nine months ended September 30, 2021[180]. - Cash and cash equivalents decreased during the nine months ended September 30, 2021, primarily due to debt payments and stock repurchases, offset by cash provided from operating activities[181]. - The company repurchased 542,227 shares at an average price of $46.11 per share, totaling an aggregate cost of $25 million under a three-year repurchase authorization of up to $400 million[191]. Revenue Sources - The company’s revenue is primarily generated from annual home service plan agreements, with revenue recognized over time based on the costs expected to be incurred[115]. - The increase in direct-to-consumer revenue for the nine months ended September 30, 2021, was driven by improved price realization and growth in first-year home service plans[128]. - The increase in other revenue was attributed to growth in ProConnect and Streem, contributing to overall revenue growth[126]. Deferred Revenue - Deferred revenue decreased during the nine months ended September 30, 2021, reflecting a decline in first-year real estate home service plans and a shift in customer payment mix[181]. - The company has no significant off-balance sheet arrangements as of September 30, 2021[180].

Frontdoor, Inc. (NASDAQ:FTDR) Q2 2021 Earnings Conference Call August 4, 2021 4:30 PM ET Company Participants Matt Davis - Vice President of Investor Relations & Treasurer Rex Tibbens - Chief Executive Officer Brian Turcotte - Chief Financial Officer Conference Call Participants Nick Cronin - Truist Securities Ian Zaffino - Oppenheimer Matthew Gaudioso - Compass Point Michael Ng - Goldman Sachs Robert Coolbrith - Wells Fargo Securities Operator Ladies and gentlemen, welcome to Frontdoor's Second Quarter 202 ...