The ADT Corporation (NYSE:ADT) today reported its financial results for the first quarter of 2014. The Company reported diluted earnings per share of $0.39 for the first quarter of 2014. Excluding special items for the separation from Tyco, merger and restructuring costs, and 2G radio conversion costs, diluted earnings per share was $0.43 1. This compares to diluted earnings per share excluding special items of $0.44 1 in the first quarter of 2013. Using the Company’s cash tax rate, diluted earnings per share before special items was $0.66 1. Net income for the first quarter of 2014 was $77 million.
The Company reported recurring revenue, which made up 92% of total revenue in the quarter, of $775 million, up 4.2% compared to the same period last year. Recurring revenue growth was primarily driven by an increase in average revenue per customer, which rose 3.1% over last year to $40.63. The Company’s customer base grew by 0.7% compared to the same period last year, resulting in nearly 6.5 million customer accounts at quarter end. Net customer growth includes an increase in customer attrition, which rose 30 basis points sequentially to 14.2%. Total revenue of $839 million increased 3.7% compared to the first quarter of 2013.
EBITDA before special items was $426 million 1, 2.2% higher than the prior year, and EBITDA margin before special items was 50.8% 1, a 70 basis point decline. The year-over-year decrease in margins was primarily attributable to the increased costs associated with being a standalone public company and costs related to productivity investments.
The Company also reported steady-state free cash flow before special items, calculated on a pre-tax and unlevered basis, of $787 million 1.“We made progress on our priorities during the quarter, setting the stage for quality growth in the future,” said Naren Gursahaney, ADT’s Chief Executive Officer. “We grew recurring revenue and EBITDA, gained strong traction on Pulse and drove significant improvements in revenue growth in our Small Business channel. Customer growth did not meet our expectations this quarter and we have implemented actions, including improvements in our dealer channel and lead generation process, to regain subscriber traction in the future. Additionally, as we outlined in our analyst day meeting in December, we are accelerating actions to improve attrition and efficiency in our business as we drive toward our goals for 2014.”