Company Quick10K Filing
frontdoor
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 85 $3,675
10-Q 2019-11-06 Quarter: 2019-09-30
10-Q 2019-08-08 Quarter: 2019-06-30
10-Q 2019-05-09 Quarter: 2019-03-31
S-1 2019-03-01 Public Filing
10-K 2019-02-28 Annual: 2018-12-31
8-K 2019-11-05 Earnings, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-04-29 Officers, Shareholder Vote, Exhibits
8-K 2019-03-20 Other Events
8-K 2019-02-27 Earnings, Exhibits
FTDR 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Significant Accounting Policies
Note 3. Revenue
Note 4. Goodwill and Intangible Assets
Note 5. Leases
Note 6. Income Taxes
Note 7. Spin-Off Charges
Note 8. Commitments and Contingencies
Note 9. Related Party Transactions
Note 10. Stock-Based Compensation
Note 11. Long-Term Debt
Note 12. Supplemental Cash Flow Information
Note 13. Cash and Marketable Securities
Note 14. Comprehensive Income (Loss)
Note 15. Derivative Financial Instruments
Note 16. Fair Value Measurements
Note 17. Earnings per Share
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 ftdr-20190930xex31_1.htm
EX-31.2 ftdr-20190930xex31_2.htm
EX-32.1 ftdr-20190930xex32_1.htm
EX-32.2 ftdr-20190930xex32_2.htm

frontdoor Earnings 2019-09-30

FTDR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
AER 5,761 43,209 34,328 0 0 0 0 33,853 0%
ADT 4,517 16,977 13,087 4,861 0 -556 1,388 14,284 0% 10.3 -3%
AL 4,457 20,484 15,184 1,838 0 551 1,637 17,166 0% 10.5 3%
AAN 4,201 3,180 1,331 3,926 445 204 280 4,101 11% 14.6 6%
JOBS 3,731 12,238 4,420 0 0 0 0 1,757 0%
FTDR 3,675 1,179 1,457 1,315 633 139 260 4,237 48% 16.3 12%
ABM 2,432 3,744 2,240 6,499 719 89 253 3,296 11% 13.0 2%
TRTN 2,426 9,996 7,659 93 20 346 1,291 9,471 22% 7.3 3%
KFY 2,163 2,407 1,142 1,992 0 187 295 1,962 0% 6.7 8%
AYR 1,543 8,634 6,613 921 0 206 818 6,535 0% 8.0 2%

ftdr-20190930x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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 September 30, 2019

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 001-36507

________________________________________________

Picture 1

frontdoor, inc.

(Exact name of registrant as specified in its charter)

Delaware

82-3871179

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

150 Peabody Place, Memphis, Tennessee 38103

(Address of principal executive offices) (Zip Code)

901-701-5002

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common stock, par value $0.01 per share

FTDR

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o  No  x

The number of shares of the registrant’s common stock outstanding as of November 1, 2019: 84,663,282 shares of common stock, par value $0.01 per share.


frontdoor, inc.

Quarterly Report on Form 10-Q

GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS

In order to aid the reader, we have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q below:

Term/Abbreviation

Definition

2018 Form 10-K

frontdoor, inc. Annual Report on Form 10-K for the year ended December 31, 2018

2026 Notes

6.750% senior notes in the aggregate principal amount of $350 million

AOCI

Accumulated other comprehensive income or loss

ASC

FASB Accounting Standards Codification

ASC 606

ASC Topic 606, Revenue from Contracts with Customers

ASC 740

ASC Topic 740, Income Taxes

ASC 842

ASC Topic 842, Leases

ASU

FASB Accounting Standards Update

ASU 2016-02

ASU 2016-02, Leases (Topic 842)

ASU 2016-13

ASU 2016-13, Financial Instruments–Credit Losses (Topic 326)

ASU 2018-15

ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Code

Internal Revenue Code of 1986, as amended

Credit Agreement

The agreements governing the Term Loan Facility and the Revolving Credit Facility

Credit Facilities

The Term Loan Facility together with the Revolving Credit Facility

ESPP

frontdoor, inc. 2019 Employee Stock Purchase Plan

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

U.S. Financial Accounting Standards Board

HVAC

Heating, ventilation and air conditioning

Indenture

The indenture and supplemental indenture between Frontdoor and Wilmington Trust, National Association as trustee, that governs the 2026 Notes

IRS

Internal Revenue Service

Omnibus Plan

frontdoor, inc. 2018 Omnibus Incentive Plan

Parent or ServiceMaster

ServiceMaster Global Holdings, Inc.

Revolving Credit Facility

$250 million revolving credit facility

SEC

U.S. Securities and Exchange Commission

Securities Act

Securities Act of 1933, as amended

Term Loan Facility

$650 million senior secured term loan facility

U.S.

United States of America

U.S. GAAP

Accounting principles generally accepted in the U.S.

The following terms in this Quarterly Report on Form 10-Q are our trademarks: frontdoor, American Home Shield®, HSA®, OneGuard®, Landmark® and the frontdoor logo.

 


TABLE OF CONTENTS

Page
No.

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated and Combined Statements of Operations and Comprehensive Income

3

Condensed Consolidated Statements of Financial Position

4

Condensed Consolidated and Combined Statements of Changes in (Deficit) Equity

5

Condensed Consolidated and Combined Statements of Cash Flows

6

Notes to Condensed Consolidated and Combined Financial Statements

7

Cautionary Statement Concerning Forward-Looking Statements

20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3. Quantitative and Qualitative Disclosures About Market Risk

35

Item 4. Controls and Procedures

35

Part II. Other Information

Item 1. Legal Proceedings

36

Item 1A. Risk Factors

36

Item 6. Exhibits

37

Signature

38

 

2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated and Combined Statements of Operations and Comprehensive Income (Unaudited)

(In millions, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Revenue

$

407

$

377

$

1,065

$

979

Cost of services rendered

201

202

526

532

Gross Profit

206

176

539

448

Selling and administrative expenses

104

90

297

259

Depreciation and amortization expense

6

5

18

14

Restructuring charges

3

Spin-off charges

8

1

23

Affiliate royalty expense

1

1

Interest expense

16

7

47

7

Interest income from affiliate

(2)

Interest and net investment income

(2)

(5)

(1)

Income before Income Taxes

82

65

180

143

Provision for income taxes

21

16

46

36

Net Income

$

61

$

49

$

134

$

108

Other Comprehensive Income (Loss), Net of Income Taxes:

Net unrealized gain on securities

Net unrealized loss on derivative instruments

(3)

(16)

Other Comprehensive Loss, Net of Income Taxes

(3)

(15)

Total Comprehensive Income

$

57

$

49

$

119

$

108

Earnings per Share:

Basic

$

0.72

$

0.58

$

1.59

$

1.28

Diluted

$

0.72

$

0.58

$

1.58

$

1.28

Weighted-average Common Shares Outstanding:

Basic

84.7

84.5

84.6

84.5

Diluted

84.9

84.5

84.8

84.5

See accompanying Notes to the unaudited Condensed Consolidated and Combined Financial Statements


3


Condensed Consolidated Statements of Financial Position (Unaudited)

(In millions, except share data)

As of

September 30,

December 31,

2019

2018

Assets:

Current Assets:

Cash and cash equivalents

$

425

$

296

Marketable securities

7

9

Receivables, less allowance of $2 in each period

8

12

Contract asset

37

Prepaid expenses and other assets

12

13

Total Current Assets

489

330

Other Assets:

Property and equipment, net

49

47

Goodwill

477

476

Intangible assets, net

155

158

Operating lease right-of-use assets

17

Deferred customer acquisition costs

18

21

Other assets

11

10

Total Assets

$

1,217

$

1,041

Liabilities and Shareholders' Equity:

Current Liabilities:

Accounts payable

$

55

$

41

Accrued liabilities:

Payroll and related expenses

15

10

Home service plan claims

78

67

Interest payable

3

9

Other

35

26

Deferred revenue

180

185

Current portion of long-term debt

7

7

Total Current Liabilities

373

345

Long-Term Debt

974

977

Other Long-Term Liabilities:

Deferred taxes

37

39

Operating lease liabilities

20

Other long-term obligations

31

24

Total Other Long-Term Liabilities

89

63

Commitments and Contingencies (Note 8)

 

 

Shareholders' Equity:

Common stock, $0.01 par value; 2,000,000,000 shares authorized; 84,657,602 shares issued and outstanding at September 30, 2019 and 84,545,152 shares issued and outstanding at December 31, 2018

1

1

Additional paid-in capital

8

1

Accumulated deficit

(202)

(336)

Accumulated other comprehensive loss

(25)

(9)

Total Deficit

(219)

(344)

Total Liabilities and Shareholders' Equity

$

1,217

$

1,041

See accompanying Notes to the unaudited Condensed Consolidated and Combined Financial Statements

4


Condensed Consolidated and Combined Statement of Changes in (Deficit) Equity (Unaudited)

(In millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net Parent Investment

Balance at beginning of period

$

$

657

$

$

661

Net income

49

108

Stock-based employee compensation

1

3

Adoption of ASC 606

2

Net transfers to Parent

(147)

(213)

Non-cash debt exchange with Parent

(1,000)

(1,000)

Balance at end of period

(439)

(439)

Common Stock

Balance at beginning of period

1

1

Balance at end of period

1

1

Additional Paid-in Capital

Balance at beginning of period

6

1

Stock-based employee compensation

2

7

Balance at end of period

8

8

Accumulated Deficit

Balance at beginning of period

(263)

(336)

Net income

61

134

Balance at end of period

(202)

(202)

Accumulated Other Comprehensive Loss

Balance at beginning of period

(21)

(9)

Other comprehensive loss, net of tax

(3)

(15)

Balance at end of period

(25)

(25)

Total Deficit

$

(219)

$

(439)

$

(219)

$

(439)

See accompanying Notes to the unaudited Condensed Consolidated and Combined Financial Statements

 

5


Condensed Consolidated and Combined Statements of Cash Flows (Unaudited)

(In millions)

Nine Months Ended

September 30,

2019

2018

Cash and Cash Equivalents at Beginning of Period

$

296

$

282

Cash Flows from Operating Activities:

Net Income

134

108

Adjustments to reconcile net income to net cash provided from operating activities:

Depreciation and amortization expense

18

14

Deferred income tax provision

3

5

Stock-based compensation expense

7

3

Restructuring charges

3

Payments for restructuring charges

(6)

Spin-off charges

1

23

Payments for spin-off charges

(1)

(22)

Other

4

Change in working capital, net of acquisitions:

Receivables