ADT security exits rooftop solar business

ADT, a major provider of home security and smart home devices, announced it will exit its residential solar business. The company said it will remain focused on cash flow generation from its core security business and will increase its dividend payments by 57% and add a new share repurchase program as part of the move to exit solar.

“The decision to exit solar operations was made after careful deliberation, and we expect this strategic action to drive substantial operational and financial benefits to ADT,” said ADT chairman, president and chief executive officer, Jim DeVries.

ADT’s Board of Directors has approved the exit of this segment, which may include the sale of components of the business to other parties.

Through the first nine months of 2023, the company’s solar business cited macroeconomic headwinds and deteriorating conditions industry wide, posting an adjusted EBITDA loss of $89 million.

The company expects to incur certain one-time exit charges and cash expenditures with potential offsets from asset sales or reduced tax expenses. As previously disclosed, as of September 30, 2023, the goodwill balance for the solar reporting unit was zero.

ADT entered the solar business in 2021 by acquiring installer Sunpro. The company spent $160 million in cash and 77 million shares of ADT to purchase the company, suggesting an enterprise value of $825 million. It announced the closure of several installation branches in November 2023, and now the company is exiting residential solar altogether.

ADT exits a battered residential solar industry that is reeling from policy changes and high interest rates.

Solar Insure, which backs many installation companies in California, which represents nearly half of the U.S. rooftop solar market, told pv magazine USA in December 2023 that its data shows 75% of solar installers are now in the “high risk” category following CPUC’s decision to implement NEM 3.0.

“We have seen a wave of recent solar installer bankruptcies and believe another wave will come in Q1 2024,” said Ara Agopian, chief executive officer, Solar Insure.