Brinks Home Security Q3 Performance Crimped by COVID-19
During the quarter ended Sept. 30, the company added 17,111 customers, compared to 21,228 accounts for the same period in the prior year.
DALLAS — Monitronics Int’l (OTC: SCTY), dba Brinks Home Security, on Thursday reported a third-quarter decline in its dealer channel was primarily due to restrictions on door-to-door selling and other impacts related to the outbreak of COVID-19.
Overall, the company reported a quarterly net loss of $19.2 million, compared to net income of $673.6 million in the prior year period, which included a one-time $702.8 million gain from restructuring. The year-over-year change is primarily attributable to prior year gains on restructuring and reorganization and current year increases in 2G and 3G radio conversion costs and amortization expense.
The Brinks Home Security reported net revenue of $130.9 million, an increase of 8.3% year-over-year, and adjusted EBITDA of $68.5 million, up 9.6% year-over-year. The improvement in net revenues includes an increase in alarm monitoring revenue of $7 million resulting from a higher number of average subscribers relating to the Protect America bulk acquisition in June.
Also included in the year-over-year increase in net revenues is a $3.3 million increase in product, installation and service revenue largely attributable to the company’s continued efforts around at-risk extensions.
Brinks Home Security operates two principal sales channels, including a direct-to-consumer (DTC) unit that offers both DIY and professionally-installed security solutions, and through its exclusive authorized dealer network.
During the third quarter ended Sept. 30, the company added 17,111 customers, compared to 21,228 accounts for the same period in the prior year. Both the dealer and the DTC channels experienced year-over-year declines in customers added. The decline in the dealer channel was primarily attributed to the company’s election to cease purchasing accounts from two dealers in the fourth quarter of 2019 and COVID-19 restrictions.
The decline in the DTC channel production was primarily due to the company’s decision to leverage more profitable organic leads. There were no bulk account acquisitions during the third quarter of 2020 or 2019.
Core unit attrition, which excludes accounts subject to earn out payments, fell almost two percentage points to 15.4% for the twelve months ended Sept. 30, compared to the prior twelve-month period.
Core RMR attrition increased slightly to 17.7% year-over-year due to a combination of lower RMR for accounts generated in the DTC channel, as a minimal equipment subsidy is offered, lower production in the dealer channel, and rate reductions relating to the company’s at-risk retention program.
Further, in light of COVID-19, beginning in March, Brinks Home Security elected to to defer taking ordinary course rate adjustments to its base, which has continued through Sept. 30. The company said it will evaluate its rate strategy going forward as market conditions warrant.
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