Frontdoor(FTDR) - 2024 Q2 - Quarterly Results

Revenue and Profitability - Revenue for Q2 2024 increased 4% to $542 million, driven by a 7% price increase offset by a 3% decline in volume [2]. - Gross profit margin reached a record high of 56%, an increase of 470 basis points, primarily due to higher realized prices and process improvements [2]. - Net income rose 32% to$ 92 million, with diluted earnings per share increasing 38% to $1.18 [2]. - Adjusted EBITDA for Q2 2024 increased 31% to$ 158 million, benefiting from higher revenue conversion and lower contract claims costs [5]. - Revenue for the three months ended June 30, 2024, was $542 million, an increase of 3.6% from$ 523 million for the same period in 2023 [26]. - Gross profit for the six months ended June 30, 2024, was $500 million, compared to$ 440 million for the same period in 2023, reflecting a 13.6% increase [26]. - Net income for the three months ended June 30, 2024, was $92 million, up 31.4% from$ 70 million in the same period of 2023 [26]. - Adjusted EBITDA for the three months ended June 2024 was $158 million, compared to$ 121 million in the same period of 2023, marking a 30.6% rise [36]. - Adjusted net income for the six months ended June 2024 was $134 million, compared to$ 94 million for the same period in 2023, reflecting a 42.6% growth [34]. Cash Flow and Financial Position - Net cash provided from operating activities doubled to $187 million for the six months ended June 30, 2024 [7]. - Free cash flow increased 70% to$ 164 million for the six months ended June 30, 2024 [8]. - Cash and cash equivalents at the end of the period were $419 million, up from$ 325 million at the beginning of the period [29]. - Total assets increased to $1,200 million as of June 30, 2024, from$ 1,089 million as of December 31, 2023 [29]. - Current liabilities rose to $365 million as of June 30, 2024, compared to$ 331 million at the end of 2023 [29]. - Free cash flow for the six months ended June 2024 was $164 million, significantly higher than$ 96 million for the same period in 2023, indicating a 70.8% increase [35]. Future Outlook - The company anticipates closing the acquisition of 2-10 Home Buyers Warranty in Q4 2024 [1]. - Full-year 2024 revenue outlook maintained at $1.81 billion to$ 1.84 billion, with an expected gross profit margin slightly above 51% [11]. - Q3 2024 revenue expected to be between $530 million and$ 545 million, reflecting a 3% increase year-over-year [10]. - The company has not provided specific forward-looking guidance for Adjusted EBITDA due to the inherent difficulty in forecasting necessary adjustments [24]. Shareholder Returns - New 3-year, $650 million share repurchase authorization approved, representing a 63% increase over the previous authorization [9]. Customer Metrics - The number of home warranties decreased to 1.95 million as of June 30, 2024, down from 2.07 million in the previous year, reflecting a reduction of 5.8% [37]. - Customer retention rate improved to 76.6% on a rolling 12-month basis, up from 76.3% in the previous year, indicating a positive trend in customer loyalty [37]. Earnings Per Share - The company reported a basic earnings per share of$ 1.18 for the three months ended June 30, 2024, compared to $0.86 for the same period in 2023 [27]. - The company reported a diluted adjusted earnings per share of$ 1.27 for the three months ended June 2024, compared to $0.87 in the same period of 2023, representing a 46% increase [34]. - The weighted-average diluted shares outstanding decreased to 78.1 million for the three months ended June 2024, down from 81.8 million in the same period of 2023 [34]. Acquisition Costs - The company incurred acquisition-related costs of$ 6 million for the three months ended June 2024, compared to no costs in the same period of 2023 [36]. - The company reported a tax impact of adjustments of $(1) million for the six months ended June 2024, consistent with the previous year [34].