UScellular reports second quarter 2021 results
Executing on strategic priorities;
guidance reaffirmed
CHICAGO, Aug. 5, 2021 /PRNewswire/ --
As previously announced, UScellular will hold a teleconference August 6, 2021, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.uscellular.com.
United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,014 million for the second quarter of 2021, versus $973 million for the same period one year ago. Service revenues totaled $774 million, versus $753 million for the same period a year ago. Net income attributable to UScellular shareholders and related diluted earnings per share were $35 million and $0.39, respectively, for the second quarter of 2021 compared to $68 million and $0.78, respectively, in the same period one year ago.
"UScellular continued strong growth in service revenue and made meaningful progress towards our strategic priorities," said Laurent Therivel, UScellular President and CEO. "Higher postpaid ARPU helped drive service revenue growth as customers chose higher-value plans.
"Our efforts to expand our prepaid business are starting to generate positive results, and our business-and-government initiatives are laying the foundation for future growth. With the competitive environment top of mind, we are continuing to execute our community-by-community strategy in order to deliver solutions that are right for our customers.
"Our 5G and network modernization programs are on track. We continue to be very optimistic on the performance capabilities of mmWave spectrum. Additionally, the 5G fixed wireless access tests of market demand have seen early, encouraging results and will provide valuable learnings as we look to bring this high-speed product to market.
"I continue to be impressed with the hard work of our associates and their commitment to keeping our customers connected. I'd like to thank all of them for their contributions this quarter."
2021 Estimated Results
UScellular's current estimates of full-year 2021 results are shown below. Such estimates represent management's view as of August 5, 2021 and should not be assumed to be current as of any future date. UScellular undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.
2021 Estimated Results |
||
Previous |
Current |
|
(Dollars in millions) |
||
Service revenues |
$3,050-$3,150 |
Unchanged |
Adjusted OIBDA1 |
$850-$950 |
Unchanged |
Adjusted EBITDA1 |
$1,025-$1,125 |
Unchanged |
Capital expenditures |
$775-$875 |
Unchanged |
The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2021 estimated results, UScellular has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, UScellular believes that the impact of income taxes cannot be reasonably predicted; therefore, UScellular is unable to provide such guidance.
Actual Results |
||||||||||
2021 Estimated |
Six Months Ended June 30, 2021 |
Year Ended |
||||||||
(Dollars in millions) |
||||||||||
Net income (GAAP) |
N/A |
$ |
97 |
$ |
233 |
|||||
Add back: |
||||||||||
Income tax expense |
N/A |
17 |
17 |
|||||||
Income before income taxes (GAAP) |
$125-$225 |
$ |
114 |
$ |
250 |
|||||
Add back: |
||||||||||
Interest expense |
180 |
97 |
112 |
|||||||
Depreciation, amortization and accretion expense |
700 |
350 |
683 |
|||||||
EBITDA (Non-GAAP)1 |
$1,005-$1,105 |
$ |
561 |
$ |
1,045 |
|||||
Add back or deduct: |
||||||||||
(Gain) loss on asset disposals, net |
20 |
7 |
25 |
|||||||
(Gain) loss on sale of business and other exit costs, net |
— |
(1) |
— |
|||||||
(Gain) loss on license sales and exchanges, net |
— |
— |
(5) |
|||||||
(Gain) loss on investments |
— |
— |
(2) |
|||||||
Adjusted EBITDA (Non-GAAP)1 |
$1,025-$1,125 |
$ |
567 |
$ |
1,063 |
|||||
Deduct: |
||||||||||
Equity in earnings of unconsolidated entities |
170 |
88 |
179 |
|||||||
Interest and dividend income |
5 |
3 |
8 |
|||||||
Adjusted OIBDA (Non-GAAP)1 |
$850-$950 |
$ |
476 |
$ |
876 |
|||||
1 |
EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. UScellular does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of UScellular's operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of UScellular's financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2021, can be found on UScellular's website at investors.uscellular.com. |
Conference Call Information
UScellular will hold a conference call on August 6, 2021 at 9:00 a.m. Central Time.
- Access the live call on the Events & Presentations page of investors.uscellular.com or at
https://event.on24.com/wcc/r/3332389/4AA81608B2125409E9D3E06EB6B1A284 - Access the call by phone at (833) 968-2187, conference ID: 2249545.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 5.0 million connections in 21 states. The Chicago-based company employed approximately 5,000 associates as of June 30, 2021. At the end of the second quarter of 2021, Telephone and Data Systems, Inc. owned 82 percent of UScellular. For more information about UScellular, visit uscellular.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; UScellular's smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties; uncertainties in UScellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; potential conflicts of interests between TDS and UScellular; cyber-attacks or other breaches of network or information technology security; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; the impact, duration and severity of public health emergencies, such as the COVID-19 pandemic. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of UScellular's Form 10-K, as updated by any UScellular Form 10-Q filed subsequent to such Form 10-K.
For more information about UScellular, visit: www.uscellular.com
United States Cellular Corporation |
|||||||||||||||||||
Summary Operating Data (Unaudited) |
|||||||||||||||||||
As of or for the Quarter Ended |
6/30/2021 |
3/31/2021 |
12/31/2020 |
9/30/2020 |
6/30/2020 |
||||||||||||||
Retail Connections |
|||||||||||||||||||
Postpaid |
|||||||||||||||||||
Total at end of period |
4,399,000 |
4,406,000 |
4,412,000 |
4,401,000 |
4,372,000 |
||||||||||||||
Gross additions |
141,000 |
143,000 |
171,000 |
168,000 |
129,000 |
||||||||||||||
Feature phones |
3,000 |
3,000 |
2,000 |
4,000 |
3,000 |
||||||||||||||
Smartphones |
98,000 |
101,000 |
117,000 |
98,000 |
82,000 |
||||||||||||||
Connected devices |
40,000 |
39,000 |
52,000 |
66,000 |
44,000 |
||||||||||||||
Net additions (losses) |
(6,000) |
(6,000) |
11,000 |
28,000 |
12,000 |
||||||||||||||
Feature phones |
(7,000) |
(9,000) |
(9,000) |
(8,000) |
(8,000) |
||||||||||||||
Smartphones |
6,000 |
6,000 |
12,000 |
8,000 |
11,000 |
||||||||||||||
Connected devices |
(5,000) |
(3,000) |
8,000 |
28,000 |
9,000 |
||||||||||||||
ARPU1 |
$ |
47.74 |
$ |
47.65 |
$ |
47.51 |
$ |
47.10 |
$ |
46.24 |
|||||||||
ARPA2 |
$ |
125.25 |
$ |
125.25 |
$ |
124.87 |
$ |
123.27 |
$ |
120.70 |
|||||||||
Churn rate3 |
1.11 |
% |
1.12 |
% |
1.21 |
% |
1.06 |
% |
0.89 |
% |
|||||||||
Handsets |
0.88 |
% |
0.92 |
% |
1.01 |
% |
0.88 |
% |
0.71 |
% |
|||||||||
Connected devices |
2.69 |
% |
2.53 |
% |
2.64 |
% |
2.35 |
% |
2.24 |
% |
|||||||||
Prepaid |
|||||||||||||||||||
Total at end of period |
507,000 |
496,000 |
499,000 |
506,000 |
496,000 |
||||||||||||||
Gross additions |
65,000 |
62,000 |
56,000 |
65,000 |
62,000 |
||||||||||||||
Net additions (losses) |
10,000 |
(3,000) |
(8,000) |
11,000 |
2,000 |
||||||||||||||
ARPU1 |
$ |
35.64 |
$ |
35.25 |
$ |
35.15 |
$ |
35.45 |
$ |
34.89 |
|||||||||
Churn rate3 |
3.66 |
% |
4.37 |
% |
4.24 |
% |
3.59 |
% |
4.05 |
% |
|||||||||
Total connections at end of period4 |
4,967,000 |
4,961,000 |
4,968,000 |
4,962,000 |
4,919,000 |
||||||||||||||
Market penetration at end of period |
|||||||||||||||||||
Consolidated operating population |
31,493,000 |
31,493,000 |
31,314,000 |
31,314,000 |
31,292,000 |
||||||||||||||
Consolidated operating penetration5 |
16 |
% |
16 |
% |
16 |
% |
16 |
% |
16 |
% |
|||||||||
Capital expenditures (millions) |
$ |
148 |
$ |
125 |
$ |
320 |
$ |
216 |
$ |
168 |
|||||||||
Total cell sites in service |
6,819 |
6,802 |
6,797 |
6,758 |
6,673 |
||||||||||||||
Owned towers |
4,278 |
4,270 |
4,271 |
4,246 |
4,208 |
||||||||||||||
1 |
Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below: |
|
• Postpaid ARPU consists of total postpaid service revenues and postpaid connections. |
||
• Prepaid ARPU consists of total prepaid service revenues and prepaid connections. |
||
2 |
Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period. |
|
3 |
Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period. |
|
4 |
Includes reseller and other connections. |
|
5 |
Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets. |
|
United States Cellular Corporation |
|||||||||||||||||||||
Consolidated Statement of Operations Highlights |
|||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||
2021 |
2020 |
2021 vs. 2020 |
2021 |
2020 |
2021 vs. 2020 |
||||||||||||||||
(Dollars and shares in millions, except per share amounts) |
|||||||||||||||||||||
Operating revenues |
|||||||||||||||||||||
Service |
$ |
774 |
$ |
753 |
3 |
% |
$ |
1,545 |
$ |
1,515 |
2 |
% |
|||||||||
Equipment sales |
240 |
220 |
9 |
% |
492 |
422 |
17 |
% |
|||||||||||||
Total operating revenues |
1,014 |
973 |
4 |
% |
2,037 |
1,937 |
5 |
% |
|||||||||||||
Operating expenses |
|||||||||||||||||||||
System operations (excluding Depreciation, amortization and accretion reported below) |
204 |
197 |
4 |
% |
389 |
377 |
3 |
% |
|||||||||||||
Cost of equipment sold |
258 |
218 |
19 |
% |
533 |
435 |
23 |
% |
|||||||||||||
Selling, general and administrative |
334 |
323 |
3 |
% |
639 |
659 |
(3) |
% |
|||||||||||||
Depreciation, amortization and accretion |
180 |
178 |
1 |
% |
350 |
354 |
(2) |
% |
|||||||||||||
(Gain) loss on asset disposals, net |
2 |
4 |
(50) |
% |
7 |
8 |
(9) |
% |
|||||||||||||
(Gain) loss on sale of business and other exit costs, net |
— |
— |
N/M |
(1) |
— |
N/M |
|||||||||||||||
Total operating expenses |
978 |
920 |
6 |
% |
1,917 |
1,833 |
5 |
% |
|||||||||||||
Operating income |
36 |
53 |
(32) |
% |
120 |
104 |
16 |
% |
|||||||||||||
Investment and other income (expense) |
|||||||||||||||||||||
Equity in earnings of unconsolidated entities |
47 |
44 |
7 |
% |
88 |
89 |
– |
||||||||||||||
Interest and dividend income |
2 |
1 |
54 |
% |
3 |
5 |
(30) |
% |
|||||||||||||
Interest expense |
(60) |
(25) |
N/M |
(97) |
(49) |
N/M |
|||||||||||||||
Total investment and other income (expense) |
(11) |
20 |
N/M |
(6) |
45 |
N/M |
|||||||||||||||
Income before income taxes |
25 |
73 |
(66) |
% |
114 |
149 |
(24) |
% |
|||||||||||||
Income tax expense (benefit) |
(10) |
4 |
N/M |
17 |
8 |
N/M |
|||||||||||||||
Net income |
35 |
69 |
(49) |
% |
97 |
141 |
(31) |
% |
|||||||||||||
Less: Net income attributable to noncontrolling interests, net of tax |
— |
1 |
(2) |
% |
2 |
2 |
16 |
% |
|||||||||||||
Net income attributable to UScellular shareholders |
$ |
35 |
$ |
68 |
(49) |
% |
$ |
95 |
$ |
139 |
(32) |
% |
|||||||||
Basic weighted average shares outstanding |
87 |
86 |
1 |
% |
87 |
86 |
– |
||||||||||||||
Basic earnings per share attributable to UScellular shareholders |
$ |
0.40 |
$ |
0.79 |
(50) |
% |
$ |
1.10 |
$ |
1.62 |
(32) |
% |
|||||||||
Diluted weighted average shares outstanding |
88 |
87 |
1 |
% |
88 |
87 |
– |
||||||||||||||
Diluted earnings per share attributable to UScellular shareholders |
$ |
0.39 |
$ |
0.78 |
(50) |
% |
$ |
1.08 |
$ |
1.59 |
(32) |
% |
|||||||||
N/M - Percentage change not meaningful |
United States Cellular Corporation |
|||||||
Consolidated Balance Sheet Highlights |
|||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
June 30, 2021 |
December 31, 2020 |
||||||
(Dollars in millions) |
|||||||
Current assets |
|||||||
Cash and cash equivalents |
$ |
267 |
$ |
1,271 |
|||
Short-term investments |
— |
3 |
|||||
Accounts receivable, net |
974 |
998 |
|||||
Inventory, net |
183 |
146 |
|||||
Prepaid expenses |
55 |
51 |
|||||
Income taxes receivable |
126 |
125 |
|||||
Other current assets |
40 |
29 |
|||||
Total current assets |
1,645 |
2,623 |
|||||
Assets held for sale |
3 |
2 |
|||||
Licenses |
3,917 |
2,629 |
|||||
Investments in unconsolidated entities |
445 |
435 |
|||||
Property, plant and equipment, net |
2,386 |
2,466 |
|||||
Operating lease right-of-use assets |
950 |
924 |
|||||
Other assets and deferred charges |
574 |
602 |
|||||
Total assets |
$ |
9,920 |
$ |
9,681 |
|||
United States Cellular Corporation |
|||||||
Consolidated Balance Sheet Highlights |
|||||||
(Unaudited) |
|||||||
LIABILITIES AND EQUITY |
|||||||
June 30, 2021 |
December 31, 2020 |
||||||
(Dollars in millions, except per share amounts) |
|||||||
Current liabilities |
|||||||
Current portion of long-term debt |
$ |
3 |
$ |
2 |
|||
Accounts payable |
293 |
387 |
|||||
Customer deposits and deferred revenues |
153 |
151 |
|||||
Accrued taxes |
46 |
48 |
|||||
Accrued compensation |
53 |
82 |
|||||
Short-term operating lease liabilities |
125 |
116 |
|||||
Other current liabilities |
78 |
85 |
|||||
Total current liabilities |
751 |
871 |
|||||
Liabilities held for sale |
— |
1 |
|||||
Deferred liabilities and credits |
|||||||
Deferred income tax liability, net |
668 |
633 |
|||||
Long-term operating lease liabilities |
890 |
875 |
|||||
Other deferred liabilities and credits |
372 |
376 |
|||||
Long-term debt, net |
2,710 |
2,489 |
|||||
Noncontrolling interests with redemption features |
10 |
10 |
|||||
Equity |
|||||||
UScellular shareholders' equity |
|||||||
Series A Common and Common Shares, par value $1.00 per share |
88 |
88 |
|||||
Additional paid-in capital |
1,663 |
1,651 |
|||||
Treasury shares |
(42) |
(67) |
|||||
Retained earnings |
2,794 |
2,739 |
|||||
Total UScellular shareholders' equity |
4,503 |
4,411 |
|||||
Noncontrolling interests |
16 |
15 |
|||||
Total equity |
4,519 |
4,426 |
|||||
Total liabilities and equity |
$ |
9,920 |
$ |
9,681 |
|||
SOURCE United States Cellular Corporation
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