TDS reports second quarter 2022 results
08/04/2022 - 04:05 PM
2022 guidance reaffirmed
CHICAGO , Aug. 4, 2022 /PRNewswire/ --
As previously announced, TDS will hold a teleconference on August 5, 2022, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.
Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,349 million for the second quarter of 2022, versus $1,311 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $18 million and $0.15 , respectively, for the second quarter of 2022 compared to $20 million and $0.17 , respectively, in the same period one year ago.
"The TDS Family of Companies achieved a solid position halfway through the year," said LeRoy T. Carlson, Jr. , TDS President and CEO. "UScellular is vigorously enhancing its network, and TDS Telecom is executing on its strategy to drive residential broadband growth.
"At UScellular, higher ARPU contributed to service revenue growth for the second quarter. We are generating momentum in several of our growth areas, including fixed wireless and our tower portfolio.
"TDS Telecom continues to actively deploy fiber in expansion communities and inside our incumbent markets which, combined with higher revenue per connection, generated strong growth in residential broadband revenue in the quarter."
2022 Estimated Results
TDS' current estimates of full-year 2022 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of August 4, 2022 and should not be assumed to be current as of any future date. TDS 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.
2022 Estimated Results
UScellular
Previous
Current
(Dollars in millions)
Service revenues
$3,100 -$3,200
Unchanged
Adjusted OIBDA1
$750 -$900
Unchanged
Adjusted EBITDA1
$925 -$1,075
Unchanged
Capital expenditures
$700 -$800
Unchanged
TDS Telecom
Previous
Current
(Dollars in millions)
Total operating revenues
$1,010 -$1,040
Unchanged
Adjusted OIBDA1
$260 -$290
Unchanged
Adjusted EBITDA1
$260 -$290
Unchanged
Capital expenditures
$500 -$550
Unchanged
The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2022 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.
2022 Estimated Results
UScellular
TDS Telecom
(Dollars in millions)
Net income (GAAP)
N/A
N/A
Add back:
Income tax expense
N/A
N/A
Income before income taxes (GAAP)
$45 -$195
$40 -$70
Add back:
Interest expense
160
—
Depreciation, amortization and accretion expense
705
220
EBITDA (Non-GAAP)1
$910 -$1,060
$260 -$290
Add back or deduct:
(Gain) loss on asset disposals, net
15
—
Adjusted EBITDA (Non-GAAP)1
$925 -$1,075
$260 -$290
Deduct:
Equity in earnings of unconsolidated entities
170
—
Interest and dividend income
5
—
Adjusted OIBDA (Non-GAAP)1
$750 -$900
$260 -$290
Actual Results
Six Months Ended
June 30, 2022
Year Ended
December 31, 2021
UScellular
TDS
Telecom
UScellular
TDS
Telecom
(Dollars in millions)
Net income (GAAP)
$ 74
$ 41
$ 160
$ 90
Add back:
Income tax expense
50
14
20
24
Income before income taxes (GAAP)
$ 124
$ 56
$ 180
$ 114
Add back:
Interest expense
73
(4)
175
(5)
Depreciation, amortization and accretion expense
342
106
678
198
EBITDA (Non-GAAP)1
$ 539
$ 158
$ 1,033
$ 308
Add back or deduct:
Loss on impairment of licenses
3
—
—
—
(Gain) loss on asset disposals, net
8
1
23
2
(Gain) loss on sale of business and other exit costs, net
—
—
(2)
—
Adjusted EBITDA (Non-GAAP)1
$ 550
$ 159
$ 1,054
$ 310
Deduct:
Equity in earnings of unconsolidated entities
82
—
179
—
Interest and dividend income
4
—
6
1
Other, net
—
—
—
(1)
Adjusted OIBDA (Non-GAAP)1
$ 464
$ 158
$ 869
$ 310
Numbers may not foot due to rounding.
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. TDS 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 TDS' 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 TDS' 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, 2022, can be found on TDS' website at investors.tdsinc.com.
Stock Repurchase During the second quarter of 2022, TDS repurchased 966,124 of its Common Shares for $16 million and UScellular repurchased 294,721 of its Common Shares for $9 million .
Conference Call Information TDS will hold a conference call on August 5, 2022 at 9:00 a.m. Central Time .
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.
About TDS Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago , TDS employed approximately 8,900 associates as of June 30, 2022 .
Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
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; TDS' 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 TDS' businesses; the ability of the company to successfully construct and manage its networks; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and 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; 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 TDS' Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K.
For more information about TDS and its subsidiaries, visit: TDS: www.tdsinc.com UScellular: www.uscellular.com TDS Telecom: www.tdstelecom.com OneNeck IT Solutions: www.oneneck.com
United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Retail Connections
Postpaid
Total at end of period
4,296,000
4,335,000
4,380,000
4,391,000
4,399,000
Gross additions
128,000
126,000
165,000
145,000
141,000
Feature phones
4,000
2,000
3,000
2,000
3,000
Smartphones
90,000
89,000
122,000
103,000
98,000
Connected devices
34,000
35,000
40,000
40,000
40,000
Net additions (losses)
(40,000)
(44,000)
(12,000)
(8,000)
(6,000)
Feature phones
(8,000)
(10,000)
(7,000)
(7,000)
(7,000)
Smartphones
(23,000)
(26,000)
5,000
2,000
6,000
Connected devices
(9,000)
(8,000)
(10,000)
(3,000)
(5,000)
ARPU1,2
$ 50.07
$ 49.71
$ 48.62
$ 48.12
$ 47.74
ARPA1,3
$ 130.43
$ 129.93
$ 127.14
$ 125.99
$ 125.25
Churn rate4
1.30 %
1.30 %
1.35 %
1.15 %
1.11 %
Handsets
1.10 %
1.10 %
1.10 %
0.95 %
0.88 %
Connected devices
2.73 %
2.70 %
3.08 %
2.59 %
2.69 %
Prepaid
Total at end of period
490,000
495,000
513,000
518,000
507,000
Gross additions
56,000
55,000
63,000
74,000
65,000
Net additions (losses)
(4,000)
(18,000)
(5,000)
11,000
10,000
ARPU2
$ 35.25
$ 34.59
$ 34.53
$ 35.05
$ 35.64
Churn rate4
4.07 %
4.84 %
4.39 %
4.09 %
3.66 %
Market penetration at end of period
Consolidated operating population
32,370,000
32,370,000
32,127,000
31,865,000
31,493,000
Consolidated operating penetration5
15 %
15 %
15 %
16 %
16 %
Capital expenditures (millions)
$ 268
$ 137
$ 321
$ 185
$ 148
Total cell sites in service
6,916
6,899
6,898
6,857
6,819
Owned towers
4,323
4,310
4,301
4,274
4,278
1
Q3 2021 Postpaid ARPU and ARPA amounts exclude $9 million of postpaid revenue related to an out-of-period error recorded in that quarter.
2
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.
3
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.
4
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.
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.
TDS Telecom
Summary Operating Data (Unaudited)
As of or for the Quarter Ended
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Residential connections
Broadband
Wireline, Incumbent
252,700
250,100
250,200
252,100
249,200
Wireline, Expansion
44,100
40,600
36,900
32,600
28,300
Cable
204,000
204,600
203,200
202,700
201,200
Total Broadband
500,800
495,200
490,300
487,400
478,700
Video
137,400
140,000
141,500
143,100
143,200
Voice
298,300
301,700
303,700
306,300
308,100
Total Residential connections
936,500
936,900
935,600
936,800
930,100
Commercial connections
250,700
260,000
264,300
269,000
274,400
Total connections
1,187,200
1,196,900
1,199,900
1,205,700
1,204,500
Residential revenue per connection1
$ 59.67
$ 57.95
$ 57.86
$ 57.75
$ 57.66
Capital expenditures (millions)
$ 120
$ 105
$ 151
$ 91
$ 99
Numbers may not foot due to rounding.
1
Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
vs. 2021
2022
2021
2022
vs. 2021
(Dollars and shares in millions, except per share amounts)
Operating revenues
UScellular
$ 1,027
$ 1,014
1 %
$ 2,037
$ 2,037
–
TDS Telecom
256
252
2 %
507
501
1 %
All Other2
66
45
47 %
120
91
32 %
1,349
1,311
3 %
2,664
2,629
1 %
Operating expenses
UScellular
Expenses excluding depreciation, amortization and accretion
806
796
1 %
1,573
1,561
1 %
Depreciation, amortization and accretion
172
180
(4) %
342
350
(2) %
Loss on impairment of licenses
3
—
N/M
3
—
N/M
(Gain) loss on asset disposals, net
6
2
N/M
8
7
7 %
(Gain) loss on sale of business and other exit costs, net
—
—
N/M
—
(1)
52 %
987
978
1 %
1,926
1,917
–
TDS Telecom
Expenses excluding depreciation, amortization and accretion
180
174
4 %
349
342
2 %
Depreciation, amortization and accretion
52
49
6 %
106
98
8 %
(Gain) loss on asset disposals, net
1
1
8 %
1
1
6 %
233
224
4 %
456
441
3 %
All Other1
Expenses excluding depreciation and amortization
61
46
35 %
116
94
25 %
Depreciation and amortization
5
5
(24) %
8
9
(20) %
66
51
29 %
124
103
21 %
Total operating expenses
1,286
1,253
3 %
2,506
2,461
2 %
Operating income (loss)
UScellular
40
36
10 %
111
120
(8) %
TDS Telecom
23
28
(18) %
51
60
(14) %
All Other2
—
(6)
N/M
(4)
(12)
65 %
63
58
8 %
158
168
(6) %
Investment and other income (expense)
Equity in earnings of unconsolidated entities
38
48
(21) %
83
90
(8) %
Interest and dividend income
5
3
77 %
7
6
7 %
Interest expense
(40)
(86)
53 %
(72)
(138)
48 %
Other, net
—
—
N/M
—
(1)
N/M
Total investment and other income (expense)
3
(35)
N/M
18
(43)
N/M
Income before income taxes
66
23
N/M
176
125
41 %
Income tax expense (benefit)
27
(11)
N/M
65
20
N/M
Net income
39
34
15 %
111
105
6 %
Less: Net income attributable to noncontrolling interests, net of tax
4
7
(35) %
15
19
(20) %
Net income attributable to TDS shareholders
35
27
28 %
96
86
11 %
TDS Preferred Share dividends
17
7
N/M
35
9
N/M
Net income attributable to TDS common shareholders
$ 18
$ 20
(13) %
$ 61
$ 77
(20) %
Basic weighted average shares outstanding
115
115
–
115
115
–
Basic earnings per share attributable to TDS common shareholders
$ 0.15
$ 0.18
(13) %
$ 0.53
$ 0.67
(21) %
Diluted weighted average shares outstanding
116
116
–
116
116
–
Diluted earnings per share attributable to TDS common shareholders
$ 0.15
$ 0.17
(12) %
$ 0.52
$ 0.65
(20) %
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
1
Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2022
2021
(Dollars in millions)
Cash flows from operating activities
Net income
$ 111
$ 105
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion
456
457
Bad debts expense
54
22
Stock-based compensation expense
23
24
Deferred income taxes, net
52
40
Equity in earnings of unconsolidated entities
(83)
(90)
Distributions from unconsolidated entities
80
80
Loss on impairment of licenses
3
—
(Gain) loss on asset disposals, net
9
8
(Gain) loss on sale of business and other exit costs, net
—
(1)
Other operating activities
3
37
Changes in assets and liabilities from operations
Accounts receivable
(25)
37
Equipment installment plans receivable
(25)
(32)
Inventory
(35)
(35)
Accounts payable
(6)
(106)
Customer deposits and deferred revenues
7
6
Accrued taxes
131
(25)
Accrued interest
1
(3)
Other assets and liabilities
(22)
(43)
Net cash provided by operating activities
734
481
Cash flows from investing activities
Cash paid for additions to property, plant and equipment
(526)
(457)
Cash paid for intangible assets
(585)
(1,264)
Cash received from investments
—
3
Cash received from divestitures and exchanges
1
1
Advance payments for license acquisitions
(1)
—
Other investing activities
(11)
2
Net cash used in investing activities
(1,122)
(1,715)
Cash flows from financing activities
Issuance of long-term debt
776
1,192
Repayment of long-term debt
(228)
(1,301)
Issuance of short-term debt
60
—
Issuance of TDS Preferred Shares
—
420
TDS Common Shares reissued for benefit plans, net of tax payments
(4)
(5)
UScellular Common Shares reissued for benefit plans, net of tax payments
(5)
(13)
Repurchase of TDS Common Shares
(20)
(3)
Repurchase of UScellular Common Shares
(18)
(2)
Dividends paid to TDS shareholders
(76)
(49)
Payment of debt and equity issuance costs
(2)
(30)
Distributions to noncontrolling interests
(2)
(2)
Other financing activities
(2)
(6)
Net cash provided by financing activities
479
201
Net increase (decrease) in cash, cash equivalents and restricted cash
91
(1,033)
Cash, cash equivalents and restricted cash
Beginning of period
414
1,452
End of period
$ 505
$ 419
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
June 30, 2022
December 31, 2021
(Dollars in millions)
Current assets
Cash and cash equivalents
$ 466
$ 367
Accounts receivable, net
1,154
1,151
Inventory, net
213
178
Prepaid expenses
106
103
Income taxes receivable
58
184
Other current assets
54
61
Total current assets
2,051
2,044
Assets held for sale
17
18
Licenses
4,686
4,097
Goodwill
547
547
Other intangible assets, net
208
197
Investments in unconsolidated entities
483
479
Property, plant and equipment, net
4,553
4,361
Operating lease right-of-use assets
1,022
1,040
Other assets and deferred charges
675
710
Total assets
$ 14,242
$ 13,493
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
June 30, 2022
December 31, 2021
(Dollars in millions, except per share amounts)
Current liabilities
Current portion of long-term debt
$ 11
$ 6
Accounts payable
443
481
Customer deposits and deferred revenues
243
236
Accrued interest
11
10
Accrued taxes
42
45
Accrued compensation
98
137
Short-term operating lease liabilities
146
141
Other current liabilities
240
124
Total current liabilities
1,234
1,180
Deferred liabilities and credits
Deferred income tax liability, net
971
921
Long-term operating lease liabilities
940
960
Other deferred liabilities and credits
879
759
Long-term debt, net
3,463
2,928
Noncontrolling interests with redemption features
12
11
Equity
TDS shareholders' equity
Series A Common and Common Shares, par value $0.01 per share
1
1
Capital in excess of par value
2,511
2,496
Preferred Shares, par value $0.01 per share
1,074
1,074
Treasury shares, at cost
(463)
(461)
Accumulated other comprehensive income
6
5
Retained earnings
2,810
2,812
Total TDS shareholders' equity
5,939
5,927
Noncontrolling interests
804
807
Total equity
6,743
6,734
Total liabilities and equity
$ 14,242
$ 13,493
Balance Sheet Highlights
(Unaudited)
June 30, 2022
TDS
TDS Corporate
Intercompany
TDS
UScellular
Telecom
& Other
Eliminations
Consolidated
(Dollars in millions)
Cash and cash equivalents
$ 320
$ 130
$ 149
$ (133)
$ 466
Licenses, goodwill and other intangible assets
$ 4,677
$ 758
$ 6
$ —
$ 5,441
Investment in unconsolidated entities
441
4
46
(8)
483
$ 5,118
$ 762
$ 52
$ (8)
$ 5,924
Property, plant and equipment, net
$ 2,671
$ 1,797
$ 85
$ —
$ 4,553
Long-term debt, net:
Current portion
$ 8
$ —
$ 3
$ —
$ 11
Non-current portion
3,118
3
342
—
3,463
$ 3,126
$ 3
$ 345
$ —
$ 3,474
TDS Telecom Highlights
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
vs. 2021
2022
2021
2022
vs. 2021
(Dollars in millions)
Operating revenues
Residential
Wireline, Incumbent
$ 88
$ 86
2 %
$ 173
$ 171
1 %
Wireline, Expansion
12
8
48 %
22
15
51 %
Cable
68
66
3 %
135
131
3 %
Total residential
168
160
5 %
330
317
4 %
Commercial
44
46
(6) %
87
93
(6) %
Wholesale
45
45
(1) %
89
91
(2) %
Total service revenues
256
251
2 %
507
500
1 %
Equipment revenues
—
—
(34) %
1
1
(6) %
Total operating revenues
256
252
2 %
507
501
1 %
Cost of services
103
101
2 %
199
199
–
Cost of equipment and products
—
—
(9) %
—
—
11 %
Selling, general and administrative expenses
77
73
6 %
150
143
4 %
Depreciation, amortization and accretion
52
49
6 %
106
98
8 %
(Gain) loss on asset disposals, net
1
1
8 %
1
1
6 %
Total operating expenses
233
224
4 %
456
441
3 %
Operating income
$ 23
$ 28
(18) %
$ 51
$ 60
(14) %
Numbers may not foot due to rounding.
Telephone and Data Systems, Inc. Financial Measures and Reconciliations (Unaudited)
Free Cash Flow
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
(Dollars in millions)
Cash flows from operating activities (GAAP)
$ 352
$ 315
$ 734
$ 481
Less: Cash paid for additions to property, plant and equipment
256
236
526
457
Free cash flow (Non-GAAP)1
$ 96
$ 79
$ 208
$ 24
1
Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.
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SOURCE Telephone and Data Systems