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TDS reports first quarter 2021 results

05/06/2021
UScellular raises 2021 guidance with strong first quarter performance;
TDS Telecom hits 500,000 broadband connections

CHICAGO, May 6, 2021 /PRNewswire/ -- 

As previously announced, TDS will hold a teleconference May 7, 2021, 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 $1,318 million for the first quarter of 2021, versus $1,261 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $57 million and $0.48, respectively, for the first quarter of 2021 compared to $69 million and $0.59, respectively, in the same period one year ago.

"The TDS Family of Businesses made a strong start to 2021 and are well-positioned to achieve their strategic priorities," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular and TDS Telecom produced impressive financial results and continued to provide essential communications, including high-quality data, video and voice services to our customers and communities. We are implementing our financing strategies to maintain a strong, yet flexible, financial foundation to fund our attractive investment opportunities, while also working to lower the cost of our balance sheet.

"UScellular increased service revenues, showing the positive effect of higher ARPU. Operational and cost discipline throughout the quarter also contributed to strong financial performance. Our attractive promotions are resonating with customers, and postpaid and prepaid handset additions strengthened compared to the same period a year ago. Investments in 5G and network modernization programs are on track reflecting UScellular's commitment to continue to meet customers' expectations for speed and reliability.

"TDS Telecom achieved excellent growth in residential customer connections and strong financial performance, driven by higher operating revenue in the first quarter. With the acceleration of its broadband strategy, 500,000 total customers are now taking broadband services, and more than half of all our customers now have 1Gig service available to them. This year, TDS Telecom has plans to double the number of service addresses that it built fiber to last year, building on the success of the program to-date."

2021 Estimated Results

TDS' current estimates of full-year 2021 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of May 6, 2021 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.

2021 Estimated Results



UScellular

Previous

Current

(Dollars in millions)



Service revenues

$3,025-$3,125

$3,050-$3,150

Adjusted OIBDA1

$800-$950

$850-$950

Adjusted EBITDA1

$975-$1,125

$1,025-$1,125

Capital expenditures

$775-$875

Unchanged




TDS Telecom

Previous

Current

(Dollars in millions)



Total operating revenues

$975-$1,025

Unchanged

Adjusted OIBDA1

$290-$320

Unchanged

Adjusted EBITDA1

$290-$320

Unchanged

Capital expenditures

$425-$475

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 2021 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.


2021 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)

$175-$275


$80-$110

Add back:




Interest expense

150




Depreciation, amortization and accretion expense

680



210


EBITDA (Non-GAAP)1

$1,005-$1,105


$290-$320

Add back or deduct:




(Gain) loss on asset disposals, net

20




Adjusted EBITDA (Non-GAAP)1

$1,025-$1,125


$290-$320

Deduct:




Equity in earnings of unconsolidated entities

170




Interest and dividend income

5




Adjusted OIBDA (Non-GAAP)1

$850-$950


$290-$320

 


Actual Results


Three Months Ended
March 31, 2021


Year Ended
December 31, 2020


UScellular


TDS

Telecom


UScellular


TDS

Telecom 

(Dollars in millions)








Net income (GAAP)

$

62



$

24



$

233



$

100


Add back:








Income tax expense

27



8



17



18


Income before income taxes (GAAP)

$

89



$

33



$

250



$

117


Add back:








Interest expense

39



(1)



112



(4)


Depreciation, amortization and accretion expense

170



49



683



203


EBITDA (Non-GAAP)1

$

298



$

80



$

1,045



$

316


Add back or deduct:








(Gain) loss on asset disposals, net

5





25



1


(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

$

302



$

81



$

1,063



$

317


Deduct:








Equity in earnings of unconsolidated entities

42





179




Interest and dividend income

2





8



5


Other, net







(1)


Adjusted OIBDA (Non-GAAP)1

$

258



$

81



$

876



$

314



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 March 31, 2021, can be found on TDS' website at investors.tdsinc.com.

Stock Repurchase
During the first quarter of 2021, TDS repurchased 162,500 Common Shares for $3 million and UScellular repurchased 54,900 Common Shares for $2 million.

Conference Call Information
TDS will hold a conference call on May 7, 2021 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 9,100 associates as of March 31, 2021.

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; difficulties involving third parties; 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

3/31/2021


12/31/2020


9/30/2020


6/30/2020


3/31/2020

Retail Connections










Postpaid










Total at end of period

4,406,000



4,412,000



4,401,000



4,372,000



4,359,000


Gross additions

143,000



171,000



168,000



129,000



132,000


Feature phones

3,000



2,000



4,000



3,000



2,000


Smartphones

101,000



117,000



98,000



82,000



88,000


Connected devices

39,000



52,000



66,000



44,000



42,000


Net additions (losses)

(6,000)



11,000



28,000



12,000



(26,000)


Feature phones

(9,000)



(9,000)



(8,000)



(8,000)



(10,000)


Smartphones

6,000



12,000



8,000



11,000



(10,000)


Connected devices

(3,000)



8,000



28,000



9,000



(6,000)


ARPU1

$

47.65



$

47.51



$

47.10



$

46.24



$

47.23


ARPA2

$

125.25



$

124.87



$

123.27



$

120.70



$

122.92


Churn rate3

1.12

%


1.21

%


1.06

%


0.89

%


1.21

%

Handsets

0.92

%


1.01

%


0.88

%


0.71

%


0.95

%

Connected devices

2.53

%


2.64

%


2.35

%


2.24

%


3.11

%

Prepaid










Total at end of period

496,000



499,000



506,000



496,000



494,000


Gross additions

62,000



56,000



65,000



62,000



57,000


Net additions (losses)

(3,000)



(8,000)



11,000



2,000



(12,000)


ARPU1

$

35.25



$

35.15



$

35.45



$

34.89



$

34.07


Churn rate3

4.37

%


4.24

%


3.59

%


4.05

%


4.67

%

Total connections at end of period4

4,961,000



4,968,000



4,962,000



4,919,000



4,903,000


Market penetration at end of period










Consolidated operating population

31,493,000



31,314,000



31,314,000



31,292,000



31,292,000


Consolidated operating penetration5

16

%


16

%


16

%


16

%


16

%

Capital expenditures (millions)

$

125



$

320



$

216



$

168



$

236


Total cell sites in service

6,802



6,797



6,758



6,673



6,629


Owned towers

4,270



4,271



4,246



4,208



4,184




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.







TDS Telecom

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

3/31/2021


12/31/2020


9/30/2020


6/30/2020


3/31/2020

Residential connections










Broadband1










Wireline, Incumbent

243,700



242,500



243,400



240,400



230,400


Wireline, Expansion

24,100



20,400



17,300



14,700



12,300


Cable

199,500



196,400



193,300



191,000



184,100


Total Broadband

467,300



459,300



454,000



446,000



426,800


Video2










Wireline

63,000



63,000



62,300



61,400



59,000


Cable

79,600



81,400



82,300



83,200



84,600


Total Video

142,700



144,400



144,500



144,600



143,600


Voice3










Wireline

255,000



256,900



260,000



261,800



259,100


Cable

53,700



53,900



54,400



55,300



54,800


Total Voice

308,700



310,800



314,400



317,100



313,900


Total Residential connections

918,700



914,400



913,000



907,800



884,300


Commercial connections










Broadband1

34,400



34,000



33,700



33,400



33,200


Video2

19,400



19,700



19,700



20,300



20,600


Voice3

116,500



119,700



122,700



126,100



128,600


ManagedIP4

108,500



113,300



116,700



117,300



119,800


Total Commercial connections

278,800



286,700



292,900



297,200



302,200


Total connections

1,197,400



1,201,100



1,205,900



1,205,000



1,186,400












Residential revenue per connection5

$

56.97



$

55.66



$

55.66



$

53.82



$

54.30












Capital expenditures (millions)

$

70



$

147



$

92



$

75



$

54



Numbers may not foot due to rounding.


1

The individual customers provided high-speed internet access through various transmission technologies, including fiber, DSL, dedicated internet circuit technologies or cable modem service.



2

The individual customers provided video services.



3

The individual circuits connecting a customer to TDS' central office facilities that provide voice services or the billable number of lines into a building for voice services.



4

The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.



5

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

March 31,


2021


2020


2021

vs. 2020

(Dollars and shares in millions, except per share amounts)






Operating revenues






UScellular

$

1,023



$

963



6

%

TDS Telecom

249



240



4

%

All Other1

46



58



(21)

%


1,318



1,261



4

%

Operating expenses






UScellular






Expenses excluding depreciation, amortization and accretion

765



732



5

%

Depreciation, amortization and accretion

170



177



(4)

%

(Gain) loss on asset disposals, net

5



4



39

%

(Gain) loss on sale of business and other exit costs, net

(1)





N/M


939



913



3

%

TDS Telecom






Expenses excluding depreciation, amortization and accretion

168



160



5

%

Depreciation, amortization and accretion

49



52



(5)

%


217



212



2

%

All Other1






Expenses excluding depreciation and amortization

47



58



(19)

%

Depreciation and amortization

5



6



(17)

%


52



64



(19)

%

Total operating expenses

1,208



1,189



2

%

Operating income (loss)






UScellular

84



50



67

%

TDS Telecom

32



28



12

%

All Other1

(6)



(6)



3

%


110



72



52

%

Investment and other income (expense)






Equity in earnings of unconsolidated entities

42



45



(7)

%

Interest and dividend income

3



6



(44)

%

Interest expense

(53)



(37)



(45)

%

Total investment and other income

(8)



14



N/M

Income before income taxes

102



86



18

%

Income tax expense

31



3



N/M

Net income

71



83



(14)

%

Less: Net income attributable to noncontrolling interests, net of tax

12



14



(9)

%

Net income attributable to TDS shareholders

59



69



(15)

%

TDS Preferred dividend requirement

2





N/M

Net income attributable to TDS common shareholders

$

57



$

69



(18)

%







Basic weighted average shares outstanding

114



115



Basic earnings per share attributable to TDS common shareholders

$

0.49



$

0.60



(18)

%







Diluted weighted average shares outstanding

116



116



Diluted earnings per share attributable to TDS common shareholders

$

0.48



$

0.59



(18)

%


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)



Three Months Ended

March 31,


2021


2020

(Dollars in millions)




Cash flows from operating activities




Net income

$

71



$

83


Add (deduct) adjustments to reconcile net income to net cash flows from operating activities




Depreciation, amortization and accretion

224



235


Bad debts expense

8



34


Stock-based compensation expense

10



11


Deferred income taxes, net

27



75


Equity in earnings of unconsolidated entities

(42)



(45)


Distributions from unconsolidated entities

23



25


(Gain) loss on asset disposals, net

5



4


(Gain) loss on sale of business and other exit costs, net

(1)




Other operating activities

(1)




Changes in assets and liabilities from operations




Accounts receivable

17



43


Equipment installment plans receivable

(18)



23


Inventory

8



(52)


Accounts payable

(115)



87


Customer deposits and deferred revenues

9



(9)


Accrued taxes



(74)


Accrued interest

9



9


Other assets and liabilities

(69)



(82)


Net cash provided by operating activities

165



367






Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(220)



(377)


Cash paid for intangible assets

(1,261)



(26)


Cash paid for investments



(1)


Cash received from divestitures and exchanges

1




Net cash used in investing activities

(1,480)



(404)






Cash flows from financing activities




Issuance of long-term debt

567



50


Repayment of long-term debt



(2)


Issuance of TDS Preferred Shares

420




TDS Common Shares reissued for benefit plans, net of tax payments

(1)



(1)


UScellular Common Shares reissued for benefit plans, net of tax payments

(1)




Repurchase of TDS Common Shares

(3)



(6)


Repurchase of UScellular Common Shares

(2)



(21)


Dividends paid to TDS shareholders

(20)



(19)


Payment of debt and equity issuance costs

(14)



(3)


Distributions to noncontrolling interests

(1)



(1)


Other financing activities

(3)




Net cash provided by (used in) financing activities

942



(3)






Net decrease in cash, cash equivalents and restricted cash

(373)



(40)






Cash, cash equivalents and restricted cash




Beginning of period

1,452



474


End of period

$

1,079



$

434





Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS






March 31, 2021


December 31, 2020

(Dollars in millions)




Current assets




Cash and cash equivalents

$

1,042



$

1,429


Short-term investments

3



3


Accounts receivable, net

1,097



1,112


Inventory, net

145



154


Prepaid expenses

114



105


Income taxes receivable

188



187


Other current assets

53



36


Total current assets

2,642



3,026






Assets held for sale

1



2






Licenses

3,924



2,638






Goodwill

547



547






Other intangible assets, net

213



213






Investments in unconsolidated entities

497



477






Property, plant and equipment, net

3,951



3,972






Operating lease right-of-use assets

1,005



998






Other assets and deferred charges

627



652






Total assets

$

13,407



$

12,525





Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


LIABILITIES AND EQUITY






March 31, 2021


December 31, 2020

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$

6



$

5


Accounts payable

360



508


Customer deposits and deferred revenues

202



193


Accrued interest

25



16


Accrued taxes

67



69


Accrued compensation

73



132


Short-term operating lease liabilities

134



129


Other current liabilities

96



101


Total current liabilities

963



1,153






Liabilities held for sale



1






Deferred liabilities and credits




Deferred income tax liability, net

890



863


Long-term operating lease liabilities

941



940


Other deferred liabilities and credits

558



541






Long-term debt, net

3,991



3,424






Noncontrolling interests with redemption features

10



10






Equity




TDS shareholders' equity




Series A Common and Common Shares, par value $0.01 per share

1



1


Capital in excess of par value

2,488



2,482


Preferred Shares, par value $0.01 per share

408




Treasury shares, at cost

(472)



(477)


Accumulated other comprehensive loss

(3)



(4)


Retained earnings

2,830



2,802


Total TDS shareholders' equity

5,252



4,804






Noncontrolling interests

802



789






Total equity

6,054



5,593






Total liabilities and equity

$

13,407



$

12,525





Balance Sheet Highlights

(Unaudited)




March 31, 2021




TDS


TDS
Corporate


Intercompany


TDS


UScellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)










Cash and cash equivalents

$

479



$

177



$

564



$

(178)



$

1,042












Licenses, goodwill and other intangible assets

$

3,915



$

761



$

8



$



$

4,684


Investment in unconsolidated entities

455



4



45



(7)



497



$

4,370



$

765



$

53



$

(7)



$

5,181












Property, plant and equipment, net

$

2,419



$

1,435



$

97



$



$

3,951












Long-term debt, net:










Current portion

$

2



$



$

4



$



$

6


Non-current portion

2,981



4



1,006





3,991



$

2,983



$

4



$

1,010



$



$

3,997





TDS Telecom Highlights

(Unaudited)








Three Months Ended

March 31,


2021


2020


2021

vs. 2020

(Dollars in millions)






Operating revenues






Residential






Wireline, Incumbent

$

85



$

81



6

%

Wireline, Expansion

7



4



80

%

Cable

65



60



9

%

Total residential

157



144



9

%

Commercial

47



49



(6)

%

Wholesale

45



47



(3)

%

Total service revenues

249



240



4

%

Equipment revenues





9

%

Total operating revenues

249



240



4

%







Cost of services

97



95



2

%

Cost of equipment and products





(1)

%

Selling, general and administrative expenses

70



65



9

%

Depreciation, amortization and accretion

49



52



(5)

%

(Gain) loss on asset disposals, net





N/M

Total operating expenses

217



212



2

%







Operating income

$

32



$

28



12

%


N/M - Percentage change not meaningful


Numbers may not foot due to rounding.

 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow



Three Months Ended
March 31,


2021


2020

(Dollars in millions)




Cash flows from operating activities (GAAP)

$

165



$

367


Less: Cash paid for additions to property, plant and equipment

220



377


Free cash flow (Non-GAAP)1

$

(55)



$

(10)




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.

 

Cision View original content:http://www.prnewswire.com/news-releases/tds-reports-first-quarter-2021-results-301286028.html

SOURCE Telephone and Data Systems, Inc.

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