News Details

TDS reports first quarter 2022 results

05/05/2022

2022 guidance reaffirmed

CHICAGO, May 5, 2022 /PRNewswire/ --

As previously announced, TDS will hold a teleconference on May 6, 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 $1,315 million for the first quarter of 2022, versus $1,318 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $44 million and $0.37, respectively, for the first quarter of 2022 compared to $57 million and $0.48, respectively, in the same period one year ago.

"The TDS Family of Companies is making meaningful progress on our strategic priorities," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular is continuing to make improvements in its high-performing network and TDS Telecom is seeing good and increasing success in its fiber expansion program.

"UScellular's first quarter results delivered growth in retail service revenue, driven by the positive impact of higher ARPU. We continue to focus on growth areas of the business, including prepaid, business and government, and fixed wireless. Fixed wireless gross additions increased year-over-year, and momentum continues to build in our tower business, which produced double-digit revenue growth for the first quarter.

"TDS Telecom increased residential broadband connections, which contributed to strong residential broadband revenue growth in the quarter. TDS Telecom announced new fiber-to-the-home expansion markets in Montana and Wisconsin, as it continues to deploy fiber outside as well as inside of our traditional markets."

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 May 5, 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)

$65-$215


$40-$70

Add back:




Interest expense

135


Depreciation, amortization and accretion expense

710


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


Three Months Ended
March 31, 2022


Year Ended
December 31, 2021


UScellular


TDS
Telecom


UScellular


TDS
Telecom 

(Dollars in millions)








Net income (GAAP)

$             52


$             23


$           160


$             90

Add back:








Income tax expense

32


8


20


24

Income before income taxes (GAAP)

$             84


$             31


$           180


$           114

Add back:








Interest expense

33


(2)


175


(5)

Depreciation, amortization and accretion expense

171


54


678


198

EBITDA (Non-GAAP)1

$           288


$             83


$       1,033


$           308

Add back or deduct:








(Gain) loss on asset disposals, net

2



23


2

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

(1)



(2)


Adjusted EBITDA (Non-GAAP)1

$           289


$             83


$       1,054


$           310

Deduct:








Equity in earnings of unconsolidated entities

45



179


Interest and dividend income

1



6


1

Other, net




(1)

Adjusted OIBDA (Non-GAAP)1

$           243


$             83


$           869


$           310



Numbers may not foot due to rounding.

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, 2022, can be found on TDS' website at investors.tdsinc.com.

Stock Repurchase
During the first quarter of 2022, TDS repurchased 254,102 of its Common Shares for $5 million and UScellular repurchased 363,821 of its Common Shares for $10 million.

Conference Call Information
TDS will hold a conference call on May 6, 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 8,800 associates as of March 31, 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 of 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

3/31/2022


12/31/2021


9/30/2021


6/30/2021


3/31/2021

Retail Connections










Postpaid










Total at end of period

4,335,000


4,380,000


4,391,000


4,399,000


4,406,000

Gross additions

126,000


165,000


145,000


141,000


143,000

Feature phones

2,000


3,000


2,000


3,000


3,000

Smartphones

89,000


122,000


103,000


98,000


101,000

Connected devices

35,000


40,000


40,000


40,000


39,000

Net additions (losses)

(44,000)


(12,000)


(8,000)


(6,000)


(6,000)

Feature phones

(10,000)


(7,000)


(7,000)


(7,000)


(9,000)

Smartphones

(26,000)


5,000


2,000


6,000


6,000

Connected devices

(8,000)


(10,000)


(3,000)


(5,000)


(3,000)

ARPU1,2

$        49.71


$        48.62


$        48.12


$        47.74


$        47.65

ARPA1,3

$      129.93


$      127.14


$      125.99


$      125.25


$      125.25

Churn rate4

1.30%


1.35%


1.15%


1.11%


1.12%

Handsets

1.10%


1.10%


0.95%


0.88%


0.92%

Connected devices

2.70%


3.08%


2.59%


2.69%


2.53%

Prepaid










Total at end of period

495,000


513,000


518,000


507,000


496,000

Gross additions

55,000


63,000


74,000


65,000


62,000

Net additions (losses)

(18,000)


(5,000)


11,000


10,000


(3,000)

ARPU2

$        34.59


$        34.53


$        35.05


$        35.64


$        35.25

Churn rate4

4.84%


4.39%


4.09%


3.66%


4.37%

Market penetration at end of period










Consolidated operating population

32,370,000


32,127,000


31,865,000


31,493,000


31,493,000

Consolidated operating penetration5

15%


15%


16%


16%


16%

Capital expenditures (millions)

$           137


$           321


$           185


$           148


$           125

Total cell sites in service

6,899


6,898


6,857


6,819


6,802

Owned towers

4,310


4,301


4,274


4,278


4,270




Q3 2021 Postpaid ARPU and ARPA amounts exclude $9 million of postpaid revenue related to an out-of-period error recorded in that quarter.

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.

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.

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.

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

3/31/2022


12/31/2021


9/30/2021


6/30/2021


3/31/2021

Residential connections










Broadband










Wireline, Incumbent

250,100


250,200


252,100


249,200


243,700

Wireline, Expansion

40,600


36,900


32,600


28,300


24,100

Cable

204,600


203,200


202,700


201,200


199,500

Total Broadband

495,200


490,300


487,400


478,700


467,300

Video

140,000


141,500


143,100


143,200


142,700

Voice

301,700


303,700


306,300


308,100


308,700

Total Residential connections

936,900


935,600


936,800


930,100


918,700

Commercial connections

260,000


264,300


269,000


274,400


278,800

Total connections

1,196,900


1,199,900


1,205,700


1,204,500


1,197,400











Residential revenue per connection1

$           57.95


$           57.86


$           57.75


$           57.66


$           56.97











Capital expenditures (millions)

$               105


$               151


$                 91


$                 99


$                 70



Numbers may not foot due to rounding.

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,


2022


2021


2022
vs. 2021

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






Operating revenues






UScellular

$   1,010


$ 1,023


(1)%

TDS Telecom

251


249


1%

All Other2

54


46


17%


1,315


1,318


Operating expenses






UScellular






Expenses excluding depreciation, amortization and accretion

767


765


Depreciation, amortization and accretion

171


170


1%

(Gain) loss on asset disposals, net

2


5


(69)%

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

(1)


(1)


(5)%


939


939


TDS Telecom






Expenses excluding depreciation, amortization and accretion

169


168


Depreciation, amortization and accretion

54


49


11%


223


217


3%

All Other1






Expenses excluding depreciation and amortization

54


47


15%

Depreciation and amortization

4


5


(17)%


58


52


12%

Total operating expenses

1,220


1,208


1%

Operating income (loss)






UScellular

71


84


(15)%

TDS Telecom

28


32


(11)%

All Other2

(4)


(6)


22%


95


110


(14)%

Investment and other income (expense)






Equity in earnings of unconsolidated entities

45


42


7%

Interest and dividend income

2


3


(55)%

Interest expense

(33)


(53)


40%

Total investment and other income (expense)

14


(8)


N/M

Income before income taxes

109


102


8%

Income tax expense

37


31


24%

Net income

72


71


1%

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

11


12


(10)%

Net income attributable to TDS shareholders

61


59


3%

TDS Preferred Share dividends

17


2


N/M

Net income attributable to TDS common shareholders

$        44


$      57


(23)%







Basic weighted average shares outstanding

115


114


Basic earnings per share attributable to TDS common shareholders

$     0.38


$   0.49


(23)%







Diluted weighted average shares outstanding

116


116


Diluted earnings per share attributable to TDS common shareholders

$     0.37


$   0.48


(23)%



N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

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,


2022


2021

(Dollars in millions)




Cash flows from operating activities




Net income

$                 72


$                 71

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




Depreciation, amortization and accretion

229


224

Bad debts expense

26


8

Stock-based compensation expense

12


10

Deferred income taxes, net

29


27

Equity in earnings of unconsolidated entities

(45)


(42)

Distributions from unconsolidated entities

19


23

(Gain) loss on asset disposals, net

2


5

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

(1)


(1)

Other operating activities


(1)

Changes in assets and liabilities from operations




Accounts receivable

14


17

Equipment installment plans receivable


(18)

Inventory

(5)


8

Accounts payable

(60)


(115)

Customer deposits and deferred revenues

9


9

Accrued taxes

129


Accrued interest

10


9

Other assets and liabilities

(59)


(69)

Net cash provided by operating activities

381


165





Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(271)


(220)

Cash paid for intangible assets

(568)


(1,261)

Cash received from divestitures and exchanges

1


1

Other investing activities

(10)


Net cash used in investing activities

(848)


(1,480)





Cash flows from financing activities




Issuance of long-term debt

776


567

Repayment of long-term debt

(127)


Issuance of short-term debt

60


Issuance of TDS Preferred Shares


420

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

(2)


(1)

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


(1)

Repurchase of TDS Common Shares

(4)


(3)

Repurchase of UScellular Common Shares

(10)


(2)

Dividends paid to TDS shareholders

(38)


(20)

Payment of debt and equity issuance costs

(2)


(14)

Distributions to noncontrolling interests

(1)


(1)

Other financing activities

(3)


(3)

Net cash provided by financing activities

649


942





Net increase (decrease) in cash, cash equivalents and restricted cash

182


(373)





Cash, cash equivalents and restricted cash




Beginning of period

414


1,452

End of period

$               596


$            1,079

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS






March 31, 2022


December 31, 2021

(Dollars in millions)




Current assets




Cash and cash equivalents

$                                549


$                                367

Accounts receivable, net

1,123


1,151

Inventory, net

184


178

Prepaid expenses

109


103

Income taxes receivable

58


184

Other current assets

62


61

Total current assets

2,085


2,044





Assets held for sale

15


18





Licenses

4,686


4,097





Goodwill

547


547





Other intangible assets, net

199


197





Investments in unconsolidated entities

506


479





Property, plant and equipment, net

4,385


4,361





Operating lease right-of-use assets

1,033


1,040





Other assets and deferred charges

668


710





Total assets

$                          14,124


$                          13,493

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


LIABILITIES AND EQUITY






March 31, 2022


December 31, 2021

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$                                    9


$                                    6

Accounts payable

388


481

Customer deposits and deferred revenues

245


236

Accrued interest

20


10

Accrued taxes

43


45

Accrued compensation

77


137

Short-term operating lease liabilities

144


141

Other current liabilities

189


124

Total current liabilities

1,115


1,180





Deferred liabilities and credits




Deferred income tax liability, net

948


921

Long-term operating lease liabilities

951


960

Other deferred liabilities and credits

770


759





Long-term debt, net

3,567


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

(456)


(461)

Accumulated other comprehensive income

6


5

Retained earnings

2,824


2,812

Total TDS shareholders' equity

5,960


5,927





Noncontrolling interests

801


807





Total equity

6,761


6,734





Total liabilities and equity

$                          14,124


$                          13,493

 

Balance Sheet Highlights

(Unaudited)




March 31, 2022




TDS


TDS Corporate


Intercompany


TDS


UScellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)










Cash and cash equivalents

$                  300


$                    40


$                  253


$                  (44)


$                  549











Licenses, goodwill and other intangible assets

$              4,677


$                  749


$                      6


$                    —


$              5,432

Investment in unconsolidated entities

465


4


45


(8)


506


$              5,142


$                  753


$                    51


$                     (8)


$              5,938











Property, plant and equipment, net

$              2,576


$              1,722


$                    87


$                    —


$              4,385











Long-term debt, net:










Current portion

$                      6


$                    —


$                      3


$                    —


$                      9

Non-current portion

3,220


3


344



3,567


$              3,226


$                      3


$                  347


$                    —


$              3,576

 

TDS Telecom Highlights

(Unaudited)








Three Months Ended
March 31,


2022


2021


2022
vs. 2021

(Dollars in millions)






Operating revenues






Residential






Wireline, Incumbent

$         85


$         85


Wireline, Expansion

10


7


54%

Cable

67


65


3%

Total residential

163


157


4%

Commercial

44


47


(6)%

Wholesale

44


45


(2)%

Total service revenues

251


249


1%

Equipment revenues



26%

Total operating revenues

251


249


1%







Cost of services

96


97


(1)%

Cost of equipment and products



28%

Selling, general and administrative expenses

72


70


3%

Depreciation, amortization and accretion

54


49


11%

(Gain) loss on asset disposals, net



3%

Total operating expenses

223


217


3%







Operating income

$         28


$         32


(11)%


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,


2022


2021

(Dollars in millions)




Cash flows from operating activities (GAAP)

$                 381


$                 165

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

271


220

Free cash flow (Non-GAAP)1

$                 110


$                  (55)



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:https://www.prnewswire.com/news-releases/tds-reports-first-quarter-2022-results-301541277.html

SOURCE Telephone and Data Systems