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UScellular reports first quarter 2022 results

May, 05, 2022

2022 guidance reaffirmed

CHICAGO, May 5, 2022 /PRNewswire/ -- As previously announced, UScellular 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.uscellular.com.

United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,010 million for the first quarter of 2022, versus $1,023 million for the same period one year ago. Service revenues totaled $787 million, versus $771 million for the same period a year ago. Net income attributable to UScellular shareholders and related diluted earnings per share were $49 million and $0.57, respectively, for the first quarter of 2022 compared to $60 million and $0.69, respectively, in the same period one year ago.

"UScellular's first quarter results showed growth in retail service revenue, driven by the positive impact of ARPU," said Laurent Therivel, UScellular President and CEO. "We continue to focus on our growth areas of the business, which include 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.

"I continue to be impressed with the hard work and dedication of our associates, and I'd like to thank all of them for their contributions this quarter."

2022 Estimated Results

UScellular's current estimates of full-year 2022 results 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. 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.


2022 Estimated Results


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

The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2022 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


2022 Estimated
Results


Three Months Ended

March 31, 2022


Year Ended
December 31, 2021

(Dollars in millions)






Net income (GAAP)

N/A


$                                 52


$                               160

Add back:






     Income tax expense

N/A


32


20

Income before income taxes (GAAP)

$65-$215


$                                 84


$                               180

Add back:






     Interest expense

135


33


175

     Depreciation, amortization and accretion expense

710


171


678

EBITDA (Non-GAAP)1

$910-$1,060


$                               288


$                           1,033

Add back or deduct:






     (Gain) loss on asset disposals, net

15


2


23

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


(1)


(2)

Adjusted EBITDA (Non-GAAP)1

$925-$1,075


$                               289


$                           1,054

Deduct:






     Equity in earnings of unconsolidated entities

170


45


179

     Interest and dividend income

5


1


6

Adjusted OIBDA (Non-GAAP)1

$750-$900


$                               243


$                               869



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 March 31, 2022, can be found on UScellular's website at investors.uscellular.com.

Stock Repurchase

During the first quarter of 2022, UScellular repurchased 363,821 of its Common Shares for $10 million.

Conference Call Information

UScellular 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.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 4.8 million retail connections in 21 states. The Chicago-based company had 4,800 full- and part-time associates as of March 31, 2022. At the end of the first quarter of 2022, Telephone and Data Systems, Inc. owned 83 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 attract people of outstanding talent throughout all levels of the organization; USM's smaller scale relative to larger competitors; 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; 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; 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; cyber-attacks or other breaches of network or information technology security; potential conflicts of interests between TDS and UScellular; 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

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

 

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. 

 

 

United States Cellular Corporation

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






     Service

$      787


$      771


2%

     Equipment sales

223


252


(12)%

          Total operating revenues

1,010


1,023


(1)%







Operating expenses






     System operations (excluding Depreciation, amortization and accretion reported below)

185


185


     Cost of equipment sold

257


275


(6)%

     Selling, general and administrative

325


305


6%

     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)%

          Total operating expenses

939


939








Operating income

71


84


(15)%







Investment and other income (expense)






     Equity in earnings of unconsolidated entities

45


42


7%

     Interest and dividend income

1


2


(46)%

     Interest expense

(33)


(39)


14%

          Total investment and other income (expense)

13


5


N/M







Income before income taxes

84


89


(6)%

     Income tax expense

32


27


19%

Net income

52


62


(17)%

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

3


2


53%

Net income attributable to UScellular shareholders

$        49


$        60


(18)%







Basic weighted average shares outstanding

86


86


Basic earnings per share attributable to UScellular shareholders

$    0.57


$    0.70


(18)%







Diluted weighted average shares outstanding

87


88


(1)%

Diluted earnings per share attributable to UScellular shareholders

$    0.57


$    0.69


(17)%


N/M - Percentage change not meaningful

 

 

United States Cellular Corporation

Consolidated Statement of Cash Flows

(Unaudited)


Three Months Ended

March 31,


2022


2021

(Dollars in millions)




Cash flows from operating activities




     Net income

$                     52


$                     62

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




          Depreciation, amortization and accretion

171


170

          Bad debts expense

25


7

          Stock-based compensation expense

7


6

          Deferred income taxes, net

22


23

          Equity in earnings of unconsolidated entities

(45)


(42)

          Distributions from unconsolidated entities

19


22

          (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


(1)

     Changes in assets and liabilities from operations




          Accounts receivable

15


4

          Equipment installment plans receivable


(18)

          Inventory

(4)


7

          Accounts payable

(62)


(86)

          Customer deposits and deferred revenues

9


7

          Accrued taxes

130


3

          Accrued interest

10


9

          Other assets and liabilities

(40)


(53)

               Net cash provided by operating activities

311


124





Cash flows from investing activities




     Cash paid for additions to property, plant and equipment

(150)


(133)

     Cash paid for licenses

(561)


(1,256)

     Cash received from divestitures and exchanges

1


1

               Net cash used in investing activities

(710)


(1,388)





Cash flows from financing activities




     Issuance of long-term debt

625


492

     Repayment of long-term debt

(126)


     Issuance of short-term debt

60


     Common Shares reissued for benefit plans, net of tax payments


(1)

     Repurchase of Common Shares

(10)


(2)

     Payment of debt issuance costs

(1)


(1)

     Distributions to noncontrolling interests

(1)


(1)

     Other financing activities

(3)


(2)

               Net cash provided by financing activities

544


485





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

145


(779)





Cash, cash equivalents and restricted cash




     Beginning of period

199


1,291

     End of period

$                   344


$                   512

 

 

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS






March 31, 2022


December 31, 2021

(Dollars in millions)




Current assets




     Cash and cash equivalents

$                                300


$                                156

     Accounts receivable, net

1,020


1,046

     Inventory, net

177


173

     Prepaid expenses

63


58

     Income taxes receivable


123

     Other current assets

51


49

     Total current assets

1,611


1,605





Assets held for sale

15


18





Licenses

4,677


4,088





Investments in unconsolidated entities

465


439





Property, plant and equipment, net

2,576


2,606





Operating lease right-of-use assets

952


959





Other assets and deferred charges

579


626





Total assets

$                          10,875


$                          10,341

 

 

United States Cellular Corporation

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

$                                    6


$                                    3

     Accounts payable

281


360

     Customer deposits and deferred revenues

200


191

     Accrued taxes

34


33

     Accrued compensation

42


83

     Short-term operating lease liabilities

131


129

     Other current liabilities

179


104

          Total current liabilities

873


903





Deferred liabilities and credits




     Deferred income tax liability, net

696


674

     Long-term operating lease liabilities

882


889

     Other deferred liabilities and credits

583


573





Long-term debt, net

3,220


2,728





Noncontrolling interests with redemption features

12


11





Equity




UScellular shareholders' equity




     Series A Common and Common Shares, par value $1.00 per share

88


88

     Additional paid-in capital

1,685


1,678

     Treasury shares

(77)


(68)

     Retained earnings

2,897


2,849

          Total UScellular shareholders' equity

4,593


4,547





Noncontrolling interests

16


16





     Total equity

4,609


4,563





Total liabilities and equity

$                          10,875


$                          10,341

 

 

United States Cellular Corporation

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow



Three Months Ended

March 31,


2022


2021

(Dollars in millions)




Cash flows from operating activities (GAAP)

$                311


$                124

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

150


133

     Free cash flow (Non-GAAP)1

$                161


$                   (9)



1

Free cash flow is a non-GAAP financial measure which UScellular 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/uscellular-reports-first-quarter-2022-results-301541220.html

SOURCE United States Cellular Corporation

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