USM
$29.44
United States Cellular
$.16
.55%
Earnings Details
2nd Quarter June 2020
Thursday, August 6, 2020 4:05:00 PM
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Summary

United States Cellular (USM) Recent Earnings

United States Cellular (USM) reported 2nd Quarter June 2020 earnings of $0.78 per share on revenue of $973.0 million. The consensus earnings estimate was $0.23 per share on revenue of $934.8 million. Sales were flat year-over-year.

United States Cellular Corp is a wireless telecommunications service provider. Its ownership interests include consolidated and investment interests in licenses covering portions of 30 states & total population of 50.9 million.

Results
Reported Earnings
$0.78
Earnings Whisper
-
Consensus Estimate
$0.23
Reported Revenue
$973.0 Mil
Revenue Estimate
$934.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

U.S. Cellular reports second quarter 2020 results

CHICAGO, Aug. 6, 2020 /PRNewswire/ --

As previously announced, U.S. Cellular will hold a teleconference August 7, 2020, 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 $973 million for the second quarter of 2020, which is equal to the same period one year ago. Service revenues totaled $753 million, which is down 1% compared to the same period a year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $68 million and $0.78, respectively, for the second quarter of 2020 compared to $31 million and $0.35, respectively, in the same period one year ago.

"My first month at U.S. Cellular has been full of learning and listening - a seamless and effective transition," said Laurent C. Therivel. "I want to thank Ken Meyers for providing sound advice and counsel. Over the past few weeks, I have traveled to various locations and met with many of our associates (in the safest manner possible). I am inspired by our customer-centric culture and high levels of engagement, and I'm inspired by the flexibility and resiliency our associates have displayed throughout this pandemic.  It is clear to me that our competitive advantage rests on our focus on the customer and our high-quality network.  Our network strength was recently recognized, with U.S. Cellular ranking #1 in the North Central Region in the J.D. Power 2020 Wireless Network Quality Performance Study - Volume 2, making this the 7th time since 2016 that U.S. Cellular has received an award. This recognition validates that our network modernization strategy is working.

"Many aspects of our second quarter performance were impacted by the pandemic yet we were able to generate very solid results. Churn was exceptionally low, offsetting less store traffic, and we saw an increase in smartphone connections. We continued our network investment programs, deploying 5G to additional markets and maintaining the quality of our network despite increasing demand for data. The leadership team and I will be looking across the organization to identify, evaluate and accelerate further growth opportunities. I am looking forward to our progress throughout the back half of 2020 and thank all our associates for their support."

2020 Estimated Results

U.S. Cellular's current estimates of full-year 2020 results are shown below. Such estimates represent management's view as of August 6, 2020 and should not be assumed to be current as of any future date. U.S. Cellular 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, especially in light of the uncertainty created by the COVID-19 pandemic.


2020 Estimated Results


Previous

Current

(Dollars in millions)



Service revenues

$3,000-$3,100

Unchanged

Adjusted OIBDA1

$725-$850

Unchanged

Adjusted EBITDA1

$900-$1,025

Unchanged

Capital expenditures

$850-$950

Unchanged

The following table provides a reconciliation of Net income to Adjusted OIBDA and Adjusted EBITDA for 2020 estimated results, actual results for the six months ended June 30, 2020, and actual results for the year ended December 31, 2019. In providing 2020 estimated results, U.S. Cellular has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, U.S. Cellular believes that the impact of income taxes cannot be reasonably predicted; therefore, U.S. Cellular is unable to provide such guidance.




Actual Results


2020 Estimated
Results


Six Months Ended
June 30, 2020


Year Ended
December 31, 2019

(Dollars in millions)






Net income (GAAP)

N/A



$

141



$

133


Add back:






Income tax expense

N/A



8



52


Income before income taxes (GAAP)

$95-$220



$

149



$

185


Add back:






Interest expense

100



49



110


Depreciation, amortization and accretion expense

685



354



702


EBITDA (Non-GAAP)1

$880-$1,005



$

552



$

997


Add back or deduct:






(Gain) loss on asset disposals, net

20



8



19


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





(1)


Adjusted EBITDA (Non-GAAP)1

$900-$1,025 



$

560



$

1,015


Deduct:






Equity in earnings of unconsolidated entities

165



89



166


Interest and dividend income

10



5



17


Adjusted OIBDA (Non-GAAP)1

$725-$850 



$

466



$

832




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. U.S. Cellular 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 U.S. Cellular'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 U.S. Cellular's financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2020, can be found on U.S. Cellular's website at investors.uscellular.com.

Conference Call Information
U.S. Cellular will hold a conference call on August 7, 2020 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 U.S. Cellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.9 million connections in 21 states. The Chicago-based company had 5,400 full- and part-time associates as of June 30, 2020. At the end of the second quarter of 2020, Telephone and Data Systems, Inc. owned 82 percent of U.S. Cellular. For more information about U.S. Cellular, 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: the impact, duration and severity of the COVID-19 pandemic; intense competition; the ability to execute U.S. Cellular's business strategy; uncertainties in U.S. Cellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on U.S. Cellular indebtedness or comply with the terms of debt covenants; 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 state and federal regulatory environment; the ability to attract people of outstanding talent throughout all levels of the organization; conditions in the U.S. telecommunications industry; U.S. Cellular's smaller scale relative to larger competitors; changes in demand, consumer preferences, price competition, or  churn rates; advances in  technology; the value of assets and investments; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of U.S. Cellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties; cyber-attacks or other breaches of network or information technology security; changes in facts and circumstances that could require U.S. Cellular to record adjustments to amounts reflected in the financial statements; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; pending and future litigation; potential conflicts of interests between TDS and U.S. Cellular. 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 U.S. Cellular's Form 10-K, as updated by any U.S. Cellular Form 10-Q filed subsequent to such Form 10-K.

The impact of the COVID-19 pandemic on U.S. Cellular's business is uncertain, but depending on its duration and severity it could have a material adverse effect on U.S. Cellular's business, financial condition or results of operations.

The impact of the recent global spread of COVID-19 on U.S. Cellular's future operations is uncertain. Public health emergencies, such as COVID-19, pose the risk that U.S. Cellular or its associates, agents, partners and suppliers may be unable to conduct business activities for an extended period of time and/or provide the level of service expected. U.S. Cellular's ability to attract customers, maintain an adequate supply chain and execute on its business strategies and initiatives could be negatively impacted by this outbreak. Additionally, COVID-19 has caused and could continue to cause increased unemployment, economic downturn and credit market deterioration, all of which could negatively impact U.S. Cellular. The extent of the impact of COVID-19 on U.S. Cellular's business, financial condition and results of operations will depend on future circumstances, including the severity of the disease, the duration of the outbreak, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted.

For more information about U.S. Cellular, visit:
U.S. Cellular: www.uscellular.com

United States Cellular Corporation

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

6/30/2020


3/31/2020


12/31/2019


9/30/2019


6/30/2019

Retail Connections










Postpaid










Total at end of period

4,372,000



4,359,000



4,383,000



4,395,000



4,414,000


Gross additions

129,000



132,000



170,000



163,000



137,000


Feature phones

3,000



2,000



2,000



3,000



5,000


Smartphones

82,000



88,000



128,000



121,000



97,000


Connected devices

44,000



42,000



40,000



39,000



35,000


Net additions (losses)

12,000



(26,000)



(12,000)



(19,000)



(26,000)


Feature phones

(8,000)



(10,000)



(11,000)



(11,000)



(10,000)


Smartphones

11,000



(10,000)



13,000



9,000



(1,000)


Connected devices

9,000



(6,000)



(14,000)



(17,000)



(15,000)


ARPU1

$

46.24



$

47.23



$

46.57



$

46.16



$

45.90


ARPA2

$

120.70



$

122.92



$

120.99



$

119.87



$

119.46


Churn rate3

0.89

%


1.21

%


1.38

%


1.38

%


1.23

%

Handsets

0.71

%


0.95

%


1.11

%


1.09

%


0.97

%

Connected devices

2.24

%


3.11

%


3.44

%


3.44

%


3.01

%

Prepaid










Total at end of period

496,000



494,000



506,000



510,000



500,000


Gross additions

62,000



57,000



63,000



70,000



61,000


Net additions (losses)

2,000



(12,000)



(3,000)



9,000



(2,000)


ARPU1

$

34.89



$

34.07



$

34.11



$

34.35



$

34.43


Churn rate3

4.05

%


4.67

%


4.40

%


4.03

%


4.20

%

Total connections at end of period4

4,919,000



4,903,000



4,941,000



4,957,000



4,967,000


Market penetration at end of period










Consolidated operating population

31,292,000



31,292,000



30,740,000



31,310,000



31,310,000


Consolidated operating penetration5

16

%


16

%


16

%


16

%


16

%

Capital expenditures (millions)

$

168



$

236



$

243



$

170



$

195


Total cell sites in service

6,673



6,629



6,578



6,554



6,535


Owned towers

4,208



4,184



4,166



4,123



4,116




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 population of consolidated operating markets as estimated by Nielsen.

 

United States Cellular Corporation

Consolidated Statement of Operations Highlights

(Unaudited)






Three Months Ended
June 30,


Six Months Ended
June 30,


2020


2019


2020 vs.
2019


2020


2019


2020 vs.
2019

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












Operating revenues












Service

$

753



$

757



(1)

%


$

1,515



$

1,498



1

%

Equipment sales

220



216



2

%


422



441



(4)

%

Total operating revenues

973



973




1,937



1,939















Operating expenses












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

197



193



2

%


377



369



2

%

Cost of equipment sold

218



224



(3)

%


435



458



(5)

%

Selling, general and administrative

323



344



(6)

%


659



669



(2)

%

Depreciation, amortization and accretion

178



177



1

%


354



345



3

%

(Gain) loss on asset disposals, net

4



5



(19)

%


8



7



7

%

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





N/M




(2)



N/M

(Gain) loss on license sales and exchanges, net





N/M




(2)



N/M

Total operating expenses

920



943



(2)

%


1,833



1,844



(1)

%













Operating income

53



30



74

%


104



95



9

%













Investment and other income (expense)












Equity in earnings of unconsolidated entities

44



40



8

%


89



84



6

%

Interest and dividend income

1



5



(79)

%


5



11



(54)

%

Interest expense

(25)



(29)



15

%


(49)



(58)



17

%

Other, net





N/M




(1)



N/M

Total investment and other income

20



16



31

%


45



36



27

%













Income before income taxes

73



46



60

%


149



131



14

%

Income tax expense

4



14



(71)

%


8



41



(81)

%

Net income

69



32



N/M


141



90



56

%

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

1



1



42

%


2



4



(51)

%

Net income attributable to U.S. Cellular shareholders

$

68



$

31



N/M


$

139



$

86



62

%













Basic weighted average shares outstanding

86



87



(1)

%


86



87



(1)

%

Basic earnings per share attributable to U.S. Cellular shareholders

$

0.79



$

0.36



N/M


$

1.62



$

0.99



63

%













Diluted weighted average shares outstanding

87



88



(1)

%


87



88



(1)

%

Diluted earnings per share attributable to U.S. Cellular shareholders

$

0.78



$

0.35



N/M


$

1.59



$

0.97



64

%



























N/M - Percentage change not meaningful

 

United States Cellular Corporation

Consolidated Statement of Cash Flows

(Unaudited)


Six Months Ended
June 30,


2020


2019

(Dollars in millions)




Cash flows from operating activities




Net income

$

141



$

90


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




Depreciation, amortization and accretion

354



345


Bad debts expense

45



48


Stock-based compensation expense

17



25


Deferred income taxes, net

106



27


Equity in earnings of unconsolidated entities

(89)



(84)


Distributions from unconsolidated entities

90



76


(Gain) loss on asset disposals, net

8



7


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



(2)


(Gain) loss on license sales and exchanges, net



(2)


Other operating activities



2


Changes in assets and liabilities from operations




Accounts receivable

23



3


Equipment installment plans receivable

22



(11)


Inventory

17



(4)


Accounts payable

55



(7)


Customer deposits and deferred revenues

(10)



8


Accrued taxes

(67)



3


Other assets and liabilities

(20)



(48)


Net cash provided by operating activities

692



476






Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(471)



(282)


Cash paid for licenses

(144)



(255)


Cash received from investments

1



11


Cash paid for investments

(1)



(11)


Cash received from divestitures and exchanges

1



32


Advance payments for license acquisitions

(16)




Other investing activities

(1)



(1)


Net cash used in investing activities

(631)



(506)






Cash flows from financing activities




Issuance of long-term debt

125




Repayment of long-term debt

(4)



(10)


Common Shares reissued for benefit plans, net of tax payments

(8)



(8)


Repurchase of Common Shares

(23)




Payment of debt issuance costs

(4)




Distributions to noncontrolling interests

(1)



(2)


Other financing activities

(1)



(1)


Net cash provided by (used in) financing activities

84



(21)






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

145



(51)






Cash, cash equivalents and restricted cash




Beginning of period

291



583


End of period

$

436



$

532


 

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS






June 30, 2020


December 31, 2019

(Dollars in millions)




Current assets




Cash and cash equivalents

$

418



$

285


Accounts receivable, net

954



1,010


Inventory, net

145



162


Prepaid expenses

50



50


Income taxes receivable

122



46


Other current assets

29



20


Total current assets

1,718



1,573






Licenses

2,621



2,471






Investments in unconsolidated entities

445



447






Property, plant and equipment, net

2,258



2,207






Operating lease right-of-use assets

914



900






Other assets and deferred charges

544



566






Total assets

$

8,500



$

8,164


 

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)


LIABILITIES AND EQUITY






June 30, 2020


December 31, 2019

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$

4



$

8


Accounts payable

294



304


Customer deposits and deferred revenues

139



148


Accrued taxes

30



30


Accrued compensation

53



76


Short-term operating lease liabilities

112



105


Other current liabilities

65



79


Total current liabilities

697



750






Deferred liabilities and credits




Deferred income tax liability, net

613



507


Long-term operating lease liabilities

874



865


Other deferred liabilities and credits

346



319






Long-term debt, net

1,625



1,502






Noncontrolling interests with redemption features

11



11






Equity




U.S. Cellular shareholders' equity




Series A Common and Common Shares, par value $1 per share

88



88


Additional paid-in capital

1,646



1,629


Treasury shares

(70)



(70)


Retained earnings

2,657



2,550


Total U.S. Cellular shareholders' equity

4,321



4,197






Noncontrolling interests

13



13






Total equity

4,334



4,210






Total liabilities and equity

$

8,500



$

8,164


 

United States Cellular Corporation

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow



Three Months Ended
June 30,


Six Months Ended
June 30,


2020


2019


2020


2019

(Dollars in millions)








Cash flows from operating activities (GAAP)

$

350



$

189



$

692



$

476


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

156



175



471



282


Free cash flow (Non-GAAP)1

$

194



$

14



$

221



$

194




1         

Free cash flow is a non-GAAP financial measure which U.S. Cellular 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/us-cellular-reports-second-quarter-2020-results-301107989.html

SOURCE United States Cellular Corporation