2023 guidance reaffirmed
CHICAGO, May 4, 2023
/PRNewswire/ --
As previously announced, UScellular will hold a
teleconference on May 5, 2023, 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 $986 million
for the first quarter of 2023, versus $1,010
million for the same period one year ago. Service revenues
totaled $767 million, versus
$787 million for the same period one
year ago. Net income attributable to UScellular shareholders and
related diluted earnings per share were $13
million and $0.15,
respectively, for the first quarter of 2023 compared to
$49 million and $0.57, respectively, in the same period one year
ago.
"Postpaid subscriber trends improved year over year as we made
progress toward stabilizing our customer base, but we still had net
subscriber losses during the quarter and have more work to do,"
said Laurent Therivel, UScellular
President and CEO. "We continue to make significant investments in
advancing our network, while our cost optimization program is
helping us improve efficiency. Finally, we continue to see momentum
in two growth areas of the business - both fixed wireless and
towers had another strong quarter."
2023 Estimated Results
UScellular's current estimates of full-year 2023 results are
shown below. Such estimates represent management's view as of
May 4, 2023 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.
|
2023 Estimated
Results
|
|
Previous
|
Current
|
(Dollars in
millions)
|
|
|
Service
revenues
|
$3,050-$3,150
|
Unchanged
|
Adjusted
OIBDA1
|
$725-$875
|
Unchanged
|
Adjusted
EBITDA1
|
$875-$1,025
|
Unchanged
|
Capital
expenditures
|
$600-$700
|
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 2023 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
|
|
2023 Estimated
Results
|
|
Three Months
Ended
March 31,
2023
|
|
Year Ended
December 31, 2022
|
(Dollars in
millions)
|
|
|
|
|
|
Net income
(GAAP)
|
N/A
|
|
$14
|
|
$35
|
Add back:
|
|
|
|
|
|
Income tax
expense
|
N/A
|
|
11
|
|
37
|
Income before income
taxes (GAAP)
|
$10-$160
|
|
$25
|
|
$72
|
Add back:
|
|
|
|
|
|
Interest
expense
|
205
|
|
47
|
|
163
|
Depreciation,
amortization and accretion expense
|
645
|
|
170
|
|
700
|
EBITDA
(Non-GAAP)1
|
$860-$1,010
|
|
$242
|
|
$935
|
Add back or
deduct:
|
|
|
|
|
|
Loss on impairment of
licenses
|
—
|
|
—
|
|
3
|
(Gain) loss on asset
disposals, net
|
15
|
|
10
|
|
19
|
(Gain) loss on sale of
business and other exit costs, net
|
—
|
|
—
|
|
(1)
|
Adjusted EBITDA
(Non-GAAP)1
|
$875-$1,025
|
|
$252
|
|
$956
|
Deduct:
|
|
|
|
|
|
Equity in earnings of
unconsolidated entities
|
145
|
|
44
|
|
158
|
Interest and dividend
income
|
5
|
|
2
|
|
8
|
Adjusted OIBDA
(Non-GAAP)1
|
$725-$875
|
|
$206
|
|
$790
|
|
|
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, 2023, can be found on UScellular's website at
investors.uscellular.com.
|
Conference Call Information
UScellular will hold a conference call on May 5, 2023 at
9:00 a.m. Central Time.
- Access the live call on the Events & Presentations page of
investors.uscellular.com or at
https://events.q4inc.com/attendee/239182809
- Access the call by phone at (888)330-2384 conference ID:
1328528.
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 4.7 million
retail connections in 21 states. The Chicago-based company had 4,900 full- and
part-time associates as of March 31,
2023. At the end of the first quarter of 2023, Telephone and
Data Systems, Inc. owned 84 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;
UScellular's smaller scale relative to larger competitors; the
ability to obtain or maintain roaming arrangements with other
carriers on acceptable terms and changes in roaming practices; 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; difficulties involving third parties with which
UScellular does business; 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; and the
impact, duration and severity of public health emergencies.
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
|
3/31/2023
|
|
12/31/2022
|
|
9/30/2022
|
|
6/30/2022
|
|
3/31/2022
|
Retail
Connections
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
|
|
|
|
|
|
Total at end of
period
|
4,223,000
|
|
4,247,000
|
|
4,264,000
|
|
4,296,000
|
|
4,335,000
|
Gross
additions
|
137,000
|
|
154,000
|
|
151,000
|
|
128,000
|
|
126,000
|
Feature
phones
|
7,000
|
|
6,000
|
|
5,000
|
|
4,000
|
|
2,000
|
Smartphones
|
86,000
|
|
99,000
|
|
102,000
|
|
90,000
|
|
89,000
|
Connected
devices
|
44,000
|
|
49,000
|
|
44,000
|
|
34,000
|
|
35,000
|
Net additions
(losses)
|
(24,000)
|
|
(17,000)
|
|
(31,000)
|
|
(40,000)
|
|
(44,000)
|
Feature
phones
|
(4,000)
|
|
(6,000)
|
|
(6,000)
|
|
(8,000)
|
|
(10,000)
|
Smartphones
|
(21,000)
|
|
(14,000)
|
|
(16,000)
|
|
(23,000)
|
|
(26,000)
|
Connected
devices
|
1,000
|
|
3,000
|
|
(9,000)
|
|
(9,000)
|
|
(8,000)
|
ARPU1
|
$
50.66
|
|
$
50.60
|
|
$
50.21
|
|
$
50.07
|
|
$
49.71
|
ARPA2
|
$
130.77
|
|
$ 130.97
|
|
$ 130.27
|
|
$
130.43
|
|
$
129.93
|
Handset upgrade
rate3
|
4.9 %
|
|
7.0 %
|
|
8.1 %
|
|
6.0 %
|
|
5.0 %
|
Churn
rate4
|
1.27 %
|
|
1.35 %
|
|
1.42 %
|
|
1.30 %
|
|
1.30 %
|
Handsets
|
1.06 %
|
|
1.12 %
|
|
1.15 %
|
|
1.10 %
|
|
1.10 %
|
Connected
devices
|
2.78 %
|
|
2.99 %
|
|
3.40 %
|
|
2.73 %
|
|
2.70 %
|
Prepaid
|
|
|
|
|
|
|
|
|
|
Total at end of
period
|
470,000
|
|
493,000
|
|
493,000
|
|
490,000
|
|
495,000
|
Gross
additions
|
43,000
|
|
61,000
|
|
62,000
|
|
56,000
|
|
55,000
|
Net additions
(losses)
|
(23,000)
|
|
—
|
|
2,000
|
|
(4,000)
|
|
(18,000)
|
ARPU1
|
$
33.19
|
|
$
33.34
|
|
$
35.04
|
|
$
35.25
|
|
$
34.59
|
Churn
rate4
|
4.63 %
|
|
4.11 %
|
|
4.07 %
|
|
4.07 %
|
|
4.84 %
|
Market penetration
at end of period
|
|
|
|
|
|
|
|
|
|
Consolidated operating
population
|
32,350,000
|
|
32,370,000
|
|
32,370,000
|
|
32,370,000
|
|
32,370,000
|
Consolidated operating
penetration5
|
15 %
|
|
15 %
|
|
15 %
|
|
15 %
|
|
15 %
|
Capital expenditures
(millions)
|
$
208
|
|
$
176
|
|
$
136
|
|
$
268
|
|
$
137
|
Total cell sites in
service
|
6,950
|
|
6,945
|
|
6,933
|
|
6,916
|
|
6,899
|
Owned
towers
|
4,338
|
|
4,336
|
|
4,329
|
|
4,323
|
|
4,310
|
|
|
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
|
Handset upgrade rate
calculated as total handset upgrade transactions divided by average
postpaid handset connections.
|
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,
|
|
2023
|
|
2022
|
|
2023
vs. 2022
|
(Dollars and shares in
millions, except per share amounts)
|
|
|
|
|
|
Operating
revenues
|
|
|
|
|
|
Service
|
$ 767
|
|
$ 787
|
|
(3) %
|
Equipment
sales
|
219
|
|
223
|
|
(2) %
|
Total operating
revenues
|
986
|
|
1,010
|
|
(2) %
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
System operations
(excluding Depreciation, amortization and accretion reported
below)
|
182
|
|
185
|
|
(2) %
|
Cost of equipment
sold
|
253
|
|
257
|
|
(2) %
|
Selling, general and
administrative
|
345
|
|
325
|
|
6 %
|
Depreciation,
amortization and accretion
|
170
|
|
171
|
|
(1) %
|
(Gain) loss on asset
disposals, net
|
10
|
|
2
|
|
N/M
|
(Gain) loss on sale of
business and other exit costs, net
|
—
|
|
(1)
|
|
N/M
|
Total operating
expenses
|
960
|
|
939
|
|
2 %
|
|
|
|
|
|
|
Operating
income
|
26
|
|
71
|
|
(63) %
|
|
|
|
|
|
|
Investment and other
income (expense)
|
|
|
|
|
|
Equity in earnings of
unconsolidated entities
|
44
|
|
45
|
|
(2) %
|
Interest and dividend
income
|
2
|
|
1
|
|
N/M
|
Interest
expense
|
(47)
|
|
(33)
|
|
(41) %
|
Total investment and
other income (expense)
|
(1)
|
|
13
|
|
N/M
|
|
|
|
|
|
|
Income before income
taxes
|
25
|
|
84
|
|
(70) %
|
Income tax
expense
|
11
|
|
32
|
|
(66) %
|
Net
income
|
14
|
|
52
|
|
(72) %
|
Less: Net income
attributable to noncontrolling interests, net of tax
|
1
|
|
3
|
|
(43) %
|
Net income
attributable to UScellular shareholders
|
$
13
|
|
$
49
|
|
(74) %
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
85
|
|
86
|
|
(1) %
|
Basic earnings per
share attributable to UScellular shareholders
|
$
0.15
|
|
$
0.57
|
|
(73) %
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
86
|
|
87
|
|
(1) %
|
Diluted earnings per
share attributable to UScellular shareholders
|
$
0.15
|
|
$
0.57
|
|
(73) %
|
|
N/M - Percentage change
not meaningful
|
United States
Cellular Corporation
|
Consolidated
Statement of Cash Flows
|
(Unaudited)
|
|
Three Months
Ended
March
31,
|
|
2023
|
|
2022
|
(Dollars in
millions)
|
|
|
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
14
|
|
$
52
|
Add (deduct)
adjustments to reconcile net income to net cash flows from
operating activities
|
|
|
|
Depreciation,
amortization and accretion
|
170
|
|
171
|
Bad debts
expense
|
26
|
|
25
|
Stock-based
compensation expense
|
—
|
|
7
|
Deferred income taxes,
net
|
7
|
|
22
|
Equity in earnings of
unconsolidated entities
|
(44)
|
|
(45)
|
Distributions from
unconsolidated entities
|
20
|
|
19
|
(Gain) loss on asset
disposals, net
|
10
|
|
2
|
(Gain) loss on sale of
business and other exit costs, net
|
—
|
|
(1)
|
Other operating
activities
|
2
|
|
1
|
Changes in assets and
liabilities from operations
|
|
|
|
Accounts
receivable
|
37
|
|
15
|
Equipment installment
plans receivable
|
1
|
|
—
|
Inventory
|
(1)
|
|
(4)
|
Accounts
payable
|
(149)
|
|
(62)
|
Customer deposits and
deferred revenues
|
(10)
|
|
9
|
Accrued
taxes
|
1
|
|
130
|
Accrued
interest
|
9
|
|
10
|
Other assets and
liabilities
|
(52)
|
|
(40)
|
Net cash provided by
operating activities
|
41
|
|
311
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
additions to property, plant and equipment
|
(196)
|
|
(150)
|
Cash paid for
licenses
|
(5)
|
|
(561)
|
Other investing
activities
|
9
|
|
1
|
Net cash used in
investing activities
|
(192)
|
|
(710)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Issuance of long-term
debt
|
115
|
|
625
|
Repayment of long-term
debt
|
(3)
|
|
(126)
|
Issuance of short-term
debt
|
—
|
|
60
|
Repayment of
short-term debt
|
(60)
|
|
—
|
Repurchase of Common
Shares
|
—
|
|
(10)
|
Distributions to
noncontrolling interests
|
(1)
|
|
(1)
|
Cash paid for software
license agreements
|
(7)
|
|
(2)
|
Other financing
activities
|
(1)
|
|
(2)
|
Net cash provided by
financing activities
|
43
|
|
544
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash
|
(108)
|
|
145
|
|
|
|
|
Cash, cash
equivalents and restricted cash
|
|
|
|
Beginning of
period
|
308
|
|
199
|
End of
period
|
$
200
|
|
$
344
|
United States
Cellular Corporation
|
Consolidated Balance
Sheet Highlights
|
(Unaudited)
|
|
ASSETS
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
(Dollars in
millions)
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
154
|
|
$
273
|
Accounts receivable,
net
|
1,009
|
|
1,072
|
Inventory,
net
|
262
|
|
261
|
Prepaid
expenses
|
76
|
|
68
|
Income taxes
receivable
|
4
|
|
4
|
Other current
assets
|
57
|
|
45
|
Total current
assets
|
1,562
|
|
1,723
|
|
|
|
|
Assets held for
sale
|
18
|
|
26
|
|
|
|
|
Licenses
|
4,692
|
|
4,690
|
|
|
|
|
Investments in
unconsolidated entities
|
477
|
|
452
|
|
|
|
|
Property, plant and
equipment, net
|
2,658
|
|
2,624
|
|
|
|
|
Operating lease
right-of-use assets
|
910
|
|
918
|
|
|
|
|
Other assets and
deferred charges
|
680
|
|
686
|
|
|
|
|
Total
assets
|
$
10,997
|
|
$
11,119
|
United States
Cellular Corporation
|
Consolidated Balance
Sheet Highlights
|
(Unaudited)
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
(Dollars in millions,
except per share amounts)
|
|
|
|
Current
liabilities
|
|
|
|
Current portion of
long-term debt
|
$
15
|
|
$
13
|
Accounts
payable
|
214
|
|
356
|
Customer deposits and
deferred revenues
|
229
|
|
239
|
Accrued
taxes
|
33
|
|
35
|
Accrued
compensation
|
44
|
|
84
|
Short-term operating
lease liabilities
|
133
|
|
133
|
Other current
liabilities
|
285
|
|
335
|
Total current
liabilities
|
953
|
|
1,195
|
|
|
|
|
Deferred liabilities
and credits
|
|
|
|
Deferred income tax
liability, net
|
715
|
|
708
|
Long-term operating
lease liabilities
|
836
|
|
843
|
Other deferred
liabilities and credits
|
601
|
|
604
|
|
|
|
|
Long-term debt,
net
|
3,297
|
|
3,187
|
|
|
|
|
Noncontrolling
interests with redemption features
|
12
|
|
12
|
|
|
|
|
Equity
|
|
|
|
UScellular
shareholders' equity
|
|
|
|
Series A Common and
Common Shares, par value $1.00 per share
|
88
|
|
88
|
Additional paid-in
capital
|
1,704
|
|
1,703
|
Treasury
shares
|
(96)
|
|
(98)
|
Retained
earnings
|
2,872
|
|
2,861
|
Total UScellular
shareholders' equity
|
4,568
|
|
4,554
|
|
|
|
|
Noncontrolling
interests
|
15
|
|
16
|
|
|
|
|
Total
equity
|
4,583
|
|
4,570
|
|
|
|
|
Total liabilities
and equity
|
$
10,997
|
|
$
11,119
|
United States
Cellular Corporation
Financial Measures
and Reconciliations
(Unaudited)
|
Free Cash
Flow
|
|
Three Months
Ended
March
31,
|
|
2023
|
|
2022
|
(Dollars in
millions)
|
|
|
|
Cash flows from
operating activities (GAAP)
|
$
41
|
|
$
311
|
Cash paid for additions
to property, plant and equipment
|
(196)
|
|
(150)
|
Cash paid for software
license agreements
|
(7)
|
|
(2)
|
Free cash flow
(Non-GAAP)1
|
$
(162)
|
|
$
159
|
|
|
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 and Cash paid for
software license agreements.
|
View original
content:https://www.prnewswire.com/news-releases/uscellular-reports-first-quarter-2023-results-301816421.html
SOURCE United States Cellular Corporation