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EX-99.2 - EX-99.2 - UNITED STATES CELLULAR CORP | usmexhibit992.htm |
8-K - 8-K - UNITED STATES CELLULAR CORP | usm8k.htm |
As previously announced, U.S. Cellular will hold a teleconference November 8, 2017, at 9:30 a.m. CST. Listen to the live call via the Events & Presentations page of investors.uscellular.com.
FOR IMMEDIATE RELEASE
U.S. Cellular reports third quarter 2017 results
U.S. Cellular continues to grow customer base and raises guidance
CHICAGO, (November 8, 2017) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $963 million for the third quarter of 2017, versus $1,023 million for the same period one year ago. Net loss attributable to U.S. Cellular shareholders and related diluted loss per share were $299 million and $3.51, respectively, as a result of a $370 million ($309 million, net of tax) non-cash charge related to goodwill impairment recorded during the three months ended September 30, 2017. This compares to Net income attributable to U.S. Cellular shareholders and related diluted earnings per share of $17 million and $0.20, respectively, in the same period one year ago. Excluding this goodwill impairment charge, Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $10 million and $0.11, respectively, for the three months ended September 30, 2017.
“I am quite pleased with the operating results for the quarter as we continued to build on the momentum of the previous quarter, growing subscribers and increasing customer loyalty while tightly managing costs,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “We added postpaid handset subscribers and experienced another quarter of exceptionally low handset churn driven by greater adoption of our Total Plans and attractive promotions. Overall, we are competing effectively in the marketplace. Our subscriber results are strong evidence that customers value our Total Plans and love the quality of our award winning network. We believe we have found a good balance of promotional offers to get new customers into our stores, and we treat all of our customers exceptionally well with our customer-focused service orientation.
“Thanks to disciplined cost management, operating expenses were down across all major categories including cost of equipment sold and selling, general and administrative expenses, helping to offset lower average revenue per user (ARPU) caused by industry-wide price competition. Even as data traffic continues to grow, our engineers have worked hard to ensure our network efficiency is at the highest level and system operations expenses continue to decrease. These cost savings coupled with the growth in customers gave us reason to raise guidance on important metrics like Adjusted EBITDA. We increased guidance despite industry-wide pricing pressure which was a key driver to both the year-over-year decline in revenue and our decision to write off goodwill. In light of all the value the wireless industry is delivering to consumers and businesses every day, these pricing declines are unfathomable.”
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U.S. Cellular’s current estimates of full-year 2017 results are shown below. Such estimates represent management’s view as of November 8, 2017. Such forward‑looking statements should not be assumed to be current as of any future date. U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
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2017 Estimated Results |
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Current |
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Previous |
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(Dollars in millions) |
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Total operating revenues (1) |
$3,850-$3,950 |
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$3,800-$4,000 |
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Adjusted OIBDA (1)(2)(3) |
$600-$700 |
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$550-$650 |
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Adjusted EBITDA (2) |
$740-$840 |
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$700-$800 |
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Capital expenditures |
Approx. |
$500 |
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Unchanged |
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The following table provides a reconciliation of Net Income (loss) to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the nine months ended September 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 estimated results, U.S. Cellular has not completed the below reconciliation to net income because it does not provide guidance for income taxes. Although potentially significant, U.S. Cellular believes that the impact of income taxes cannot be reasonably predicted; therefore, U.S. Cellular is unable to provide such guidance.
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Actual Results |
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2017 Estimated Results |
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Nine Months Ended September 30, 2017 |
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Year Ended December 31, 2016 |
(Dollars in millions) |
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Net income (loss) (GAAP) |
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N/A |
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$ |
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$ |
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Add back: |
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Income tax expense (benefit) |
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N/A |
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Income (loss) before income taxes (GAAP) |
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$ |
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$ |
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$ |
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Add back: |
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Interest expense |
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110 |
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Depreciation, amortization and accretion expense |
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610 |
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EBITDA (Non-GAAP) |
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$ |
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$ |
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$ |
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Add back (deduct): |
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Loss on impairment of goodwill |
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(Gain) loss on sale of business and other exit costs, net |
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(Gain) loss on license sales and exchanges, net |
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(Gain) loss on assets disposals, net |
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20 |
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Adjusted EBITDA (Non-GAAP) (2) |
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$ |
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$ |
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$ |
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Deduct: |
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Equity in earnings of unconsolidated entities |
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130 |
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Interest and dividend income (1) |
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10 |
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Other, net |
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Adjusted OIBDA (Non-GAAP) (1)(2)(3) |
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$ |
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$ |
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$ |
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Note: Totals may not foot due to rounding differences. |
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(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
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(2) |
Adjusted EBITDA is defined as net income adjusted for the items set forth in the reconciliation above. Adjusted OIBDA is defined as net income adjusted for the items set forth in the reconciliation above. 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 Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income (loss) or Income (loss) before income taxes. |
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(3) |
A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income (GAAP) for September 30, 2017, actual results can be found on U.S. Cellular’s website at investors.uscellular.com. |
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U.S. Cellular will hold a conference call on November 8, 2017 at 9:30 a.m. Central Time.
- Access the live call on the Events & Presentations page of investors.uscellular.com or at https://www.webcaster4.com/Webcast/Page/1145/23219.
- Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
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 5.1 million connections in 22 states. The Chicago-based company had 6,000 full- and part-time associates as of September 30, 2017. At the end of the third quarter of 2017, Telephone and Data Systems, Inc. owned 83 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.
Contacts
Jane McCahon, Senior Vice President - Corporate Relations and Corporate Secretary of TDS
312-592-5379
jane.mccahon@tdsinc.com
Julie Mathews, IRC, Director - Investor Relations of TDS
312-592-5341
julie.mathews@tdsinc.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 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; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings of U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of services and products offered by U.S. Cellular. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by U.S. Cellular to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.
For more information about U.S. Cellular, visit:
U.S. Cellular: www.uscellular.com
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Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
9/30/2017 |
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6/30/2017 |
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3/31/2017 |
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12/31/2016 |
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9/30/2016 |
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Retail Connections |
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Postpaid |
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Total at end of period |
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Gross additions |
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Feature phones |
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Smartphones |
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Connected devices |
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Net additions (losses) |
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Feature phones |
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Smartphones |
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Connected devices |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPU (Non-GAAP)(2) |
$ |
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$ |
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$ |
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$ |
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$ |
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ARPA (3) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPA (Non-GAAP)(4) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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1.16% |
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1.13% |
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1.29% |
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1.41% |
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1.34% |
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Handsets |
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0.96% |
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0.91% |
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1.08% |
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1.23% |
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1.22% |
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Connected devices |
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2.33% |
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2.35% |
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2.55% |
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2.49% |
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2.04% |
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Prepaid |
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Total at end of period |
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Gross additions |
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Net additions (losses) |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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4.75% |
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4.93% |
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5.69% |
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5.44% |
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4.84% |
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Total connections at end of period (6) |
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Market penetration at end of period |
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Consolidated operating population |
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Consolidated operating penetration (7) |
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16% |
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16% |
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16% |
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16% |
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16% |
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Capital expenditures (millions) |
$ |
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$ |
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$ |
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$ |
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$ |
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Total cell sites in service |
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Owned towers |
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(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: |
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▪ |
Postpaid ARPU consists of total postpaid service revenues and postpaid connections. |
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▪ |
Prepaid ARPU consists of total prepaid service revenues and prepaid connections. |
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(2) |
Average Billings Per User (ABPU) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period. Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric. |
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(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. |
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(4) |
Average Billings Per Account (ABPA) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period. Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric. |
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(5) |
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. |
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(6) |
Includes reseller and other connections. |
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(7) |
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. |
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Consolidated Statement of Operations Highlights |
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(Unaudited) |
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Three Months Ended September 30, |
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2017 |
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2016 |
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2017 vs. 2016 |
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Increase (Decrease) |
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(Dollars and shares in millions, except per share amounts) |
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Operating revenues |
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Service(1) |
$ |
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$ |
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$ |
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(6)% |
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Equipment sales |
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(5)% |
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Total operating revenues(1) |
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(6)% |
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Operating expenses |
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System operations (excluding Depreciation, amortization and accretion reported below) |
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(6)% |
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Cost of equipment sold |
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(7)% |
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Selling, general and administrative |
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(5)% |
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Depreciation, amortization and accretion |
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(2)% |
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Loss on impairment of goodwill |
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N/M |
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(Gain) loss on asset disposals, net |
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(26)% |
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(Gain) loss on sale of business and other exit costs, net |
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N/M |
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(Gain) loss on license sales and exchanges, net |
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100% |
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Total operating expenses |
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32% |
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Operating income (loss)(1) |
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>(100)% |
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Investment and other income (expense) |
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Equity in earnings of unconsolidated entities |
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(7)% |
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Interest and dividend income(1) |
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68% |
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Interest expense |
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(2)% |
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Total investment and other income(1) |
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(21)% |
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Income (loss) before income taxes |
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>(100)% |
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Income tax expense (benefit) |
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>(100)% |
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Net income (loss) |
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>(100)% |
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Less: Net income (loss) attributable to noncontrolling interests, net of tax |
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(9)% |
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Net income (loss) attributable to U.S. Cellular shareholders |
$ |
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$ |
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$ |
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>(100)% |
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Basic weighted average shares outstanding |
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- |
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Basic earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
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$ |
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$ |
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>(100)% |
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Diluted weighted average shares outstanding |
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- |
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Diluted earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
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$ |
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$ |
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>(100)% |
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N/M - Percentage change not meaningful |
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(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
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Consolidated Statement of Operations Highlights |
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(Unaudited) |
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Nine Months Ended September 30, |
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2017 |
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2016 |
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2017 vs. 2016 |
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Increase (Decrease) |
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(Dollars and shares in millions, except per share amounts) |
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Operating revenues |
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Service(1) |
$ |
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$ |
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$ |
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(5)% |
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Equipment sales |
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(3)% |
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Total operating revenues(1) |
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(4)% |
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Operating expenses |
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System operations (excluding Depreciation, amortization |
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and accretion reported below) |
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(4)% |
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Cost of equipment sold |
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(6)% |
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Selling, general and administrative |
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(4)% |
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Depreciation, amortization and accretion |
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- |
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Loss on impairment of goodwill |
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N/M |
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(Gain) loss on asset disposals, net |
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(17)% |
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(Gain) loss on sale of business and other exit costs, net |
|
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>(100)% |
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(Gain) loss on license sales and exchanges, net |
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(16)% |
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Total operating expenses |
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8% |
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Operating income (loss)(1) |
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>(100)% |
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Investment and other income (expense) |
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|
|||||
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Equity in earnings of unconsolidated entities |
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(8)% |
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Interest and dividend income(1) |
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45% |
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Interest expense |
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(1)% |
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Other, net |
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|
(9)% |
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Total investment and other income(1) |
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(25)% |
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Income (loss) before income taxes |
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|
>(100)% |
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Income tax expense (benefit) |
|
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>(100)% |
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Net income (loss) |
|
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|
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|
>(100)% |
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Less: Net income (loss) attributable to noncontrolling interests, net of tax |
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>100% |
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Net income (loss) attributable to U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
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Basic weighted average shares outstanding |
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- |
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Basic earnings (loss) per share attributable to |
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|
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|
|||||
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U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
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>(100)% |
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Diluted weighted average shares outstanding |
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|
|
- |
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Diluted earnings (loss) per share attributable to |
|
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|
|
|
|
|||||
|
U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
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>(100)% |
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N/M - Percentage change not meaningful |
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(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
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