PR Newswire | May 6, 2021 04:05PM EDT

05/06 15:05 CDT

TDS reports first quarter 2021 resultsUScellular raises 2021 guidance with strong first quarter performance;TDS Telecom hits 500,000 broadband connections CHICAGO, May 6, 2021

CHICAGO, May 6, 2021 /PRNewswire/ --

As previously announced, TDS will hold a teleconference May 7, 2021, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page ofinvestors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,318 million for the first quarter of 2021, versus $1,261 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $57 million and $0.48, respectively, for the first quarter of 2021 compared to $69 million and $0.59, respectively, in the same period one year ago.

"The TDS Family of Businesses made a strong start to 2021 and are well-positioned to achieve their strategic priorities," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular and TDS Telecom produced impressive financial results and continued to provide essential communications, including high-quality data, video and voice services to our customers and communities. We are implementing our financing strategies to maintain a strong, yet flexible, financial foundation to fund our attractive investment opportunities, while also working to lower the cost of our balance sheet.

"UScellular increased service revenues, showing the positive effect of higher ARPU. Operational and cost discipline throughout the quarter also contributed to strong financial performance. Our attractive promotions are resonating with customers, and postpaid and prepaid handset additions strengthened compared to the same period a year ago. Investments in 5G and network modernization programs are on track reflecting UScellular's commitment to continue to meet customers' expectations for speed and reliability.

"TDS Telecom achieved excellent growth in residential customer connections and strong financial performance, driven by higher operating revenue in the first quarter. With the acceleration of its broadband strategy, 500,000 total customers are now taking broadband services, and more than half of all our customers now have 1Gig service available to them. This year, TDS Telecom has plans to double the number of service addresses that it built fiber to last year, building on the success of the program to-date."

2021 Estimated Results

TDS' current estimates of full-year 2021 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of May 6, 2021 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.

2021 Estimated Results



UScellular Previous Current

(Dollars in millions)

Service revenues $3,025-$3,125$3,050-$3,150

Adjusted OIBDA^1 $800-$950 $850-$950

Adjusted EBITDA^1 $975-$1,125 $1,025-$1,125

Capital expenditures $775-$875 Unchanged



TDS Telecom Previous Current

(Dollars in millions)

Total operating revenues$975-$1,025 Unchanged

Adjusted OIBDA^1 $290-$320 Unchanged

Adjusted EBITDA^1 $290-$320 Unchanged

Capital expenditures $425-$475 Unchanged

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2021 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.

2021 Estimated Results

UScellular TDS Telecom

(Dollars in millions)

Net income (GAAP) N/A N/A

Add back:

Income tax expense N/A N/A

Income before income taxes (GAAP) $175-$275 $80-$110

Add back:

Interest expense 150 -

Depreciation, amortization and accretion expense680 210

EBITDA (Non-GAAP)^1 $1,005-$1,105$290-$320

Add back or deduct:

(Gain) loss on asset disposals, net 20 -

Adjusted EBITDA (Non-GAAP)^1 $1,025-$1,125$290-$320

Deduct:

Equity in earnings of unconsolidated entities 170 -

Interest and dividend income 5 -

Adjusted OIBDA (Non-GAAP)^1 $850-$950 $290-$320

Actual Results

Three Months Ended Year Ended March 31, 2021 December 31, 2020

TDS TDS UScellular UScellular Telecom Telecom

(Dollars in millions)

Net income (GAAP) $ 62 $ 24 $ 233 $100

Add back:

Income tax expense 27 8 17 18

Income before income taxes (GAAP) $ 89 $ 33 $ 250 $117

Add back:

Interest expense 39 (1) 112 (4)

Depreciation, amortization and accretion170 49 683 203 expense

EBITDA (Non-GAAP)^1 $ 298 $ 80 $ 1,045 $316

Add back or deduct:

(Gain) loss on asset disposals, net 5 - 25 1

(Gain) loss on sale of business and (1) - - - other exit costs, net

(Gain) loss on license sales and - - (5) - exchanges, net

(Gain) loss on investments - - (2) -

Adjusted EBITDA (Non-GAAP)^1 $ 302 $ 81 $ 1,063 $317

Deduct:

Equity in earnings of unconsolidated 42 - 179 - entities

Interest and dividend income 2 - 8 5

Other, net - - - (1)

Adjusted OIBDA (Non-GAAP)^1 $ 258 $ 81 $ 876 $314

Numbers may not foot due to rounding.

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring^ non-cash charges, gains and losses, and other items as presented above as1 they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for March 31, 2021, can be found on TDS' website at investors.tdsinc.com.

Stock RepurchaseDuring the first quarter of 2021, TDS repurchased 162,500 Common Shares for $3 million and UScellular repurchased 54,900 Common Shares for $2 million.

Conference Call InformationTDS will hold a conference call on May 7, 2021 at 9:00 a.m. Central Time.

* Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://event.on24.com/wcc/r/3155155/0CD2FBCBA421B063439060A77D169D23 * Access the call by phone at (833) 968-2187, conference ID: 2661419.

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.

About TDSTelephone and Data Systems, Inc. (TDS), a Fortune 1000(r) company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed approximately 9,100 associates as of March 31, 2021.

Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; TDS' smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS' businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; cyber-attacks or other breaches of network or information technology security; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; the impact, duration and severity of public health emergencies, such as the COVID-19 pandemic. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of TDS' Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K.

For more information about TDS and its subsidiaries, visit:

TDS: www.tdsinc.comUScellular: www.uscellular.comTDS Telecom: www.tdstelecom.comOneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Summary Operating Data (Unaudited)

As of or for the Quarter 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Ended

Retail Connections

Postpaid

Total at end4,406,000 4,412,000 4,401,000 4,372,000 4,359,000 of period

Gross 143,000 171,000 168,000 129,000 132,000 additions

Feature 3,000 2,000 4,000 3,000 2,000 phones

Smartphones 101,000 117,000 98,000 82,000 88,000

Connected 39,000 52,000 66,000 44,000 42,000 devices

Net additions (6,000) 11,000 28,000 12,000 (26,000) (losses)

Feature (9,000) (9,000) (8,000) (8,000) (10,000) phones

Smartphones 6,000 12,000 8,000 11,000 (10,000)

Connected (3,000) 8,000 28,000 9,000 (6,000) devices

ARPU^1 $47.65 $47.51 $47.10 $46.24 $47.23

ARPA^2 $125.25 $124.87 $123.27 $120.70 $122.92

Churn rate^31.12 %1.21 %1.06 %0.89 %1.21 %

Handsets 0.92 %1.01 %0.88 %0.71 %0.95 %

Connected 2.53 %2.64 %2.35 %2.24 %3.11 %devices

Prepaid

Total at end496,000 499,000 506,000 496,000 494,000 of period

Gross 62,000 56,000 65,000 62,000 57,000 additions

Net additions (3,000) (8,000) 11,000 2,000 (12,000) (losses)

ARPU^1 $35.25 $35.15 $35.45 $34.89 $34.07

Churn rate^34.37 %4.24 %3.59 %4.05 %4.67 %

Total connections 4,961,000 4,968,000 4,962,000 4,919,000 4,903,000 at end of period^4

Market penetration at end of period

Consolidated operating 31,493,000 31,314,000 31,314,000 31,292,000 31,292,000 population

Consolidated operating 16 %16 %16 %16 %16 %penetration^ 5

Capital expenditures$125 $320 $216 $168 $236 (millions)

Total cell sites in 6,802 6,797 6,758 6,673 6,629 service

Owned towers4,270 4,271 4,246 4,208 4,184



Average Revenue Per User (ARPU) - metric is calculated by dividing a ^revenue base by an average number of connections and by the number of 1months in the period. These revenue bases and connection populations are shown below:

?Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

?Prepaid ARPU consists of total prepaid service revenues and prepaid connections.



^Average Revenue Per Account (ARPA) - metric is calculated by dividing total2postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.



^Churn rate represents the percentage of the connections that disconnect 3service each month. These rates represent the average monthly churn rate for each respective period.



^Includes reseller and other connections. 4



^Market penetration is calculated by dividing the number of wireless 5connections at the end of the period by the total estimated population of consolidated operating markets.







TDS Telecom

Summary Operating Data (Unaudited)

As of or for the 3/31/2021 12/31/20209/30/2020 6/30/2020 3/31/2020 Quarter Ended

Residential connections

Broadband^1

Wireline, 243,700 242,500 243,400 240,400 230,400 Incumbent

Wireline, 24,100 20,400 17,300 14,700 12,300 Expansion

Cable 199,500 196,400 193,300 191,000 184,100

Total Broadband 467,300 459,300 454,000 446,000 426,800

Video^2

Wireline 63,000 63,000 62,300 61,400 59,000

Cable 79,600 81,400 82,300 83,200 84,600

Total Video 142,700 144,400 144,500 144,600 143,600

Voice^3

Wireline 255,000 256,900 260,000 261,800 259,100

Cable 53,700 53,900 54,400 55,300 54,800

Total Voice 308,700 310,800 314,400 317,100 313,900

Total Residential 918,700 914,400 913,000 907,800 884,300 connections

Commercial connections

Broadband^1 34,400 34,000 33,700 33,400 33,200

Video^2 19,400 19,700 19,700 20,300 20,600

Voice^3 116,500 119,700 122,700 126,100 128,600

ManagedIP^4 108,500 113,300 116,700 117,300 119,800

Total Commercial 278,800 286,700 292,900 297,200 302,200 connections

Total connections 1,197,4001,201,1001,205,9001,205,0001,186,400



Residential revenue per $56.97 $55.66 $55.66 $53.82 $54.30 connection^5



Capital expenditures $70 $147 $92 $75 $54 (millions)

Numbers may not foot due to rounding.

^ The individual customers provided high-speed internet access through various1 transmission technologies, including fiber, DSL, dedicated internet circuit technologies or cable modem service.

^ The individual customers provided video services.2

^ The individual circuits connecting a customer to TDS' central office3 facilities that provide voice services or the billable number of lines into a building for voice services.

^ The number of telephone handsets, data lines and IP trunks providing4 communications using IP networking technology.

^ Total residential revenue per connection is calculated by dividing total5 residential revenue by the average number of residential connections and by the number of months in the period.

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)



Three Months Ended March 31,

2021 2021 2020 vs. 2020

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

Operating revenues

UScellular $1,023$963 6 %

TDS Telecom 249 240 4 %

All Other^1 46 58 (21) %

1,318 1,261 4 %

Operating expenses

UScellular

Expenses excluding depreciation, amortization and 765 732 5 %accretion

Depreciation, amortization and accretion 170 177 (4) %

(Gain) loss on asset disposals, net 5 4 39 %

(Gain) loss on sale of business and other exit (1) - N/M costs, net

939 913 3 %

TDS Telecom

Expenses excluding depreciation, amortization and 168 160 5 %accretion

Depreciation, amortization and accretion 49 52 (5) %

217 212 2 %

All Other^1

Expenses excluding depreciation and amortization 47 58 (19) %

Depreciation and amortization 5 6 (17) %

52 64 (19) %

Total operating expenses 1,208 1,189 2 %

Operating income (loss)

UScellular 84 50 67 %

TDS Telecom 32 28 12 %

All Other^1 (6) (6) 3 %

110 72 52 %

Investment and other income (expense)

Equity in earnings of unconsolidated entities 42 45 (7) %

Interest and dividend income 3 6 (44) %

Interest expense (53) (37) (45) %

Total investment and other income (8) 14 N/M

Income before income taxes 102 86 18 %

Income tax expense 31 3 N/M

Net income 71 83 (14) %

Less: Net income attributable to noncontrolling 12 14 (9) %interests, net of tax

Net income attributable to TDS shareholders 59 69 (15) %

TDS Preferred dividend requirement 2 - N/M

Net income attributable to TDS common shareholders$57 $69 (18) %



Basic weighted average shares outstanding 114 115 -

Basic earnings per share attributable to TDS $0.49 $0.60(18) %common shareholders



Diluted weighted average shares outstanding 116 116 -

Diluted earnings per share attributable to TDS $0.48 $0.59(18) %common shareholders

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

^ Consists of TDS corporate, intercompany eliminations and all other business1 operations not included in the UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)



Three Months Ended March 31,

2021 2020

(Dollars in millions)

Cash flows from operating activities

Net income $71 $ 83

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

Depreciation, amortization and accretion 224 235

Bad debts expense 8 34

Stock-based compensation expense 10 11

Deferred income taxes, net 27 75

Equity in earnings of unconsolidated entities (42) (45)

Distributions from unconsolidated entities 23 25

(Gain) loss on asset disposals, net 5 4

(Gain) loss on sale of business and other exit costs, net (1) -

Other operating activities (1) -

Changes in assets and liabilities from operations

Accounts receivable 17 43

Equipment installment plans receivable (18) 23

Inventory 8 (52)

Accounts payable (115) 87

Customer deposits and deferred revenues 9 (9)

Accrued taxes - (74)

Accrued interest 9 9

Other assets and liabilities (69) (82)

Net cash provided by operating activities 165 367



Cash flows from investing activities

Cash paid for additions to property, plant and equipment (220) (377)

Cash paid for intangible assets (1,261)(26)

Cash paid for investments - (1)

Cash received from divestitures and exchanges 1 -

Net cash used in investing activities (1,480)(404)



Cash flows from financing activities

Issuance of long-term debt 567 50

Repayment of long-term debt - (2)

Issuance of TDS Preferred Shares 420 -

TDS Common Shares reissued for benefit plans, net of tax (1) (1) payments

UScellular Common Shares reissued for benefit plans, net (1) - of tax payments

Repurchase of TDS Common Shares (3) (6)

Repurchase of UScellular Common Shares (2) (21)

Dividends paid to TDS shareholders (20) (19)

Payment of debt and equity issuance costs (14) (3)

Distributions to noncontrolling interests (1) (1)

Other financing activities (3) -

Net cash provided by (used in) financing activities 942 (3)



Net decrease in cash, cash equivalents and restricted cash(373) (40)



Cash, cash equivalents and restricted cash

Beginning of period 1,452 474

End of period $1,079$ 434







Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



ASSETS



March 31, 2021December 31, 2020

(Dollars in millions)

Current assets

Cash and cash equivalents $1,042 $ 1,429

Short-term investments 3 3

Accounts receivable, net 1,097 1,112

Inventory, net 145 154

Prepaid expenses 114 105

Income taxes receivable 188 187

Other current assets 53 36

Total current assets 2,642 3,026



Assets held for sale 1 2



Licenses 3,924 2,638



Goodwill 547 547



Other intangible assets, net 213 213



Investments in unconsolidated entities497 477



Property, plant and equipment, net 3,951 3,972



Operating lease right-of-use assets 1,005 998



Other assets and deferred charges 627 652



Total assets $13,407 $ 12,525







Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



LIABILITIES AND EQUITY



March 31, 2021December 31, 2020

(Dollars in millions, except per share amounts)

Current liabilities

Current portion of long-term debt $ 6 $5

Accounts payable 360 508

Customer deposits and deferred revenues 202 193

Accrued interest 25 16

Accrued taxes 67 69

Accrued compensation 73 132

Short-term operating lease liabilities 134 129

Other current liabilities 96 101

Total current liabilities 963 1,153



Liabilities held for sale - 1



Deferred liabilities and credits

Deferred income tax liability, net 890 863

Long-term operating lease liabilities 941 940

Other deferred liabilities and credits 558 541



Long-term debt, net 3,991 3,424



Noncontrolling interests with redemption features10 10



Equity

TDS shareholders' equity

Series A Common and Common Shares, par value 1 1 $0.01 per share

Capital in excess of par value 2,488 2,482

Preferred Shares, par value $0.01 per share 408 -

Treasury shares, at cost (472) (477)

Accumulated other comprehensive loss (3) (4)

Retained earnings 2,830 2,802

Total TDS shareholders' equity 5,252 4,804



Noncontrolling interests 802 789



Total equity 6,054 5,593



Total liabilities and equity $ 13,407 $12,525







Balance Sheet Highlights

(Unaudited)



March 31, 2021

TDS TDS IntercompanyTDS Corporate

UScellularTelecom & Other EliminationsConsolidated

(Dollars in millions)

Cash and cash $479 $177 $ 564 $ (178) $ 1,042 equivalents



Licenses, goodwill and $3,915 $761 $ 8 $ - $ 4,684 other intangible assets

Investment in unconsolidated 455 4 45 (7) 497 entities

$4,370 $765 $ 53 $ (7) $ 5,181



Property, plant and equipment, $2,419 $1,435$ 97 $ - $ 3,951 net



Long-term debt, net:

Current portion $2 $- $ 4 $ - $ 6

Non-current 2,981 4 1,006 - 3,991 portion

$2,983 $4 $ 1,010$ - $ 3,997







TDS Telecom Highlights

(Unaudited)



Three Months Ended March 31,

2021 2021 2020 vs. 2020

(Dollars in millions)

Operating revenues

Residential

Wireline, Incumbent $85$816 %

Wireline, Expansion 7 4 80 %

Cable 65 60 9 %

Total residential 157 144 9 %

Commercial 47 49 (6) %

Wholesale 45 47 (3) %

Total service revenues 249 240 4 %

Equipment revenues - - 9 %

Total operating revenues 249 240 4 %



Cost of services 97 95 2 %

Cost of equipment and products - - (1) %

Selling, general and administrative expenses70 65 9 %

Depreciation, amortization and accretion 49 52 (5) %

(Gain) loss on asset disposals, net - - N/M

Total operating expenses 217 212 2 %



Operating income $32$2812 %

N/M - Percentage change not meaningful

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow



Three Months Ended March 31,

2021 2020

(Dollars in millions)

Cash flows from operating activities (GAAP) $165 $367

Less: Cash paid for additions to property, plant and equipment220 377

Free cash flow (Non-GAAP)^1 $(55) $(10)

Free cash flow is a non-GAAP financial measure which TDS believes may be^ useful to investors and other users of its financial information in1 evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.

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SOURCE Telephone and Data Systems, Inc.