PR Newswire | Aug 5, 2021 05:28PM EDT

08/05 16:27 CDT

TDS reports second quarter 2021 resultsUScellular and TDS Telecom executing on strategic priorities; guidance reaffirmed CHICAGO, Aug. 5, 2021

CHICAGO, Aug. 5, 2021 /PRNewswire/ --

As previously announced, TDS will hold a teleconference August 6, 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 $1,311 million for the second quarter of 2021, versus $1,263 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $20 million and $0.17, respectively, for the second quarter of 2021 compared to $65 million and $0.56, respectively, in the same period one year ago.

"The TDS family of companies produced solid revenue growth for the second quarter of 2021 and made good progress on achieving our long-term strategic goals," said LeRoy T. Carlson, Jr., TDS President and CEO."Also, our commitment to maintaining financial flexibility has allowed us to take actions to lower the average cost of financing for our growth initiatives.

"At UScellular, higher postpaid ARPU helped drive service revenue growth as customers chose higher-value plans. Our efforts to build market share in our prepaid business are starting to generate positive results, and our business and government initiatives are laying the foundation for future growth. UScellular's 5G and network modernization programs are on track. We continue to be very optimistic on the performance capabilities of mmWave spectrum. Additionally, the 5G fixed wireless access tests of market demand have seen early, encouraging results and will provide valuable learnings as we look to bring this high-speed service to market.

"At TDS Telecom, increased broadband connections and customers choosing higher speeds contributed to higher operating revenues for the quarter. 1Gig speeds are available to more than half of all service addresses, and the TDS Telecom fiber footprint is expanding inside as well as outside of our traditional markets. Performance of our launched fiber expansion markets continues to meet expectations. To take advantage of the fiber opportunities, we are accelerating and upsizing our fiber expansion in the years ahead."

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 August 5, 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 $3,050-$3,150Unchanged

Adjusted OIBDA^1 $850-$950 Unchanged

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

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) $125-$225 $80-$110

Add back:

Interest expense 180 -

Depreciation, amortization and accretion expense700 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

Six Months Ended Year Ended June 30, 2021 December 31, 2020

TDS TDS UScellular UScellular Telecom Telecom

(Dollars in millions)

Net income (GAAP) $97 $ 46 $233 $100

Add back:

Income tax expense 17 15 17 18

Income before income taxes (GAAP) $114 $ 62 $250 $117

Add back:

Interest expense 97 (2) 112 (4)

Depreciation, amortization and 350 98 683 203 accretion expense

EBITDA (Non-GAAP)^1 $561 $ 157$1,045 $316

Add back or deduct:

(Gain) loss on asset disposals, net7 1 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 $567 $ 158$1,063 $317

Deduct:

Equity in earnings of 88 - 179 - unconsolidated entities

Interest and dividend income 3 - 8 5

Other, net - - - (1)

Adjusted OIBDA (Non-GAAP)^1 $476 $ 159$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 June 30, 2021, can be found on TDS' website at investors.tdsinc.com.

Conference Call Information

TDS will hold a conference call on August 6, 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/3332389/4AA81608B2125409E9D3E06EB6B1A284 * Access the call by phone at (833) 968-2187, conference ID: 2249545.

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 TDS

Telephone 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 8,900 associates as of June 30, 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 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Ended

Retail Connections

Postpaid

Total at end4,399,000 4,406,000 4,412,000 4,401,000 4,372,000 of period

Gross 141,000 143,000 171,000 168,000 129,000 additions

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

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

Connected 40,000 39,000 52,000 66,000 44,000 devices

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

Feature (7,000) (9,000) (9,000) (8,000) (8,000) phones

Smartphones 6,000 6,000 12,000 8,000 11,000

Connected (5,000) (3,000) 8,000 28,000 9,000 devices

ARPU^1 $47.74 $47.65 $47.51 $47.10 $46.24

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

Churn rate^31.11 %1.12 %1.21 %1.06 %0.89 %

Handsets 0.88 %0.92 %1.01 %0.88 %0.71 %

Connected 2.69 %2.53 %2.64 %2.35 %2.24 %devices

Prepaid

Total at end507,000 496,000 499,000 506,000 496,000 of period

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

Net additions 10,000 (3,000) (8,000) 11,000 2,000 (losses)

ARPU^1 $35.64 $35.25 $35.15 $35.45 $34.89

Churn rate^33.66 %4.37 %4.24 %3.59 %4.05 %

Total connections 4,967,000 4,961,000 4,968,000 4,962,000 4,919,000 at end of period^4

Market penetration at end of period

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

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

Capital expenditures$148 $125 $320 $216 $168 (millions)

Total cell sites in 6,819 6,802 6,797 6,758 6,673 service

Owned towers4,278 4,270 4,271 4,246 4,208

^ Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue1 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.

^ Average Revenue Per Account (ARPA) - metric is calculated by dividing total2 postpaid 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 disconnect3 service 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 wireless5 connections 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 6/30/2021 3/31/2021 12/31/20209/30/2020 6/30/2020 Quarter Ended

Residential connections

Broadband^1

Wireline, 249,200 243,700 242,500 243,400 240,400 Incumbent

Wireline, 28,300 24,100 20,400 17,300 14,700 Expansion

Cable 201,200 199,500 196,400 193,300 191,000

Total Broadband 478,700 467,300 459,300 454,000 446,000

Video^2

Wireline 64,800 63,000 63,000 62,300 61,400

Cable 78,400 79,600 81,400 82,300 83,200

Total Video 143,200 142,700 144,400 144,500 144,600

Voice^3

Wireline 254,200 255,000 256,900 260,000 261,800

Cable 54,000 53,700 53,900 54,400 55,300

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

Total Residential 930,100 918,700 914,400 913,000 907,800 connections

Commercial connections

Broadband^1 34,900 34,400 34,000 33,700 33,400

Video^2 19,100 19,400 19,700 19,700 20,300

Voice^3 114,300 116,500 119,700 122,700 126,100

ManagedIP^4 106,200 108,500 113,300 116,700 117,300

Total Commercial 274,400 278,800 286,700 292,900 297,200 connections

Total connections 1,204,5001,197,4001,201,1001,205,9001,205,000



Residential revenue per $57.66 $56.97 $55.66 $55.66 $53.82 connection^5



Capital expenditures $99 $70 $147 $92 $75 (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 Six Months Ended June 30, June 30,

2021 2021 2021 2020 2021 2020 vs. 2020 vs. 2020

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

Operating revenues

UScellular $1,014$973 4 %$2,037$1,9375 %

TDS Telecom 252 241 5 %501 481 4 %

All Other^1 45 49 (8) %91 106 (15) %

1,311 1,263 4 %2,629 2,524 4 %

Operating expenses

UScellular

Expenses excluding depreciation, 796 738 8 %1,561 1,471 6 %amortization and accretion

Depreciation, amortization and 180 178 1 %350 354 (2) %accretion

(Gain) loss on asset disposals, 2 4 (50) %7 8 (9) %net

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

978 920 6 %1,917 1,833 5 %

TDS Telecom

Expenses excluding depreciation, 174 158 10 %342 319 7 %amortization and accretion

Depreciation, amortization and 49 51 (5) %98 103 (5) %accretion

(Gain) loss on asset disposals, 1 - N/M 1 - N/M net

224 210 7 %441 422 5 %

All Other^1

Expenses excluding depreciation and 46 49 (6) %94 105 (13) %amortization

Depreciation and 5 7 (17) %9 13 (17) %amortization

51 55 (7) %103 118 (14) %

Total operating 1,253 1,185 6 %2,461 2,373 4 %expenses

Operating income (loss)

UScellular 36 53 (32) %120 104 16 %

TDS Telecom 28 31 (10) %60 59 1 %

All Other^1 (6) (6) - (12) (12) 2 %

58 78 (26) %168 151 12 %

Investment and other income (expense)

Equity in earnings of unconsolidated 48 44 7 %90 90 - entities

Interest and 3 2 40 %6 8 (22) %dividend income

Interest expense (86) (38) N/M (138) (75) (85) %

Other, net - - (11) %(1) (1) 10 %

Total investment and other income (35) 8 N/M (43) 22 N/M (expense)

Income before 23 86 (73) %125 173 (28) %income taxes

Income tax expense (11) 8 N/M 20 12 62 %(benefit)

Net income 34 78 (56) %105 161 (35) %

Less: Net income attributable to noncontrolling 7 13 (44) %19 26 (26) %interests, net of tax

Net income attributable to TDS27 65 (59) %86 135 (36) %shareholders

TDS Preferred Share7 - N/M 9 - N/M dividends

Net income attributable to TDS$20 $65 (69) %$77 $135 (43) %common shareholders



Basic weighted average shares 115 114 - 115 115 - outstanding

Basic earnings per share attributable $0.18 $0.57(69) %$0.67 $1.18 (43) %to TDS common shareholders



Diluted weighted average shares 116 115 1 %116 115 - outstanding

Diluted earnings per share $0.17 $0.56(70) %$0.65 $1.15 (43) %attributable to TDS 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 Balance Sheet Highlights

(Unaudited)



ASSETS



June 30, 2021December 31, 2020

(Dollars in millions)

Current assets

Cash and cash equivalents $385 $ 1,429

Short-term investments - 3

Accounts receivable, net 1,072 1,112

Inventory, net 189 154

Prepaid expenses 108 105

Income taxes receivable 187 187

Other current assets 50 36

Total current assets 1,991 3,026



Assets held for sale 3 2



Licenses 3,926 2,638



Goodwill 547 547



Other intangible assets, net 207 213



Investments in unconsolidated entities487 477



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



Operating lease right-of-use assets 1,021 998



Other assets and deferred charges 626 652



Total assets $12,780 $ 12,525

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



LIABILITIES AND EQUITY



June 30, 2021December 31, 2020

(Dollars in millions, except per share amounts)

Current liabilities

Current portion of long-term debt $ 6 $5

Accounts payable 374 508

Customer deposits and deferred revenues 199 193

Accrued interest 13 16

Accrued taxes 66 69

Accrued compensation 92 132

Short-term operating lease liabilities 138 129

Other current liabilities 98 101

Total current liabilities 986 1,153



Liabilities held for sale - 1



Deferred liabilities and credits

Deferred income tax liability, net 903 863

Long-term operating lease liabilities 951 940

Other deferred liabilities and credits 538 541



Long-term debt, net 3,335 3,424



Noncontrolling interests with redemption 10 10 features



Equity

TDS shareholders' equity

Series A Common and Common Shares, par value1 1 $0.01 per share

Capital in excess of par value 2,462 2,482

Preferred Shares, par value $0.01 per share 406 -

Treasury shares, at cost (458) (477)

Accumulated other comprehensive loss (2) (4)

Retained earnings 2,812 2,802

Total TDS shareholders' equity 5,221 4,804



Noncontrolling interests 836 789



Total equity 6,057 5,593



Total liabilities and equity $ 12,780 $12,525

Balance Sheet Highlights

(Unaudited)



June 30, 2021

TDS TDS IntercompanyTDS Corporate

UScellularTelecom & Other EliminationsConsolidated

(Dollars in millions)

Cash and cash $267 $167 $ 119 $ (168) $ 385 equivalents



Licenses, goodwill and $3,917 $756 $ 7 $ - $ 4,680 other intangible assets

Investment in unconsolidated 445 4 46 (8) 487 entities

$4,362 $760 $ 53 $ (8) $ 5,167



Property, plant and equipment, $2,386 $1,492$ 94 $ - $ 3,972 net



Long-term debt, net:

Current portion $3 $- $ 3 $ - $ 6

Non-current 2,710 4 621 - 3,335 portion

$2,713 $4 $ 624 $ - $ 3,341

TDS Telecom Highlights

(Unaudited)



Three Months Ended Six Months Ended June 30, June 30,

2021 2021 2021 2020 2021 2020 vs. 2020 vs. 2020

(Dollars in millions)

Operating revenues

Residential

Wireline, Incumbent $86$817 %$171$1626 %

Wireline, Expansion 8 4 81 %15 8 80 %

Cable 66 60 10 %131 119 9 %

Total residential 160 145 10 %317 289 10 %

Commercial 46 48 (4) %93 98 (5) %

Wholesale 45 47 (3) %91 94 (3) %

Total service revenues 251 240 5 %500 480 4 %

Equipment revenues - - 5 %1 1 7 %

Total operating revenues 252 241 5 %501 481 4 %



Cost of services 101 92 10 %199 188 6 %

Cost of equipment and products- - (12) %- - (7) %

Selling, general and 73 66 11 %143 130 10 %administrative expenses

Depreciation, amortization and49 51 (5) %98 103 (5) %accretion

(Gain) loss on asset 1 - N/M 1 - N/M disposals, net

Total operating expenses 224 210 7 %441 422 5 %



Operating income $28$31(10) %$60 $59 1 %

N/M - Percentage change not meaningful

Numbers may not foot due to rounding.

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SOURCE Telephone and Data Systems, Inc.