PR Newswire | Aug 5, 2021 05:30PM EDT

08/05 16:29 CDT

UScellular reports second quarter 2021 resultsExecuting on strategic priorities;guidance reaffirmed CHICAGO, Aug. 5, 2021

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

As previously announced, UScellular will hold a teleconference August 6, 2021, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page ofinvestors.uscellular.com.

United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,014 million for the second quarter of 2021, versus $973 million for the same period one year ago. Service revenues totaled $774 million, versus $753 million for the same period a year ago. Net income attributable to UScellular shareholders and related diluted earnings per share were $35 million and $0.39, respectively, for the second quarter of 2021 compared to $68 million and $0.78, respectively, in the same period one year ago.

"UScellular continued strong growth in service revenue and made meaningful progress towards our strategic priorities," said Laurent Therivel, UScellular President and CEO. "Higher postpaid ARPU helped drive service revenue growth as customers chose higher-value plans.

"Our efforts to expand our prepaid business are starting to generate positive results, and our business-and-government initiatives are laying the foundation for future growth. With the competitive environment top of mind, we are continuing to execute our community-by-community strategy in order to deliver solutions that are right for our customers.

"Our 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 product to market.

"I continue to be impressed with the hard work of our associates and their commitment to keeping our customers connected. I'd like to thank all of them for their contributions this quarter."

2021Estimated Results

UScellular's current estimates of full-year 2021 results 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. 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.

2021 Estimated Results

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

The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2021 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

2021 EstimatedSix Months EndedYear Ended Results December 31, 2020 June 30, 2021

(Dollars in millions)

Net income (GAAP) N/A $ 97 $233

Add back:

Income tax expense N/A 17 17

Income before income taxes (GAAP) $125-$225 $ 114 $250

Add back:

Interest expense 180 97 112

Depreciation, amortization and accretion expense 700 350 683

EBITDA (Non-GAAP)^1 $1,005-$1,105$ 561 $1,045

Add back or deduct:

(Gain) loss on asset disposals, net 20 7 25

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

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

(Gain) loss on investments - - (2)

Adjusted EBITDA (Non-GAAP)^1 $1,025-$1,125$ 567 $1,063

Deduct:

Equity in earnings of unconsolidated entities 170 88 179

Interest and dividend income 5 3 8

Adjusted OIBDA (Non-GAAP)^1 $850-$950 $ 476 $876

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 as1 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 June 30, 2021, can be found on UScellular's website at investors.uscellular.com.

Conference Call InformationUScellular 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.uscellular.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.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.

About UScellularUnited States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 5.0 million connections in 21 states. The Chicago-based company employed approximately 5,000 associates as of June 30, 2021. At the end of the second quarter of 2021, Telephone and Data Systems, Inc. owned 82 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 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; UScellular's 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 UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties; 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; potential conflicts of interests between TDS and UScellular; 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 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 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020

Retail Connections

Postpaid

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

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

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

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

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

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

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

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

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

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^3 1.11 %1.12 %1.21 %1.06 %0.89 %

Handsets 0.88 %0.92 %1.01 %0.88 %0.71 %

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

Prepaid

Total at end of period 507,000 496,000 499,000 506,000 496,000

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

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

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

Churn rate^3 3.66 %4.37 %4.24 %3.59 %4.05 %

Total connections at end of period^44,967,000 4,961,000 4,968,000 4,962,000 4,919,000

Market penetration at end of period

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

Consolidated operating penetration^516 %16 %16 %16 %16 %

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

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

Owned towers 4,278 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 total^2 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 disconnect^3 service each month. These rates represent the average monthly churn rate for each respective period.

^4 Includes reseller and other connections.

^ 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.

United States Cellular Corporation

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

Service $774 $753 3 % $1,545$1,5152 %

Equipment sales 240 220 9 % 492 422 17 %

Total operating revenues 1,014 973 4 % 2,037 1,937 5 %



Operating expenses

System operations (excluding Depreciation, amortization and accretion 204 197 4 % 389 377 3 % reported below)

Cost of equipment sold 258 218 19 % 533 435 23 %

Selling, general and administrative 334 323 3 % 639 659 (3) %

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

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

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

Total operating expenses 978 920 6 % 1,917 1,833 5 %



Operating income 36 53 (32)% 120 104 16 %



Investment and other income (expense)

Equity in earnings of unconsolidated entities 47 44 7 % 88 89 -

Interest and dividend income 2 1 54 % 3 5 (30)%

Interest expense (60) (25) N/M (97) (49) N/M

Total investment and other income (expense) (11) 20 N/M (6) 45 N/M



Income before income taxes 25 73 (66)% 114 149 (24)%

Income tax expense (benefit) (10) 4 N/M 17 8 N/M

Net income 35 69 (49)% 97 141 (31)%

Less: Net income attributable to noncontrolling interests, net of tax - 1 (2) % 2 2 16 %

Net income attributable to UScellular shareholders $35 $68 (49)% $95 $139 (32)%



Basic weighted average shares outstanding 87 86 1 % 87 86 -

Basic earnings per share attributable to UScellular shareholders $0.40$0.79(50)% $1.10 $1.62 (32)%



Diluted weighted average shares outstanding 88 87 1 % 88 87 -

Diluted earnings per share attributable to UScellular shareholders $0.39$0.78(50)% $1.08 $1.59 (32)%

N/M - Percentage change not meaningful

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)



ASSETS



June 30, 2021December 31, 2020

(Dollars in millions)

Current assets

Cash and cash equivalents $ 267 $1,271

Short-term investments - 3

Accounts receivable, net 974 998

Inventory, net 183 146

Prepaid expenses 55 51

Income taxes receivable 126 125

Other current assets 40 29

Total current assets 1,645 2,623



Assets held for sale 3 2



Licenses 3,917 2,629



Investments in unconsolidated entities445 435



Property, plant and equipment, net 2,386 2,466



Operating lease right-of-use assets 950 924



Other assets and deferred charges 574 602



Total assets $ 9,920 $9,681

United States Cellular Corporation

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 $3 $2

Accounts payable 293 387

Customer deposits and deferred revenues 153 151

Accrued taxes 46 48

Accrued compensation 53 82

Short-term operating lease liabilities 125 116

Other current liabilities 78 85

Total current liabilities 751 871



Liabilities held for sale - 1



Deferred liabilities and credits

Deferred income tax liability, net 668 633

Long-term operating lease liabilities 890 875

Other deferred liabilities and credits 372 376



Long-term debt, net 2,710 2,489



Noncontrolling interests with redemption features 10 10



Equity

UScellular shareholders' equity

Series A Common and Common Shares, par value $1.00 per share88 88

Additional paid-in capital 1,663 1,651

Treasury shares (42) (67)

Retained earnings 2,794 2,739

Total UScellular shareholders' equity 4,503 4,411



Noncontrolling interests 16 15



Total equity 4,519 4,426



Total liabilities and equity $9,920 $9,681

View original content: https://www.prnewswire.com/news-releases/uscellular-reports-second-quarter-2021-results-301349885.html

SOURCE United States Cellular Corporation