UScellular reports first quarter 2023 results
- UScellular reaffirms its 2023 estimated results, with unchanged service revenues, adjusted OIBDA, adjusted EBITDA, and capital expenditures. The company reported total operating revenues of $986 million for Q1 2023, compared to $1,010 million for the same period last year. Net income and diluted earnings per share decreased from $49 million and $0.57, respectively, in Q1 2022 to $13 million and $0.15 in Q1 2023. Postpaid subscriber trends improved year over year, and the company continues to see momentum in fixed wireless and towers.
- UScellular had net subscriber losses during Q1 2023 and still has work to do in stabilizing its customer base.
2023 guidance reaffirmed
As previously announced, UScellular will hold a teleconference on May 5, 2023, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.uscellular.com.
United States Cellular Corporation (NYSE:USM) reported total operating revenues of
"Postpaid subscriber trends improved year over year as we made progress toward stabilizing our customer base, but we still had net subscriber losses during the quarter and have more work to do," said Laurent Therivel, UScellular President and CEO. "We continue to make significant investments in advancing our network, while our cost optimization program is helping us improve efficiency. Finally, we continue to see momentum in two growth areas of the business - both fixed wireless and towers had another strong quarter."
2023 Estimated Results
UScellular's current estimates of full-year 2023 results are shown below. Such estimates represent management's view as of May 4, 2023 and should not be assumed to be current as of any future date. UScellular undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.
2023 Estimated Results | ||
Previous | Current | |
(Dollars in millions) | ||
Service revenues | Unchanged | |
Adjusted OIBDA1 | Unchanged | |
Adjusted EBITDA1 | Unchanged | |
Capital expenditures | Unchanged | |
The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2023 estimated results, UScellular has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, UScellular believes that the impact of income taxes cannot be reasonably predicted; therefore, UScellular is unable to provide such guidance.
Actual Results | |||||
2023 Estimated | Three Months Ended March 31, 2023 | Year Ended | |||
(Dollars in millions) | |||||
Net income (GAAP) | N/A | ||||
Add back: | |||||
Income tax expense | N/A | 11 | 37 | ||
Income before income taxes (GAAP) | |||||
Add back: | |||||
Interest expense | 205 | 47 | 163 | ||
Depreciation, amortization and accretion expense | 645 | 170 | 700 | ||
EBITDA (Non-GAAP)1 | |||||
Add back or deduct: | |||||
Loss on impairment of licenses | — | — | 3 | ||
(Gain) loss on asset disposals, net | 15 | 10 | 19 | ||
(Gain) loss on sale of business and other exit costs, net | — | — | (1) | ||
Adjusted EBITDA (Non-GAAP)1 | |||||
Deduct: | |||||
Equity in earnings of unconsolidated entities | 145 | 44 | 158 | ||
Interest and dividend income | 5 | 2 | 8 | ||
Adjusted OIBDA (Non-GAAP)1 | |||||
1 | EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in |
Conference Call Information
UScellular will hold a conference call on May 5, 2023 at 9:00 a.m. Central Time.
- Access the live call on the Events & Presentations page of investors.uscellular.com or at
https://events.q4inc.com/attendee/239182809 - Access the call by phone at (888)330-2384 conference ID: 1328528.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.7 million retail connections in 21 states. The
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to attract people of outstanding talent throughout all levels of the organization; UScellular's smaller scale relative to larger competitors; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which UScellular does business; uncertainties in UScellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; conditions in the
For more information about UScellular, visit: www.uscellular.com
United States Cellular Corporation | |||||||||
Summary Operating Data (Unaudited) | |||||||||
As of or for the Quarter Ended | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | ||||
Retail Connections | |||||||||
Postpaid | |||||||||
Total at end of period | 4,223,000 | 4,247,000 | 4,264,000 | 4,296,000 | 4,335,000 | ||||
Gross additions | 137,000 | 154,000 | 151,000 | 128,000 | 126,000 | ||||
Feature phones | 7,000 | 6,000 | 5,000 | 4,000 | 2,000 | ||||
Smartphones | 86,000 | 99,000 | 102,000 | 90,000 | 89,000 | ||||
Connected devices | 44,000 | 49,000 | 44,000 | 34,000 | 35,000 | ||||
Net additions (losses) | (24,000) | (17,000) | (31,000) | (40,000) | (44,000) | ||||
Feature phones | (4,000) | (6,000) | (6,000) | (8,000) | (10,000) | ||||
Smartphones | (21,000) | (14,000) | (16,000) | (23,000) | (26,000) | ||||
Connected devices | 1,000 | 3,000 | (9,000) | (9,000) | (8,000) | ||||
ARPU1 | $ 50.66 | $ 50.60 | $ 50.21 | $ 50.07 | $ 49.71 | ||||
ARPA2 | $ 130.77 | $ 130.97 | $ 130.27 | $ 130.43 | $ 129.93 | ||||
Handset upgrade rate3 | 4.9 % | 7.0 % | 8.1 % | 6.0 % | 5.0 % | ||||
Churn rate4 | 1.27 % | 1.35 % | 1.42 % | 1.30 % | 1.30 % | ||||
Handsets | 1.06 % | 1.12 % | 1.15 % | 1.10 % | 1.10 % | ||||
Connected devices | 2.78 % | 2.99 % | 3.40 % | 2.73 % | 2.70 % | ||||
Prepaid | |||||||||
Total at end of period | 470,000 | 493,000 | 493,000 | 490,000 | 495,000 | ||||
Gross additions | 43,000 | 61,000 | 62,000 | 56,000 | 55,000 | ||||
Net additions (losses) | (23,000) | — | 2,000 | (4,000) | (18,000) | ||||
ARPU1 | $ 33.19 | $ 33.34 | $ 35.04 | $ 35.25 | $ 34.59 | ||||
Churn rate4 | 4.63 % | 4.11 % | 4.07 % | 4.07 % | 4.84 % | ||||
Market penetration at end of period | |||||||||
Consolidated operating population | 32,350,000 | 32,370,000 | 32,370,000 | 32,370,000 | 32,370,000 | ||||
Consolidated operating penetration5 | 15 % | 15 % | 15 % | 15 % | 15 % | ||||
Capital expenditures (millions) | $ 208 | $ 176 | $ 136 | $ 268 | $ 137 | ||||
Total cell sites in service | 6,950 | 6,945 | 6,933 | 6,916 | 6,899 | ||||
Owned towers | 4,338 | 4,336 | 4,329 | 4,323 | 4,310 | ||||
1 | Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below: |
• Postpaid ARPU consists of total postpaid service revenues and postpaid connections. | |
• Prepaid ARPU consists of total prepaid service revenues and prepaid connections. | |
2 | Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period. |
3 | Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections. |
4 | Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period. |
5 | Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets. |
United States Cellular Corporation | |||||
Consolidated Statement of Operations Highlights | |||||
(Unaudited) | |||||
Three Months Ended March 31, | |||||
2023 | 2022 | 2023 vs. 2022 | |||
(Dollars and shares in millions, except per share amounts) | |||||
Operating revenues | |||||
Service | $ 767 | $ 787 | (3) % | ||
Equipment sales | 219 | 223 | (2) % | ||
Total operating revenues | 986 | 1,010 | (2) % | ||
Operating expenses | |||||
System operations (excluding Depreciation, amortization and accretion reported below) | 182 | 185 | (2) % | ||
Cost of equipment sold | 253 | 257 | (2) % | ||
Selling, general and administrative | 345 | 325 | 6 % | ||
Depreciation, amortization and accretion | 170 | 171 | (1) % | ||
(Gain) loss on asset disposals, net | 10 | 2 | N/M | ||
(Gain) loss on sale of business and other exit costs, net | — | (1) | N/M | ||
Total operating expenses | 960 | 939 | 2 % | ||
Operating income | 26 | 71 | (63) % | ||
Investment and other income (expense) | |||||
Equity in earnings of unconsolidated entities | 44 | 45 | (2) % | ||
Interest and dividend income | 2 | 1 | N/M | ||
Interest expense | (47) | (33) | (41) % | ||
Total investment and other income (expense) | (1) | 13 | N/M | ||
Income before income taxes | 25 | 84 | (70) % | ||
Income tax expense | 11 | 32 | (66) % | ||
Net income | 14 | 52 | (72) % | ||
Less: Net income attributable to noncontrolling interests, net of tax | 1 | 3 | (43) % | ||
Net income attributable to UScellular shareholders | $ 13 | $ 49 | (74) % | ||
Basic weighted average shares outstanding | 85 | 86 | (1) % | ||
Basic earnings per share attributable to UScellular shareholders | $ 0.15 | $ 0.57 | (73) % | ||
Diluted weighted average shares outstanding | 86 | 87 | (1) % | ||
Diluted earnings per share attributable to UScellular shareholders | $ 0.15 | $ 0.57 | (73) % | ||
N/M - Percentage change not meaningful |
United States Cellular Corporation | |||
Consolidated Statement of Cash Flows | |||
(Unaudited) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Dollars in millions) | |||
Cash flows from operating activities | |||
Net income | $ 14 | $ 52 | |
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||
Depreciation, amortization and accretion | 170 | 171 | |
Bad debts expense | 26 | 25 | |
Stock-based compensation expense | — | 7 | |
Deferred income taxes, net | 7 | 22 | |
Equity in earnings of unconsolidated entities | (44) | (45) | |
Distributions from unconsolidated entities | 20 | 19 | |
(Gain) loss on asset disposals, net | 10 | 2 | |
(Gain) loss on sale of business and other exit costs, net | — | (1) | |
Other operating activities | 2 | 1 | |
Changes in assets and liabilities from operations | |||
Accounts receivable | 37 | 15 | |
Equipment installment plans receivable | 1 | — | |
Inventory | (1) | (4) | |
Accounts payable | (149) | (62) | |
Customer deposits and deferred revenues | (10) | 9 | |
Accrued taxes | 1 | 130 | |
Accrued interest | 9 | 10 | |
Other assets and liabilities | (52) | (40) | |
Net cash provided by operating activities | 41 | 311 | |
Cash flows from investing activities | |||
Cash paid for additions to property, plant and equipment | (196) | (150) | |
Cash paid for licenses | (5) | (561) | |
Other investing activities | 9 | 1 | |
Net cash used in investing activities | (192) | (710) | |
Cash flows from financing activities | |||
Issuance of long-term debt | 115 | 625 | |
Repayment of long-term debt | (3) | (126) | |
Issuance of short-term debt | — | 60 | |
Repayment of short-term debt | (60) | — | |
Repurchase of Common Shares | — | (10) | |
Distributions to noncontrolling interests | (1) | (1) | |
Cash paid for software license agreements | (7) | (2) | |
Other financing activities | (1) | (2) | |
Net cash provided by financing activities | 43 | 544 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (108) | 145 | |
Cash, cash equivalents and restricted cash | |||
Beginning of period | 308 | 199 | |
End of period | $ 200 | $ 344 | |
United States Cellular Corporation | |||
Consolidated Balance Sheet Highlights | |||
(Unaudited) | |||
ASSETS | |||
March 31, 2023 | December 31, 2022 | ||
(Dollars in millions) | |||
Current assets | |||
Cash and cash equivalents | $ 154 | $ 273 | |
Accounts receivable, net | 1,009 | 1,072 | |
Inventory, net | 262 | 261 | |
Prepaid expenses | 76 | 68 | |
Income taxes receivable | 4 | 4 | |
Other current assets | 57 | 45 | |
Total current assets | 1,562 | 1,723 | |
Assets held for sale | 18 | 26 | |
Licenses | 4,692 | 4,690 | |
Investments in unconsolidated entities | 477 | 452 | |
Property, plant and equipment, net | 2,658 | 2,624 | |
Operating lease right-of-use assets | 910 | 918 | |
Other assets and deferred charges | 680 | 686 | |
Total assets | $ 10,997 | $ 11,119 | |
United States Cellular Corporation | |||
Consolidated Balance Sheet Highlights | |||
(Unaudited) | |||
LIABILITIES AND EQUITY | |||
March 31, 2023 | December 31, 2022 | ||
(Dollars in millions, except per share amounts) | |||
Current liabilities | |||
Current portion of long-term debt | $ 15 | $ 13 | |
Accounts payable | 214 | 356 | |
Customer deposits and deferred revenues | 229 | 239 | |
Accrued taxes | 33 | 35 | |
Accrued compensation | 44 | 84 | |
Short-term operating lease liabilities | 133 | 133 | |
Other current liabilities | 285 | 335 | |
Total current liabilities | 953 | 1,195 | |
Deferred liabilities and credits | |||
Deferred income tax liability, net | 715 | 708 | |
Long-term operating lease liabilities | 836 | 843 | |
Other deferred liabilities and credits | 601 | 604 | |
Long-term debt, net | 3,297 | 3,187 | |
Noncontrolling interests with redemption features | 12 | 12 | |
Equity | |||
UScellular shareholders' equity | |||
Series A Common and Common Shares, par value | 88 | 88 | |
Additional paid-in capital | 1,704 | 1,703 | |
Treasury shares | (96) | (98) | |
Retained earnings | 2,872 | 2,861 | |
Total UScellular shareholders' equity | 4,568 | 4,554 | |
Noncontrolling interests | 15 | 16 | |
Total equity | 4,583 | 4,570 | |
Total liabilities and equity | $ 10,997 | $ 11,119 | |
United States Cellular Corporation Financial Measures and Reconciliations (Unaudited)
| |||
Free Cash Flow | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Dollars in millions) | |||
Cash flows from operating activities (GAAP) | $ 41 | $ 311 | |
Cash paid for additions to property, plant and equipment | (196) | (150) | |
Cash paid for software license agreements | (7) | (2) | |
Free cash flow (Non-GAAP)1 | $ (162) | $ 159 | |
1 | Free cash flow is a non-GAAP financial measure which UScellular believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. |
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SOURCE United States Cellular Corporation
FAQ
What are UScellular's 2023 estimated results?
What were UScellular's Q1 2023 financial results?
Did UScellular see any improvements in subscriber trends?
What are the growth areas for UScellular's business?
Did UScellular provide any updates on its cost optimization program?
