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U.S. Cellular (USM) Reports Q2 Revenue of $957M, EPS of $0.05

August 4, 2023 7:37 AM

United States Cellular Corporation (NYSE: USM) reported total operating revenues of $957 million for the second quarter of 2023, versus $1,027 million for the same period one year ago. Service revenues totaled $760 million, versus $783 million for the same period one year ago. Net income attributable to UScellular shareholders and related diluted earnings per share were $5 million and $0.05, respectively, for the second quarter of 2023 compared to $21 million and $0.25, respectively, in the same period one year ago.

"Postpaid handset subscriber trends improved slightly year-over-year driven by improvements in churn, however, gross additions remained challenged. Two of UScellular's growth areas, fixed wireless and the tower portfolio, produced year-over-year double-digit increases in gross additions and revenues, respectively. And our ongoing cost optimization programs are helping to offset inflationary pressures," said Laurent Therivel, UScellular President and CEO. "In July, UScellular surpassed 100,000 fixed wireless customers – a key milestone as momentum for the product continues."

Recent Development: On August 4, 2023, Telephone and Data Systems (TDS) and UScellular announced a process to explore a range of strategic alternatives for UScellular.

2023 Estimated Results

UScellular's current estimates of full-year 2023 results are shown below. Such estimates represent management's view as of August 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.

The 2023 Estimated Results shown below do not reflect any anticipated costs, expenses or results of the strategic review referenced above.

2023 Estimated Results

Previous

Current

(Dollars in millions)

Service revenues

$3,050-$3,150

$3,025-$3,075

Adjusted OIBDA1

$725-$875

$750-$850

Adjusted EBITDA1

$875-$1,025

$925-$1,025

Capital expenditures

$600-$700

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
Results

Six Months Ended

June 30, 2023

Year Ended
December 31, 2022

(Dollars in millions)

Net income (GAAP)

N/A

$20

$35

Add back:

Income tax expense

N/A

29

37

Income before income taxes (GAAP)

$50-$150

$49

$72

Add back:

Interest expense

200

99

163

Depreciation, amortization and accretion expense

655

330

700

EBITDA (Non-GAAP)1

$905-$1,005

$478

$935

Add back or deduct:

Loss on impairment of licenses

—

—

3

(Gain) loss on asset disposals, net

20

13

19

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

—

—

(1)

Adjusted EBITDA (Non-GAAP)1

$925-$1,025

$491

$956

Deduct:

Equity in earnings of unconsolidated entities

160

82

158

Interest and dividend income

15

5

8

Adjusted OIBDA (Non-GAAP)1

$750-$850

$404

$790

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 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 as 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, 2023, can be found on UScellular's website at investors.uscellular.com.

Conference Call Information

UScellular will hold a conference call on August 4, 2023 at 9:00 a.m. Central Time.

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.

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