Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q2 2015 Earnings Presentation
27 slides from Telephone And Data Systems's earnings presentation, Jul 31, 2015
Slide 1: Second Quarter 2015 Results
Second Quarter 2015 Results July 31, 2015
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 All information set forth in this presentation, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates, and expectati
Slide 3: Upcoming conferences
Upcoming conferences • 9/9/15 - Drexel Hamilton – New York • 9/10/15 – Hosting analyst meetings at CTIA – Las Vegas • 9/28/15 - 10/2/15 – European roadshow 3
Slide 4: U.S. Cellular
K US. Cellular
Slide 5: Second quarter highlights: Growing top and bottom lines
Second quarter highlights Growing top and bottom lines • Continued customer growth • Continued adoption of data-centric devices driving strong growth in data usage • Postpaid churn of 1.34% reflecting improved levels of customer satisfaction; 78% of postpaid customers under contract • Total revenue
Slide 6: Customer results
Customer results Q2 ‘15 Q2 ’14 Postpaid gross additions 191,000 190,000 Postpaid churn 1.34% 1.73% Postpaid net additions (losses) 17,000 (26,000) Prepaid net additions (losses) 8,000 (4,000) Retail net additions (losses) 25,000 (30,000) Total retail customers 4,692,000 4,500,000 Basic Connected Pho
Slide 7: Postpaid churn rate
Postpaid churn rate 2.50% 2.29% 2.03% 2.00% 1.91% 1.71% 1.73% 1.59% 1.60% 1.48% 1.50% 1.34% 1.00% 0.50% 0.00% 7
Slide 8: Smartphone sales and penetration
Smartphone sales and penetration Smartphones Sold Smartphones Customers (% of handsets sold) (% of postpaid handsets) 100% 87% 87% 70% 69% 90% 86% 79% 81% 68% 80% 67% 70% 66% 65% 60% 64% 62% 62% 50% 40% 60% 58% 30% 58% 20% 56% 10% 54% 0% 52% Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q2 '14 Q3 '14 Q4 '14 Q1
Slide 9: Data usage (In MB)
Data usage (In MB) (In Millions) 18,000 1,500 16,000 1,450 14,000 1,400 12,000 1,350 10,000 1,300 8,000 1,250 6,000 4,000 1,200 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Total System Usage (MB Millions) Average Usage per Data Subscriber 9
Slide 10: Postpaid service revenue
Postpaid service revenue (Corrected 8/11/15) Q2’15 Q2’14 Change % Change Average Revenue Per User As reported $53.62 $56.82 $(3.20) (6%) EIP billings 4.44 0.19 As reported plus EIP billings $58.06 $57.01 $1.05 1.8% Average Revenue Per Account As Reported $133.85 $131.95 $ 1.90 1% EIP billings 11.09
Slide 11: Total operating revenues
Total operating revenues ($ in millions) Q2 ‘15 Q2 ‘14 % Change Service revenues $824 $843 (2%) Retail service 735 746 (2%) Roaming 49 58 (15%) Tower rentals (1) 13 14 (3%) Other 28 26 5% Equipment sales revenues 151 114 32% Total operating revenues $976 $958 2% (1) On a comparable basis excluding d
Slide 12: Growing top and bottom lines
Growing top and bottom lines ($ in millions) Q2 ‘15 Q2 ‘14 % Change Total operating revenues $976 $958 2% System operations expense 196 187 5% Cost of equipment sold 254 272 (7%) SG&A expenses 363 404 (10%) Total cash expenses 813 863 (6%) Operating cash flow(1) 163 94 73% Depreciation, amortization
Slide 13: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q2 ‘15 Q2 ‘14 % Change Operating cash flow(1) $163 $ 94 73% Equity in earnings of unconsolidated 36 33 7% entities Interest and dividend income 9 2 >100% Other, net (1) -- Adjusted EBITDA(1) $207 $129 61% (1) Operating cash flow and Adjusted EBITDA are non-GAAP financ
Slide 14: 2015 guidance
2015 guidance(1) (as of 7/31/15) 2015 Estimates 2015 Estimates 2014 (in millions) (Current) (Previous) Actual Total operating revenues $4,000 - $4,100 $4,000 - $4,200 $3,893 Operating cash flow(2) $440 - $540 $400 - $500 $338 Adjusted EBITDA(2) $600 - $700 $580 - $680 $480 Capital expenditures Appro
Slide 15: TDS Telecom
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Slide 16: 2015 strategic priorities
2015 strategic priorities • Wireline • Continue targeted fiber deployment; increase broadband and IPTV penetration in existing markets • Cable • Improve residential and commercial broadband customer penetrations • Leverage wireline capabilities to create additional synergies • Continue to evaluate p
Slide 17: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q2 ‘15 Q2 ‘14 % Change Wireline $176 $181 (3%) Cable 45 22 98% HMS 76 68 11% Total operating revenues(1) 295 271 9% Expenses(1)(2) 216 197 9% Adjusted EBITDA(3) $79 $74 7% (1) Reflects intercompany eliminations. (2) Represents cost of products and se
Slide 18: Wireline operating performance
Wireline operating performance ($ in millions) Q2 ’15 Q2 ’14 % Change Residential $74 73 1% Commercial 55 57 (4%) Wholesale 46 49 (8%) Total service revenues 175 180 (3%) Expenses(1) 112 112 --- Adjusted EBITDA(2) $64 $69 (6%) (1) Represents cost of products and services and selling, general and adm
Slide 19: Broadband speeds, IPTV and managedIP driving wireline revenue growth
Broadband speeds, IPTV and managedIP driving wireline revenue growth ILEC Residential Customers by Broadband Speeds managedIP Connections 160,000 6/30/15 6/30/14 140,000 > 5 Mb 84% 81% 120,000 > 10 Mb 44% 38% 100,000 80,000 > 25 Mb 13% 8% 60,000 40,000 IPTV Connections 20,000 6/30/15 6/30/14 0 Q2'14
Slide 20: Cable snapshot
Cable snapshot Connections Operating Performance % 6/30/15 6/30/14 ($ in millions) Q2 ‘15 Q2 ‘14 Change Video 109,100 69,700 Total operating $45 $22 98% Broadband 112,300 63,200 revenues Voice 51,500 17,800 Expenses(1) 34 18 90% Total cable 272,900 150,700 Adjusted EBITDA(2) $11 $5 >100% connections
Slide 21: Hosted and Managed Services operating performance
Hosted and Managed Services operating performance ($ in millions) Q2 ’15 Q2 ’14 % Change Service revenues $29 $28 7% Equipment revenues 46 40 14% Total operating revenues 76 68 11% Expenses(1) 71 68 6% Adjusted EBITDA(2) $4 --- >100% (1) Represents cost of products and services and selling, general
Slide 22: 2015 TDS Telecom guidance
2015 TDS Telecom guidance(1) Unchanged from previous estimates (as of 7/31/15) 2015 Estimates 2014 Actual (Current) ($ in millions) Total operating revenues $1,130 - $1,180 $1,088 Operating cash flow(2) $280 - $310 $296 Adjusted EBITDA(2) $280 - $310 $298 Capital expenditures $220 $208 (1) There can
Slide 23: Appendix
Appendix 23
Slide 24: Operating Cash Flow and Adjusted EBITDA Reconciliation – Q2 2015 and Q2 2014 Actual Results
Operating Cash Flow and Adjusted EBITDA Reconciliation – Q2 2015 and Q2 2014 Actual Results Actual Results Three months ended June 30, 2015 Three months ended June 30, 2014 U.S. Total TDS U.S. Total TDS Cellular Wireline Cable HMS Telecom TDS (2) Cellular Wireline Cable HMS Telecom TDS (2) (Dollars
Slide 25: Operating Cash Flow and Adjusted EBITDA Reconciliation
Operating Cash Flow and Adjusted EBITDA Reconciliation 2015 Estimated Results (1) Actual Results Year ended December 31, 2014 U.S. Cellular TDS Telecom TDS(2) U.S. Cellular TDS Telecom TDS (2) (Dollars in millions) Net income (loss) (GAAP) N/A N/A N/A ($47) ($24) ($147) Add back: Income tax expense
Slide 26: Reconciliation footnotes and definitions
(l) In providing 2015 Estimated Results, TDS has not completed the above reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, the company is unable to provide such guidance. (2) The
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