Yahoo Finance Telephone and Data Systems (TDS) Q1 Earnings Beat, Top Line Falls
Telephone and Data Systems, Inc. TDS reported relatively modest first-quarter 2024 results, with the bottom line beating the Zacks Consensus Estimate and the top line matching the same. The company reported a revenue decline year over year, owing to demand softness in the U.S. Cellular vertical. However, solid growth in residential broadband connections partially cushioned the top line. TDS Telecom deployed 28,000 marketable fiber addresses in the first quarter of 2024. It expanded its total service addresses by 12% year over year, reaching total service address of 1.7 million. Management’s focus on cost optimization is driving profitability.
Net Income
The company reported a net income of $12 million or 10 cents per share against a net loss of $9 million or a loss of 8 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 32 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Telephone and Data Systems, Inc. price-consensus-eps-surprise-chart | Telephone and Data Systems, Inc. Quote
Revenues
Net sales in the quarter were $1.26 billion, down from $1.3 billion reported in the year-ago quarter due to declining revenues from the U.S. Cellular segment. The top line matched the Zacks Consensus Estimate.
Revenues from U.S. Cellular were $950 million, down 4% year over year. A reduction in postpaid retail and prepaid connections impeded the top line. However, growth in fixed wireless customers and tower revenues are positive factors. Net sales missed our revenue estimate of $958.1 million.
Total cash expenses stood at $729 million, down from $780 million in the prior-year quarter.
Operating income rose to $51 million from $26 million in the year-ago quarter. Postpaid average revenues per user (ARPU) rose to $51.96 from $50.66. Postpaid average revenues per account increased to $132.00 from $130.77 in the year-ago quarter. Prepaid ARPU was $32.25, down from $33.19 in the prior-year quarter.
TDS Telecom contributed $266 million to revenues compared with $253 million reported in the prior-year quarter. The top line beat our estimate of $250.8 million. Total residential connections stood at 956,100, up from 937,200 in the year-earlier quarter. Residential revenues per connection were $64.58, up 7% year over year from $60.24 in the prior-year quarter.
Total cash expenses were $173 million, down 6% year over year. Around 17% of customers opted for 1 Gigabit+ speed compared with the previous-year quarter’s tally of 11%. About 52% of the users have chosen 100 Mbps or higher speed compared to 53% in the year-earlier quarter. Its broadband expansion rose to 100,400 from 62,800 a year ago. Total connections stood at 1,162,200 compared with 1,167,000 in the year-ago quarter.
Other Details
Total operating expenses stood at $1.2 billion, down 6% from the prior-year quarter’s levels. Its operating income rose to $67 million from $29 million in the year-ago quarter.
Adjusted EBITDA in TDS Telecom came at $95 million, up 38% year over year, backed by lower cash expenses. Adjusted EBITDA for U.S. Cellular witnessed an improvement of 8% to $272 million compared with the prior-year quarter’s figure of $252 million.
Cash Flow & Liquidity
In the first quarter of 2024, Telephone and Data Systems generated $224 million of net cash from operating activities compared with $46 million in the prior-year quarter. As of Mar 31, 2024, the company had $249 million in cash and cash equivalents, with $4.16 billion of long-term debt.
Outlook
For 2024, management expects total operating revenues at TDS Telecom in the range of $1.07-$1.1 billion. Adjusted EBITDA is estimated in the band of $310-340 million. Adjusted OIBDA (non-GAAP) is expected to be $310-340 million. Capital expenditures are expected in the range of $310-340 million.
Service revenues for U.S. Cellular are expected in the range of $2.95-$3.05 billion. The company expects the adjusted EBITDA in the range of $920-$1,020 million. Adjusted OIBDA is projected at $750-$850 million. Capital expenditure is projected in the band of $550-$650 million.
Zacks Rank & Stocks to Consider
TDS currently carries a Zacks Rank #3 (Hold).
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