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A month has gone by since the last earnings report for Telephone & Data Systems (TDS). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TDS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Telephone and Data Systems Q1 Earnings Beat, Revenues Up Y/Y
Telephone and Data Systems reported healthy first-quarter 2019 financial results with year-over-year increase in revenues and earnings.
Net Income
The parent of U.S. Cellular and TDS Telecom’s net income came in at $59 million or 50 cents per share compared with $39 million or 34 per share in the year-ago quarter, primarily driven by top-line growth. The bottom line beat the Zacks Consensus Estimate by 14 cents.
Revenues
Quarterly total operating revenues were $1,257 million compared with $1,225 million in the prior-year quarter, owing to U.S. Cellular’s improved customer results. The top line, however, lagged the consensus estimate of $1,273 million.
U.S. Cellular
By segments, operating revenues from U.S. Cellular were $966 million, up 2.5% year over year. Total operating expenses increased to $902 million from $877 million. Operating income was $64 million compared with $65 million in the year-ago quarter. Postpaid average revenue per user improved to $45.44 from $44.34, while average revenue per account grew to $118.84 from $118.22.
TDS Telecom
Operating revenues were $230 million, almost stable year over year, reflecting healthy traction in broadband connections. Revenues from wireline were $171 million, down 2.3% due to lower ILEC sale as the company focused to pursue commercial fiber. Cable revenues were $60 million, reflecting an increase of 9.1%, primarily driven by growth in residential connections.
Cash Flow and Liquidity
During the first quarter, Telephone and Data Systems generated $327 million of net cash from operating activities compared with $214 million in the year-ago period. Free cash flow (non-GAAP) for the same period totaled $172 million compared with $83 million in the prior-year period.
As of Mar 31, 2019, the company had $959 million in cash and equivalents with $2,414 million of net long-term debt.
Guidance
For full-year 2019, Telephone and Data Systems expects total operating revenues in the range of $5,125-$5,375 million. Adjusted EBITDA is projected to be $1,185-$1,365 million, while capital expenditure is estimated to be in the range of $940-$1,090 million. The company projects adjusted OIBDA in the band of $1,000-$1,180 million.