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Telephone and Data Systems (TDS) Q2 Earnings Top Estimates

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Telephone and Data Systems, Inc. (TDS - Free Report) reported mixed results for the second quarter of 2018.

Net income came in at $33 million or 29 cents per share compared with $10 million or 9 cents in the year-ago quarter, comfortably beating the Zacks Consensus Estimate of 23 cents.

Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise

 

Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise | Telephone and Data Systems, Inc. Quote

Total operating revenues for the reported quarter were $1,255 million compared with $1,247 million in the prior-year quarter. Notably, the figure marginally missed the Zacks Consensus Estimate of $1,256 million.

United States Cellular Division

Quarterly total revenues from United States Cellular division were $974 million, up 1.1% year over year.

Total operating expenses decreased 4.2% to $918 million. Operating income was $56 million compared with $5 million in the year-ago quarter.

TDS Division

In the reported quarter, total operating revenues came in at $230 million, relatively flat year over year. The revenues were primarily driven by increase in video connections and customer demand for faster broadband speeds, offset by decline in wholesale and commercial revenues.

Within the segment, revenues from wireline came in at $174 million, down 4% year over year, due to lower CLEC sales and continued decline in special access services.

Cable revenues were $57 million, reflecting an increase of 12%, primarily driven by growth in residential connections.

Cash Flow & Liquidity

At the end of the second quarter, net cash provided by operating activities came in at $463 million compared with $358 million in the year-ago period. For the first six months of 2018, free cash flow was $188 million compared with $116 million at the end of Jun 30, 2017. Net long-term debt at quarter end was $2,427 million with cash and cash equivalents of $873 million.

Guidance

For full-year 2018, Telephone and Data Systems tweaked its earlier guidance. The company currently expects total operating revenues in the range of $5,055-$5,205 million compared with the earlier guidance of $5,015-$5,265 million. Adjusted EBITDA is projected to be $1,145-$1,275 million while capital expenditure is estimated between $790 million and $840 million. The company projects adjusted OIBDA in the range of $985-$1,115 million.

The company accomplished a number of initiatives in the quarter operationally. It launched Voice over LTE in California, Oregon and Washington. Also, it decided to work on its Voice over LTE networks in New England and the Mid-Atlantic. In addition, it launched the Apple Watch.

Zacks Rank & Stocks to Consider

Telephone and Data Systems currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Atlantic Power Corporation (AT - Free Report) , Ameren Corporation (AEE - Free Report) and NorthWestern Corporation (NWE - Free Report) . While Atlantic Power sports a Zacks Rank #1 (Strong Buy), Ameren Corporation and NorthWestern Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlantic Power surpassed estimates twice in the trailing four quarters with an average beat of 7.24%.

Ameren Corporation exceeded estimates thrice in the trailing four quarters with an average beat of 7.69%.

NorthWestern Corporation surpassed estimates twice in the trailing four quarters with an average beat of 19.78%.

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