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Press Release: T-Mobile Caps Best Year Ever in -4-

· 02/04/2021 16:01
FY 2021 ------------------------- Current Guidance (in millions) Range ------------------------- Net cash provided by operating activities $ 13,000 $ 13,500 Cash purchases of property and equipment (11,700) (12,000) Proceeds related to beneficial interests in securitization transactions (1) 3,700 3,900 Cash payments for debt prepayment or debt extinguishment costs (100) -- ----------- ---------- Free Cash Flow $ 4,900 $ 5,400 === ====== ====== (1) Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2021.Year Ended Quarter December 31, -------------------------------------------------------------------------------------- ----------------------- (in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2019 2020 --------- --------- --------- --------- --------- --------- --------- --------- --------- ------------ Net cash provided by operating activities $ 1,392 $ 2,147 $ 1,748 $ 1,537 $ 1,617 $ 777 $ 2,772 $ 3,474 $ 6,824 $ 8,640 Cash purchases of property and equipment (1,931) (1,789) (1,514) (1,157) (1,753) (2,257) (3,217) (3,807) (6,391) (11,034) Proceeds related to beneficial interests in securitization transactions 1,157 839 900 980 868 602 855 809 3,876 3,134 Proceeds from sales of tower sites -- -- -- 38 -- -- -- -- 38 -- Cash payments for debt prepayment or debt extinguishment costs -- (28) -- -- -- (24) (58) -- (28) (82) --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------- Free Cash Flow 618 1,169 1,134 1,398 732 (902) 352 476 4,319 658 Gross cash paid for the settlement of interest rate swaps -- -- -- -- -- 2,343 -- -- -- 2,343 --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------- Free Cash Flow, excluding gross payments for the settlement of interest rate swaps $ 618 $ 1,169 $ 1,134 $ 1,398 $ 732 $ 1,441 $ 352 $ 476 $ 4,319 $ 3,001 ===== ===== ===== ===== ===== ===== ===== ===== ===== ======to affiliates 109 101 100 98 99 63 44 41 408 247 Interest income (8) (4) (5) (7) (12) (6) (3) (8) (24) (29) Other expense, net (7) 22 (3) (4) 10 195 99 101 8 405 Income tax expense 295 301 325 214 306 2 407 71 1,135 786 ------ ------ ------ ------ ------ ------ ------ ------ ------- ------- Operating income 1,476 1,541 1,471 1,234 1,539 820 2,565 1,712 5,722 6,636 Depreciation and amortization 1,600 1,585 1,655 1,776 1,718 4,064 4,150 4,219 6,616 14,151 Operating income from discontinued operations (1) -- -- -- -- -- 432 -- -- -- 432 Stock-based compensation (2) 93 111 108 111 123 139 125 129 423 516 Merger-related costs 113 222 159 126 143 798 288 686 620 1,915 COVID-19-related costs (3) -- -- -- -- 117 341 -- -- -- 458 Impairment expense -- -- -- -- -- 418 -- -- -- 418 Other, net (4) 2 2 3 (5) 25 5 1 -- 2 31 ------ ------ ------ ------ ------ ------ ------ ------ ------- ------- Adjusted EBITDA $3,284 $3,461 $3,396 $3,242 $3,665 $7,017 $7,129 $6,746 $13,383 $24,557 ----- ----- ----- ----- ----- ----- ----- ----- ------ ------ (1) Following the Prepaid Transaction, starting on July 1, 2020, we provide MVNO services to DISH. We have included the operating income from discontinued operations, for periods prior to the Prepaid Transaction, in our determination of Adjusted EBITDA to reflect EBITDA contributions of the Prepaid Business that has been replaced by the MVNO Agreement beginning on July 1, 2020 in order to enable management, analysts and investors to better assess ongoing operating performance and trends. (2) Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the consolidated financial statements. Additionally, certain stock-based compensation expenses associated with the Sprint merger have been included in Merger-related costs. (3) Supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs were not significant for Q3 and Q4 2020. (4) Other, net may not agree to the Consolidated Statements of Comprehensive Income, primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur or are not reflective of T-Mobile's ongoing operating performance, and are therefore excluded in Adjusted EBITDA.

Adjusted EBITDA - Earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization expense, non-cash Stock-based compensation and certain expenses not reflective of T-Mobile's ongoing operating performance, such as Merger-related costs, COVID-19-related costs and Impairment expense. Core Adjusted EBITDA represents Adjusted EBITDA less lease revenues. Core Adjusted EBITDA and Adjusted EBITDA are non-GAAP financial measures utilized by T-Mobile's management to monitor the financial performance of our operations. T-Mobile uses Core Adjusted EBITDA and Adjusted EBITDA as benchmarks to evaluate T-Mobile's operating performance in comparison to its competitors. T-Mobile also uses Adjusted EBITDA internally as a measure to evaluate and compensate its personnel and management for their performance. Management believes analysts and investors use Core Adjusted EBITDA and Adjusted EBITDA as supplemental measures to evaluate overall operating performance and facilitate comparisons with other wireless communications companies because they are indicative of T-Mobile's ongoing operating performance and trends by excluding the impact of Interest expense from financing, non-cash depreciation and amortization from capital investments, non-cash stock-based compensation, Merger-related costs including network decommissioning costs, incremental costs directly attributable to COVID-19 and impairment expense, as they are not indicative of T-Mobile's ongoing operating performance, as well as certain other nonrecurring income and expenses. Management believes analysts and investors use Core Adjusted EBITDA because it normalizes for the transition in the company's device financing strategy, by excluding the impact of lease revenues from Adjusted EBITDA, to align with the related depreciation expense on leased devices, which is excluded from the definition of Adjusted EBITDA. Core Adjusted EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for income from operations, Net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").

T-Mobile US, Inc.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures (continued)

(Unaudited)

Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, are calculated as follows:

Free Cash Flow - Net cash provided by operating activities less Cash purchases of property and equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment of debt extinguishment costs. Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, are utilized by T-Mobile's management, investors, and analysts to evaluate cash available to pay debt and provide further investment in the business.

Our current guidance range for Free Cash Flow is calculated as follows:

T-Mobile US, Inc.

Calculation of Operating Measures

(Unaudited)

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February 04, 2021 16:01 ET (21:01 GMT)